30244 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 447 and 457 

[CMS–2244–FC] 

RIN 0938–AP73 

Medicaid Program; Premiums and Cost 

Sharing 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule with comment period. 

SUMMARY: This final rule revises the 

November 25, 2008 final rule entitled, 

‘‘Medicaid Programs; Premiums and 

Cost Sharing (73 FR 71828),’’ to address 

public comments received during 

reopened comment periods, and to 

reflect relevant statutory changes made 

in section 5006(a) of the American 

Recovery and Reinvestment Act of 2009 

(the Recovery Act). This revised final 

rule implements and interprets section 

1916A of the Social Security Act (the 

Act), which was added by sections 

6041, 6042, and 6043 of the Deficit 

Reduction Act of 2005 (DRA), amended 

by section 405(a)(1) of the Tax Relief 

and Health Care Act of 2006 (TRHCA) 

and further amended by section 5006(a) 

of the American Recovery and 

Reinvestment Act of 2009 (the Recovery 

Act). These provisions increase State 

flexibility to impose premiums and cost 

sharing for coverage of certain 

individuals whose family income 

exceeds specified levels. This revised 

rule also provides a further opportunity 

for public comment on revisions made 

to implement and interpret section 

5006(a) of the Recovery Act. The 

Recovery Act prohibits States from 

charging premiums and cost sharing 

under Medicaid to Indians furnished 

items or services directly by the Indian 

Health Service, Indian Tribes, Tribal 

Organizations, or Urban Indian 

Organizations or through referral under 

contract health services. 

DATES:

Effective Date: These regulations are 

effective on July 1, 2010. 

Comment Date: To be assured of 

consideration, comments limited to the 

implementation of section 5006(a) of the 

Recovery Act must be received at one of 

the addresses provided below, no later 

than 5 p.m. on July 27, 2010. 

ADDRESSES: In commenting, please refer 

to file code CMS–2244–FC. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed). We cannot accept 

comments by facsimile (FAX) 

transmission. 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the instructions under the ‘‘More Search 

Options’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–2244–FC, P.O. Box 8010, 

Baltimore, MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–2244–FC, 

Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244– 

1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Christine Gerhardt, (410) 786–0693. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://regulations.gov. 

Follow the search instructions on that 

Web site to view public comments. 

Comments received timely will be 

also available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

A. Statutory Authority 

The Deficit Reduction Act of 2005 

(DRA) (Pub. L. 109–171) was enacted on 

February 8, 2006. Sections 6041, 6042, 

and 6043 of the DRA established a new 

section 1916A of the Social Security Act 

(the Act), which was amended by 

section 405(a)(1) of the Tax Relief and 

Health Care Act of 2006 (TRHCA) (Pub. 

L. 109–432, enacted on December 20, 

2006). Section 1916A of the Act sets 

forth State options for alternative 

premiums and cost sharing, including 

options for higher cost sharing for nonpreferred prescription drugs and for 

non-emergency use of a hospital 

emergency room. 

Section 6041 of the DRA established 

new subsections 1916A(a) and (b) of the 

Act, which allow States to amend their 

State plans to impose alternative 

premiums and cost sharing on certain 

groups of individuals, for items and 

services other than drugs (which are 

subject to a separate provision discussed 

below), and to adopt certain rules with 

respect to the nonpayment and payment 

of the premiums and cost sharing. 

Subsections 1916A(a) and (b) of the Act 

set forth limitations on alternative 

premiums and cost sharing that vary 

based on family income, and exclude 

some specific services from alternative 

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Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 30245 

cost sharing. Section 6041 of the DRA 

also created a new section 1916(h) of the 

Act, which requires the Secretary to 

increase the ‘‘nominal’’ cost sharing 

amounts under section 1916 of the Act 

for each year (beginning with 2006) by 

the annual percentage increase in the 

medical care component of the 

consumer price index for all urban 

consumers (CPI–U) as rounded up in an 

appropriate manner. Section 405(a)(1) of 

the TRHCA modified subsections 

1916A(a) and (b) of the Act. 

Section 6042 of the DRA created 

section 1916A(c) of the Act, which 

provides States with additional options 

to encourage the use of preferred drugs. 

Section 405(a)(1) of the TRHCA also 

modified section 1916A(c) of the Act. 

Under section 1916A(c) of the Act, 

States may amend their State plans to 

require increased cost sharing by certain 

groups of individuals for non-preferred 

drugs and to waive or reduce the 

otherwise applicable cost sharing for 

preferred drugs. States may also permit 

pharmacy providers to require the 

receipt of a cost sharing payment from 

an individual before filling a 

prescription. 

Section 6043 of the DRA created 

section 1916A(e) of the Act, which 

permits States to amend their State 

plans to allow hospitals, after an 

appropriate medical screening 

examination under section 1867 of the 

Act (per the Emergency Medical 

Treatment and Active Labor Act), to 

impose higher cost sharing upon certain 

groups of individuals for nonemergency care or services furnished in 

a hospital emergency department. 

Section 405(a)(1) of the TRHCA 

modified section 1916A(e) of the Act. 

Under this option, if the hospital 

determines that an individual does not 

have an emergency medical condition 

and that an available and accessible 

alternate non-emergency services 

provider can provide the services in a 

timely manner without the imposition 

of the same cost sharing, before 

providing the non-emergency services 

and imposing cost sharing, it must 

inform the individual of the availability 

of such services from the accessible 

non-emergency services provider and 

coordinate a referral to that provider. 

After notice is given, the hospital may 

require payment of the cost sharing 

before providing non-emergency 

services, if the individual elects to 

receive the non-emergency services 

from the hospital. The cost sharing 

cannot be imposed if no available 

alternative non-emergency service 

provider exists. 

Section 5006(a) of the American 

Recovery and Reinvestment Act of 2009 

(the Recovery Act) (Pub. L. 111–5, 

enacted on February 17, 2009) amended 

sections 1916 and 1916A of the Act 

effective July 1, 2009. Specifically, 

Section 5006(a)(1)(A) of the Recovery 

Act amended section 1916 of the Act to 

add a new subsection (j), which 

prohibits premiums and cost sharing for 

Indians who are provided services or 

items covered under the Medicaid State 

plan by Indian health care providers or 

through referral under contract health 

services. Section 5006(a)(2) of the 

Recovery Act amended section 

1916A(b)(3)(A) of the Act to add a new 

clause prohibiting premiums on an 

Indian furnished an item or service 

directly by Indian health care providers 

or through referral under contract health 

services, and also added a clause to 

1916A(b)(3)(B) prohibiting cost sharing 

for that population. In addition, section 

5006(a)(1)(B) of the Recovery Act 

amended section 1916 of the Act to 

specify that payments to Indian health 

care providers or to a health care 

provider through referral under contract 

health services for Medicaid services or 

items furnished to Indians cannot be 

reduced by the amount of any 

enrollment fee, premium, or cost 

sharing that otherwise would be due 

from the individual. 

We also acknowledge the importance 

of providing adequate mental health 

benefits and will be separately 

addressing how the laws following the 

DRA, including the Paul Wellstone and 

Pete Domenici Mental Health Parity and 

Addiction Equity Act of 2008 (Pub. L. 

110–343), relate to the Medicaid 

program regarding the treatment of 

beneficiary cost sharing. 

B. Regulatory History 

On February 22, 2008, we published 

a proposed rule in the Federal Register 

(73 FR 9727) that proposed to 

implement and interpret the provisions 

of sections 6041, 6042, and 6043 of the 

DRA. A final rule entitled ‘‘Medicaid 

Program; Premiums and Cost Sharing’’ 

was published in the Federal Register 

on November 25, 2008 (73 FR 71828). 

On January 27, 2009, prior to the 

effective date of the November 25, 2008 

final rule, we published a final rule in 

the Federal Register (74 FR 4888) that 

temporarily delayed for 60 days the 

effective date of the November 25, 2008 

final rule and reopened the comment 

period on the policies set out in the 

November 25, 2008 final rule. 

On March 27, 2009, we published a 

second final rule in the Federal Register 

(74 FR 13346) that further delayed the 

effective date of the November 25, 2008 

final rule until December 31, 2009. We 

stated that the delay was needed 

because our initial review had indicated 

that substantial revisions to the final 

rule would be needed. Also, the 

comment period was again reopened, 

for two purposes: for additional 

comments on the policies set forth in 

the November 25, 2008 final rule, and 

for comments on revisions needed to 

reflect section 5006(a) of the Recovery 

Act (related to the exclusion of Indians 

from payment of premiums and cost 

sharing). 

On October 30, 2009, we published a 

proposed rule in the Federal Register 

(74 FR 56151) to delay further the 

effective date of the November 25, 2008 

final rule until July 1, 2010. Upon 

review and consideration of the public 

comments received and the provisions 

of the Recovery Act, we determined that 

we needed more time to review and 

revise the November 25, 2008 final rule. 

On November 30, 2009, we published a 

third final rule in the Federal Register 

(74 FR 62501) that delayed the effective 

date of the November 25, 2008 final rule 

until July 1, 2010. 

II. Provisions of the November 25, 2008 

Final Rule and the Extended Comment 

Period and Analysis of and Response to 

Public Comments 

A. Public Comments 

We received approximately 50 timely 

items of correspondence during the 

public comment period for the February 

22, 2008 proposed rule, which we 

addressed in the November 25, 2008 

final rule. We received approximately 5 

timely items of correspondence 

(including 20 specific comments) in 

response to the January 27, 2009 

reopening of the comment period. In 

addition, we received approximately 10 

timely items of correspondence 

(including 36 specific comments) in 

response to the March 27, 2009 

reopening of the comment period. 

Summaries of those public comments 

and our responses are set forth in the 

various sections of this final rule under 

the appropriate heading. 

B. General Comments 

A majority of the public comments 

received for the January 27, 2009 and 

March 27, 2009 extended comment 

periods were similar to comments 

received on the February 22, 2008 

proposed rule, which we addressed in 

the November 25, 2008 final rule. In 

light of the continued concerns reflected 

by these comments, and additional 

review of available research, State 

practice, and changes in overall 

economic circumstances throughout the 

country, we have reconsidered our 

responses to these comments. In 

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30246 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 

particular, we have given greater weight 

to concerns about maintaining access to 

services for needy families. A summary 

of the general comments received and 

our responses are as follows: 

Comment: Several commenters stated 

that the rule would significantly reduce 

affordability of care and patients’ access 

to adequate care, and would result in 

decreased utilization of essential health 

care services, increased adverse events, 

and worsened health status due to less 

use of health care characterized as 

‘‘effective’’ and subsequent use of more 

costly care. These commenters 

requested that the final rule reflect the 

need for caution and care when 

imposing premiums and cost sharing 

charges on low-income Medicaid 

beneficiaries. These commenters 

asserted that the November 25, 2008 

final rule would allow States to increase 

health care expenses for vulnerable 

citizens, result in more crisis situations 

that lead to more expensive 

hospitalizations, limit access to basic 

health care, and force out people who 

need services most. These commenters 

argued that increased flexibility for 

States to impose premiums or cost 

sharing is detrimental to low-income 

populations, unless there are explicit 

restrictions on maximum premium and 

cost sharing levels. 

One commenter described her 

personal situation that she would have 

inadequate money for food or rent if her 

copayments were increased. 

Response: We appreciate the 

significant concerns expressed in these 

comments and agree that there is ample 

evidence that cost is a significant barrier 

to people accessing coverage and care, 

particularly for those with low or 

moderate incomes. These are important 

issues with which States must contend 

when they determine whether to impose 

premiums and cost sharing for their 

Medicaid and Children’s Health 

Insurance Program (CHIP) populations 

and as they design and implement these 

provisions. CMS also must be mindful 

of these issues as we promulgate rules 

and oversee the operation of Medicaid 

and CHIP. However, to the extent that 

these comments reflect fundamental 

disagreements with the statutory 

flexibility and requirements enacted in 

sections 1916 and 1916A of the Act, we 

note that CMS is charged with 

implementing applicable statutory 

provisions. 

We have developed the revised final 

rule in accordance with the provisions 

set forth at sections 1916 and 1916A of 

the Act. This regulation is consistent 

with the statute and reflects little 

interpretive policy by CMS; therefore, 

we are unable to change major aspects 

of the revised final rule based on these 

comments. 

In light of public comments, we have, 

however, reconsidered some of our prior 

responses to comments on specific 

interpretive issues, in order to increase 

the protections for vulnerable 

populations to the extent consistent 

with the statutory requirements. As we 

discuss in greater detail in responding 

to specific public comments on each 

issue below, in this revised rule we are: 

• Reducing the maximum copayment 

amount from $5.70 (the maximum 

copayment amount for children in 

separate CHIP programs) to $3.40 per 

visit in fiscal year 2009 (which is then 

adjusted for inflation annually) for 

Medicaid expansion optional targeted 

low income children enrolled in 

managed care organizations, when a 

State does not have a fee-for-service 

system. 

• Specifying that a State that adopts 

cost sharing rules that could result in 

aggregate costs to the family that exceed 

five percent of the family’s income 

must: (1) Describe in its Medicaid State 

plan the methodology it will use to 

identify beneficiaries who are subject to 

premiums or cost sharing for specific 

items or services; and (2) track 

beneficiaries’ incurred premiums and 

cost sharing through a mechanism 

developed by the State that does not 

rely on beneficiaries. These 

requirements are imposed so that the 

State is able to inform beneficiaries and 

providers of beneficiaries’ liability and 

notify beneficiaries and providers when 

individual beneficiaries have reached 

the five percent limit on family out-ofpocket expenses and so are no longer 

subject to further cost sharing for the 

remainder of the family’s current 

monthly or quarterly cap period. 

Ideally, for ease of administration and 

accuracy, States will use automated 

systems to track these cost sharing 

amounts. 

• Specifying that a State must 

describe in its Medicaid State plan how 

the State identifies for providers, ideally 

through the use of automated systems, 

whether cost sharing for a specific item 

or service may be imposed on an 

individual beneficiary and whether the 

provider may require the beneficiary, as 

a condition for receiving the item or 

service, to pay the cost sharing charge. 

• Specifying at a minimum the 

services listed at § 457.520 as the 

preventive services that must be 

excluded from cost sharing for children 

younger than age 18, which reflect the 

well baby and well child care and 

immunizations described by the Bright 

Futures guidelines of the American 

Academy of Pediatrics. 

• Requiring States to describe in their 

Medicaid State plan their process for 

beneficiaries to request a reassessment 

of the family’s aggregate limit for 

premiums and cost sharing if the 

family’s income is reduced or if 

eligibility is being terminated due to 

nonpayment of premiums. 

• Clarifying that the statutory 

exclusion of family planning services 

and supplies from cost sharing 

encompasses the entire range of such 

services for which the State claims or 

could claim the enhanced Federal 

matching rate for family planning 

services and supplies under section 

1903(a)(5) of the Act, including 

contraceptives and other 

pharmaceuticals. 

• Clarifying that the statutory 

exclusion of certain populations and 

services from cost sharing exceeding a 

nominal amount means that drugs not 

identified by a State as non-preferred 

drugs within a class of pharmaceuticals 

are subject to the same exclusions from 

cost sharing as preferred drugs. 

• Requiring States to submit 

documentation with a State plan 

amendment proposing to establish or 

substantially modify alternative 

premiums or cost sharing under section 

1916A of the Act that the State provided 

the public with advance notice of the 

amendment and reasonable opportunity 

for comment in a form and manner 

provided under applicable State law. 

CMS will continue to carefully review 

State plan amendments submitted to 

implement or modify premiums or cost 

sharing to ensure that the processes 

described adhere to the statutory and 

regulatory requirements. 

We further note that the concerns 

expressed by the commenters may be 

widely shared. To date, only 8 States 

have approved State plan amendments 

for alternative premiums and/or cost 

sharing under section 1916A of the Act. 

These provisions are usually applied to 

narrowly defined, higher income 

populations and/or to limited services, 

such as premiums for specific 

expansion populations or slightly more 

than nominal pharmacy copayments. 

Comment: We also received a 

recommendation that the rule should 

reflect the change in course signaled by 

the Children’s Health Insurance 

Program Reauthorization Act of 2009 

(CHIPRA) to strengthen quality of care, 

ensure the availability of preventive 

services, and enhance access to needed 

services to improve health outcomes. 

The commenter also recommended that 

rigorous data collection accompany any 

enhanced cost sharing, to determine 

whether higher co-payment 

requirements present a greater access 

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Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 30247 

barrier to people with disabilities. The 

commenter further recommended that 

providers report to States and that States 

report to CMS at least a sample of the 

race and ethnicity of individuals for 

whom providers approved a waiver 

from mandatory co-payments on a caseby-case basis, in order to demonstrate 

that the waiver does not have a 

disparate effect on people of color or 

non-English-speaking individuals. 

