Court Opinion

ID: 4071997
Source: CourtListenerOpinion
Date Created: 2016-09-30 02:29:42.496332+00
Date Added: 2024-06-11T14:27:29.069774
License: Public Domain

ACCEPTED
                                                                                 03-15-00226-CV
                                                                                         6505541
                                                                      THIRD COURT OF APPEALS
                                                                                 AUSTIN, TEXAS
                                                                            8/14/2015 2:26:54 PM
                                                                               JEFFREY D. KYLE
                                                                                          CLERK
                       CASE NO. 03-15-00226-CV

                    IN THE COURT OF APPEALS           FILED IN
                                               3rd COURT OF APPEALS
                 FOR THE THIRD JUDICIAL DISTRICT AUSTIN, TEXAS
                        AT AUSTIN, TEXAS       8/14/2015 2:26:54 PM
                                                         JEFFREY D. KYLE
              Texas Health & Human Services     Commission, Clerk
                              Appellant,
                                   v.
                             Linda Puglisi,
                               Appellee.

             On Appeal from Cause No. D-1-GN-14-000381
           53rd Judicial District Court of Travis County, Texas
              Honorable Judge Gisela D. Triana Presiding.

                      APPELLANT’S REPLY BRIEF

KEN PAXTON                         EUGENE A. CLAYBORN
Attorney General of Texas          State Bar No.: 00785767
                                   Assistant Attorney General
CHARLES E. ROY                     Deputy Chief, Administrative Law Division
First Assistant Attorney General   OFFICE OF THE ATTORNEY GENERAL OF TEXAS
                                   P.O. Box 12548, Capitol Station
JAMES E. DAVIS                     Austin, Texas 78711-2548
Deputy Attorney General for        Telephone: (512) 475-3204
Civil Litigation                   Facsimile: (512) 320-0167
                                   eugene.clayborn@texasattorneygeneral.gov
DAV ID A. TALBOT, JR.
Chief, Administrative Law          Attorneys for Texas Health and
Division                           Human Services Commission

ORAL ARGUMENT REQUESTED                                   August 14, 2015
                                               Table of Contents

Table of Contents ...................................................................................................... ii

Table of Authorities ................................................................................................. iii

I.     ARGUMENT AND AUTHORITIES ................................................................1
        A. Puglisi’s definition for covered DME is misleading. .............................1
          B.     Puglisi requires maximum assistance from her caregivers for all
                 activities of daily living. .........................................................................3
          C. Compliance with Tex. Hum. Res. Code §§ 32.04242, 32.050(b) ...........4
          D. Puglisi subverts the substantial evidence review standard. ....................6
          E.     Detgen is controlling authority regarding HHSC’s categorical
                 exclusion of mobile standers based on the availability of a cost-
                 effective alternative. ...............................................................................7
          F.     Puglisi received adequate due process. ................................................11

II.    CONCLUSION ................................................................................................11

PRAYER ..................................................................................................................12

CERTIFICATE OF COMPLIANCE .......................................................................13

CERTIFICATE OF SERVICE ..........................................................................14

APPENDICES .........................................................................................................15

                                                            ii
                                              Table of Authorities
Cases

City of El Paso v. Pub. Util. Comm’n,
  883 S.W.2d 179 (Tex. 1994) ..................................................................................6

DeSario v. Thomas,
 139 F.3d 80 (2nd Cir. 1998) ...............................................................................3, 5

Detgen ex. rel. Detgen v. Janek,
 752 F.3d 627 (5th Cir. 2014) ....................................................................... 8, 9, 10

Lavine v. Milne,
  424 U.S. (1976) ......................................................................................................6

Slekis v. Thomas,
  525 U.S. 1098 S.Ct. 864 L. Ed. 2d 767 (1998) ........................................................6

Tex. Health Facilities Comm’n v. Charter Med.-Dall.,
  665 S.W.2d 446 (Tex. 1984) ..................................................................................6

Tex. Rivers Prot. Ass’n v. Tex. Natural Res. Conservation Comm’n,
  910 S.W.2d 147 (Tex. App.—Austin 1995, writ denied) ......................................6

Univ. of Tex. Med. Sch. at Houston v. Than,
 901 S.W.2d 926 (Tex. 1995) ................................................................................11

Statutes
Texas Government Code
  § 2001.175 ............................................................................................................12

Rules

1 Tex. Admin. Code
  § 354.1039(a)(4)(D) ...............................................................................................8
  § 354.1041 ..................................................................................................... 4, 5, 6

                                                            iii
Tex. Hum. Res. Code
  §§ 32.04242, .050(b) ..................................................................................... 4, 5, 6

Other Authorities
42 C.F.R.
  Part 431 Subpart E ..................................................................................................9

TMPPM
 § 2.2.14.22 ..............................................................................................................8
 § 2.2.14.26 ..........................................................................................................8, 9
 § 2.3.1.2 ..................................................................................................................5
 § 2.3.1.3 ..................................................................................................................5

Fed. Reg.
  Vol. 76, No. 133, Tuesday, July 12, 2011, Page 41032 .........................................3

                                                             iv
                           CASE NO. 03-15-00226-CV

                       IN THE COURT OF APPEALS
                    FOR THE THIRD JUDICIAL DISTRICT
                           AT AUSTIN, TEXAS

                  Texas Health & Human Services Commission,
                                  Appellant,
                                      v.
                                 Linda Puglisi,
                                   Appellee.

                 On Appeal from Cause No. D-1-GN-14-000381
               53rd Judicial District Court of Travis County, Texas,
                   Honorable Judge Gisela D. Triana Presiding.

                         APPELLANT’S REPLY BRIEF

TO THE HONORABLE JUDGE OF THIS COURT:

      COMES NOW the Texas Health and Human Services Commission (HHSC)

and submits Appellant’s Reply Brief.

                  I.     ARGUMENT AND AUTHORITIES

A.    Puglisi’s definition for covered DME is misleading.

      Puglisi erroneously alleges that “[a]n item of medical equipment is covered if

it meet HHSC’s definition of DME.” Br. of Appellee, p. 3. Puglisi’s definition of

covered DME, however, is derived from her fundamental misreading of the May 21,

2013 CMS letter. Br. of Appellee; App. 1. The May 21, 2013 CMS letter states

that “[a]s such, items of DME meeting the state’s definition of such coverage is to

                                         1
be provided to individuals (of any age) meeting the State’s medical necessity

criteria.” (emphasis added). Br. of Appellee; App. p. 1. This statement shows that

an item defined as DME may or may not meet the State’s definition of covered DME.

      In fact, there is no dispute about whether any of Puglisi’s requested items are

defined as DME. The facts are that the power wheel chair, the integrated standing

feature, and the power seat system are all defined as DME. Similarly, there is no

dispute about which of Puglisi’ requested items are covered. The facts are that the

power wheelchair and the power seat system are covered DME. However, the

integrated standing feature is not covered. However, the parties dispute whether

the requested items are medically necessary since the items do not facilitate any

additional MRADLs activities.

   Despite these immutable facts, Puglisi asserts that the integrated standing feature

should be covered DME solely because it satisfies the definition of DME. But the

definition of covered DME is determined by the process and procedures prescribed

in applicable statutes, rules, and policies. Appellant’s Br. App. 4, 5. In essence,

Puglisi’s improperly conflates the definition of DME and the definition of covered

DME in order to reach an erroneous conclusion. As a result, Puglisi cannot rely

solely on the definition of DME to determine whether certain DME is covered DME

or not. “There is no requirement that a state fund every medically necessary

procedure or item falling within a service it covers under its plan. To begin with,

                                          2
medical necessity and coverage are distinct concepts; a patient’s medical necessity

does not determine whether a particular item or service is covered.” DeSario v.

Thomas, 139 F.3d 80 (2nd Cir. 1998).

       In addition, the May 21, 2013 CMS letter also states that its “Notice of

Proposed Rulemaking issued July 12, 2011” include proposals that define “a medical

supply, equipment, and appliance” and also provide “that any item meeting any of

those definitions must be covered under the state plan.…”.          Br. of Appellee;

App. 1. It is true that CMS published proposed policy changes and clarifications to

certain Home Health Services, however, CMS’s proposals have not been formally

adopted.   Fed. Reg. Vol. 76, No. 133, Tuesday, July 12, 2011, Page 41032;

Appellant’s Reply Br.; App. p. 13. Regardless, nothing in the proposed changes

appears to restrict the HHSC’s authority to define the scope of coverage for Medicaid

DME.

