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

###### Centers for Medicare & Medicaid Services (CMS)

# AGENCY:

Centers for Medicare & Medicaid Services, HHS.

# ACTION:

Notice of hearing.

# SUMMARY:

This notice announces an administrative hearing to reconsider the decision to disapprove Ohio State Plan Amendment (SPA) 98-020, on February 21, 2002, at 10:00 a.m., Chicago Regional Office Federal Building; Fifth Floor; Minnesota Room; 233 North Michigan Avenue; Chicago, Illinois 60601.

# CLOSING DATE:

Requests to participate in the hearing as a party must be received by the presiding officer by January 15, 2002.

# FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes, Office of Hearings, CMS Suite L, 2520 Lord Baltimore Drive, Baltimore, Maryland 21244-2670, Telephone: (410)-786-2055.

# SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider CMS's decision to disapprove Ohio SPA 98-020.

                    Section 1116 of the Social Security Act (the Act) and 42 CFR, part 430 establish Department procedures that provide an administrative hearing for reconsideration of a disapproval of a state plan or plan amendment. The Centers for Medicare & Medicaid Services (CMS) is required to publish a copy of the notice to a state Medicaid agency that informs the agency of the time and place of the hearing and the issues to be considered. If we subsequently notify the agency of additional issues that will be considered at the hearing, we will also publish that notice. Any individual or group that wants to participate in the hearing as a party must petition the presiding officer within 15 day after publication of this notice, in accordance with the requirements contained at 42 CFR 430.76(b)(2). Any interested person or organization that wants to participate as                     *amicus curia*                     must petition the presiding officer before the hearing begins in accordance with the requirements contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the presiding officer will notify all participants.                

The issue is whether the claiming methodology Ohio proposed for determining allowable administrative costs is consistent with the requirements of the Social Security Act (the Act) and implementing regulations, including the issue of whether the methodology would adequately document such claims. As discussed below in more detail, the disapproval was based on findings that the proposed claiming methodology would permit the development of unallowable claims for Federal financial participation (FFP) primarily because it was based on time study that did not reflect Medicaid requirements.

Ohio submitted SPA 98-020 on December 24, 1998. This amendment contains an interagency agreement between the Ohio Department of Job and Family Services and the Ohio Department of Education through which the State would claim FFP under the Medicaid program for the costs of administrative activities performed by local education agencies in the State of Ohio. The CMS was unable to approve Ohio Medicaid SPA 98-020 because the methodology that would serve as the basis for the development of Medicaid administrative claims is flawed.

                    After review of the information and materials in the December 24, 1998, SPA submission and the June 25, 2001, response to our request for additional information, CMS determined that the requirements for administrative claiming in schools were not met. The primary basis for this conclusion is that the administrative claiming methodology was based on a time study that would permit development of unallowable Medicaid claims. The time study developed as part of this methodology includes: (1) Education-related activities that are not allowed under Medicaid; (2) activities at the enhanced FFP rate, which do not meet the requirements for Skilled                           ( print page 67535)                        Professional Medical Personnel claiming; and (3) an activity code structure that does not meet the requirement to account for all the activities performed by time study participants. As a result, CMS found that SPA 98-020 did not comply with applicable Medicaid requirements, including those related to methods of administration under section 1902(a)(4) of the Act and implementing CMS regulations.                

The CMS found that the flawed methodology means that the claim which would be authorized by SPA 98-020 are not reasonable and necessary for the proper and efficient administration of the State plan. This conclusion is based on the CMS review of the proposed activity code definitions, sampling methodology, documentation requirements, interagency agreement, and indirect cost rate. Therefore, after consulting with the Secretary as required by Federal regulation, CMS informed Ohio of its decision to disapprove this amendment.

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

Section 1116 of the Social Security Act

(42 U.S.C. section 1316); 42 CFR section 430.18

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

Dated: December 11, 2001.

Thomas A. Scully,

Administrator, Center for Medicare & Medicaid Services.

[FR Doc. 01-32110 Filed 12-28-01; 8:45 am]

BILLING CODE 4163-18-M