Response: While we agree with the 

commenter’s overall sentiments, we 

believe it is important to consider these 

kinds of recommended information 

collection and reporting requirements 

separately, in conjunction with other 

similar potential information collection 

and reporting requirements. CMS has 

broad authority under section 1902(a)(6) 

of the Act to require States to report any 

needed information, but it is important 

to carefully consider such reporting 

requirements and ensure that they can 

be integrated with existing State 

responsibilities and are not overly 

burdensome. Because providers are not 

required to report on their claims for 

Medicaid reimbursement whether the 

provider collected a mandatory 

copayment, requiring providers to 

obtain and submit information about the 

race and ethnicity of individuals for 

whom the provider waived a copayment 

would be burdensome and costly for all 

involved, even for a sample of claims. 

C. General Comments on the Exemption 

of Indians From Premiums and Cost 

Sharing 

We received the following general 

comments concerning the exemption of 

Indians furnished items or services 

directly by an Indian health care 

provider (the Indian Health Service 

(IHS), an Indian Tribe, a Tribal 

Organization, or an Urban Indian 

Organization) or through referral under 

contract health services from payment 

of premiums and cost sharing effective 

July 1, 2009, in accordance with the 

section 5006(a) of the Recovery Act. 

Comment: Several commenters urged 

CMS to fulfill its responsibilities for 

early Tribal consultation, which did not 

occur with the original cost-sharing 

rule. 

Response: CMS believes that it is in 

compliance with applicable Tribal 

consultation responsibilities, but notes 

that considerable additional 

consultation was undertaken since the 

original cost sharing rule was published. 

Further, we are open to specific 

suggestions as to how to maximize the 

effectiveness of Tribal consultation. In 

our March 27, 2009 final rule, we 

specifically requested public comment 

on the new provisions exempting 

Indians from premiums and cost 

sharing, and we believe that there has 

been a full opportunity for Tribes to 

raise issues of concern. Moreover, the 

Recovery Act contains expanded 

consultation responsibilities for States 

in implementing options under the 

Federal Medicaid and CHIP statutes. 

In keeping with the Department’s 

Tribal consultation policy and the new 

provisions in the Recovery Act, CMS 

collaborated and consulted with the 

Tribal Technical Advisory Group 

(TTAG) and the IHS to solicit advice on 

implementing these provisions. The 

Tribal Affairs Group and the Center for 

Medicaid, CHIP and Survey and 

Certification within CMS jointly hosted 

two All Tribes Calls on June 5 and 12, 

2009, to consult on implementation of 

section 5006 of the Recovery Act. Two 

face-to-face consultation meetings were 

held in Denver on July 8 and 10, 2009, 

to solicit advice and input on these 

provisions from federally-recognized 

Tribes, Indian health care providers, 

and Urban Indian Organizations. An 

All-States Call was held on June 10, 

2009, with the State Medicaid and CHIP 

programs, to describe the CMS Tribal 

consultation process and the Recovery 

Act provisions and to solicit feedback 

and questions from States. 

Comment: A commenter asserted that 

CMS should adopt the TTAG 

recommendation to adopt an interim 

rule to implement section 5006(a) of the 

Recovery Act by July 1, 2009, because, 

otherwise, violations of the new 

provision could occur and go 

undetected. The commenter stated that 

it is important for CMS to assure that 

mechanisms are put in place timely at 

the State level, to assure compliance 

with this new provision as of the 

effective date of July 1, 2009. 

Response: The requirements of 

section 5006(a) of the Recovery Act 

were effective as of July 1, 2009, and 

CMS intends to work with States to 

implement the statutory requirements 

through its compliance reviews and 

reviews of State plan amendments. CMS 

issued a letter to State Medicaid 

Directors and State Health Officials on 

January 22, 2010 (SMDL# 10–001/ 

ARRA# 6), providing guidance on 

implementation of section 5006 of the 

Recovery Act. 

The Congress did not expressly 

provide authority for interim final 

rulemaking authority under the 

Recovery Act. In light of the strong 

public interest in timely protection of 

the exempt Indian populations, we 

provided the interim guidance to States 

described above and have diligently 

pursued the rulemaking process. 

Comment: A commenter asked that 

CMS establish effective procedures to 

properly enforce this provision, 

including a new audit element to 

quickly detect any prohibited 

reductions in providers’ payments or 

other violations. The commenter 

asserted that States must make 

supplemental payments to providers for 

any prohibited reductions in payment. 

Response: Congress did not provide 

for any new enforcement mechanism for 

these provisions, and it is not clear that 

existing enforcement mechanisms are 

inadequate. All States have an appeal 

process through which beneficiaries and 

providers can appeal State 

determinations concerning the amount 

of medical assistance. CMS involvement 

is primarily through the State plan 

approval process. In addition, CMS has 

authority to initiate compliance actions 

under section 1904 of the Act in the 

event of systemic noncompliance by a 

State. 

Comment: Another commenter 

recommended that CMS include 

requirements for administrative 

simplicity in the implementation of the 

Recovery Act’s new exclusion of Native 

Americans from cost-sharing, including 

ease of tribal membership 

documentation. 

Response: We agree that 

administrative simplicity is very 

important. Therefore, we have defined 

the term ‘‘Indian’’ for purposes of the 

exemption from premiums and cost 

sharing in broad terms that indicate the 

kinds of documentation that could 

support the application of the 

exception. 

Specifically, Indian means any 

individual defined at 25 USC 1603(c), 

1603(f), or 1679(b), or who has been 

determined eligible as an Indian, 

pursuant to 42 CFR 136.12. This means 

the individual: 

(1) Is a member of a Federallyrecognized Indian tribe; 

(2) resides in an urban center and 

meets one or more of the four criteria: 

(a) Is a member of a tribe, band, or other 

organized group of Indians, including 

those tribes, bands, or groups 

terminated since 1940 and those 

recognized now or in the future by the 

State in which they reside, or who is a 

descendant, in the first or second 

degree, of any such member; (b) is an 

Eskimo or Aleut or other Alaska Native; 

(c) is considered by the Secretary of the 

Interior to be an Indian for any purpose; 

or (d) is determined to be an Indian 

under regulations promulgated by the 

Secretary; 

(3) is considered by the Secretary of 

the Interior to be an Indian for any 

purpose; or 

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30248 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 

(4) is considered by the Secretary of 

Health and Human Services to be an 

Indian for purposes of eligibility for 

Indian health care services, including as 

a California Indian, Eskimo, Aleut, or 

other Alaska Native. 

Documentation that an individual is 

an Indian could include Tribal 

enrollment and membership cards, a 

certificate of degree of Indian blood 

issued by the Bureau of Indian Affairs, 

a Tribal census document, or a 

document issued by a Tribe indicating 

an individual’s affiliation with the 

Tribe. The Indian health care programs 

and urban Indian health programs are 

responsible for determining who is 

eligible to receive an item or service 

furnished by their programs and so a 

medical record card or similar 

documentation that specifies an 

individual is an Indian as defined above 

could suffice as appropriate 

documentation. These documents are 

examples of documents that may be 

used, but do not constitute an allinclusive list of such documents. 

Comment: A commenter also stated 

that Tribal leaders are not cognizant of 

all the impacts that these changes will 

have on the elderly Indian populations 

enrolled in Medicaid. The commenter 

stated that none of this information has 

been provided by CMS or the IHS. 

Response: As described above, CMS 

has engaged in an extensive Tribal 

consultation process, providing 

information to the Tribes, soliciting 

their input, and incorporating changes 

into this revised rule based on that 

input. 

Comment: A commenter stated that 

for Indians who use the IHS system, 

Medicaid is considered the primary 

payer, and IHS is considered the payer 

of last resort according to 42 CFR 

136.61. Therefore, the commenter 

asserted that a conflict exists between 

section 5006 of the Recovery Act 

specifying circumstances under which 

Indians may not be charged cost-sharing 

(and so defining when they may be 

charged cost sharing) and the IHS payer 

of last resort policy, as well as Federal 

responsibility in providing health care 

for Native Americans. 

Response: We do not see any conflict 

between the exclusion of Indians from 

Medicaid premiums and cost sharing 

and the IHS payer of last resort rule, 

which was included in section 2901 of 

the Patient Protection and Affordable 

Care Act of 2010, Public Law 111–148. 

We also do not see any conflict with 

overall Federal responsibilities toward 

Indian health care. Indeed, we believe 

that these policies are consistent and 

ensure that Medicaid programs will pay 

for health care coverage of Medicaid 

items and services primary to both IHS 

and to individual Indians. 

Comment: A commenter expressed 

concern that CMS seems to feel that the 

statutory framework for the cost sharing 

rule reflects the principle that States are 

in the best position to weigh the Tribes’ 

concerns, as Sovereign Nations, and that 

the States alone are to determine the 

appropriate levels and scope of 

alternative cost sharing. The commenter 

noted that the Tribes’ poorest people 

who are on Medicaid cannot afford even 

the smallest cost sharing, and the 

commenter was concerned that CMS 

ensure that States follow requirements 

to consult with Tribes prior to 

implementing cost sharing that will 

directly affect the Tribes and indigent 

patients. 

Response: We agree that there are 

special concerns about cost sharing for 

Indians, and we believe that Congress 

recognized these concerns in enacting 

the Recovery Act protections for Indians 

from cost sharing that are being 

implemented in this revised final rule, 

and the new requirements for CMS to 

maintain the TTAG and for States to 

engage in tribal consultation under 

section 5006(e) of the Recovery Act. We 

will continue to monitor State 

compliance with tribal consultation 

requirements in all aspects of the 

Medicaid program. 

D. Comments From the January 27, 2009 

and March 27, 2009 Extended Comment 

Periods on the November 25, 2008 Final 

Rule 

Following is a summary of each 

provision in the February 22, 2008 

proposed rule entitled ‘‘Medicaid 

Programs: Premiums and Cost Sharing’’ 

that was addressed in a public 

comment. We include a background 

summary of any changes included in the 

final rule published on November 25, 

2008 based on comments received 

during the initial comment period; and 

then a summary of the additional 

comments on the final rule that were 

received during the reopened comment 

periods beginning on January 27 and 

March 27, 2009; and responses to those 

additional comments. 

Maximum Allowable and Nominal 

Charges (§ 447.54) 

Under DRA § 6041(b)(2), adding 

§ 1916(h) to the Social Security Act, the 

Secretary was authorized to adjust the 

regulatory definition of nominal 

charges. In reviewing those definitions, 

we also addressed the issue of 

maximum charges by managed care 

organizations (MCO). CMS had 

previously, in interpreting regulatory 

provisions that addressed maximum 

charges only under fee-for-service 

systems, limited MCO charges to an 

estimate of the charges that would have 

been allowed under a fee-for-service 

system. In the February 22, 2008 

proposed rule, we proposed to revise 

§ 447.54 to provide updates for Federal 

fiscal year (FY) 2007 to the existing 

‘‘nominal’’ Medicaid cost sharing 

amounts, specifically the nominal 

deductible amount described at 

§ 447.54(a)(1) and the nominal 

copayment amounts described at 

§ 447.54(a)(3) by applying an inflation 

factor, and described a methodology for 

future inflation-based updates that 

included rounding the maximum 

copayment amounts to the next highest 

10-cent increment. We also proposed to 

add a new § 447.54(a)(4) to establish a 

maximum copayment amount for 

Federal FY 2007 for services provided 

by an MCO, in light of the difficulty in 

determining comparable fee-for-service 

charges. We noted that a similar MCO 

limit was applied under the CHIP 

program. 

In the November 25, 2008 final rule, 

we updated the maximum nominal 

copayments to reflect amounts for 

Federal FY 2009. The amounts were 

rounded to the next highest 5-cent 

increment rather than 10-cent 

increment, to be consistent with the 

Medicare Part D program. In addition, 

we clarified that we would calculate the 

update each year without considering 

any rounding adjustment made in the 

previous year. A new paragraph (a)(4) 

was added to specify that the 

copayment amount for services 

provided by an MCO may not exceed 

the copayment amount for comparable 

services under a fee-for-service delivery 

system. In the circumstance when there 

is no fee-for-service delivery system 

under the plan, we specified that the 

copayment amount for services 

furnished by an MCO may not exceed 

the maximum copayment amount under 

a fee-for-service delivery system, which 

was $3.40 per visit for Federal FY 2009 

(based on the maximum fee-for-service 

copayment under Medicaid), or for 

individuals referenced in an approved 

State child health plan under title XXI 

of the Act, a higher different maximum 

MCO copayment amount of $5.70 per 

visit (based on the maximum fee-forservice amount for children enrolled in 

separate CHIP programs under title XXI 

of the Act). 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: Several commenters 

recommended deletion of the $5.70 per 

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visit maximum Medicaid copayment 

specifically for children in CHIP-related 

Medicaid expansions under managed 

care plans when a State does not have 

a fee-for-service system. This amount 

was added in the final rule published on 

November 25, 2008. 

Response: We agree with the 

underlying concern that copayments for 

such children would exceed levels 

otherwise considered nominal under the 

Medicaid program. Therefore, in this 

revised final rule, we have deleted the 

higher maximum copayment amount for 

Medicaid expansion children enrolled 

with MCOs. The same maximum 

copayment of $3.40 per visit for Federal 

FY 2009 will be applied for Medicaid 

expansion children as for all other 

Medicaid beneficiaries enrolled in 

MCOs. While our intent had been to 

align the Medicaid and CHIP programs 

by permitting the same copayment 

levels under either program, we have 

been convinced by the commenters that 

the status of the children under the 

Medicaid program should be of primary 

importance, because it indicates a 

State’s determination that the children 

should be entitled to all the benefits and 

protections of the Medicaid program. 

We have always applied Medicaidspecific rules to Medicaid expansion 

programs, even if those rules vary from 

the rules applicable to separate CHIP 

programs. The importance of ensuring 

coverage for children and reducing 

barriers to such coverage has been 

affirmed generally by Congress in 

CHIPRA, which expanded and 

improved the CHIP program while 

maintaining the option of using CHIP 

funding for serving children through the 

Medicaid program. 

Alternative Premiums and Cost Sharing: 

Basis, Purpose and Scope (§ 447.62) 

In the February 22, 2008 proposed 

rule, we proposed to implement the 

flexibility for States to impose 

alternative premiums and cost sharing 

with the protections outlined in the 

TRHCA, including the imposition of 

nominal cost sharing for individuals 

with family income at or below 100 

percent of the FPL limited to 

prescription drugs and non-emergency 

services furnished in a hospital 

emergency room. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule without change but added 

a provision that clarified that 

individuals with family income at or 

below 100 percent of the FPL could be 

charged nominal copayments to the 

extent consistent with section 1916 of 

the Act. 

Specific comments on this section 

received during the reopened comment 

period, and our responses to those 

additional comments, are as follows: 

Comment: Several commenters 

recommended that the alternative 

premium and cost sharing rules be 

simplified and clarified as much as 

possible, such as the different 

requirements based on the family’s 

income level, because neither the State 

nor providers have the resources to 

implement these complex rules. 

Response: We agree that the 

regulatory presentation of the statutory 

limitations on alternative premiums and 

cost sharing may have been confusing. 

In this revised final rule at § 447.62(a) 

and (b)(1), we have attempted to clarify 

the regulatory provisions to better 

ensure consistency with the statutory 

requirements in sections 1916 and 

1916A of the Act. The basic provisions 

of this section, such as the different 

exclusions and limits based on a 

family’s income level, are defined in 

statute and are by nature complex. We 

have attempted to describe these 

complex exclusions and limits in the 

simplest and most straightforward 

manner possible in this revised rule. 

Comment: A commenter 

recommended that the rule be revised to 

make it clear that the Secretary of 

Health and Human Services’ (HHS) 

authority to waive cost sharing 

provisions under section 1916A of the 

Act is limited in accordance with 

section 1916(f) of the Act. 

Response: In this revised final rule, 

we included language in § 447.62(b) to 

clarify the text, taking into account the 

amendment to section 1916(f) of the Act 

made by section 6041(b)(1) of the DRA. 

In light of section 1916A of the Act and 

the provision of the DRA that applies 

section 1916(f) to 1916A of the Act, we 

are reviewing our policies under section 

1115 of the Social Security Act. 