B.     Puglisi requires maximum assistance from her caregivers for all activities
       of daily living.

       Puglisi states that “[s]he requires a custom power wheelchair for all mobility.”

Br. of Appellee, p. 5. Based on statements of Molina Healthcare’s Rehab Review,

Nurse Review, and Medical Doctor Review, however, the Hearing Officer

determined the following:

                                           3
      On or about June 4, 2013, Molina Healthcare forwarded the DME
      request to Rehab Review for a third party review for medical necessity
      of the DME requested. Rehab Review is a Rehabilitation Engineering
      and Assistive Technology Society (RESNA) certified entity contracted
      to conduct independent reviews for medical necessity of DME.

       ....

      Appellant requires maximum assistance with all activities of daily
      living including transfers. Appellant requires caregiver assistance to
      transfer in and out of her bed and wheelchair.

      Molina healthcare recommended approval of a group 3 power
      wheelchair with a stand-alone dynamic stander to meet the Appellant’s
      needs; however Appellant is unable to transfer independently and
      would require assistance from one or two caregivers to transfer to the
      dynamic stander.

A.R. at 334. In short, Puglisi needs maximum assistance from her caregivers for all

MRADLs with or without a power wheelchair, integrated standing feature, or power

seat elevation system. Therefore, a group 4 custom power wheelchair with an

integrated mobile stander is not medically necessary to correct or ameliorate

Puglisi’s disability, condition, or illness, given that her caregivers must assist her

with transfers, feeding, and dressing.

C.    Compliance with Tex. Hum. Res. Code §§ 32.04242, 32.050(b) and Tex.
      Admin. Code § 354.1041 is important.

      Puglisi states that “[i]t does not matter that ‘Texas law requires HHSC to

analyze claims submitted first under Medicare the extent allowed by law.’” Br. of

Appellee p. 12. Also, Puglisi states that this case is not about the payment of

claims.” Br. of Appellee, p. 12. Further, Puglisi states that “Medicare’s primary

                                          4
payor status does not dictate any particular order for securing prior authorization of

the recommended wheelchair.” Br. of Appellee, p. 12. However, compliance with

Tex. Hum. Res. Code §§ 32.04242, .050(b) and 1 Tex. Admin. Code § 354.1041 is

important.     To a state agency, compliance with the law cannot be so easily

disregarded.

      On the one hand, absent a clear delegation of authority, it is nonsensical to

expect a state Medicaid program to provide prior authorizations of DME for a

Federal Medicare program and vice versa. On the other hand, TMPPM § 2.3.1.2

(Benefits     for   Medicare/Medicaid    Clients)   provides    that   “[f]or   eligible

Medicare/Medicaid clients, Medicare is the primary coinsurance and providers must

contact Medicare first for prior authorization and reimbursement.” (emphasis

added). Appendix 14. Further, TMPPM § 2.3.1.3 (Medicare and Medicaid Prior

Authorization) provides that “[f]or MQMB clients, do not submit prior

authorization requests to TMHP if the Medicare denial reason states ‘not medically

necessary.’     Medicaid only will consider prior authorization requests if the

Medicare denial states ‘not a benefit of Medicare.’”           Appellant’s Reply Br.;

Appendix 14. Hence, Puglisi’s MQMB status is a significant intervening event that

renders the underlying issues of this suit unfit for judicial review because applicable

law and policy requires her to present her prior authorization to Medicare before

presenting her request to HHSC. See DeSario v. Thomas, 139 F.3d 80, 96 (2nd Cir.

                                          5
1998), cert. granted, judgment vacated, Slekis v. Thomas, 525 U.S. 1098, 119 S. Ct.
864, 142 L. Ed. 2d 767 (1998) (“In general, the ‘normal assumption [is] that an

applicant is not entitled to benefits unless and until he proves his eligibility.’”

(Quoting Lavine v. Milne, 424 U.S. (1976)). Therefore, compliance with Tex.

Hum. Res. Code §§ 32.04242, .050(b) and 1 Tex. Admin. Code § 354.1041 is an

essential prerequisite to seeking prior authorization or reimbursement from

Medicaid.

D.    Puglisi subverts the substantial evidence review standard.

      The trial court erred by ignoring the substantial evidence review standard and

the proper burden of proof. In this suit for judicial review, Puglisi has the burden

of proof. “[F]indings, inferences, conclusions, and decisions of an administrative

agency are presumed to be supported by substantial evidence, and the burden is on

the contestant to prove otherwise.” City of El Paso v. Pub. Util. Comm’n, 883
S.W.2d 179, 185 (Tex. 1994) (citing Tex. Health Facilities Comm’n v. Charter

Med.-Dall., 665 S.W.2d 446, 452–53 (Tex. 1984)). As long as a properly supported

finding given in the order supports an agency’s action, the court will uphold the

action despite the existence of other findings that are irrelevant or unsupported by

the record. Tex. Rivers Prot. Ass’n v. Tex. Natural Res. Conservation Comm’n, 910
S.W.2d 147, 155 (Tex. App.—Austin 1995, writ denied).

                                         6
      Puglisi makes several statements throughout her brief that demonstrate her

failure to meet the burden of proof under the substantial evidence test. Br. of

Appellee, p. 24-34. In one example, Puglisi states that “[t]he bottom line is that the

administrative record contains no credible evidence refuting the professional

opinions of Linda’s medical providers.” Br. of Appellee, p. 31. This statement,

however, follows several pages of argument dedicated to discounting the evidence

in the record that supports the findings and conclusions contained in the orders

upholding Molina’s decision. The bottom line is that there is more than a mere

scintilla of evidence in the record to support the Hearing Officer’s and the Reviewing

Attorney’s findings and conclusions. Appellant’s Br. p. 16-44.

E.    Detgen is controlling authority regarding HHSC’s categorical exclusion
      of mobile standers based on the availability of a cost-effective alternative.

      Puglisi asserts that “TMHP’s policy excluding wheelchair standing features

from Medicaid coverage …, is an invalid basis for HHSC’s decision” and that

“TMHP’s exclusion of wheelchair standing features meets all of the criteria of a

‘rule’ identified in the Texas Administrative Procedures Act (APA), but was not

promulgated in compliance with the Act.” Br. of Appellee, p. 40-41. These

assertions fail because HHSC is not prohibited from categorically excluding certain

types of DME and Puglisi cannot claim a private right to DME that has been

categorically excluded from Medicaid coverage.

                                          7
      In fact, Puglisi fails to assert a private right to a mobile stander in her legal

analysis alleging how TMPPM § 2.2.14.26 is a rule. The most that Puglisi could

possibly claim is a right to exceptional circumstances review because mobile

standers are categorically excluded from Medicaid coverage.                Exceptional

circumstances review applies to unlisted DME. See 1 TAC § 354.1039(a)(4)(D).

However, Puglisi never requested exceptional circumstances review.

      In this case, TMPPM § 2.2.14.22 provides a less costly, yet equally effective

alternative to the categorically excluded mobile power stander. Appellant’s Br.

App. 5, DM-78. As to the reasonableness of HHSC’s categorical exclusion of

certain DME (i.e. ceiling lifts), the Fifth Circuit recently stated the following:

      It is hardly unreasonable for a state to exclude—even categorically—
      any medical device whose purpose can be served by a more cost-
      effective method. Not only has Texas not violated the plain language
      of the statute, but also the reasonableness standard in the text likely
      supports its imposition of reasonable categorical exclusions. The
      plaintiffs’ notion that it would be unreasonable for a state not to provide
      particular equipment within its definition of DME sounds plausible,
      except that the state can choose by definition to exclude ceiling lifts.
      FN6. Moreover, a categorical exclusion based on the availability of
      cost-effective alternatives cannot mean that the state has denied a
      medically necessary device, even if the statute did impose such a
      standard.

Detgen ex. rel. Detgen v. Janek, 752 F.3d 627, 632 (5th Cir. 2014) (Medicaid

recipient brought suit against HHSC challenging the denial of their request for the

installation of ceiling lifts to transfer the recipient to and from bed, bath, etc.).

Appellant’s Br. App. 8.
                                           8
      Nevertheless, Puglisi asserts that Detgen is “wrong.” Br. of App. p. 36.