Comment: Several commenters 

advised that giving States the flexibility 

to exclude additional groups of 

individuals from payment of premiums 

or cost sharing should not have the 

effect of discriminating against 

individuals on the basis of race, color, 

national origin, or disability (title VI of 

the Civil Rights Act of 1964, Americans 

with Disabilities Act (ADA), 42 CFR 

430.2(b), 45 CFR Part 80). 

Response: We agree. Existing HHS 

regulations under these civil rights and 

other statutes, including section 504 of 

the Rehabilitation Act, already prohibit 

both States and entities that receive 

Federal Medicaid funding from taking 

discriminatory actions. The HHS Office 

for Civil Rights (responsible for 

Departmental enforcement of most civil 

rights laws) and the Department of 

Justice (which also has responsibility for 

enforcement of certain civil rights laws, 

including the Americans with 

Disabilities Act), are available to 

investigate any questions or complaints 

as to illegal discrimination under these 

statutes and the implementing 

regulations. 

Alternative Premiums, Enrollment Fees, 

or Similar Charges: State Plan 

Requirements (§ 447.64) 

We proposed at § 447.64(a), that the 

State plan describe the group or groups 

of individuals that may be subject to 

such premiums, enrollment fees, or 

similar charges. We further proposed in 

§ 447.64(b) that the State plan include a 

schedule of the premiums, enrollment 

fees, or similar charges. At § 447.64(c), 

we proposed that the State plan describe 

the methodology used to determine 

family income, including the period and 

periodicity of those determinations. We 

also proposed in § 447.64(d) that the 

State plan describe the methodology the 

State would use to ensure that the 

aggregate amount of premiums and cost 

sharing imposed for all individuals in 

the family does not exceed 5 percent of 

family income as applied during the 

monthly or quarterly period specified by 

the State. In addition, at § 447.64(e), we 

proposed that the State plan specify the 

process for informing beneficiaries, 

applicants, providers, and the public of 

the schedule. We further proposed in 

§ 447.64(f) that the State plan describe 

the premium payment terms for the 

group or groups and the consequences 

for an individual who does not pay. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule with no substantive 

changes. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: Several commenters 

requested that the State agency, rather 

than beneficiaries or managed care 

organizations, be required to track each 

beneficiary’s aggregate incurred 

premiums and cost sharing, to assure 

that a beneficiary’s aggregate limit is not 

exceeded. 

Response: We agree with the 

commenters’ request because we are 

concerned that it would be overly 

burdensome for beneficiaries to track 

aggregate incurred cost sharing that may 

have been made in small cash 

transactions when such information can 

be more efficiently tracked through the 

State’s eligibility, enrollment, and 

claims processing systems. In this 

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revised final rule, we have modified 

paragraph (d) of § 447.64 to specify that 

if a State chooses to charge premiums 

and cost sharing that could result in 

aggregate costs to a family that exceed 

5 percent of the family’s income, the 

State must develop a tracking 

mechanism and not rely on the so-called 

‘‘shoebox’’ method that puts the burden 

on families to track cost sharing. 

Specifically, a State must describe in its 

Medicaid State plan the methodology it 

will use to identify beneficiaries who 

are subject to premiums or cost sharing 

for specific items or services and track 

their incurred premiums and cost 

sharing, in order to inform beneficiaries 

and providers of beneficiaries’ liability 

and notify beneficiaries and providers 

when individual beneficiaries have 

incurred the 5 percent limit on family 

out-of-pocket expenses and are no 

longer subject to further cost sharing for 

the remainder of the family’s current 

monthly or quarterly cap period. Such 

methods must assure that families’ cost 

sharing will not exceed the statutory 

limits. Ideally, for ease of administration 

and accuracy, States will use automated 

systems to track these cost sharing 

amounts. 

We encourage States to track such 

costs through their Medicaid 

Management Information System 

(MMIS). Some States already use MMIS 

for this purpose. To the extent that they 

do so, enhanced Federal funding is 

available for development and operation 

of system improvements. 

As part of our review of State plan 

amendments and our ongoing reviews 

and audits of State Medicaid programs, 

we will review how States that impose 

costs that could exceed the 5 percent 

limit meet these requirements, to assure 

their compliance with the statutory and 

regulatory requirements. We will also 

share best practices among States to 

promote effective and efficient tracking 

systems. We note that States that design 

their cost sharing rules so that costs 

cannot exceed the 5 percent limit need 

not develop a tracking system. 

General Alternative Premium 

Protections (§ 447.66) 

In the February 22, 2008 proposed 

rule at § 447.66(a), we proposed to 

implement statutory requirements of 

section 1916A(b)(3)(A) of the Act that 

limit the application of alternative 

premiums under section 1916A by 

requiring that States exclude certain 

classes of individuals from the 

imposition of premiums. In addition, we 

proposed at § 447.66(b) that a State may 

exempt additional classes of individuals 

from premiums. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule without change. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: Several commenters 

requested that the Recovery Act’s 

exclusion of premiums and cost sharing 

for Indians under certain circumstances 

be broadened to exclude from premiums 

and cost-sharing all Indians receiving 

any Medicaid service from any 

Medicaid provider. 

Response: The Recovery Act specifies 

under what circumstances States are 

required to exclude Indians from 

payments of premiums and cost sharing 

under sections 1916 and 1916A of the 

Act, and we are not authorized to 

expand on these statutory 

circumstances. In this revised final rule 

at § 447.66(a)(7), we are specifying that 

States may not impose alternative 

premiums upon an Indian who is 

eligible to receive or has received an 

item or service furnished by an Indian 

health care provider or through referral 

under contract health services under 

authorities for serving Indians. This 

language would not preclude States 

from excluding from premiums 

individuals based on other criteria that 

could have the effect of broadening the 

circumstances in which Indian 

populations would be exempt from 

premiums. We add at § 447.66(c) to 

clarify that nothing in this subsection 

shall be construed as restricting the 

application of any other limitations on 

the imposition of premiums that may 

apply to an individual receiving 

Medicaid who is an Indian. And, at 

§ 447.70(e) we specify that States may 

exempt additional individuals, items, or 

services from cost sharing. We 

anticipate that additional exemptions, if 

needed to protect Indian populations, 

will be an issue raised in the tribal 

consultation process. 

Alternative Copayments, Coinsurance, 

Deductibles, or Similar Cost Sharing 

Charges: State Plan Requirements 

(§ 447.68) 

In the February 22, 2008 proposed 

rule at § 447.68(a), we proposed that the 

State plan describe the group or groups 

of individuals that may be subject to 

such cost sharing. We further proposed 

in § 447.68(b) that the State plan must 

describe the methodology used to 

determine family income, including the 

period and periodicity of those 

determinations. We also proposed in 

§ 447.68(c) that the State plan describe 

the item or service for which the charge 

is imposed. In § 447.68(d), we proposed 

that the State plan must describe 

methods, such as the use of integrated 

automated systems, for tracking cost 

sharing charges, informing beneficiaries 

and providers of the beneficiary’s 

liability, and notifying them when a 

beneficiary has reached the aggregate 

maximum for a period. In § 447.68(e), 

we proposed that the State plan must 

specify the process of publicizing the 

schedule of cost sharing charges. In 

§ 447.68(f), we proposed that the State 

plan must explain the methodology the 

State would use to ensure that the 

aggregate amount of premiums and cost 

sharing imposed for all individuals in 

the family does not exceed 5 percent as 

applied during the monthly or quarterly 

period specified by the State. In 

addition, at § 447.68(g), we proposed 

that the State plan specify how notice is 

provided of the time frame and manner 

of required cost sharing and the 

consequences for an individual who 

does not pay. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule without any substantive 

change. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: Several commenters 

requested that States be required to 

describe in their State plans a method 

by which States identify for Medicaid 

providers which beneficiaries, services, 

and items are exempted from cost 

sharing, in accordance with § 447.70 

and § 447.71. Commenters also stated 

that States should be required to 

provide accurate and updated 

information to providers about 

appropriate cost sharing for each 

beneficiary. One commenter stated that 

States should be required to 

demonstrate, before implementing 

alternative premiums and cost sharing, 

that adequate State administrative 

systems are in place to protect families 

from exceeding the cost sharing limits. 

Other commenters requested that States, 

rather than beneficiaries or managed 

care organizations, be required to track 

beneficiaries’ aggregate premiums and 

cost sharing, to assure that 5 percent of 

a family’s income is not exceeded. 

Another commenter stated that CMS 

should require States to implement 

automated systems to support the 

tracking and computing of beneficiaries’ 

copayments at the point-of-sale and to 

adopt policies that support electronic 

identification of non-preferred drugs. 

The commenter also stated that States 

must be required to make information 

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electronically available at the point-ofsale regarding a beneficiary’s required 

cost sharing and whether the 

beneficiary’s family has met its 

applicable monthly or quarterly 

aggregate limit. In addition, the 

commenter stated that CMS should 

make an enhanced 90 percent 

administrative match available to States 

that implement such a system. 

Response: We agree with many of 

these comments that beneficiaries 

should not bear the full burden of 

accounting for aggregate cost sharing 

maximums. In this revised final rule, we 

have thus revised paragraph (d) of 

§ 447.68 to specify that a State must 

describe in its Medicaid State plan the 

methodology it will use to identify 

beneficiaries who are subject to 

premiums or to cost sharing for specific 

items or services and, if cost sharing 

could exceed 5 percent of family 

income, to track beneficiaries’ incurred 

premiums and cost sharing in order to 

inform beneficiaries and providers of 

beneficiaries’ liability and to notify 

beneficiaries and providers when 

individual beneficiaries have reached 

the five percent limit on family out-ofpocket expenses to assure that costs do 

not exceed the 5 percent statutory limit. 

Also, a State is required to describe in 

its State plan the State’s methods for 

assuring that providers and beneficiaries 

are effectively informed of cost sharing 

requirements in the State plan, in 

accordance with § 447.68(d). States 

must be mindful of the need for clear, 

non-technical explanations and that 

accommodations must be made for 

individuals for whom English is not the 

first language. 

For example, one State informs 

providers and members (beneficiaries) 

of allowable cost sharing amounts via 

provider updates and a member 

Enrollment and Benefits booklet. 

Another State conducts public meetings 

and sends a letter to each beneficiary for 

whom cost sharing is applicable. 

While this rule requires States 

imposing cost sharing that could exceed 

the 5 percent statutory cap to have a 

methodology to track costs and to assure 

that costs do not exceed the 5 percent 

limit, the rule does not require one 

particular system for tracking. Some of 

the methods that States are using to 

track families’ incurred premiums and 

cost sharing and to assure that they do 

not exceed the aggregate maximum of 5 

percent of the family’s income include: 

• On State has its premium collection 

vendor track premium payments. Its 

MCPs track enrollees’ copayments. If a 

family reaches its aggregate maximum, 

the premium vendor will waive 

premiums and suspend invoicing for the 

remainder of the benefit period. The 

MCOs will notify their pharmacy and 

ambulance transportation providers to 

waive the family’s copayments through 

a specified date. 

• Another State uses MMIS to track 

and enforce cost sharing limits. The 

system calculates a family’s quarterly 

out-of-pocket maximum based on the 

family’s income, and tracks the family’s 

cost sharing payments associated with 

submitted claims. If a family’s 

maximum is reached, an indicator is 

changed in MMIS and providers are 

alerted as part of eligibility verification 

that the family is not subject to 

copayments. 

• Another State calculates each 

family’s cost sharing limit as part of the 

eligibility determination process, 

records this information in the 

eligibility system, copies the State’s 

benefits administrator, and informs the 

family of the limit in the eligibility 

approval notice. It encourages families 

to track their payments, but it also has 

the benefits administrator track families’ 

payments and notify the State if a family 

reaches its maximum. Families can also 

call the State to check on the amount of 

out-of-pocket expenses they have 

incurred. If the maximum is reached, 

the State moves the family to a no-cost 

benefits plan for the remainder of their 

plan year and notifies the family of this 

change in writing. 

• Another State has its eligibility and 

enrollment broker inform families of 

their out-of-pocket limits in the letter 

notifying them of enrollment in a health 

plan. It also notifies the health plan. The 

health plan tracks families’ cost sharing 

payments. If the limit is reached, the 

health plan notifies the family by letter 

and annotates the family’s file in the 

electronic claims system in order to 

notify providers that no further cost 

sharing is required. 

• Another State has its system track 

families’ out-of-pocket payments, and 

stops deducting the copayment amount 

from the allowed amount on a 

provider’s claim if a family reaches its 

limit. The system notes on an 

Explanation of Benefits (EOB) when a 

family reaches its maximum, and 

families may share the EOB with 

providers. Such a notice is also 

included in the point-of-sale system 

used by pharmacists. Monthly reports 

are generated to track copayments. 

We are requiring that States describe 

their method of tracking when they 

impose cost sharing that could exceed 

the 5 percent statutory limit, and are 

recommending that, whenever possible, 

they employ automated systems to do 

so. The Health Insurance Portability and 

Accountability Act of 1996 (HIPAA) 

governs the contents and format of 

electronic transactions providing 

information from a State’s MMIS, 

including an electronic transaction sent 

by a State Medicaid program in 

response to an enrolled provider’s 

electronic request for information 

related to a beneficiary’s Medicaid 

eligibility (for example, information 

about a beneficiary’s cost sharing 

responsibilities and payments). MMIS 

system changes and operations are 

subject to an enhanced Federal 

matching rate. As part of our review of 

State plan amendments and our ongoing 

reviews and audits of State Medicaid 

programs, we will review how States 

meet the premium and cost sharing 

requirements, to assure their 

compliance with the statutory and 

regulatory requirements. We will also 

share best practices to help other States 

learn about effective and efficient ways 

to track cost sharing. 

General Alternative Cost Sharing 

Protections (§ 447.70) 

In the February 22, 2008 proposed 

rule, we proposed that State plans may 

not impose alternative cost sharing 

under section 1916A(a) of the Act for 

certain services including emergency 

services and family planning services 

and supplies. We also proposed that 

State plans could not impose cost 

sharing for preferred drugs within a 

class for the same categories of 

individuals. We proposed that the State 

may exempt additional individuals or 

services from cost sharing. Also, we 

proposed that cost sharing applicable to 

a preferred drug be charged for a nonpreferred drug if the prescribing 

physician determines that the preferred 

drug would not be as effective for the 

individual or would have adverse 

effects for the individual or both. We 

further proposed that such overrides 

meet the State’s criteria for prior 

authorization and be approved through 

the State’s prior authorization process. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule without substantive 

changes. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: One commenter 

recommended that the rule define the 

preventive services which are excluded 

from alternative cost-sharing (see 

§ 447.70(a)(2)), such as by using the 

definition in the American Academy of 

Pediatrics Bright Futures guidelines. 

Response: We agree. In this revised 

final rule, we revised § 447.70(a)(2) to 

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specify that, at the minimum, the 

preventive services listed at § 457.520 

must be excluded from cost sharing for 

children younger than 18 years old, 

which reflect the well baby and well 

child care and immunizations described 

by the Bright Futures guidelines of the 

American Academy of Pediatrics. These 

guidelines are used for well baby and 

well child care services in the CHIP 

program. They provide an explanation 

of the periodicity schedule 

recommended by the American 

Academy of Pediatrics for preventive 

visits and appropriate immunizations 

for children. The referencing of such a 

schedule allows for flexibility in the 

definition of preventive services to 

reflect the most current medical practice 

standards. States are permitted to 

exempt preventive services beyond 

those described in the Bright Futures 

guidelines. 

Comment: Several commenters 

recommended that the entire package of 

family planning services and supplies 

described and mandated at section 

1905(a)(4)(C) of the Act be excluded 

from cost sharing, as required by 

sections 1916A(b)(3)(B)(vii) and 

1916(a)(2)(D) of the Act, so that even 

nominal cost sharing is not permitted 

for non-preferred family planning drugs 

(for example, contraceptive drugs not on 

a State’s preferred drug list) and cost 

sharing does not otherwise distinguish 

between family planning methods. 

Response: While we agree with the 

concerns of commenters, we are not 

authorized by the statute to generally 

preclude alternate cost sharing under 

section 1916A(c) of the Act for family 

planning drugs. The protections under 

section 1916A(b)(3)(B)(vii) of the Act are 

‘‘subject to the succeeding provisions of 

this section’’ which include the special 

provisions concerning alternate cost 

sharing under section 1916A(c) of the 

Act. But we believe it is reasonable to 

require that States have a consistent 

treatment of family planning drugs. In 

this revised final rule, we have revised 

§ 447.70(a)(7) to clarify that the 

exclusion for family planning services 

and supplies encompasses 

contraceptives and other prescription 

drugs for which the State claims or 

could claim the Federal matching rate 

available under section 1903(a)(5) of the 

Act for family planning services and 

supplies. 