TMPPM § 2.2.14.26, however, does not violate federal and state Medicaid

requirements because “[a] State may develop a list of pre-approved items of ME

[Medical Equipment] as an administrative convenience because such a list

eliminates the need to administer an extensive application process for each ME

request submitted.” (emphasis added).        CMS letter dated September 4, 1998;

Appellant’s Brief; Appendix 6. Moreover, CMS guidance provides that:

       . . . [A] State will be in compliance with federal Medicaid requirements
      only if, with respect to an individual applicant’s request for an item of
      ME, the following conditions are met:

      •      The process is timely and employs reasonable and specific
      criteria by which an individual item of ME will be judged for coverage
      under the State’s home health services benefit. These criteria must be
      sufficiently specific to permit a determination of whether an item of
      ME that does not appear on a State’s pre-approved list has been
      arbitrarily excluded from coverage based solely on a diagnosis, type of
      illness, or condition.

      •     The State’s process and criteria, as well as the State’s pre-
      approved list of items, are made available to beneficiaries and the
      public.

      •     Beneficiaries are informed of their right under 42 C.F.R. Part 431
      Subpart E, to a fair hearing to determine whether an adverse decision is
      contrary to the law cited above.

CMS letter dated September 4, 1998; Appellant’s Br. App. 6. In addition to the

federal guidance described in the DeSario Letter, Detgen v. Janek provides that:

“[t]he rule the court employs is this: where a State has explicit guidance from CMS
                                         9
that FFP will not be available for an item of DME, that State acts reasonably when

it categorically excludes such an item from coverage in its Medicaid policies.”

Detgen ex. rel. Detgen v. Janek, 945 F. Supp. 2d 746, 759 (N. D. Tex. 2013) (“The

court finds that Texas Medicaid’s policy categorically excluding ceiling lifts from

coverage does not conflict with the Medicaid Act’s ‘reasonable standards’

requirement, the ‘amount, duration, and scope’ regulation, or the DeSario letter’s

guidance.”). Appellant’s Br. App. p. 12. Furthermore, recent CMS guidance

provides that “items of DME meeting the state’s definition of coverage is to be

provided to individuals (of any age) meeting the State’s medical necessity criteria.”

CMS letter dated May 21, 2013 (“This means that medically necessary ceiling lifts

will be reimbursed by CMS as part of the Texas home health benefit if these lifts

meet the state’s definition of DME [coverage].” (emphasis added). A.R. at 303.

Furthermore, Detgen states that”

      It would be perfectly consistent with federal law and this letter to adopt
      a list of pre-approved devices for convenience and a list of categorical
      exclusions if based on reasonable grounds, such as the availability of
      more cost-effective alternatives, and to permit a beneficiary to
      demonstrate need for an item on neither list. In short nothing in the
      DeSario letter prohibits categorical exclusions, which might even be
      eminently reasonable and thus consistent with the statutory language.

Detgen ex. rel. Detgen v. Janek, 752 F.3d 627, 633 (5th Cir. 2014); Appellant’s Br.

App. p. 8. HHSC’s categorical exclusion of mobile standers, therefore, is consistent

with state and federal statutes, rules, and guidance.

                                          10
F.    Puglisi received adequate due process.

      After Puglisi requested the DME, Molina reviewed, analyzed, and denied the

request.   HHSC reviewed and affirmed Molina’s decision.             The trial court

judicially reviewed HHSC’s decision. Now this Court is judicially reviewing the

trial court’s decision. Nevertheless, Puglisi is alleging a denial of due process even

though she has participated in hearings at multiple levels of administrative and

judicial review. Her experiences before the administrative and judicial tribunals

define adequate due process. If this Court concludes that Puglisi is entitled to more

due process, the clear solution is to remand this case back to Molina and begin due

process anew. See Univ. of Tex. Med. Sch. at Houston v. Than, 901 S.W.2d 926

(Tex. 1995) (“In general, the remedy for a denial of due process is due process.”).

                              II.    CONCLUSION

      This case should have been dismissed for lack of subject matter jurisdiction

or remanded to the agency to take and adjudicate additional evidence regarding

Puglisi’s dual eligibility status.   Regardless, substantial evidence supports the

Hearing Officer and Reviewing Attorney findings and conclusions. Moreover,

Molina, the Hearing Officer, and the Reviewing Attorney properly interpreted and

applied agency rules, policies, and procedures. In the final analysis, Puglisi has

received all the process that she was due.

                                         11
                                      PRAYER

      WHEREFORE, PREMISES CONSIDERED, Appellant respectfully asks that

this Court: a) reverse the trial court and dismiss this suit for lack of subject matter

jurisdiction; b) reverse the trial court and render judgment in favor of HHSC because

Molina Healthcare’s and HHSC’s decisions are supported by substantial evidence;

or c) reverse the trial court and remand the case to Molina Healthcare and HHSC to

take additional evidence pursuant to Texas Government Code § 2001.175, to allow

Puglisi the opportunity to seek prior authorization from Medicare, and to allow

Puglisi the opportunity to request exceptional circumstances review.

                              Respectfully Submitted,

                              KEN PAXTON
                              Attorney General of Texas

                              CHARLES E. ROY
                              First Assistant Attorney General

                              JAMES E. DAVIS
                              Deputy Attorney General for Litigation

                              DAV ID A. TALBOT, JR.
                              Chief, Administrative Law Division

                                          12
                            /s/ Eugene A. Clayborn
                            EUGENE A. CLAYBORN
                            State Bar No.: 00785767
                            Assistant Attorney General
                            Deputy Chief, Administrative Law Division
                            O FFICE OF THE A TTORNEY G ENERAL OF T EXAS
                            P.O. Box 12548, Capitol Station
                            Austin, Texas 78711-2548
                            Telephone: (512) 475-3204
                            Facsimile: (512) 320-0167
                            eugene.clayborn@ texasattorneygeneral.gov

                            Attorneys for Texas Health & Human Services
                            Commission

                     CERTIFICATE OF COMPLIANCE

I certify that the reply brief submitted complies with Texas Rule of Appellate
Procedure 9 and the word count of this document is 2,621. The word processing
software used to prepare this filing and calculate the word count of the document
was Microsoft Word 97-2003.

Dated: August 14, 2015

                               /s/ Eugene A. Clayborn
                               EUGENE A. CLAYBORN
                               Assistant Attorney General

                                       13
                      CERTIFICATE OF SERVICE

      I hereby certify that a true and correct copy of the foregoing document has
been served on this the 14th day of August, 2015 on the following:

Maureen O’Connell                           Via: Electronic Service
State Bar No.: 00795949
S OUTHERN D ISABILITY L AW C ENTER
1307 Payne Avenue
Austin, Texas 78757
moconnell458@gmail.com
Attorneys for Appellee

                               /s/ Eugene A. Clayborn
                               EUGENE A. CLAYBORN
                               Assistant Attorney General

                                       14
                        CASE NO. 03-15-00226-CV
    ___________________________________________________________
                      IN THE COURT OF APPEALS
                  FOR THE THIRD JUDICIAL DISTRICT
                            AT AUSTIN, TEXAS
   ____________________________________________________________
               Texas Health & Human Services Commission,
                                   Appellant,
                                      v.
                                 Linda Puglisi,
                                   Appellee.
   ____________________________________________________________
               On Appeal from Cause No. D-1-GN-14-000381
             53rd Judicial District Court of Travis County, Texas
                Honorable Judge Gisela D. Triana Presiding.
   ____________________________________________________________
                      APPELLANT’S REPLY BRIEF
 _________________________________________________________________

                            APPENDICES

No. 13.        Fed. Reg. Proposed Rules

No. 14.        TMPPM 2.3

                                  15
DEPARTMENT OF ÉIEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard, Mail Stop S2-26-12
Baltimore, MD 21244-1850                                         øAñfverÊaMDg|ø

Center for Medicaid, CHIP, and Survey & Certification

CMCS Informational Bulletin

DATE:             July 13, 2011

FROM:             Cindy Mann, Director
                  Center for Medicaid, CHIP and Survey and & Certification (CMCS)

SUBJECT:          Updates on Medicaid/CHIP

This Informational Bulletin covers several important topics of interest to States:
    o New Initiative for Medicare-Medicaid Enrollees;
    o Proposed Regulations Regarding Affordable Insurance Exchanges
    o Home Health Services NPRM;
    o PRA Package for Medicaid and CHIP State Plan, Waiver, and Program Submissions;
    o CMS Second National Background Check Program Conference;
    o Inclusion of Training Costs in Rate Development:
    o Pharmacy Pricing Survey

New Initiative for Medicare-Medicaid Enrollees

CMCS and the Office of Medicare-Medicaid Coordination is pleased to announce the release of
a State Medicaid Director's letter providing guidance on opportunities to test new financial
models designed to help States improve quality and share in the lower costs that result from
better coordinatingcare for individuals enrolled in both Medicare and Medicaid (Medicare-
Medicaid enrollees). A longstanding barrier to coordinating care for Medicare-Medicaid
enrollees has been the financial misalignment between Medicare and Medicaid. To address this,
and in response to State requests CMS is eager to collaborate with States to test two models to
better align the financing of these two programs and integrate primary, acute, behavioral health
and long term services and supports for their Medicare-Medicaid enrollees. We will be setting
up calls with States to review these opportunities.