Comment: Several commenters 

requested that the rule be made 

consistent with section 1916A(c)(2)(B) 

of the Act by limiting alternative cost 

sharing for non-preferred prescription 

drugs for the items or services listed at 

§ 447.70(a) to no more than the nominal 

amount, in order to protect vulnerable 

populations such as pregnant women. 

Response: While we understand the 

underlying concerns of commenters, we 

are not authorized by the statute to 

generally preclude alternate cost sharing 

under section 1916A(c) of the Act for 

the services listed at § 447.70(a). The 

protections under section 

1916A(b)(3)(B)(vii) of the Act are 

‘‘subject to the succeeding provisions of 

this section’’ which include the special 

provisions concerning alternate cost 

sharing under section 1916A(c) of the 

Act. As a result of our review of these 

comments, however, we realized that 

we had not integrated the protections at 

section 1916A(c)(3) of the Act into these 

regulations, and thus we have integrated 

into the revised final rule at § 447.70(d) 

the provision that drugs identified as 

non-preferred drugs are subject to the 

same exclusions and limits for costsharing as preferred drugs if the 

individual’s prescribing physician 

determines that the preferred drug for 

treatment of the same condition either 

would be less effective for the 

individual or would have adverse 

effects for the individual or both. We 

deleted as unnecessary the additional 

requirement that the State’s criteria for 

prior authorization, if any, must be met. 

Alternative Premium and Cost Sharing 

Exemptions and Protections for 

Individuals With Family Incomes Above 

100 Percent but at or Below 150 Percent 

of the FPL (§ 447.72) 

In the February 22, 2008 proposed 

rule, we proposed at § 447.72(a) that the 

State plan exclude individuals with 

family incomes above 100 percent but at 

or below 150 percent of the FPL from 

the imposition of premiums. We also 

proposed at § 447.72(b) that cost sharing 

for those individuals under the State 

plan not exceed 10 percent of the 

payment the State Medicaid agency 

makes for that item or service, with the 

exception that cost sharing not exceed 

the nominal cost sharing amount for 

non-preferred drugs or twice the 

nominal cost sharing amount for nonemergency services furnished in a 

hospital emergency department. In the 

case of States that do not have fee-forservice payment rates, we proposed that 

any copayment imposed by a State for 

services provided by an MCO may not 

exceed $5.20 for FY 2007. In addition, 

we proposed at § 447.72(c) that 

aggregate premiums and cost sharing for 

individuals whose family income 

exceeds 100 percent, but does not 

exceed 150 percent of the FPL, not 

exceed the 5 percent aggregate 

maximum permitted under § 447.78(a). 

In the November 25, 2008 final rule, 

we revised § 447.74(b) to specify that 

the copayment amount for services 

provided by an MCO may not exceed 

$3.40 per visit for Federal FY 2009 

when the State does not have a 

comparable fee-for-service system. We 

added a higher copayment limit of $5.70 

for Federal FY 2009 for services 

provided by an MCO for Medicaid 

expansion optional targeted low-income 

children in that circumstance. In 

addition, we revised the methodology 

for updating the maximum nominal 

amounts for Medicaid each October 1 by 

rounding to the next highest 5-cent 

increment rather than 10-cent 

increment, to be consistent with the 

Medicare Part D program. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: As we discussed above, 

several commenters recommended that 

the separate $5.70 per visit maximum 

co-payment added in the final rule 

published on November 25, 2008, be 

deleted for Medicaid expansion optional 

targeted low income children in 

managed care plans when a State does 

not have a fee-for-service system. 

Response: We are accepting this 

comment for the reasons discussed 

above. The result is that the same per 

visit maximum will apply to all 

Medicaid managed care enrollees when 

the State does not have a fee-for-service 

system. 

Alternative Premium and Cost Sharing 

Protections for Individuals With Family 

Incomes Above 150 Percent of the FPL 

(§ 447.74) 

In the February 22, 2008 proposed 

rule at § 447.74(a), we proposed that a 

State plan may impose premiums upon 

individuals with family income above 

150 percent of the FPL, subject to the 

aggregate limit on premiums and cost 

sharing at § 447.78. We also proposed at 

§ 447.74(b) that cost sharing for those 

individuals under the State plan not 

exceed 20 percent of the payment the 

State Medicaid agency makes for that 

item or service. In the case of States that 

do not have fee-for-service payment 

rates, we proposed that any copayment 

that the State imposes for services 

provided by an MCO may not exceed 

$5.20 for FY 2007. In addition, we 

proposed at § 447.74(c) that aggregate 

cost sharing for individuals whose 

family income exceeds 150 percent of 

the FPL not exceed the maximum 

permitted under § 447.78(a). 

In the November 25, 2008 final rule, 

we revised § 447.74(b) to specify that 

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the copayment amount for services 

provided by an MCO may not exceed 

$3.40 per visit for Federal FY 2009. We 

added a higher limit for Medicaid 

expansion optional targeted low-income 

children of $5.70 for Federal FY 2009. 

In addition, we revised the methodology 

for updating the nominal amounts for 

Medicaid each October 1 by rounding to 

the next highest 5-cent increment rather 

than 10-cent increment, to be consistent 

with the Medicare Part D program. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: One commenter stated that 

the cost sharing permitted for higher 

income individuals would be excessive. 

The commenter stated that for 

individuals with incomes above 150 

percent FPL, the cost sharing amount 

would increase to 20 percent. The 

commenter also recommended that cost 

sharing be capped at a reasonable 

amount. 

Response: Cost sharing limits are 

specified in this rule as required by 

section 1916A of the Act. However, 

because a 20 percent cost sharing 

amount can be difficult or even 

impossible for Medicaid beneficiaries to 

pay given their limited incomes, in this 

revised final rule at § 447.62(b)(3), we 

clarify that States have the option to 

impose premiums and cost sharing that 

are below the maximum levels 

permitted under this subpart. 

Public Schedule (§ 447.76) 

In the February 22, 2008 proposed 

rule, we proposed at § 447.76(a) that 

State plans provide for schedules of 

premiums and cost sharing and 

specified the information contained on 

such schedules. In addition, at 

§ 447.76(b), we proposed that the State 

make the public schedule available to 

beneficiaries at the time of enrollment 

and reenrollment, applicants, all 

participating providers, and the general 

public. 

In the November 25, 2008 final rule, 

we added § 447.76(a)(7) to specify that 

the State must make available either a 

list of preferred drugs or a method to 

obtain such a list upon request. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: One commenter requested 

that States give adequate notice to 

pharmacy providers, beneficiaries, and 

the public of changes to cost-sharing 

requirements when State plan 

amendments implementing the changes 

are submitted to CMS, no later than 60 

days prior to the effective date. 

Response: We agree that providers 

need adequate time to adjust their 

procedures and protocols to incorporate 

changes, and that beneficiaries and their 

advocates need time to prepare for 

changes in cost sharing. Such notice is 

consistent with administration of the 

State plan in the best interests of 

beneficiaries. In this revised final rule, 

we added a new paragraph (c) to 

§ 447.76 to require a State to provide the 

public with advance notice and 

reasonable opportunity to comment in a 

form and manner provided under 

applicable State law prior to submitting 

for CMS approval a Medicaid State plan 

amendment (SPA) to establish 

alternative premiums or cost sharing 

under section 1916A of the Act or to 

modify substantially an existing plan for 

alternative premiums or cost sharing. 

Also, the State must submit 

documentation with the SPA to 

demonstrate that this requirement was 

met. This requirement is similar to the 

requirements at § 447.205 about public 

notice prior to submitting a Medicaid 

SPA revising providers’ payment rates 

for services and at § 457.65(b)–(d) about 

public notice prior to submitting a CHIP 

SPA eliminating or restricting eligibility 

or benefits or implementing or 

increasing cost sharing charges or the 

cumulative cost sharing maximum. 

Section 447.76 also requires States to 

make a public schedule with cost 

sharing information available to 

beneficiaries, applicants, providers, and 

the general public. Therefore, the public 

schedule must be changed as necessary 

to remain current. In this revised final 

rule, we modified § 447.76 (b)(1), to 

clarify that beneficiaries must receive 

advance written notice when their 

premiums, cost sharing charges, or 

aggregate limits are revised. 

Aggregate Limits on Alternative 

Premiums and Cost Sharing (§ 447.78) 

In the February 22, 2008 proposed 

rule at § 447.78(a), we proposed that for 

individuals with family income above 

100 percent of the FPL the aggregate 

amount of premiums and cost sharing 

imposed under sections 1916 and 

1916A of the Act not exceed 5 percent 

of a family’s income for a monthly or 

quarterly period, as specified in the 

State plan. We received no comments 

questioning this proposal, and received 

at least one comment supporting the 

broad reach of this language. Thus, we 

included this language in the November 

25, 2008 final rule. While sections 

1916A(b)(1)(B)(ii) and (2)(A) of the Act 

for families with income above 100 

percent of the FPL only specifically 

reference sections 1916A(c) and (e) of 

the Act in reference to the 5 percent 

aggregate limit, we read these provisions 

together with the provision at section 

1916A(a)(2)(B) to establish a 5 percent 

aggregate limit regardless of which 

statutory option the State selects. To 

read these provisions in isolation would 

frustrate the statutory purpose and 

permit a State to effectively impose 

aggregate cost sharing far in excess of 5 

percent of family income by using the 

two statutory cost sharing options 

cumulatively. Such a result would be an 

inadequate beneficiary protection, and 

would not achieve the statutory purpose 

of the aggregate limit. The clear 

statutory purpose is to limit family cost 

sharing obligations to 5 percent of 

family income and that purpose can be 

achieved only if the aggregate limit 

applies to all cost sharing imposed 

under the State plan for all family 

members, including cost sharing 

imposed under section 1916. Thus, we 

believe that Congress intended the three 

aggregate limit provisions to establish a 

single aggregate limit for cost sharing 

under either section 1916 or 1916A 

regardless of the underlying authority 

for the cost sharing. Applying all cost 

sharing under the State plan to the 

aggregate limit is also consistent with 

simplicity of administration and the 

best interests of beneficiaries as required 

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

because it eliminates any need to 

distinguish between the statutory 

authority for any particular cost sharing. 

At § 447.78(b) of the proposed rule, 

we proposed that for individuals with 

family income at or below 100 percent 

of the FPL the aggregate amount of cost 

sharing under sections 1916 and 1916A 

of the Act not exceed 5 percent of a 

family’s income for the monthly or 

quarterly period, as required by section 

1916A(a)(2)(B) of the Act, and 

consistent with the reading above. We 

also proposed at § 447.78(c) that family 

income should be determined in a 

manner for that period as specified by 

the State in the State plan. We clarified 

that States may use gross income to 

compute family income and that they 

may use a different methodology for 

computing family income for purposes 

of determining the aggregate limits than 

for determining income eligibility. 

In the November 25, 2008 final rule, 

we revised § 447.78(c) to include the 

phrase, ‘‘including the use of such 

disregards as the State may provide.’’ 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

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Comment: One commenter 

recommended that the total aggregate 

amount of cost sharing for individuals 

in a family be limited to 2 percent of the 

family’s income. 

Response: We are unable by rulemaking to revise the total aggregate limit 

of 5 percent specified in statute at 

sections 1916A(b)(1)(B)(ii) and 

1916A(b)(2)(A) of the Act. However, in 

this revised final rule, we clarify at 

§ 447.62(b)(3) that States have the 

option to impose premiums and cost 

sharing below the maximum levels 

under this subpart. Also, we recognize 

that some families include children in 

Medicaid and CHIP, so we encourage 

States to consider implementing a 5 

percent limit on families’ aggregate 

premiums and cost sharing in both 

Medicaid and CHIP. 

Comment: One commenter stated that 

families should be permitted to request 

a change in the aggregate limit on their 

cost sharing when the household’s 

income changes. 

Response: We had not previously 

considered this issue, and we agree with 

the commenter. In this revised final 

rule, we have modified § 447.78(c) to 

require that State plans include a 

process for individuals to request a 

reassessment of the family’s aggregate 

limit if the family’s income is reduced 

or if eligibility is being terminated due 

to nonpayment of a premium. 

Enforceability of Alternative Premiums 

and Cost Sharing (§ 447.80) 

In the February 22, 2008 proposed 

rule at § 447.80(a), we proposed to 

permit a State to condition Medicaid 

eligibility for individuals in a specified 

group or groups upon prepayment of 

premiums, to terminate the eligibility of 

an individual for failure to pay after 60 

days or more, and to waive payment in 

any case where requiring the payment 

would create undue hardship. At 

§ 447.80(b), we proposed that a State 

permit a provider, including a 

pharmacy, to require an individual to 

pay cost sharing imposed under section 

1916A of the Act as a condition of 

receiving an item or service. However, 

at § 447.80(b)(1), we specified that a 

provider, including a pharmacy or 

hospital, may not require an individual 

whose family income is at or below 100 

percent of the FPL to pay the cost 

sharing charge as a condition of 

receiving the item or service. In 

addition, at § 447.80(b)(2), we proposed 

that a hospital that has determined after 

an appropriate medical screening under 

section 1867 of the Act that an 

individual does not have an emergency 

medical condition, before it can require 

payment of the cost sharing and treat 

the non-emergency medical condition, 

must first provide the individual with 

the name and location of an available 

and accessible alternate non-emergency 

services provider, information that the 

alternate provider can provide the 

services with imposition of no or lesser 

cost sharing, and a referral to coordinate 

scheduling of treatment. Finally, at 

§ 447.80(b)(3), we proposed that a 

provider may reduce or waive cost 

sharing imposed under section 1916A of 

the Act on a case-by-case basis. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule without substantive 

changes. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: One commenter 

recommended that States not be given 

the option to deny treatment for 

Medicaid beneficiaries or terminate 

them from Medicaid eligibility if they 

are unable to pay a premium or 

copayment. Also, the commenter 

recommended that States be encouraged 

to use alternative payment schedules. 

Response: Under section 1916A(d) of 

the Act, States have the flexibility to 

take certain specified actions in the 

event of nonpayment of premiums, and 

may allow providers to condition the 

delivery of services on payment of the 

alternative cost sharing. The statute 

expressly permits States and providers 

to use such enforcement flexibly, to 

respond to individual circumstances. 

For example, a State may waive 

premiums on a case-by-case basis due to 

hardship. Also, providers may reduce or 

waive cost sharing on a case-by-case 

basis. 

Comment: One commenter asked who 

would want to decide if an emergency 

was ‘‘serious enough’’ so a copayment 

would not be charged. 

Response: We clarify here that we 

interpret an emergency to include 

circumstances consistent with the 

‘‘prudent layperson’’ standard set forth 

in section 1932(b)(2) of the Act and 

§ 438.114(a). Under that standard, an 

emergency service is one needed to 

evaluate or stabilize an emergency 

medical condition, which is a condition 

manifesting itself by acute symptoms of 

sufficient severity (including severe 

pain) such that a prudent layperson, 

who possesses an average knowledge of 

health and medicine, could reasonably 

expect the absence of medical attention 

to result in jeopardy to health (including 

the health of an unborn child), serious 

impairment to bodily functions, or the 

serious dysfunction of any bodily organ 

or part. This would, at a minimum, 

include the required medical screening 

under current regulations at § 489.24, 

including circumstances under which 

services are required to stabilize the 

patient. 

Comment: One commenter 

recommended that copayments for nonemergency use of hospital emergency 

departments not be imposed if Medicaid 

beneficiaries are using the emergency 

room due to lack of access to primary 

care physicians or other alternative care. 

Response: We agree that this is what 

the statute requires. The requirements at 

§ 447.80(b)(2) are intended to assure that 

alternative copayments for nonemergency use of hospital emergency 

departments are not imposed if 

alternative non-emergency services 

providers are not available and 

accessible in a timely manner to treat 

the individual’s medical condition. 

Comment: Several commenters 

recommended that § 447.80(b) specify 

that giving providers the discretion to 

waive mandatory copayments on a caseby-case basis may not have the effect of 

discriminating against individuals who 

do not speak English or against 

individuals on the basis of race, color, 

national origin, or disability (title VI of 

the Civil Rights Act of 1964, Americans 

with Disabilities Act, 42 CFR 430.2(b), 

45 CFR Part 80). 

Response: Existing HHS regulations 

under these civil rights and other 

statutes, including section 504 of the 

Rehabilitation Act, already prohibit both 

States and entities that receive Medicaid 

funding from taking discriminatory 

actions. The HHS Office for Civil Rights 

(responsible for Departmental 

enforcement of most civil rights laws) 

and the Department of Justice (which 

also has responsibility for enforcement 

of certain civil rights laws, including the 

Americans with Disabilities Act), are 

available to investigate any questions or 

complaints as to illegal discrimination 

under these statutes and the 

implementing regulations. 