For more information, please visit:

f
Proposed Regulations Regard in g Affo rdable Insurance Exchan ges
On July ll,20Il, CMS issued the a proposed rule setting forth a framework to assist States in
building Affordabte Insurance Exchanges, state-based competitive marketplaces where
individuals and small businesses will be able to purchase affordable private health insurance.
Starting in2014, Exchanges will make it easy for individuals and small businesses to compare
health plans, get answers to questions, find out if they are eligible for tax credits for private

                                                                               Appendix - 13
2lPage- Inforrnational Bulletin
insurance or health programs like Medicaid and the Children's Health fnsurance Program
(CHIP), and enroll in a health plan that meets their needs.
The proposed rules offer States guidance and options on how to structure their Exchanges in two
key areas:
  .     Setting standards for establishing Exchanges, setting up a Small Business Health
        Optioñs Program (SHOP), performing the basic functions of an Exchange, and certiffing
        health plans for participation in the Exchange, and;
   .    Ensuring premium stability for plans and enrollees in the Exchange, especially in the
        early yeàri as new people come in to Exchanges to shop for health insurance.

These proposed rules set minimum standards for Exchanges, give States the flexibility they need
to desiþ Èxchanges that best fit their unique insurance markets, and are consistent with steps
States ñave already taken to move forward with Exchanges. The proposed rules build on over a
year,s worth of wórk with States, small businesses, consumers and health insurance plans and
ãffer Søtes substantial flexibility. For example, it allows States to decide whether their
Exchanges should be local, regional, or operated by a non-profit organization, how to select
phns tJparticipate, and whethã to partner with the Department of Health and Human Services
GIIIS) to split up the work.

To reduce duplication of effort and the administrative burden on the states, HHS also announced
that the federãl government will partner with States to make Exchange development and
operations morJeflicient. States can choose to develop an Exchange in partnership with the
féderal government or develop these systems themselves. This provides States more flexibility to
focus their resources on designing the right Exchanges for their local insurance markets.

To review the proposed rule yisi¡; http://www.ofr.gov/OFRUoload/OFRData/2011-1761O-Pl.pdf       .

The comment period closes on September 28,2011. HHS will also convene a series of regional
listening sessións and meetings tofacilitate pubic comments. Additional guidance-including
propo."ã rules related to eligibility and enrollment procedures for Exchanges and Medicaid-
will be issued in the future.

For more information on Exchanges, includingfact sheets, visit
http ://www.healthcare. gov/exchanges'

Home Health Services; Policy Changes and Clarifications Related to Home Health

On Tuesday, July 5, 2011, CMS released a Notice of Proposed Rule Making (NPRM)
                                                                                        providing
additional guidance to States on the implementation of section 6407 of the Affordable Care Act
which adds a requirement that in the course of authorizing home health services, physicians must
document the exlstence of a face-to-face encounter (including through the use of telehealth) with
the Medicaid eligible individual within specified timeframes. This proposed rule aligns Medicaid
implementation õf face-to-face encounteis with Medicare's regulatory guidance. This will
improve facilitation of services for individuals dually eligible for both programs, and make it
       for providers participating in both programs to understand the rules. This provision was
"*i..
effective ón January 1,2010, but this is a proposed rule and comments are welcome.

                                                                               Appendix - 13
3lPage- lnforrxational Bulletin
ln addition, this proposed rule clarifies that home health services, including medical supplies,
equipment and appliances may not be restricted to the home, and if medically necessary, should
be provided in any non-institutional setting in which normal life activities take place. It includes
in regulation the definition of medical supplies, equipment and appliances.

For more information and instructions on how to submit comments on this rule, please visit:
http://www.gpo.gov/fdsys/pkg/FR-201l-07-12/pdf/201l-16937.pdf. All comments are due by
September 12,2011.

PRA Package for Medicaid and CHIP State Plan, Waiver, and Program Submissions

On Friday, July 1, 2011, CMS published a generic Paperwork Reduction Act (PRA) package in
the Federal Register that includes forms necessary for CMCS to conduct ongoing business with
our State partners to continue the implementation of the Affordable Carc Act provisions related
to Medicaid and the CHIP. These forms include State plan amendments, waiver, demonstration
and reporting templates that will be developed over the 3-year approval period.

This PRA package provides support to both States and CMS by:

   o   Developing streamlined submissions for States to implement health reform initiatives in
       Medicaid and CHIP;
   o   Enhancing collaboration and partnerships by documenting CMS policy for States to use
       as they are developing program changes; and
   o   Improving the efficiency of administration by creating a common and user friendly
       understanding of the information needed by CMS to process requests for State plan
       amendments, waiver, demonstrations and reporting.

For more information and instructions on how to submit comments on this rule, please visit:
http://www.qÞo.sov/fdsys/pke/FR-201 1-07-01/pdf/201 I -16600.pdf. Comments and
recommendations must be submitted by August 30,2011.

Encouraging States to Attend the CMS Second National Bacþround Check Program
Conference

We are pleased to announce that the second CMS National Background Check Program (NBCP)
Conference is scheduled for2.5 days, September 13-15,2011attheCrownePlazaHotel, St.
Louis-Downtown located at200 N. Fourth Street, St. Louis, Missouri. This conference will
provide education to NBCP gtantee States as well as non-grantee States interested in establishing
or improving their background check programs for long term care providers and facilities.
Although grantee States are required to use grant funds to send at least three attendees to each of
the NBCP conferences, we also hope States who have not yet received a grantwill attend.

The NBCP conference is part of the technical assistance efforts CMS is providing to States in
support of section 6201 of the Affordable Care Act of 20l},which directs the Secretary ofthe
Department of Health and Huma¡r Services to establish a nationwide program to identiff efficient

                                                                                Appendix - 13
4lPage- Inforlnational Bulletin
eflective, and economical procedures for long term care facilities and providers to conduct
background checks on a statewide basis on all prospective direct patient access employees. The
NBCP will enhance the safety of residents and clients of long term care providers by
disqualiffing certain offenders from positions that would bring them into contact with vulnerable
populations served in long term care settings.

Non-grantee States interested in attending the second CMS NBCP Conference at their own
expense, should contact Lisa Byrd, CMS Training Coordinator, via email at
lisa.byrd@cms.hhs.gov by Monday, August l,20ll for registration assistance. If you are a
non-grantee State with travel funding issues that may prohibit attendance at this conference,
please contact the Background Check Team at Background_Checks@cms.hhs.gov to discuss the
potential for CMS assistance. For all other questions related to conference registration, please
contact lisa.byrd@cms.hhs. gov.

Inclusion of Training Costs in Rate Development

In light of questions we have received, CMCS is providing this information regarding the
mechanism by whioh provider-related training costs may be considered in the development of
the rate of payment for medical services. Questions have come up particularly in the area of
home health services.

Medicaid statute and regulations (sectio n 1902 of the Social Security Act and 42 Code of Federal
Regulations 430 and 447) allow reimbursement for covered services delivered by a qualified
p.ovider to an eligible beneficiary. Costs associated with requirements that are prerequisite to
being a qualified Medicaid provider are not reimbursable by Medicaid. However, costs
associated with maintaining status as a qualified provider may be included in determining the
rate for services. Specifically, if as part of its provider qualification requirements, a State
requires a provider to acquire a certain minimum number of hours of specified types of
continuing education (CE) each period (annually or quarterly, for example), the State may
recognize such CE expenses as a cost to the provider of doing business and may consider such
costJ in developing the rate paid for the service. The cost of CE may only be included as part of
the rate paid for the service and may not be claimed separately by the Medicaid agency as an
administrative expense.

For example, a State's provider qualification standards could require the direct service provider
to: 1) have a high school diploma (or its equivalent) and be at least 18 years of age, and2)
complete a certain number of specified CE hours or credits during the calendar or fiscal year (or
quarter¡ in order to maintain eligible provider status. The State could not pay, or include in its
rates, costs for individuals to obtain a high school diploma or its equivalent. However, the State
may include the estimated costs of meeting ongoing CE requirements in determining the rate
paid for the service. If the provider fails to acquire the minimum required number of CE hours
òr credits, the provider would no longer be qualified, and no Medicaid payment could be made
either for services or for the CE that would be needed as a prerequisite to regaining status as a
qualified provider.

                                                                               Appendix - 13
5lPage- lnf527 U.S. 581 (1ssg).
iection 1861(aa)(5) of the Act), under      specific NPP may perform the face-to-        In attachments to that letter, we set forth
the supervision of the physician, may       face encounter with the individual in        specific policy clarifications to allow
conduct the face-to-face encounters         lieu of the physician, and inform the        States more flexibility to serve
prior to the start of home health           physiciar making the initial order for       individuals with disabilities in various
services.                                                                                ways and in different settings.
                                            service under tìe Medicaid home health
  Section 6407(b) of the Affordable Care                                                     Attachment 3-g of the letter:
Act amended section rs3a(a)(1L)(B) of       benefit.
                                                                                         "Prohibition of Homebound
the Act to require documentation of a          Consistent with that view, in the
                                                                                         Requirements in Home Health" clarified
similar face-to-face encounter with a       proposed regulation, we would provide        that the use of a "homebound"
physician or specific NPPs by a             that the physician must document the         requirement under the Medicaid home
physician ordering durable medical          face-to-face encounter regardless of         health benefit violates Federal
equipment (DlvIE). The NPPs autlorized      whether the physician himself or herself     regulatory requirements at S 440.230(c)
to conduct a face-to-face encounter on       or one of tÏe permitted NPPs performed      and S 440.240(b). These requirements
behalf of a physician are the same for      tlre face-to-face encounter. The timing of   provide that mandatory benefits must be
this provision as for the provision         this face-to-face encounter is specified     sufficient in amount, duration and
described above, with one exception.         as being within the 6-month period           scope to reasonabìy achieve their
We interpret sections 64o7(b) and           preceding the written order for home         purpose, may not be arbitrarily denied
6407(d) of the Affordable Care Act to       health services, or other reasonable          or reduced in scope based on diagnosis,
prohibit certified nurse-midwives from                                                   type ofilÌness, or condition, and that
                                            timeframe specified by the Secretary.
conducting the face-to-face encounter
                                                Similarly, in implementing the            the same amount, duration and scope
prior to the physician ordering DME.
                                            requirements under section 6407(b) of         must be available to any individual
                                             the Affordable Care Act, relating to
                                                                                         within the group of categoricalÌy needy
                                            DME, we take into account existing
                                                                                          individuals and within any group of
                                                                                          medically needy individuals. In the
                                            Medicaid regulatory requirements under
                                                                                          attachment, we stated that the
specified by the Secretary. This            S 440.70 requiring physician orders.
                                                                                          restriction of home health services to
provision also maintains the role of the    Because DME is not a term used in
physician in the ¿ictual ordering of DME.                                                 individuals who are homebound to the
                                            Medicaid in the same manner as in             exclusion of other individuals in need
C. Application of Home Health Face-to-      Medicare, we use the Medicaid term            of these services ignores the reality that
Face Requirements to Medicaid               "medical supplies, equipment and              individuals with disabilities can and do
                                            appliances" or the shortened version          live and function in the community. We
   Section 6407(d) ofthe Affordable Care    "medical equipment." The NPPs
Act provides that the requirements for                                                    further noted that developments in
                                            authorized to conduct a face-to-face          technology and service delivery made it
face-to-face encounters in the provisions
                                            encounter on behalf of a physician are        possible for individuals with even the
described above "shall apply in the case
                                            the same for this provision as for the        most severe disabilities to participate in
of physicians making certifications for
home health services under title XIX of
                                            provision described above, with one           a wide variety of activities in the
the Social Security Act in the same         exception. Certified nurse-midwives are       community with appropriate supports.
manner and to the same extent as such       not permitted to conduct the face-to-face     We also expressed the importance of
requirements apply in the case of           encounter prior to the physician              ensuring that Medicaid is available to
physicians making such certifications       ordering medical equipment. Therefore,        provide medically necessary home
under title XVIII of such Act." The         we are proposing to amend the                 health services to inclividuals in need of
purpose of this regulation is to            Medicaid regulations at $ 440.70 to           those services who are not homebound
implement that statutory directive.         incorporate both the general home              and continue to be an important part of
   In implementing the face-to-face         health and the medical equipment face-         efforts to offer individuals with
encounter requirements of section 6407      to-face requirements.                          disabilities services in the most

                                                                                                   Appendix - 13
47034               Federal Register/Vol. ZO, No. 133/Tuesday, July 1'2, 2O1'1'lProposed Rules

integrated setting appropriate to their      appliances under the home health            tìat  a State could use such lists or
needs, in accordance with the ADA.           benefit, other than the language            presumptions, but must provide
   We are clarifying in this rule that       discussed in the prior paragraph. States    individuals the opportunity to rebut the
Medicaid home health services may not        have adopted reasonable definitions of      list or presumption with a process that
be limited to services furnished in the      those terms, for exampìe, based on the      employs reasonable and specific criteria
home. This policy reflects prior court       Medicare definition. But in the absence     to assess coverage for an item based on
cases on the subject. In Skubel v.           of a generalìy applicable definition of     individual medical needs, and
FuoroLi, 113 F.sd 330 (2d. Ctu. 1997) the    the term, there has been confusion as to    determine whether the list or
court found that the Medicaid statute        the oroner scooe of the benefit.            presumption is based on an arbitrary
did not address the site of care for the        We bälieve that a consistent approach    exclusion based on diagnosis, type of
mandatory home health benefit. The           to categorizing home health medical         illness, o¡ condition. We have not
court found that the State could not         supplies, equipment, and appliances         proposed any language to reflect this
limit coverage of home health sewices        will ensure beneficiaries are receiving     policy in part because the principles at
to those provided at the individual's        needed items and provide clear and          issue are not specific to home health
residence. In 1990, the same court ruled     consistent guidance to States to ensure     medical equipment. We invite comment
invalid an interpretation that limited the   the use of the appropriate benefit          on this issue.
provision ofprivate duty nursing                                     king this             In addition, in the May 5, 2010
services to an individual's residence'                               criteria defining   Federal Register (75 FR 24437), we
The case, Detselv. Sullivon,895 F.2d 58                                quiPment, and     issued the "Medicare and Medicaid
(2d Cir.1990), involved children             appìiances, to better align with the        Programs: Changes in Provider and
suffering from severe medical                Medicare program's definition of            Supplier Enrollment, Ordering and
conditions. Following the Delse.l case,      durable medical equipment found at          Referring, and Documentation
CMS, then the Health Care Financing           541,4.202. We propose that supplies are
Administration, ultimately adopted the       defined as "health care related items
court's standard and issued nationwide       that are consumable or disposable, or
guidance eliminating the at-home             cannot witÏstand repeated use by more       we have not incorporated changes to the
restriction on private duty nursing, To      than one individual." We propose that       scope of providers that may order
date, we have not issued similar             medical equipment and appliances are        medical supplies, equipment and
guidance requiring nationwide adoption       "items that are primarily and               appliances in the Medicaid program, as
of the Skubel ruling. We are using our       customarily used to serve a medical         section 6405(a) ofthe Affordable Care
authority through tìis rulemaking            purpose, generally not useful to an         Act was not applicable to Title XIX, we
opportunity to do so.                        individual in the absence of an illness     are specifically soliciting comments
                                             or injury, can withstand repeated use,      through this rule on the merits of doing
2. Clarification of the Definition of        and can be reusabìe or removable."
Medical Supplies, Equipment and                 We believe these standard definitions
Appliances                                   will ensure that such items will be         IL Provisions ofthe Proposed
 An important component of the               available to all who are entitled to the    Regulations
Medicaid home health benefit is              home health benefit, and not restricted
                                                                                           Please note that although the
medical supplies, equipment and              to individuaÌs eligible for targeted
                                                                                         Affordable Care Act uses the term
appliances, under S 447.70(b)(3). The        benefits through home and community-
                                                                                         "individual" to refer to the Medicaid
cuirent wording of the regulation does       based services (HCBS) waivers or the
                                                                                         benefi ciary, throughout this proposed
not further define these terms, except to    section 1915(i) HCBS State Plan option,
                                                                                         rule we have used "recipient" to mirror
indicate that these items should be          Items that meet the criteria for coverage
                                                                                         the regulation text in the current
"suitable for use in tle home."              under the home health benefit must be
Although this phrase could be read to        covered as such. States will not be
                                                                                         Medicaid home health regulations. At
refer only to the type of items included     precluded from covering items meeting       this time, we do not intend to modify
                                                                                         this term.
in the benefit, it has been susceptible to   this definition through a section 1915(c)
reading as a prohibition on use of           HCBS waiver service, such as a home            For the reasons discussed above, we
covered items outside the home' We are       modification, or through a section          propose to modify $ 4a0.70(b)(3) to say
using this opportunity to revise that         1915(Ð State PIan option. However, the     the following: "Medical supplies,
phrase to make clear that it is not a         State must also offer those items as       equipment and appliances suitable for
limitation on the location in which           home health supplies, equipment and        use in any non-institutional setting in
items are used, but rather refers to items    appliances.                                which normal life activities take place,"
that are necessary for everyday activities                                                 In S aao.7o(b)(3)(i) and (ii), we
                                             3. Other Issues                             propose revising the current text to
and not specialized for an institutional
setting. Thus we would indicate that           We note that we are considering           define what constitutes medical
these items must be "suitable for use in     whether other clarifications to the home    supplies, equipment, and appliances.
any non-institutional setting in which       health regulations are warranted. In        We propose to indicate that supplies are
normal life activities take place." This     particular, we are considering whether      defined as "health care related items
would clarify that although States may       it would be useful to include language      that are consumable or disposable, or
continue to establish medical necessity      to reflect the policies set forth in a      cannot withstand repeated use by more
criteria to determine the authorization      September 4, 1998 letter to State           than one individual." We propose to
of these items, States may not denY          Medicaid Directors, responding in part      indicate that medical equipment and
requests for these items based on the        to a Second Circuit decision in Desario     appliances are "items that are primarily
grounds that they are for use outside of     v. Thomos, l3s F, 3d 80 (1998), about       and customarily used to serve a medical
the home.                                    the use of lists or other presumptions in   purpose, generally not useful to an
   Current Medicaid regulations do not       determining coverage of items under the     individual in the absence of an illness
 contain any specific definition of          home health benefit for medical             or injury, can withstand repeated use,
medical supplies, equipment, and             equipment. In that letter, we indicated     and can be reusable or removable." We