Comment: A commenter agreed with 

the rule that providers should be able to 

decide when to reduce or waive cost 

sharing on a case-by-case basis. If a State 

significantly increases cost sharing, the 

pharmacy provider, rather than the 

State, must decide whether to condition 

rendering pharmacy services on the 

receipt of full payment of cost-sharing 

from the beneficiary. Otherwise, the 

providers will likely be the ones paying 

the higher charges, especially in States 

where pharmacy providers are quite 

often unable to collect the current 

nominal co-payments. 

Response: We agree. This policy is 

consistent with the statute and the 

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revised final rule at § 447.82(a). If a 

State elects the option permitting 

providers to require a beneficiary to pay 

an allowable cost sharing charge as a 

condition for receiving an item or 

service, the provider has the discretion 

to reduce or waive the application of 

cost sharing on a case-by-case basis. In 

this revised final rule, we added a new 

paragraph (c) to § 447.82 requiring 

States to identify for providers, ideally 

through the use of automated systems, 

whether cost sharing for a specific item 

or service may be imposed on an 

individual beneficiary and whether the 

provider may require the beneficiary, as 

a condition for receiving the item or 

service, to pay the cost sharing charge. 

Comment: A commenter advised that 

the rule should provide guidance for 

how hospitals are to implement cost 

sharing for non-emergency services 

rendered in a hospital emergency 

department without violating the 

Emergency Medical Treatment and 

Active Labor Act (EMTALA), which 

requires hospitals to screen patients 

who request an emergency examination 

and not delay treatment to stabilize a 

patient in order to inquire about the 

individual’s method of payment or 

insurance status. 

Response: We are revising 

§ 447.80(c)(1) to state that nothing in 

paragraph (b)(2) relating to alternate cost 

sharing for non-emergency services in 

hospital emergency departments shall 

be construed to limit a hospital’s 

obligations with respect to screening 

and stabilizing treatment of an 

emergency medical condition under 

EMTALA, which is codified at section 

1867 of the Act relating to EMTALA, 

and is the basis for the regulation at 

§ 489.24. 

Restrictions on Payments to Providers 

(§ 447.82) 

In the February 22, 2008 proposed 

rule at § 447.80(a), we proposed to 

require States to reduce the amount of 

the State’s payments to providers by the 

amount of beneficiaries’ cost sharing 

obligations, regardless of whether the 

provider successfully collects the cost 

sharing. We noted in the rule’s preamble 

that States have the ability to increase 

total State plan rates to providers to 

maintain the same level of State 

payment when cost sharing is 

introduced. 

In the November 25, 2008 final rule, 

we accepted the provisions of the 

proposed rule without change. 

Specific comments to this section 

submitted during the reopened 

comment periods and our responses to 

those additional comments are as 

follows: 

Comment: One commenter 

recommended that States not be 

required to reduce payments to 

providers by the required copayments if 

the provider waives or reduces the cost 

sharing amounts. Another commenter 

stated that the DRA cost sharing is 

tantamount to a hidden rate reduction 

for MCOs and other providers. Since 

cost sharing is deducted from providers’ 

payments, MCOs must decide whether 

to absorb high administrative costs to 

track cost sharing or to forego the 

collection of the fees. Also, commenters 

requested that MCOs be required to pay 

providers in full when providers decide 

not to collect cost sharing from 

beneficiaries; otherwise, providers will 

leave the network. 

Response: The requirement that States 

not reimburse providers for unpaid cost 

sharing is a longstanding Medicaid 

policy set forth at § 447.57, and is 

consistent with the overall policy set 

forth at § 447.15, that the Medicaid 

agency must limit participation in the 

Medicaid program to providers who 

accept, as payment in full, the amounts 

paid by the agency plus any deductible, 

coinsurance or copayment required by 

the State plan to be paid by the 

individual. There is no indication of any 

intent to change this longstanding 

policy in the DRA provisions that added 

section 1916A to the Act. 

Consistent with such requirements, 

section 5006(a) of the Recovery Act 

added section 1916(j)(1)(B) of the Act to 

require that payment due to an Indian 

health care provider or a health care 

provider through referral under contract 

health services for directly furnishing an 

item or service to a Medicaid-eligible 

Indian not be reduced by the amount of 

any enrollment fee, premium, or similar 

charge, or any deductible, copayment, 

cost sharing, or similar charge that 

would otherwise be due. Each State 

through its regular administrative and 

political processes, in consultation with 

the Tribes as required by section 5006(e) 

of the Recovery Act, must decide how 

to implement this requirement and how 

to assure that providers are paid in full 

under such circumstances. 

III. Provisions of the Revised Final Rule 

In this revised final rule, we are 

adopting the provisions as set forth in 

the November 25, 2008 final rule, 

subject to the following changes. 

A. Implementation of Section 5006(a) of 

the Recovery Act 

The following provisions are open for 

public comment. The provisions 

implement and interpret section 5006(a) 

of the Recovery Act, which exempts 

Indians from premiums and cost sharing 

under certain circumstances effective 

July 1, 2009. Also, the provisions 

respond to public comments received 

on these new statutory requirements 

during the March 27, 2009 extended 

comment period on the November 25, 

2008 final rule. 

Section 5006(a) of the Recovery Act 

amends sections 1916 and 1916A of the 

Act, to exempt Indian applicants and 

beneficiaries from Medicaid premium 

and cost sharing requirements under 

certain circumstances and to assure that 

Indian health care providers, and health 

care providers providing contract health 

services (CHS) under a referral from an 

Indian health care provider, will receive 

full payment. Premiums and cost 

sharing exemptions for Indians under 

CHIP are not affected. The provisions 

took effect on July 1, 2009. 

Specifically, the Recovery Act: 

• Exempts Indians from payments of 

enrollment fees, premiums, or similar 

chargesif they either are eligible to 

receive or have received an item or 

service furnished by an Indian health 

care provider or through referral under 

CHS. 

• Exempts Indians from payment of a 

deductible, coinsurance, copayment, or 

similar charge for any item or service 

covered by Medicaid if the Indian is 

furnished the item or service directly by 

an Indian health care provider or 

through referral under CHS. 

• Prohibits any reduction of payment 

that is due under Medicaid to an Indian 

health care provider or a health care 

provider through referral under CHS for 

directly furnishing an item or service to 

an Indian. The State must pay these 

providers the full Medicaid payment 

rate for furnishing the item or service. 

Their payments may not be reduced by 

the amount of any enrollment fee, 

premium, deductible, copayment, or 

similar charge that otherwise would be 

due from the Indian. 

Definitions 

In administering the Recovery Act’s 

cost sharing provisions related to 

Indians, the following definitions 

apply— 

• Indian health care provider means 

a health care program operated by the 

Indian. 

• Health Service (IHS) or by an Indian 

Tribe, Tribal Organization, or Urban 

Indian Organization (otherwise known 

as an I/T/U) as those terms are defined 

in section 4 of the Indian Health Care 

Improvement Act (25 U.S.C. 1603). 

• Indian means any individual 

defined at 25 U.S.C. 1603(c), 1603(f), or 

1679(b), or who has been determined 

eligible as an Indian, pursuant to 42 

CFR 136.12. This means the individual: 

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(1) Is a member of a Federallyrecognized Indian tribe; 

(2) resides in an urban center and 

meets one or more of the four criteria: 

(a)Is a member of a tribe, band, or other 

organized group of Indians, including 

those tribes, bands, or groups 

terminated since 1940 and those 

recognized now or in the future by the 

State in which they reside, or who is a 

descendant, in the first or second 

degree, of any such member; (b) is an 

Eskimo or Aleut or other Alaska Native; 

(c) is considered by the Secretary of the 

Interior to be an Indian for any purpose; 

or (d) is determined to be an Indian 

under regulations promulgated by the 

Secretary; 

(3) is considered by the Secretary of 

the Interior to be an Indian for any 

purpose; or 

(4) is considered by the Secretary of 

Health and Human Services to be an 

Indian for purposes of eligibility for 

Indian health care services, including as 

a California Indian, Eskimo, Aleut, or 

other Alaska Native. 

The IHS administers the CHS Program 

for the provision of services to Indians 

when those services are not available at 

IHS or Tribal facilities. Any IHS-eligible 

Indian Medicaid beneficiary who 

receives a referral, including any 

authorization for payment, by an IHS or 

Tribal provider to an outside provider 

for contract health service is eligible for 

the exemption from cost sharing for that 

service. States will need to educate nonIHS providers about such documents, so 

that providers will know to waive cost 

sharing requirements for referrals 

through CHS for which payment may be 

made by Medicaid. States must inform 

providers, ideally through the use of 

automated systems, whether an 

individual is exempted from premiums 

or cost sharing. Reference materials 

about CHS may be accessed on the IHS 

Web page at: http://www.ihs.gov/ 

NonMedicalPrograms/chs/. 

State Medicaid programs must consult 

with the IHS, Tribes, Tribal 

Organizations, and Urban Indian 

Organizations within the State to 

determine what documents the Indian 

health care providers will use for 

exemption of Indians from enrollment 

fees, premiums, or other similar charges 

and from deductibles, coinsurance, 

copayments, or similar charges for 

referrals to providers through the CHS 

Program. 

Cost Sharing: Basis and Purpose 

(§ 447.50) 

We added a new paragraph (b) with 

definitions for ‘‘Indian’’ and ‘‘Indian 

health care provider.’’ 

Requirements and Options (§ 447.51) 

We added a new paragraph (a)(2) that 

exempts Indians from payments of 

enrollment fees, premiums, or similar 

charges if they are eligible to receive or 

have received an item or service 

furnished by an Indian health care 

provider or through referral under CHS. 

Applicability; Specification; Multiple 

Charges (§ 447.53) 

We added a new paragraph (b)(6) to 

exclude from cost sharing under 

Medicaid all items and services 

furnished to an Indian directly by an 

Indian health care provider or through 

referral under CHS. 

Restrictions on Payments to Providers 

(§ 447.57) 

We added a new paragraph (c) to 

specify that payment under Medicaid 

due to an Indian health care provider or 

a health care provider through referral 

under CHS for directly furnishing an 

item or service to an Indian may not be 

reduced by the amount of any 

enrollment fee, premium, or similar 

charge or any deductible, copayment, 

cost sharing, or similar charge that 

otherwise would be due. Note that there 

is no exemption for cost sharing, such 

as deductibles, coinsurance or copayments, on services rendered to 

eligible individuals at non-Indian health 

care providers where there was not 

referral or authorization through CHS as 

defined below. 

Contract health service means any 

health service that is (1) delivered based 

on a referral by, or at the expense of, an 

Indian health program; and (2) provided 

by a public or private medical provider 

or hospital that is not a provider or 

hospital of the Indian health program. 

General Alternative Premium 

Protections (§ 447.66) 

We added a new paragraph (a)(7) to 

exclude Indians from payments of 

enrollment fees, premiums, or similar 

charges if they are eligible to receive or 

have received an item or service 

furnished by an Indian health care 

provider or through referral under 

contract health services. 

In addition, we added a new 

paragraph (c) to specify that a State may 

apply additional limitations on 

imposition of premiums that may apply 

to an individual receiving Medicaid 

who is an Indian. 

General Alternative Cost Sharing 

Protections (§ 447.70) 

We added a new paragraph (a)(10) to 

exclude from cost sharing under 

Medicaid all items and services 

furnished to an Indian directly by an 

Indian health care provider or through 

referral under CHS. 

Restrictions on Payments to Providers 

(§ 447.82) 

We added a new paragraph (b) to 

specify that payment under Medicaid 

due to an Indian health care provider or 

a health care provider through referral 

under CHS for furnishing an item or 

service directly to an Indian may not be 

reduced by the amount of any 

enrollment fee, premium, or similar 

charge, or any deductible, copayment, 

cost sharing, or similar charge that 

otherwise would be due. 

B. Additional Changes to the Medicaid 

Regulations in Response to Public 

Comments Requirements and Options 

(§ 447.51) 

We revised paragraphs (a) and (c) to 

clarify the requirements for consistency 

with section 1916 of the Act, to specify 

the categorically needy populations for 

which the State Medicaid agency may 

impose an enrollment fee, premium, or 

similar charge in accordance with 

section 1916(c), (d), (g), or (i) of the act. 

Applicability; Specification; Multiple 

Charges (§ 447.53) 

We revised the definition of 

‘‘emergency services’’ in paragraph (b)(4) 

to cite the definition which includes the 

‘‘prudent layperson’’ standard at section 

1932(b)(2) of the Act and § 438.114(a). 

Maximum Allowable and Nominal 

Charges (§ 447.54) 

We revised paragraph (a)(1) and 

(a)(3)(ii) to clarify the requirements for 

consistency with section 1916 of the 

Act. Also, we revised the example in 

paragraph (a)(1) for a 6-month 

certification period rather than a 3- 

month period for consistency with 

States’ practices. 

We also revised paragraph (a)(4), in 

response to public comments, to delete 

a higher maximum copayment of $5.70 

per visit for services provided by an 

MCO, when the State does not have a 

fee-for-service delivery system, for 

Medicaid expansion optional targeted 

low income children for whom 

enhanced Federal match is paid under 

section XXI of the Act. Since these are 

Medicaid-eligible children, they will be 

subject to the Medicaid limit for such 

coverage of $3.40 per visit, rather than 

the limit imposed for separate CHIP 

programs under title XXI. 

In addition, we revised paragraph (b) 

to correct a citation to § 431.57. Also, 

the paragraph was revised for 

consistency with sections 1916(a)(3) and 

1916(b)(3) of the Act that the Secretary 

of Health & Human Services will only 

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approve a waiver of the requirement 

that cost sharing charges must be 

limited to a nominal amount if the State 

establishes to the Secretary’s satisfaction 

that alternative sources of 

nonemergency, outpatient services are 

actually available and accessible to 

Medicaid beneficiaries in a timely 

manner. 

Standard Co-Payment (§ 447.55) 

We revised paragraph (b) to correct a 

citation to § 447.54(a) and (c). 

Alternative Premiums and Cost Sharing: 

Basis, Purpose and Scope (§ 447.62) 

We revised paragraph (a) to clarify the 

requirements for consistency with 

section 1916A of the Act. 

We also revised paragraph (b) to take 

into account the amendment to section 

1916(f) of the Act made by section 

6041(b)(1) of the DRA. 

Alternative Premiums, Enrollment Fees, 

or Similar Charges: State Plan 

Requirements (§ 447.64) 

We revised paragraphs (a), (c), and (d) 

to clarify the requirements for 

consistency with section 1916A of the 

Act. 

We also revised paragraph (d), in 

response to public comments, to require 

that if a State imposes cost sharing that 

could result in aggregate costs to a 

family that exceed five percent of the 

family’s income, the State must develop 

a tracking mechanism and not rely on 

the so-called ‘‘shoebox’’ method that 

puts the burden on families to track cost 

sharing. Specifically, a State must 

describe in its Medicaid State plan the 

methodology it will use to identify 

beneficiaries who are subject to 

premiums or cost sharing for specific 

items or services and track the 

premiums and cost sharing incurred, in 

order to inform beneficiaries and 

providers of beneficiaries’ liability and 

notify beneficiaries and providers when 

individual beneficiaries have reached 

the five percent limit on family out-ofpocket expenses and are no longer 

subject to further cost sharing for the 

remainder of the family’s current 

monthly or quarterly cap period. Such 

methods must assure that families’ cost 

sharing will not exceed the statutory 

limit. 

Alternative Copayments, Coinsurance, 

Deductibles, or Similar Cost Sharing 

Charges: State Plan Requirements 

(§ 447.68) 

We revised paragraphs (b), (c), (d), 

(f)(1), and (f)(2) to clarify the 

requirements for consistency with 

section 1916A of the Act. 

We revised paragraph (d) to specify 

that a State must describe in its 

Medicaid State plan the methodology it 

will use to identify beneficiaries who 

are subject to premiums or cost sharing 

for specific items or services and, if cost 

sharing could exceed five percent of 

family income, to track beneficiaries’ 

incurred premiums and cost sharing 

through a tracking system developed by 

the State, in order to inform 

beneficiaries and providers of 

beneficiaries’ liability and notify 

beneficiaries and providers when 

individual beneficiaries have reached 

the five percent limit on family out-ofpocket expenses to assure that costs do 

not exceed the five percent statutory 

limit. 

Paragraph (f) is revised to clarify that 

the aggregate limit under § 447.78 on a 

family’s premium and cost sharing 

applies to section 1916 and/or 1916A 

for all individuals in the family enrolled 

in Medicaid. 

General Alternative Cost Sharing 

Protections (§ 447.70) 

We renumbered and revised this 

section to make it consistent with 

section 1916A of the Act. In addition, 

we revised this section in response to 

public comments. 

We revised the definition of 

‘‘emergency services’’ in paragraph (a)(6) 

(previously (a)(1)(vi)) and referenced 

this term in paragraph (b) to cite the 

definition which includes the ‘‘prudent 

layperson’’ standard at section 

1932(b)(2) of the Act and § 438.114(a). 

We revised paragraph (a)(2) 

(previously (a)(1)(ii)) to specify at a 

minimum the services listed at 

§ 457.520 as the preventive services 

excluded from alternative cost sharing 

for children younger than age 18, which 

reflect the well baby and well child care 

and immunizations described by the 

Bright Futures guidelines of the 

American Academy of Pediatrics. 

We revised paragraph (a)(7) 

(previously (a)(1)(vii)) to specify that the 

family planning services and supplies 

exempted from cost sharing include 

contraceptives and other 

pharmaceuticals for which the State 

claims or could claim Federal match at 

the enhanced rate under section 

1903(a)(5) of the Act for family planning 

services and supplies. 

We revised paragraph (a)(9) 

(previously (a)(1)(ix)) to explain that 

disabled children receiving medical 

assistance by virtue of sections 

1902(a)(10)(A)(ii)(XIX) and 1902(cc) of 

the Act who are exempted from 

alternative cost sharing are those 

covered in accordance with the 

Medicaid eligibility option offered by 

the Family Opportunity Act. 

We revised paragraph (a)(11) 

(previously (a)(1)(x)) and paragraph (c) 

(previously (b)) to specify that drugs not 

identified by the State’s Medicaid 

program as non-preferred drugs within 

a class are subject to the same 

exclusions and limits for cost sharing as 

drugs identified by the State as 

preferred drugs within a class. 

We revised paragraph (b) (previously 

(a)(2)) for consistency with section 

1916A(e)(2)(B) of the Act to specify that 

cost sharing of no more than the 

nominal amounts defined in § 447.54 

may be imposed on the exempt 

populations specified in paragraph (a) of 

this section for nonemergency services 

furnished in a hospital emergency 

department, under certain conditions. 

Also, we revised paragraph (d) 

(previously (c)) to specify that drugs 

identified by a State’s Medicaid program 

as non-preferred drugs within a class are 

subject to the same exclusions and 

limits for cost sharing as preferred drugs 

within a class if the individual’s 

prescribing physician determines that 

the preferred drug for treatment of the 

same condition either would be less 

effective for the individual or would 

have adverse effects for the individual 

or both. We deleted as unnecessary the 

additional requirement that the State’s 

criteria for prior authorization, if any, 

must be met. 

Alternative Premium and Cost Sharing 

Exemptions and Protections for 

Individuals With Family Incomes at or 

Below 100 Percent of the FPL (§ 447.71) 

We revised paragraphs (b)(1), (b)(3), 

and (c) and added a new paragraph (d) 

to clarify the requirements for 

consistency with sections 1916 and 

1916A of the Act. Paragraph (d) 

specifies that a State may not impose on 

individuals with family income at or 

below 100 percent of the FPL the DRA’s 

alternative premiums and cost sharing 

defined at section 1916A of the Act, but 

may impose cost sharing that does not 

exceed the nominal amounts specified 

at § 447.54. 

Alternative Premium and Cost Sharing 

Exemptions and Protections for 

Individuals With Family Incomes Above 

100 Percent but at or Below 150 Percent 

of the FPL (§ 447.72) 

We revised the introduction to 

paragraph (b) and its subsection (2) and 

paragraph (c) to clarify the requirements 

for consistency with section 1916A of 

the Act. 

We revised paragraph (b)(3), in 

response to public comments, to delete 

a higher maximum copayment of $5.70 

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per visit for services provided by an 

MCO, when the State does not have a 

fee-for-service delivery system, for 

Medicaid expansion optional targeted 

low income children for whom 

enhanced Federal match is paid under 

section XXI of the Act. Since these are 

Medicaid-eligible children, they will be 

subject to the Medicaid limit for such 

coverage of $3.40 per visit in FY 2009, 

rather than the limit imposed for 

separate CHIP programs under title XXI. 

Alternative Premium and Cost Sharing 

Protections for Individuals With Family 

Incomes Above 150 Percent of the FPL 

(§ 447.74) 

We revised paragraphs (a), (b), and (c) 

to clarify the requirements for 

consistency with section 1916A of the 

Act. 

We also revised paragraph (b) to 

delete a higher maximum copayment of 

$5.70 per visit for services provided by 

an MCO, when the State does not have 

a fee-for-service delivery system, for 

Medicaid expansion optional targeted 

low income children for whom 

enhanced Federal match is paid under 

section XXI of the Act. Since these are 

Medicaid-eligible children, they will be 

subject to the Medicaid limit for such 

coverage of $3.40 per visit in FY 2009, 

rather than the limit imposed for 

separate CHIP programs under title XXI. 

Public Schedule (§ 447.76) 

We revised paragraph (b)(1) for a 

minor change by replacing the words 

‘‘and the’’ with the word ‘‘or’’ before 

‘‘aggregate’’. 

Also, in response to public comments, 

we added a new paragraph (c) to require 

a State to provide the public with 

advance notice and reasonable 

opportunity to comment in a form and 

manner provided under applicable State 

law prior to submitting for CMS 

approval a Medicaid State plan 

amendment (SPA) to establish 

alternative premiums or cost sharing 

under section 1916A of the Act or to 

modify substantially an existing plan for 

alternative premiums or cost sharing. 

Also, the State must submit 

documentation with the SPA to 

demonstrate that this requirement was 

met. 

Aggregate Limits on Alternative 

Premiums and Cost Sharing (§ 447.78) 

We revised paragraphs (a), (b), (c), and 

(c)(2) to clarify the requirements for 

consistency with section 1916A of the 

Act. In particular, we clarify that the 

total aggregate limit of 5 percent of a 

family’s income applies for premiums 

and/or cost sharing imposed under 

section 1916 and/or 1916A of the Act 

for all individuals in the family enrolled 

in Medicaid. 

We also revised paragraph (c), in 

response to public comments, to require 

that States describe in their State plan 

for alternative premiums or cost sharing 

the process for individuals to request a 

reassessment of the family’s aggregate 

limit if the family’s income is reduced 

or if eligibility is being terminated due 

to nonpayment of a premium. 

Enforceability of Alternative Premiums 

and Cost Sharing (§ 447.80) 

We revised paragraphs (a)(3) and (b) 

and added a new paragraph (c) to clarify 

and specify the requirements for 

consistency with section 1916A of the 

Act related to alternative cost sharing 

for nonemergency services provided in 

hospital emergency departments. Also, 

we revised paragraph (b)(2) to reference 

the definition of ‘‘emergency services’’ at 

section 1932(b)(2) of the Act and 

§ 438.114(a). 

Restrictions on Payments to Providers 

(§ 447.82) 

We revised this section to make the 

existing text a new paragraph (a). 

We added a new paragraph (c) to 

require that a State describe in its 

Medicaid State plan how the State 

identifies for providers, ideally through 

the use of automated systems, whether 

cost sharing for a specific item or 

service may be imposed on an 

individual beneficiary and whether the 

provider may require the beneficiary, as 

a condition for receiving the item or 

service, to pay the cost sharing charge. 

C. Changes to the CHIP Regulations 

Maximum Allowable Cost Sharing 

Charges on Targeted Low-Income 

Children in Families With Income From 

101 to 150 Percent of the FPL 

(§ 457.555) 

We revised paragraphs (a)(1)(i) and 

(a)(2) for minor changes in clarification. 

IV. Response to Comments on Revised 

Final Rule 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment on 

the proposed rule. The notice of 

proposed rulemaking includes a 

reference to the legal authority under 

which the rule is proposed, and the 

terms and substances of the proposed 

rule or a description of the subjects and 

issues involved. This procedure can be 

waived, however, if an agency finds 

good cause that a notice-and-comment 

procedure is impracticable, 

unnecessary, or contrary to the public 

interest and incorporates a statement of 

the finding and its reasons in the rule 

issued. 

A proposed rule was published on 

February 22, 2008 with a public 

comment period. A final rule was issued 

on November 25, 2008. The November 

25, 2008 final rule published in the 

Federal Register included a description 

of changes to the proposed rule based 

on the public comments and our 

responses to comments received during 

the public comment period. On January 

27, 2009 and March 27, 2009, we 

published final rules to delay the 

effective date of the November 25, 2008 

final rule and to reopen the public 

comment period. The March 27, 2009 

final rule specifically indicated that 

analysis of comments received during 

the first reopened comment period 

indicated a need for revisions to the 

November 25, 2008 final rule, and also 

specifically requested public comments 

on changes needed to address section 

5006(a) of the Recovery Act. On October 

30, 2009, we published a proposed rule 

in the Federal Register to delay the 

effective date of the November 25, 2008 

final rule until July 1, 2010. 

In keeping with the Department’s 

Tribal consultation policy and the new 

provisions in the Recovery Act, CMS 

collaborated and consulted with the 

Tribal Technical Advisory Group 

(TTAG) and the IHS to solicit advice on 

implementing these provisions. The 

Tribal Affairs Group and the Center for 

Medicaid, CHIP, and Survey and 

Certification within CMS jointly hosted 

two All Tribes Calls on June 5 and 12, 

2009, to consult on implementation of 

section 5006 of the Recovery Act. Two 

face-to-face consultation meetings were 

held in Denver on July 8 and 10, 2009, 

to solicit advice and input on these 

provisions from federally-recognized 

Tribes, Indian health care providers, 

and Urban Indian Organizations. An All 

States Call was held on June 10, 2009, 

with the State Medicaid and CHIP 

programs to describe the CMS Tribal 

consultation process and the Recovery 

Act provisions and to solicit feedback 

and questions from States. We believe 

the requirement of a notice of proposed 

rulemaking has been effectively met 

through the issuances described in the 

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preceding paragraphs. However, to the 

extent that the requirement has not been 

met, we find good cause to waive a 

notice of proposed rulemaking because 

it is unnecessary when the purposes of 

the requirement have been met through 

the prior issuances, which clearly 

indicated the intent to revise the 

November 25, 2008 final rule and 

invited public comment to inform our 

revisions. 

Specifically, the two 2009 final rules 

included a reopening of the public 

comment period, indicated that the 

November 25, 2008 final rule would be 

revised, and requested specific 

comments on the changes required by 

section 5006(a) of the Recovery Act. In 

doing so, these final rules effectively 

proposed revision of the November 25, 

2008 final rule and invited public 

comment. These actions fully satisfied 

the requirements for notice of proposed 

rulemaking, and further process would 

be unnecessary. 

With respect to the provisions of this 

revised final rule that concern section 

5006(a) of the Recovery Act, we further 

find good cause to waive the notice of 

proposed rulemaking based on the 

strong public interest in protecting 

beneficiaries from premiums and cost 

sharing in accordance with law. Section 

5006(a)(1) became effective on July 1, 

2009, and prompt implementation is 

necessary to ensure that its protections 

are applied without delay. Delay in 

implementation would harm the Indian 

beneficiaries whom the statute was 

specifically intended to help. 

Therefore, we find good cause to 

waive the notice of proposed 

rulemaking and to issue this final rule 

on an interim basis. We are providing a 

30-day public comment period. 

VI. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs): 

A. ICRs Regarding 

Section 447.64 Alternative Premiums, 

Enrollment Fees, or Similar Charges: 

State Plan Requirements 

Section 447.64 requires a State 

imposing alternative premiums, 

enrollment fees, or similar charges on 

individuals to describe in the State plan: 

(a) The group or groups of individuals 

that may be subject to the premiums, 

enrollment fees, or similar charges. 

(b) The schedule of the premiums, 

enrollment fees, or similar charges 

imposed. 

(c) The methodology used to 

determine family income for purposes 

of the imitations on premiums related to 

family income level that are described 

in § 447.78(c) of this chapter, including 

the period and periodicity of those 

determinations. 

(d) The methodology used by the 

State to: 

(1) Identify beneficiaries who are 

subject to premiums or to cost sharing 

for specific items or services; and 

(2) If the State adopts cost sharing 

rules that could place families at risk of 

reaching the total aggregate limit for 

premiums and cost sharing under 

Medicaid, defined at § 447.78 as 5 

percent of the family’s income, track 

beneficiaries’ incurred premiums and 

cost sharing through a mechanism 

developed by the State that does not 

rely on beneficiaries, in order to inform 

beneficiaries and providers of 

beneficiaries’ liability and notify 

beneficiaries and providers when 

individual beneficiaries have reached 

the 5 percent limit on family out-ofpocket expenses and are no longer 

subject to further cost sharing for the 

remainder of the family’s current 

monthly or quarterly cap period. 

(e) The process for informing the 

beneficiaries, applicants, providers, and 

the public of the schedule of premiums, 

enrollment fees, or similar charges for a 

group or groups of individuals in 

accordance with § 447.76. 

(f) The notice of, timeframe for, and 

manner of required premium payments 

for a group or groups of individuals and 

the consequences for an individual who 

does not pay. 

The burden associated with this 

requirement is the time and effort it 

would take for a State to include this 

detailed description in the State plan. 

We estimate it would take one State 

approximately 20 minutes to 

incorporate this information in their 

plan. We believe 56 States will be 

affected by this requirement for a total 

annual burden of 18.67 hours. 

Section 447.68 Alternative 

Copayments, Coinsurance, Deductibles, 

or Similar Cost Sharing Charges: State 

Plan Requirements 

Section 447.68 requires a State 

imposing alternative copayments, 

coinsurance, deductibles, or similar cost 

sharing charges on individuals to 

describe in the State plan: 

(a) The group or groups of individuals 

that may be subject to the cost sharing 

charge. 

(b) The methodology used to 

determine family income, for purposes 

of the limitations on cost sharing related 

to family income that are described in 

§ 447.78(c) of this chapter, including the 

period and periodicity of those 

determinations. 

(c) The schedule of the copayments, 

coinsurance, deductibles, or similar cost 

sharing charges imposed for each item 

or service for which a charge is 

imposed. 

(d) The methodology used by the 

State to identify beneficiaries who are 

subject to premiums or cost sharing for 

specific items or services and, if the 

State adopts cost sharing rules that 

could place families at risk of reaching 

the total aggregate limit for premiums 

and cost sharing under Medicaid, 

defined at § 447.78 as 5 percent of the 

family’s income, track beneficiaries’ 

incurred premiums and cost sharing 

through a tracking system developed by 

the State, in order to inform 

beneficiaries and providers of 

beneficiaries’ liability and notify 

beneficiaries and providers when the 

individual beneficiaries reached the 5 

percent limit on family out-of-pocket 

expenses and are no longer subject to 

further cost sharing for the remainder of 

the family’s current monthly or 

quarterly cap period. 

(e) The process for informing 

beneficiaries, applicants, providers, and 

the public of the schedule of cost 

sharing charges for specific items and 

services for a group or groups of 

individuals in accordance with § 447.76 

of this chapter. 

(f) The methodology used to ensure 

that: 

(1) The aggregate amount of premiums 

and cost sharing imposed under section 

1916 and section 1916A of the Act for 

all individuals in the family enrolled in 

Medicaid with family income above 100 

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30260 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 

percent of the Federal poverty level 

(FPL) does not exceed 5 percent of the 

family’s income of the family involved. 

(2) The aggregate amount of cost 

sharing under section 1916 and section 

1916A of the Act for all individuals in 

the family enrolled in Medicaid with 

family income at or below 100 percent 

of the FPL does not exceed 5 percent of 

the family’s income of the family 

involved. 

(g) The notice of, timeframe for, and 

manner of required cost sharing and the 

consequences for failure to pay. 

The burden associated with this 

requirement is the time and effort it 

would take for a State to include this 

detailed description in the State plan. 

We estimate it would take one State 

approximately 20 minutes to 

incorporate this information in their 

plan. We believe 56 States will be 

affected by this requirement for a total 

annual burden of 18.67 hours. 

Section 447.76 Public Schedule 

Section 447.76(a) requires States to 

make available to the groups in 

paragraph (b) of this section a public 

schedule that contains the following 

information: 

(1) Current premiums, enrollment 

fees, or similar charges. 