                                                                                                  Appendix - 13
                     Federal Register/Vol. zo, No. 133/Tuesday,                    Iuly   1'2, 2o1'1'lProposed Rules               41035

are specifically soliciting comment on        achieve this goal, the encounter must              working in collaboration with the
these nrooosed orovisions.                    occur close enough to the start of home            physician in accordance with State law,
  For ihe'reasoris discussed above, we        health services to ensure that the                 or a certified nurse-midwife (as defined
propose to modify S 440.70(c), to add         clinical conditions exhibited by the               in section 186r(gg) of the Act, as
the folìowing text to the end of the          recipient during the encounter are                 authorized by State law), or a physician
current provision: "Nothing in this           related to the primary reason for the              assistant (as defined in section
section should be read to prohibit a          recipient's need for home health                   1861(aa)(5) of the Act), under the
recipient from receiving home health          services. As such, we believe that                 suoervision of the ohvsician.
setvices in any non-institutional setting     encounters would need to occur closer                 îhe statutory prôviÉion allows the
in which normal life activities take          to the start of home healtl services               permitted NPPs to perform the face-to-
place." Although the Court indicated          rather than the 6-month period initially           face encounter and inform the
ihat individuals would be limited to the      indicated, but not required by the                 physician, who documents the
same number of service hours they             Affordable Care Act.                               encounter.
would have received if the home health          Consistent with the Medicare                        Based on the same reasoning set out
se¡vices were provided only in their          program's implementation of this                   in the Medicare proposed rule,
place ofresidence, in an effort to not        provision, we propose to indicate in a             Medicare Program; Home Health
limit the ability of States to offer a more   new $ 440.70(f)(1) that for the initial            Prospective Payment System Rate
robust home health benefit, we propose        ordering of home health services, the              Update for Calendar Year 2O72i
to allow States the option to authorize       physician must document ürat a face-to-            published elsewhere in this Federal
additional services or hours of services      face encounter that is related to the              Register, for individuals admitted to
to account for this new flexibility. We       primary reason the individual requires             home health upon discharge from a
also propose to add more text at the end      home health services has occurred no               hospital or post-acute setting, we
of this provision as follows: "Additional     more than 90 days prior to the start of            propose to also allow the physician who
services or service hours may, at the         services under the Medicaid home                   attended to the individual in the
State's option, be authorized to account      health benefit. We believe that in most            hospital or post-acute setting to inform
for medical needs that arise in these         cases, a face-to-face encounter with a             the ordering physician regarding their
settings". This will incorporate both the     recipient within the 90 days prior to the          encounters with the individuaÌ to satisfy
Skubel and Olmstead decisions into the        start of home health services will                 the face-to-face encountet requirement,
provision of home health services. This       provide the physician and/or specified             much like an NPP currently can.
State flexibility would be applied to the     NPPs   with   a   current clinical                    We propose to add a new
State's Medicaid program as a whole,          presentation of the recipient's condition          S 440.70(Ð(2) to list the practitioners

and would not be a person-specific            such that the physician can accurately             that may perform the face-to-face
fl exibiÌity. State medical necessity         order home healtl services and                     encounters. These practitioners include
criteria would continue to be applied         establish an effective care plan, based            the physician aìready referenced in
uniformly to all Medicaid individuals.        on the encounter conducted by either                S aao.70(a)(z), and the following NPPs:

We note that any such additional hours        the physician or allowed NPP. We also              A nurse practitioner or clinical nurse
of service that are authorized by the         believe that a face-to-face encounter              specialist (as those terms are defined in
State would be matched at the State's         which occurs within 90 days prior to               section 186L(aa)(5) of the Act) who is
current Federal Medical Assistance            the start of services would be generally           working in collaboration with the
Percentage (FMAP).                            relevant to the reason for the recipient's         physician in accordance with State law,
   The remainder of this section pertains     need for home health services, and                 or a certified nurse-midwife (as defined
to proposed changes to S 440.70 to            therefore such a face-to-face encounter            in section 1ao1(gg) ofthe Act, as
incorporate provisions of the Affordable      would be sufficient to meet the goals of           authorized by State law), or a physician
Care Act.                                     this statutory requirement. We                     assistant (as defined in section
   Section 6407 of the Affordable Care        recognize, however, that there may be              1861(aa)(5) of the Act), under the
Act requires, as a condition for payment      circumstances when it may not be                   supervision ofthe physician, and for
for home health services,                     possible to meet this general                      recipients admitted to home health
documentation of a face-to-face               requirement, and the individual's access           immediately after an acute or post-acute
encounter prior to an order for such          to needed services must be protected.              stay, the attending acute or post-acute
services. Section 6407 of the Affordable      To account for these circumstances, we             ohvsician.
                                                                                                 ' fre aìso propose to add a new
Care Act requires that the timing of the      also propose in Saa0.70(f)(1) to allow an
face-to-face encounter for home health        opportunity to meet the face-to-face               S 440.70(Ð(3) to indicate that if an
services must occur within the 6-month        encounter requirement through an                   attending acute or post-acute physician
period preceding certification, or other      encounter with the recipient within 30             or allowed NPP conducts the face-to-
ieasonable timeframe determined by the        days after the start of home health                face visit, the attending acute or post-
Secretary. Based on the same reasoning        servtces.                                          acute physician or practitioner is
set out in the Medicare final rule,             While we recognize the necessity of              required to communicate the clinical
Medicare Program; Home Heaìth                 permitting face-to-face encounters to              findings of the face-to-face encounter to
Prospective Payment System Rate               occur after the start of services in the           the physician, in order for the physician
Update for Calendar Year 2011; Changes        instances described above, we                      to document the face-to-face encounter
in Certification Requirements for Home        emphasize that the timing of the face-to-          accordingly. This requirement is
Health Agencies and Hospices as               face encounter in normal circumstances             necessary to ensure that the physician
published in the November 1.7,2o1o,           should occur within the 90 days prior              has sufficient information to determine
Federal Register, we propose to               to the start of home health services.              the need for home health services, in the
determine a reasonable timeframe for            The statute describes NPPs who may               absence of conducting the face-to-face
the face-to-face encounter that is shorter    perform this face-to-face encounter as a           encounter himself or herself. We are
than 6 months. The statutory goal is to       nurse practitioner or clinical nurse               also proposing to specify that these
achieve greater physician accountability      specialist, as those terms are defined in          clinical findings must be reflectecl in a
in ordering home health services. To          section 1861(aa)(5) of the Act, who is             written or electronic document included

                                                                                                         Appendix - 13
41036                Federal Register/Vol. zO, No. 1.33/Tuesday,             Iuly   1'2, 2o11lProposed Rules

in the recipient's medical record             does not permit certified nurse               in a way that embraces   a person-
(whether by the physician or by the           midwives to conduct face-to-face              centered philosophy. For clarification
NPP). We are not prescribing at the           encounters required for these items.          and consistency among programs, our
Federal level the specific elements           This is reflected in our proposed             expectation regarding the person-
necessary to document the face-to-face        g   ++0,70(g)(2).                             centered philosophy is that the plan of
encounter, as that is a matter of clinical      The proposal to limit the face-to-face      care reflects what is important to the
judgment that could vary according to         requirements to items that would be           recipient and for the recipient. The
the individual circumstance. However,         subject to such requirements as durable       person-centered approach is a process,
States may choose to implement a              medical equipment under the Medicare          directed by the recipient with long-term
minimum list of required information to       progran is based on the aim of                support needs, or by another person
adeouatelv document the encounter.            maximizing consistency with the               important in the life of the recipient
   In'a nerú S 440.70(fX4)(i), we propose     Medicare program's implementation of          who the recipient has freely chosen to
to require that the physician's               section 6407 of the Affordable Care Act       direct this process, intended to identify
documentation of the face-to-face             and reducing administrative burden on         the strengths, capacities, preferences,
encounter must be either a separate and       the provider community. Thus we               needs, and desired outcomes of the
distinct area on the written order, an        would only require that, for items of         recipient. The person-centered process
addendum to the order that is easily          durable medical equipment specified by        includes the opportunity for the
identifiable and clearly titled, or a         CMS under the Medicare plogram as             recipient to choose others to serve as
separate document easily identifiable         subject to a face-to-face encounter           important contributors to the planning
and clearly titled in the recipient's         requirement, the physician must               Drocess.
medical record. The documentation             document that a face-to-face encounter        ' This process and the resulting service
must also describe how the health status      that is related to the primary reason the     plan will assist the recipient in
of the recipient at the time of the face-     individual requires the item has              achieving personally defined outcomes
to-face encounter is related to the           occurred no more than 90 days before          in the most integrated community
primary reason the recipient requires         the order is written or within 30 days        setting in a manner that reflects what is
home health services. In a new                after the order is written. We intend to      important to the recipient to ensure
S 440.7O(fl(4xii), we propose to require      issue guidance to States indicating how       delivery of services in a manner that
that the physician's documentation of         they, and providers, can access the           reflects personaì preferences and
tlre face-to-face encounter be clearly        current Medicare list of specific durable     choices, and what is important for the
titled, and state that either the physician   medical equipment items subiect to the        recipient to meet identified support
himself or herseìf, or the applicable         face-to-face requirement.                     needs.
NPP, has conducted a face-to-face                 Medical supþlies, equipment and
encounter with the recipient and              appÌiances for which a face-to-face           III. Collection   of Information
include the date of that encounter.           encounter would not be required under         Requirements
    Finally, we propose to add a new          the Medicare program as durable                 Under the Paperwork Reduction Act
S 440.70(Ð(5) to indicate that the face-to-   medical equipment, would not require a        of 1995, we are required to provide 60-
face encounters may be performed              face-to-face encounter prior to the           day notice in the Federal Register and
through the use of telehealth. We are         ordering of items under the Medicaid          solicit public comment before a
aware that many States currently make         program. These items will be of a             collection of information requirement is
use of telehealth or telemedicine in the      imaller dollar value, and at a decreased      submitted to the Office of Management
delivery of Medicaid services. Medicaid       risk for fraud, waste and abuse. We           and Budget (OMB) for review and
has issued informal guidance on the           welcome public comment on this                approval. In order to fairly evaluate
parameters of telehealth and                  anoroach.                                     whether an information collection
telemedicine that is modeled after
                                                ^
                                                  foe recognize the difficulty that some    should be approved by OMB, section
Medicare requirements. We are                 recipients with complex medical needs         3506(c)(zXA) of the Paperwork
proposing to allow States to continue         may face in participating in a face-to-       Reduction Act of 1995 requires that we
utilizing their current telehealth            face encounter (such as issues with           solicit comment on the following issues:
technologies as they apply to the             accessing transportation, obtaining              . The need for the information
implementation of this provision,             caregiver support, etc.,) particularly in     collection and its usefulness in carrying
however we are cognizant that State           rural areas. Once this rule ìs finalized,     out the proper functions of our agency.
Medicaid telehealth policies may not          we expect States to implement this               . The accuracy of our eistimate of the
align with Medicare's. We wish to             provision in a way that does not result       information collection burden.
minimize duplication and fragmentation        in barriers to service delivery, as this is      . The quality, utility, and clarity of
of services for beneficiaries who are         not the intent of the legislation. The        the information to be collected.
dually-eligible for Medicare and              statute specifically references telehealth       . Recommendations to minimize the
Medicaid, and therefore we are                as an alternative for ensuring that this      information collection burden on the
specificalìy soliciting comnent on            new requirement is implemented in a           affected public, including automated
approaches to telehealth policy that          way that protects continuity of services.     collection techniques.
would further this goal.                      We encourage States to work with the             We are soliciting public comment on
   In a new S e+0.70(d, we propose to         home health provider community to             each of these issues for the following
apply all of the requirements of              incorporate these face-to-face visits jn      sections of this document that contain
S 440.70(0 to the provision of supplies,      creative and flexible ways to account for     information collection requirements
equipment and appliances as described         individual circumstances. We are              (lCRs)r
in S aaO.70(b)(s) to the extent that a        available to provide technical assistance       Proposed S 440.70(fJ(3) and (g)(r)
face-to-face encounter would be               to States in achieving this goal.             require NPPs and attending acute or
required under the Medicare program             In keeping with a movement across all       post-acute physicians to communicate
for durable medical equipment, with           Medicaid services, we expect the plans        the clinical findings of the face{o-face
one exception from the requirements at        of care deveÌoped to address a                encounter to the ordering physician.
S 440,70(Ð. The Affordable Care Act           recipient's home health needs be done         The burden associated with these

                                                                                                       Appendix - 13
                      Federal Register/Vol. Zo, No. L33/Tuesday, July 1,2,2o1'1'lProposed Rules                                      47037