(2) Current cost sharing charges. 

(3) The aggregate limit on premiums 

and cost sharing or just cost sharing. 

(4) Mechanisms for making payments 

for required premiums and charges. 

(5) The consequences for an applicant 

or beneficiary who does not pay a 

premium or charge. 

(6) A list of hospitals charging 

alternative cost sharing for nonemergency use of the emergency 

department. 

(7) Either a list of preferred drugs or 

a method to obtain such a list upon 

request. 

The burden associated with this 

requirement is the time and effort it 

would take the State to prepare and 

make available to appropriate parties a 

public schedule. We estimate that it 

would take 20 minutes per State. We 

believe 56 States and territories will be 

affected by this requirement for an 

annual burden of 18.67 hours. 

Section 447.76(c) requires the State, 

prior to submitting to the Centers for 

Medicare & Medicaid Services for 

approval a Medicaid State plan 

amendment to establish alternative 

premiums or cost sharing under section 

1916A of the Act or an amendment to 

modify substantially an existing plan for 

alternative premiums or cost sharing, to 

provide the public with advance notice 

of the amendment and allow reasonable 

opportunity to comment with respect to 

such amendment in a form and manner 

provided under applicable State law. 

The State must submit documentation 

with the SPA to demonstrate that this 

requirement was met. 

The burden associated with this 

requirement is the time and effort it 

would take for a State to provide 

advance notice to the public and 

prepare and submit documentation with 

the SPA. We estimate it would take 1 

State approximately 3 hours to meet this 

requirement; therefore, the total annual 

burden associated with this requirement 

is 3 hours. 

Section 447.80 Enforceability of 

Alternative Premiums and Cost Sharing 

Section 447.80(b)(2) states that a 

hospital that has determined after an 

appropriate medical screening pursuant 

to § 489.24, that an individual does not 

need emergency services before 

providing treatment and imposing 

alternative cost sharing on an individual 

in accordance with § 447.72(b)(2) and 

§ 447.74(b) of this chapter for nonemergency services as defined in section 

1916A(e)(4)(A) of the Act, must provide: 

(1) The name and location of an 

available and accessible alternate nonemergency services provider, as defined 

in section 1916A(e)(4)(B) of the Act; 

(2) Information that the alternate 

provider can provide the services in a 

timely manner with the imposition of a 

lesser cost sharing amount or no cost 

sharing; and 

(3) A referral to coordinate scheduling 

of treatment by this provider. 

The burden associated with this 

requirement is the time and effort it 

would take for a hospital to provide the 

name and location of an alternate 

provider who can provide services of a 

lesser cost sharing amount or no cost 

sharing and a referral to that provider. 

We estimate the burden on a hospital to 

be 5 minutes. We believe the number of 

hospital visits will be 4,077,000; 

therefore, the total annual burden is 

339,750 hours. 

B. Comments on ICRs 

We have submitted a copy of this final 

rule to OMB for its review of the 

information collection requirements 

described above. We will revise OMB 

number 0938–0993 to reflect any 

additional burden not currently 

approved. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this revised final 

rule with comment period; or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

2244–FC, Fax: (202) 395–6974; or Email: OIRA_submission@omb.eop.gov. 

VII. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VIII. 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 Social Security 

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 

major rules with economically 

significant effects of $100 million or 

more in any 1 year. We estimate this 

final rule with comment period will not 

reach the economically significant 

threshold of $100 million in benefits 

and costs and consequently is not a 

major rule under the Congressional 

Review Act. 

The economic impact associated with 

this final rule relates to changes it 

proposes to the November 25, 2008, 

final rule. The main change estimated to 

have a budget impact is the Recovery 

Act’s exemption of Indians from 

premiums and cost sharing under 

certain circumstances. The estimated 

budget impact of section 5006 of the 

Recovery Act has been included in the 

FY 2011 President’s budget. The RFA 

requires agencies to analyze options for 

regulatory relief of small businesses, if 

a rule has a significant impact on a 

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substantial number of small entities. 

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 Small Business 

Administration’s (SBA) definition of a 

small business (having revenues of less 

than $7 million to $34.5 million in any 

1 year.) Individuals and States are not 

included in the definition of a small 

entity. Therefore, the Secretary has 

determined that this final rule with 

comment period will not have a 

significant impact on a substantial 

number of 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. Therefore, the 

Secretary has determined that this final 

rule with comment period will 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) 

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 2009, that 

threshold is approximately $133 

million. This final rule with comment 

period will not impose spending costs 

on State, local, or tribal governments in 

the aggregate, or by the private sector, of 

$133 million in any one 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 with comment period 

will not have substantial direct 

requirement costs on State and local 

governments, preempt State law, or 

otherwise have Federalism implications. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 447 

Accounting, Administrative practice 

and procedure, Drugs, Grant programs— 

Health, Health facilities, Health 

professions, Medicaid, Reporting and 

recordkeeping requirements, Rural 

areas. 

42 CFR Part 457 

Administrative practice and 

procedure, Grant programs—Health, 

Health insurance, Reporting and 

recordkeeping requirements. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 447—PAYMENTS FOR 

SERVICES 

■ 1. The authority citation for part 447 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

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

■ 2. Section 447.50 is amended by 

adding a new paragraph (b) to read as 

follows: 

§ 447.50 Cost sharing: Basis and purpose. 

* * * * * 

(b) Definitions. For the purposes of 

this subpart: 

(1) Indian means any individual 

defined at 25 USC 1603(c), 1603(f), or 

1679(b), or who has been determined 

eligible as an Indian, pursuant to 

§ 136.12 of this part. This means the 

individual: 

(i) Is a member of a Federallyrecognized Indian tribe; 

(ii) Resides in an urban center and 

meets one or more of the following four 

criteria: 

(A) Is a member of a tribe, band, or 

other organized group of Indians, 

including those tribes, bands, or groups 

terminated since 1940 and those 

recognized now or in the future by the 

State in which they reside, or who is a 

descendant, in the first or second 

degree, of any such member; 

(B) Is an Eskimo or Aleut or other 

Alaska Native; 

(C) Is considered by the Secretary of 

the Interior to be an Indian for any 

purpose; or 

(D) Is determined to be an Indian 

under regulations promulgated by the 

Secretary; 

(iii) Is considered by the Secretary of 

the Interior to be an Indian for any 

purpose; or 

(iv) Is considered by the Secretary of 

Health and Human Services to be an 

Indian for purposes of eligibility for 

Indian health care services, including as 

a California Indian, Eskimo, Aleut, or 

other Alaska Native. 

■ 3. Section 447.51 is amended by 

revising paragraph (a) and the 

introductory text of paragraph (c) to 

read as follows: 

§ 447.51 Requirements and options. 

(a) The plan must provide that the 

Medicaid agency does not impose any 

enrollment fee, premium, or similar 

charge for any services available under 

the plan upon: 

(1) Categorically needy individuals, as 

defined in § 435.4 and § 436.3 of this 

subchapter, except for the following 

populations in accordance with sections 

1916(c), (d), (g), and (i) of the Act: 

(i) A pregnant woman or an infant 

under one year of age described in 

subparagraph (A) or (B) of section 

1902(l)(1) of the Act, who is receiving 

medical assistance on the basis of 

section 1902(a)(10)(A)(ii)(IX) of the Act 

and whose family income equals or 

exceeds 150 percent of the Federal 

poverty level (FPL) applicable to a 

family of the size involved; 

(ii) A qualified disabled and working 

individual described in section 1905(s) 

of the Act whose income exceeds 150 

percent of the FPL; 

(iii) An individual provided medical 

assistance only under section 

1902(a)(10)(A)(ii)(XV) or section 

1902(a)(10)(A)(ii)(XVI) of the Act and 

the Ticket to Work and Work Incentives 

Improvement Act of 1999 (TWWIIA); 

and 

(iv) A disabled child provided 

medical assistance under section 

1902(a)(10)(A)(ii)(XIX) of the Act in 

accordance with the Family 

Opportunity Act; and 

(2) An Indian who either is eligible to 

receive or has received an item or 

service furnished by an Indian health 

care provider or through referral under 

contract health services. 

* * * * * 

(c) For each charge imposed under 

paragraph (a) or (b) of this section, the 

plan must specify— 

* * * * * 

■ 4. Section 447.53 is amended by 

revising paragraph (b)(4) and adding a 

new paragraph (b)(6) to read as follows: 

§ 447.53 Applicability; specification; 

multiple charges. 

* * * * * 

(b) * * * 

(4) Emergency services. Services as 

defined at section 1932(b)(2) of the Act 

and § 438.114(a). 

* * * * * 

(6) Indians. Items and services 

furnished to an Indian directly by an 

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Indian health care provider or through 

referral under contract health services. 

* * * * * 

§ 447.54 [Amended] 

■ 5. Section 447.54 is amended by— 

■ A. Republishing the introductory text. 

■ B. Revising paragraph (a)(1), 

paragraph (a)(3)(ii), and paragraph 

(a)(4). 

■ C. Revising paragraph (b). 

The revisions read as follows: 

§ 447.54 Maximum allowable and nominal 

charges. 

Except as provided at § 447.62 

through § 447.82 of this part, the 

following requirements must be met: 

(a) Non-institutional services. Except 

as specified in paragraph (b) of this 

section, for non-institutional services, 

the plan must provide that the following 

requirements are met: 

(1) For Federal FY 2009, any 

deductible it imposes does not exceed 

$2.30 per month per family for each 

period of Medicaid eligibility. For 

example, if Medicaid eligibility is 

certified for a 6-month period, the 

maximum deductible which may be 

imposed on a family for that period of 

eligibility is $13.80. In succeeding years, 

any deductible may not exceed these 

amounts as updated each October 1 by 

the percentage increase in the medical 

care component of the CPI–U for the 

period of September to September 

ending in the preceding calendar year, 

and then rounded to the next higher 5- 

cent increment. 

* * * * * 

(3) * * * 

(ii) Thereafter, any copayments may 

not exceed these amounts as updated 

each October 1 by the percentage 

increase in the medical care component 

of the CPI–U for the period of 

September to September ending in the 

preceding calendar year and then 

rounded to the next higher 5-cent 

increment. 

(4) For Federal FY 2009, any 

copayment that the State imposes for 

services provided by a managed care 

organization (MCO) may not exceed the 

copayment permitted under paragraph 

(a)(3)(i) of this section for comparable 

services under a fee-for-service delivery 

system. When there is no fee-for-service 

delivery system, the copayment may not 

exceed $3.40 per visit. In succeeding 

years, any copayment may not exceed 

these amounts as updated each October 

1 by the percentage increase in the 

medical care component of the CPI–U 

for the period of September to 

September ending in the preceding 

calendar year and then rounded to the 

next higher 5-cent increment. 

(b) Waiver of the requirement that cost 

sharing amounts be nominal. Upon 

approval from CMS, the requirement 

that cost sharing charges must be 

nominal may be waived, in accordance 

with sections 1916(a)(3) and 1916(b)(3) 

of the Act and § 431.57 of this chapter, 

for non-emergency services furnished in 

a hospital emergency department, if the 

State establishes to the satisfaction of 

the Secretary that alternative sources of 

nonemergency, outpatient services are 

actually available and accessible to 

Medicaid beneficiaries in a timely 

manner. 

* * * * * 

■ 6. Section 447.55 is amended by 

revising paragraph (b) to read as follows: 

§ 447.55 Standard co-payment. 

* * * * * 

(b) This standard copayment amount 

for any service may be determined by 

applying the maximum copayment 

amounts specified in § 447.54(a) and (c) 

to the agency’s average or typical 

payment for that service. For example, 

if the agency’s typical payment for 

prescribed drugs is $4 to $5 per 

prescription, the agency might set a 

standard copayment of $.60 per 

prescription. This standard copayment 

may be adjusted based on updated 

copayments as permitted under 

§ 447.54(a)(3). 

■ 7. Section 447.57 is amended by 

adding a new paragraph (c) to read as 

follows: 

§ 447.57 Restrictions on payments to 

providers. 

* * * * * 

(c) Payment under Medicaid due to an 

Indian health care provider or a health 

care provider through referral under 

contract health services for directly 

furnishing an item or service to an 

Indian may not be reduced by the 

amount of any enrollment fee, premium, 

or similar charge, or any deductible, 

copayment, cost sharing, or similar 

charge that otherwise would be due 

from the Indian. 

■ 8. Section 447.62 is revised to read as 

follows: 

§ 447.62 Alternative premiums and cost 

sharing: Basis, purpose and scope. 

(a) Section 1916A of the Act sets forth 

options for a State through a Medicaid 

State plan amendment to impose 

alternative premiums and cost sharing, 

which are premiums and cost sharing 

that are not subject to the limitations 

under section 1916 of the Act as 

described in §§ 447.51 through 447.56. 

For States that impose alternative 

premiums or cost sharing, § 447.64, 

§ 447.66, § 447.68, § 447.70, § 447.71, 

§ 447.72, § 447.74, § 447.76, § 447.78, 

§ 447.80, and § 447.82 prescribe State 

plan requirements and options for 

alternative premiums and cost sharing 

for a group or groups of individuals (as 

specified by the State) for services or 

items (as specified by the State) and the 

standards and conditions under which 

States may impose them. The State may 

vary the premiums and cost sharing 

among groups of individuals or types of 

services or items, consistent with the 

limitations specified in this subpart and 

section 1916A(a)(1) of the Social 

Security Act. Otherwise, premiums and 

cost sharing must comply with the 

requirements described in § 447.50 

through § 447.60. 

(b) Waivers of the limitations 

described in this subpart on deductions, 

cost sharing, and similar charges may be 

granted only in accordance with the 

provisions of section 1916(f) of the Act. 

§ 447.64 [Amended] 

■ 9. Section 447.64 is amended by 

revising paragraphs (a), (c), and (d) to 

read as follows: 

§ 447.64 Alternative premiums, enrollment 

fees, or similar charges: State plan 

requirements. 

* * * * * 

(a) The group or groups of individuals 

that may be subject to the premiums, 

enrollment fees, or similar charges. 

* * * * * 

(c) The methodology used to 

determine family income for purposes 

of the limitations on premiums related 

to family income level that are 

described in § 447.78(c) of this chapter, 

including the period and periodicity of 

those determinations. 

(d) The methodology used by the 

State to: 

(1) Identify beneficiaries who are 

subject to premiums or cost sharing for 

specific items or services; and 

(2) If the State adopts cost sharing 

rules that could place families at risk of 

reaching the total aggregate limit for 

premiums and cost sharing under 

Medicaid, defined at § 447.78, track 

beneficiaries’ incurred premiums and 

cost sharing through a mechanism 

developed by the State that does not 

rely on beneficiaries, in order to inform 

beneficiaries and providers of 

beneficiaries’ liability and notify 

beneficiaries and providers when 

individual beneficiaries have incurred 

family out-of-pocket expenses up to that 

limit and are no longer subject to further 

cost sharing for the remainder of the 

family’s current monthly or quarterly 

cap period. 

* * * * * 

■ 10. Section 447.66 is amended by— 

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■ A. Adding a new paragraph (a)(7). 

■ B. Adding a new paragraph (c). 

The additions read as follows: 

§ 447.66 General alternative premium 

protections. 

(a) * * * 

(7) An Indian who is eligible to 

receive or has received an item or 

service furnished by an Indian health 

care provider or through referral under 

contract health services. 

* * * * * 

(c) Nothing in this subsection shall be 

construed as restricting the application 

of any other limitations on the 

imposition of premiums that may apply 

to an individual receiving Medicaid 

who is an Indian. 

■ 11. Section 447.68 is amended by 

revising paragraphs (b) through (d) and 

(f) to read as follows: 

§ 447.68 Alternative copayments, 

coinsurance, deductibles, or similar cost 

sharing charges: State plan requirements. 

* * * * * 

(b) The methodology used to 

determine family income, for purposes 

of the limitations on cost sharing related 

to family income level that are 

described in § 447.78(c) of this chapter, 

including the period and periodicity of 

those determinations. 

(c) The schedule of the copayments, 

coinsurance, deductibles, or similar cost 

sharing charges imposed for each item 

or service for which a charge is 

imposed. 

(d) The methodology used by the 

State to identify beneficiaries who are 

subject to premiums or cost sharing for 

specific items or services and, if families 

are at risk of reaching the total aggregate 

limit for premiums and cost sharing 

under Medicaid defined at § 447.78, 

track beneficiaries’ incurred premiums 

and cost sharing through a mechanism 

developed by the State that does not 

rely on beneficiaries, in order to inform 

beneficiaries and providers of 

beneficiaries’ liability and notify 

beneficiaries and providers when 

individual beneficiaries have incurred 

family out-of-pocket expenses up to that 

limit and are no longer subject to further 

cost sharing for the remainder of the 

family’s current monthly or quarterly 

cap period. 

* * * * * 

(f) The methodology used to ensure 

that: 

(1) The aggregate amount of premiums 

and cost sharing imposed under section 

1916 and section 1916A of the Act for 

all individuals in the family enrolled in 

Medicaid with family income above 100 

percent of the Federal poverty level 

(FPL) does not exceed 5 percent of the 

family’s income of the family involved. 

(2) The aggregate amount of cost 

sharing imposed under section 1916 and 

section 1916A of the Act for all 

individuals in the family enrolled in 

Medicaid with family income at or 

below 100 percent of the FPL does not 

exceed 5 percent of the family’s income 

of the family involved. 

* * * * * 

■ 12. Section 447.70 is revised to read 

as follows: 

§ 447.70 General alternative cost sharing 

protections. 

(a) States may not impose alternative 

cost sharing for the following items or 

services. Except as indicated, these 

limits do not apply to alternative cost 

sharing for prescription drugs identified 

by a State’s Medicaid program as nonpreferred within a class of such drugs or 

for non-emergency use of the emergency 

room. 

(1) Services furnished to individuals 

under 18 years of age who are required 

to be provided Medicaid under section 

1902(a)(10)(A)(i) of the Act, including 

services furnished to individuals with 

respect to whom child welfare services 

are being made available under Part B 

of title IV of the Act on the basis of 

being a child in foster care and 

individuals with respect to whom 

adoption or foster care assistance is 

made available under Part E of that title, 

without regard to age. 

(2) Preventive services, at a minimum 

the services specified at § 457.520, 

provided to children under 18 years of 

age regardless of family income, which 

reflect the well baby and well child care 

and immunizations in the Bright 

Futures guidelines issued by the 

American Academy of Pediatrics. 

(3) Services furnished to pregnant 

women, if those services relate to the 

pregnancy or to any other medical 

condition which may complicate the 

pregnancy. 

(4) Services furnished to a terminally 

ill individual who is receiving hospice 

care (as defined in section 1905(o) of the 

Act). 

(5) Services furnished to any 

individual who is an inpatient in a 

hospital, nursing facility, intermediate 

care facility for the mentally retarded, or 

other medical institution, if the 

individual 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. 

(6) Emergency services as defined at 

section 1932(b)(2) of the Act and 

§ 438.114(a), except charges for services 

furnished after the hospital has 

determined, based on the screening and 

any other services required under 

§ 489.24 of this chapter, that the 

individual does not need emergency 

services consistent with the 

requirements of paragraph (b) of this 

section. 

(7) Family planning services and 

supplies described in section 

1905(a)(4)(C) of the Act, including 

contraceptives and other 

pharmaceuticals for which the State 

claims or could claim Federal match at 

the enhanced rate under section 

1903(a)(5) of the Act for family planning 

services and supplies. 

(8) Services furnished to women who 

are receiving medical assistance by 

virtue of the application of sections 

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

the Act (breast or cervical cancer 

provisions). 

(9) Services furnished to disabled 

children who are receiving medical 

assistance by virtue of the application of 

sections 1902(a)(10)(A)(ii)(XIX) and 

1902(cc) of the Act, in accordance with 

the Family Opportunity Act. 

(10) Items and services furnished to 

an Indian directly by an Indian health 

care provider or through referral under 

contract health services. 

(11) Preferred drugs within a class, or 

drugs not identified by the State’s 

Medicaid program as a non-preferred 

drug within a class, for individuals for 

whom cost sharing may not otherwise 

be imposed as described in paragraphs 

(a)(1) through (10) of this section. 

(b) For the exempt populations 

specified in paragraph (a) of this 

section, a State may impose nominal 

cost sharing as defined in § 447.54 of 

this chapter for services furnished in a 

hospital emergency department, other 

than those required under § 489.24, if 

the hospital has determined based on 

the medical screening required under 

§ 489.24 that the individual does not 

need emergency services as defined at 

section 1932(b)(2) of the Act and 

§ 438.114(a), the requirements of 

§ 447.80(b)(1) are met, and the services 

are available in a timely manner without 

cost sharing through an outpatient 

department or another alternative nonemergency health care provider in the 

geographic area of the hospital 

emergency department involved. 

(c) In the case of a drug that a State’s 

Medicaid program either has identified 

as a preferred drug within a class or has 

not otherwise identified as a nonpreferred drug within a class, cost 

sharing may not exceed the nominal 

levels permitted under section 1916 of 

the Act as specified in § 447.54 of this 

chapter. Cost sharing can be imposed 

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30264 Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules and Regulations 

that exceeds the nominal levels 

permitted under section 1916 of the Act 

for drugs that are identified by a State’s 

Medicaid program as non-preferred 

drugs within a class in accordance with 

section 1916A(c) of the Act. 

(d) In the case of a drug that is 

identified by a State’s Medicaid program 

as a non-preferred drug within a class, 

the cost sharing is limited to the amount 

imposed for a preferred drug if the 

individual’s prescribing physician 

determines that the preferred drug for 

treatment of the same condition either 

would be less effective for the 

individual or would have adverse 

effects for the individual or both. 

(e) States may exempt additional 

individuals, items, or services from cost 

sharing. 

■ 13. Section 447.71 is amended by— 

■ A. Revising paragraphs (b)(1), (b)(3), 

and (c). 

■ B. Adding a new paragraph (d). 

The additions and revisions read as 

follows: 

§ 447.71 Alternative premium and cost 

sharing exemptions and protections for 

individuals with family incomes at or below 

100 percent of the FPL. 

* * * * * 

(b) * * * 

(1) The State may impose cost sharing 

under authority provided under section 

1916 of the Act and consistent with the 

levels described in such section and 

§ 447.54. 

* * * * * 

(3) The State may impose cost sharing 

for non-emergency services furnished in 

a hospital emergency department that 

does not exceed the nominal amount as 

defined in § 447.54 as long as the 

services are available in a timely 

manner without cost sharing through an 

outpatient department or other 

alternative non-emergency services 

health care provider in the geographic 

area of the hospital emergency 

department involved. 

(c) Aggregate cost sharing under 

sections 1916 and 1916A of the Act for 

all individuals in the family enrolled in 

Medicaid may not exceed the maximum 

permitted under § 447.78(b). 

(d) The State may not impose 

alternative premiums and cost sharing 

in accordance with section 1916A of the 

Act on individuals whose family 

income is at or below 100 percent of the 

FPL, but may impose cost sharing that 

does not exceed the nominal amount as 

defined at § 447.54 and section 1916 of 

the Act. 

■ 14. Section 447.72 is amended by 

revising paragraphs (b) and (c) to read 

as follows: 

§ 447.72 Alternative premium and cost 

sharing exemptions and protections for 

individuals with family incomes above 100 

percent but at or below 150 percent of the 

FPL. 

* * * * * 

(b) Cost sharing may be imposed 

under the State plan for individuals 

whose family income exceeds 100 

percent, but does not exceed 150 

percent, of the FPL if the cost sharing 

does not exceed 10 percent of the 

payment the agency makes for the item 

or service, with the following 

exceptions: 

(1) Cost sharing for non-preferred 

drugs cannot exceed the nominal 

amount as defined in § 447.54. 

(2) Cost sharing for non-emergency 

services furnished in the hospital 

emergency department cannot exceed 

twice the nominal amount as defined in 

§ 447.54. A hospital must meet the 

requirements described at § 447.80(b)(2) 

before the cost sharing can be imposed. 

(3) In the case of States that do not 

have fee-for-service payment rates, any 

copayment that the State imposes for 

services provided by an MCO to a 

Medicaid beneficiary, including a child 

covered under a Medicaid expansion 

program for whom enhanced match is 

claimed under title XXI of the Act, may 

not exceed $3.40 per visit for Federal FY 

2009. Thereafter, any copayment may 

not exceed this amount as updated each 

October 1 by the percentage increase in 

the medical care component of the CPI– 

U for the period of September to 

September ending in the preceding 

calendar year and then rounded to the 

next highest 5-cent increment. 

(c) Aggregate cost sharing under 

sections 1916 and 1916A of the Act for 

all individuals in the family enrolled in 

Medicaid may not exceed the maximum 

permitted under § 447.78(a). 

■ 15. Section 447.74 is revised to read 

as follows: 

§ 447.74 Alternative premium and cost 

sharing protections for individuals with 

family incomes above 150 percent of the 

FPL. 

(a) States may impose premiums 

under the State plan consistent with the 

aggregate limits set forth in § 447.78(a) 

on individuals whose family income 

exceeds 150 percent of the FPL. 

(b) Cost sharing may be imposed 

under the State plan on individuals 

whose family income exceeds 150 

percent of the FPL if the cost sharing 

does not exceed 20 percent of the 

payment the agency makes for the item 

(including a non-preferred drug) or 

service, with the following exception: In 

the case of States that do not have feefor-service payment rates, any 

copayment that the State imposes for 

services provided by an MCO to a 

Medicaid beneficiary, including a child 

covered under a Medicaid expansion 

program for whom enhanced match is 

claimed under title XXI of the Act, may 

not exceed $3.40 per visit for Federal FY 

2009. Thereafter, any copayment may 

not exceed this amount as updated each 

October 1 by the percentage increase in 

the medical care component of the CPI– 

U for the period of September to 

September ending in the preceding 

calendar year and then rounded to the 

next highest 5-cent increment. 

(c) Aggregate premiums and cost 

sharing under sections 1916 and 1916A 

of the Act for all individuals in the 

family enrolled in Medicaid may not 

exceed the maximum permitted under 

§ 447.78(a). 

■ 16. Section 447.76 is amended by 

revising paragraph (b)(1) and adding a 

new paragraph (c) to read as follows: 

§ 447.76 Public schedule. 

* * * * * 

(b) * * * 

(1) Beneficiaries, at the time of their 

enrollment and reenrollment after a 

redetermination of eligibility, and when 

premiums, cost sharing charges, or 

aggregate limits are revised. 

* * * * * 

(c) Prior to submitting to the Centers 

for Medicare & Medicaid Services for 

approval a State plan amendment (SPA) 

to establish alternative premiums or cost 

sharing under section 1916A of the Act 

or an amendment to modify 

substantially an existing plan for 

alternative premiums or cost sharing, 

the State must provide the public with 

advance notice of the amendment and 

reasonable opportunity to comment 

with respect to such amendment in a 

form and manner provided under 

applicable State law, and must submit 

documentation with the SPA to 

demonstrate that this requirement was 

met. 

■ 17. Section 447.78 is revised to read 

as follows: 

§ 447.78 Aggregate limits on alternative 

premiums and cost sharing. 

(a) The total aggregate amount of 

premiums and cost sharing imposed 

under sections 1916 and 1916A of the 

Act for all individuals in a family 

enrolled in Medicaid with family 

income above 100 percent of the FPL 

may not exceed 5 percent of the family’s 

income for the monthly or quarterly 

period, as specified by the State in the 

State plan. 

(b) The total aggregate amount of cost 

sharing imposed under sections 1916 

and 1916A of the Act for all individuals 

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in a family enrolled in Medicaid with 

family income at or below 100 percent 

of the FPL may not exceed 5 percent of 

the family’s income for the monthly or 

quarterly period, as specified by the 

State in the State plan. 

(c) Family income shall be 

determined in a manner, for such 

period, and at such periodicity as 

specified by the State in the State plan, 

including the use of such disregards as 

the State may provide and the process 

for individuals to request a reassessment 

of the family’s aggregate limit if the 

family’s income is reduced or if 

eligibility is being terminated due to 

nonpayment of a premium. 

(1) States may use gross income or 

any other methodology. 

(2) States may use a different 

methodology for determining the 

family’s income to which the 5 percent 

aggregate limit is applied than is used 

for determining income eligibility. 

■ 18. Section 447.80 is amended by— 

■ A. Revising paragraph (a)(3), the 

introductory text of paragraph (b), and 

paragraph (b)(2). 

■ B. Adding a new paragraph (c). 

The additions and revisions read as 

follows: 

§ 447.80 Enforceability of alternative 

premiums and cost sharing. 

* * * * * 

(a) * * * 

(3) Waive payment of a premium in 

any case where the State determines 

that requiring the payment would create 

an undue hardship for the individual. 

(b) With respect to alternative cost 

sharing, a State may amend its Medicaid 

State plan to permit a provider, 

including a pharmacy or hospital, to 

require an individual, as a condition for 

receiving the item or service, to pay the 

cost sharing charge, except as specified 

in paragraphs (b)(1) through (3) of this 

section. 

* * * * * 

(2) A hospital that has determined 

after an appropriate medical screening 

pursuant to § 489.24 of this chapter, that 

an individual does not need emergency 

services as defined at section 1932(b)(2) 

of the Act and § 438.114(a), before 

providing treatment and imposing 

alternative cost sharing on an individual 

in accordance with § 447.72(b)(2) and 

§ 447.74(b) of this chapter for nonemergency services as defined in section 

1916A(e)(4)(A) of the Act, must provide: 

(i) The name and location of an 

available and accessible alternate nonemergency services provider, as defined 

in section 1916A(e)(4)(B) of the Act. 

(ii) Information that the alternate 

provider can provide the services in a 

timely manner with the imposition of a 

lesser cost sharing amount or no cost 

sharing. 

(iii) A referral to coordinate 

scheduling of treatment by this 

provider. 

* * * * * 

(c) Nothing in paragraph (b)(2) of this 

section shall be construed to: 

(1) Limit a hospital’s obligations with 

respect to screening and stabilizing 

treatment of an emergency medical 

condition under section 1867 of the Act; 

or 

(2) Modify any obligations under 

either State or Federal standards relating 

to the application of a prudentlayperson standard with respect to 

payment or coverage of emergency 

medical services by any managed care 

organization. 

§ 447.82 [Amended] 

■ 19. Section 447.82 is revised to read 

as follows: 

§ 447.82 Restrictions on payments to 

providers. 

(a) The plan must provide that the 

State Medicaid agency reduces the 

payment it makes to a provider by the 

amount of a beneficiary’s cost sharing 

obligation, regardless of whether the 

provider successfully collects the cost 

sharing. 

(b) Payment that is due under 

Medicaid to an Indian health care 

provider or a health care provider 

through referral under contract health 

services for directly furnishing an item 

or service to an Indian may not be 

reduced by the amount of any 

enrollment fee, premium, or similar 

charge, or any deductible, copayment, 

cost sharing, or similar charge that 

otherwise would be due. 

(c) The plan must describe how the 

State identifies for providers, ideally 

through the use of the automated 

systems, whether cost sharing for a 

specific item or service may be imposed 

on an individual beneficiary and 

whether the provider may require the 

beneficiary, as a condition for receiving 

the item or service, to pay the cost 

sharing charge. 

PART 457—ALLOTMENTS AND 

GRANTS TO STATES 

■ 20. The authority citation for part 457 

continues to read as follows: 

Authority: Section 1102 of the Social 

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

■ 21. Section 457.555 is amended by 

revising paragraphs (a)(1)(i) and (a)(2) to 

read as follows: 

§ 457.555 Maximum allowable cost sharing 

charges on targeted low-income children in 

families with income from 101 to 150 

percent of the FPL. 

(a) * * * * 

(1)(i) For Federal FY 2009, any copayment or similar charge the State 

imposes under a fee-for-service delivery 

system may not exceed the amounts 

shown in the following table: 

State payment for the service 

Maximum 

Copayment 

$15 or less .................................. $1.15 

$15.01 to $40 ............................. $2.30 

$40.01 to $80 ............................. $3.40 

$80.01 or more ........................... $5.70 

* * * * * 

(2) For Federal FY 2009, any copayment that the State imposes for 

services provided by a managed care 

organization may not exceed $5.70 per 

visit. In succeeding years, any 

copayment may not exceed this amount 

as updated each October 1 by the 

percentage increase in the medical care 

component of the CPI–U for the period 

of September to September ending in 

the preceding calendar year and then 

rounded to the next higher 5-cent 

increment. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: April 22, 2010. 

Marilyn Tavenner, 

Acting Administrator and Chief Operating 

Officer, Centers for Medicare & Medicaid 

Services. 

Approved: May 18, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–12954 Filed 5–27–10; 8:45 am] 

BILLING CODE 4120–01–P 

mstockstill on DSKH9S0YB1PROD with RULES4