                                       d         ADDRESSES    section of this proposed rule;        similar face-to-face encounter with a
                                                 or                                                 physician or specific NPPs by a
                                       cians        2. Submit your comments to the                  physician ordering durable medicaÌ
                                       his is    Office of lnformation and Regulatory               equipment (DME). The NPPs autlorized
                                                 Affairs, Office of Management and                  to conduct a face-to-face encounter on
encounter. We estimate that there would          Budget, Attention: CMS Desk Officer,               behalf of a physician are the same for
be 1,1.43,443 initial home health                ICMS-2348-Pl Fax: (zoz) 395-6974; or               this provision as for the provision
episodes in a year based on our 2008             E -m ail : OIRA _subnt i s si on@omb. e op. gov.   described above, with one exception.
claims data. As such, the estimated                                                                 Certified nurse-midwives are not
                                                 IV. Response to Comments                           permitted to conduct the face-to-face
burden for the NPP and attending acute
or post-acute physicians documenting,               Because of the large number of public           encounter prior to tlre physician
signing, and dating the recipient's face-        comments we normally receive on                    ordering DME. The timing of tìis face-
to-face encounter would be 1'so,574              Federal Register docunents, we are not             to-face encounter is specified as being
hours for CY 2071..                              able to acknowledge or respond to them             within the 6-month period preceding
   Proposed S 440.70(f)(4) and (e)(r)            individuaìly. We will consider all                 the written order for DME, or other
would require that physicians document           comments we receive by the date and                reasonable timeframe specified by the
the existence of a face-to-face encounter        time specified in the DATES section of             Secretary. This provision also maintains
with the Medicaid eligible recipient.            this preamble, and, when we proceed                the role ofthe physician in the actual
The burden associated with these                 with a subsequent document, we will                ordering of DME.
requirements would be the time and               respond to the comments in the             B. Overall Impact
effort required for the physician to             preamble to that document.
complete and maintain this                                                                     We have examined tlre impacts of t}ris
                                                 V. Regulatory Impact Statement             rule as required by Executive Order
documentation. The ordering
physician's burden for composing the             A. Statement of Need                       12866 on Regulatory Planning and
face-to-face documentation, which                                                           Review (September 30, 1993), Executive
                                                    This regulation is necessary to         Order 13563 on Improving Regulation
would include determining how the                implement Section 6407 of the Patient
clinical findings ofthe encounter                                                           and Regulatory Review (lanuary 18,
                                                 Protection and Affordable Care Act of      2011), the Regulatory Flexibility Act
support eligibility; writing, typing, or         2009 (the Affordable Care Act), (Pub. L.
dictating the face-to-face                                                                  (RFA) (September 19, 1980, Pub. L. s6-
                                                 71.7-L48, enacted on March 23,2o1.o), as 354), section 1102(b) ofthe Social
documentation; signing, and dating the
                                                 amended by section 10605 of the            Security Act, section 2O2 of ltre
recipient's face-to-face encounter is
                                                 Affordable Care Act which affects the      Unfunded Mandates Reform Act of 1gg5
estimated at 10 minutes for each
                                                 home health benefit under both the         (March 22,ls95, Pub. L. 104--4), and
encounter. We estimate that there would
                                                 Medicare and Medicaid programs.            Executive Order 13132 on Federalism
be 1,143,443 initial home health
                                                    Section 6407(a) ofthe Affordable Care (August 4, 1999), and the Congressional
episodes in a year based on our 2008
claims data. As such, the estimated
                                                 Act (as amended by section 10605)          Review Act (s U.S.C. s04(2)).
burden for the physician documenting,            added new requirements to section             Executive Orders 12866 and 13563
                                                 r81a(a)(2XC) of the Act under Part A of    direct agencies to assess all costs and
signing, and dating the recipient's face-
to-face encounter would be 1,9O,574              the Medicare program, and section          benefits of available regulatory
hours for Cy 20L1.. We acknowledge               1835(aX2)(A) of the Act, under Part B of aìternatives and, ifregulation is
                                                 the Medicare program, that the             necessary, to select regulatorY
that this figure is inflated by the
instances in which the physician                 physician, or certain allowed              approaches that maximize net benefits
himself or herself conducted the face-to-        nonphysician practitioners (NPPs),         (including potential economic,
face encounter with the individual,              document a face-to-face encounter with     environmental, public health and safety
making this second 1O-minute                     the individual (including through the      effects, distributive impacts, and
documentation burden unnecessary.                use of telehealth, subject to the          equity). Executive Order 13563
    This notice of proposed rulemaking           requirements in section 1834(m) of the     emphasizes the importance of
also serves as the required oo-day               Act), prior to making a certification that quantifuing both costs and benefits, of
Federal Register notification for                home health services are required under reducing costs, of harmonizing rules,
aforementioned information collection            the Medicare home health benefit.          and of promoting flexibility. A
requirements. To obtain copies of the            Section 1814(aX2)(C) of the Act            regulatory impact analysis (RIA) must
supporting statement and any related             indicates that in addition to a physician, be prepared for major rules with
forms for the proposed paperwork                 a nurse practitioner or clinical nurse      economicaÌly significant effects ($100
coìlections referenced above, access             specialist (as those terms are defined in  million or more in any 1 year). We
CMS' Web sile at http://vvww.ctns.gov/           section 1861(aa)(5) of the Act) who is      tentativeìy estimate that this rulemaking
P op erworkÃe dtt cti on A ctof 1 I I 5 /PRAL/   working in collaboration with the           may be "economically significant" as
 list.osp#TopOfPoge or e-mail your               physician in accordance with State law, measured by the $100 million threshold,
request, including your address, phone            or a certified nurse-midwife (as defined   and, therefore, may be a major rule
number, OMB number, and CMS                      in section r861(gg) of the Act, as          under the Congiessionaì Review Act.
 document identifier, to                          authorized by State law), or a physician   Accordingly, we have prepared a
Po perwork@cm s.hh s.gov, or caìl the             assistant (as defined in section           Regulatory Impact Analysis which to
Reports Clearance Office at 41.0-786-             1861(aa)(5) of the Act), under the         the best of our ability presents the costs
1326.                                             supervision of the physician, may          and benefits of the rulemaking.
  If you comment on these information             conduct the face-to-face encounters          The CMS Office of the Actuary
collection and recordkeeping                      prior to the start of home health          estimated Section 6407 as having no
requirements, please do either of the             servi ces.                                 potential impact on Federal Medicaid
following:                                          Section 6407(b) of the Affordable Care costs and savings. According to the CMS
   1. Submit your comments                        Act amended section lsaa(a)(11)(B) of      Actuarial estimates, Section 6407 wouìd
eìectronically as specified in the                the Act to require documentation of a      bring an estimated $350 million in

                                                                                                            Appendix - 13
41038                Federal Register/Vol. zo, No. 133/Tuesday, July 1,2,201,1/Proposed Rules

savings to the Me&icare program from            beds. We are not preparing an analysis          A. Redesignating paragraphs (bX3)(i)
2o7o-2o14 and $azo million in savings           for section 1102(b) of the Act because        and (ii) as (bX3Xiii) and (iv),
from 2010-2019. Although this                   the Secretary has determined that this        respectively.
provision applies to Medicaid in the            proposed rule would not have a                  B. Revising the introductory text of
same manner and to the same extent as           aignificant impact on the operations of       paragraph (b)(3).
the Medicare program, no estimates              a substantial number of small rural             C. Adding new paragraphs (b[e)(i)
(costs or savings) were noted for the           hosnitals.                                    and (ii).
Medicaid program.                                  Säction 2o2 of Ihe Unfunded                  D. Adding paragraphs (cX1) and (2).
   Aìthough tliere is no quantitative data      Mandates Reform Act (UMRA) of 1995              E. Adding paragraphs (0 and (g).
to arrive at a specific dollar figure to        also requires that agencies assess              The revisions and additions read as
attribute to the additional medical             anticipated costs and benefits before         follows:
supplies, equipment, and appliances             issuing any rule that may result in
that may now be authorized in                   expenditure in any one year of $100           S440,70 Home health services,
accordance with S 440.70(b)(3), we              million in 1995 dollars, updated              *****
acknowle                                        annually for inflation. In 2011, that           (b)*     **
provision                                       threshold level is approximately $136           (s) Medical supplies, equipment, and
economic                                   te   million. This proposed rule will not          appliances suitable for use in any non-
however,                                   lt   result in an impact of $136 million or        institutional setting in which normal
in offsetting benefits to both                  more on State, local or tribal                life activities take place.
beneficiaries and State budgets,                governments, in the aggregate, or on the         (i) Supplies a¡e defined as health care
including the ability for individuals to        nrivate sector.                               related items that are consumable or
return to or enter the workforce, thereby       ' Executive Order 13132 establishes           disposable, or cannot withstand
                     oftaxpaYers, and           certain requirements that an agency           repeated use by more than one
                     on other Medicaid          must meet when it promulgates a               individual.
                    institutional care.         proposed rule (and subsequent final             (ii) Equipment and appliances are
,A,lthough there is no specific estimate        iule) that imposes substantial direct         defined as items tlat are primarily and
regarding these benefits, they                  requirement costs on State and local          customarily used to serve a medical
nonetheless should be taken into                governments, preempts State law, or           purpose, generally not useful to an
ac                                              otherwise has Federalism implications.        individual in the absence of an illness
co                                              Since this regulation does not impose         or injury, can witlstand repeated use,
co                                              any costs on State or local govemments,                be reusable or removable.
                       the various              the requirements of Executive Order           ïU "i"
                      the RIA.                  13132 are not applicable,                       (c)* *    *
                      agencies to analYze                                                       (1) Nothing in this section shouìd be
                     y relief for small         C. Conclusion
                                                                                              read to prohibit a recipient from
                      a significant imPact         We tentatively estimate that this rule     receiving home health services in any
on a substantial number of small                may be "economically significant" as          non-institutional setting in which
entities. For purposes of the RFA, small        meàsured by the $100 million threshold        normal life activities take place.
entities include small businesses,              as set forth by Executive Order 12866,          (z) Additional services or service
nonprofit organizations, and small              as well as the Congressional Review           hours may, at the State's option, be
                                                Act. The analysis above provides our          authorized to account for medical needs
                                                initial Regulatory Impact Analysis. We        tlrat arise in*these settings.
                                                have not prepared an analysis for the
                                                RFA, section 1102(b) of the Act, section        (fl No payment may be made for
                                                 2o2 of t]ne UMRA, and Executive Order
                                                                                              se¡vices referenced in paragraphs (b)(r),
1 year. For details, see the Small              13132 because tlre provisions are not         (z), and (4) of this section, unless the
Business Administration's final rule that       imoacted bv this rule.
set forth size standards for healtl care           Ii accordänce with the provisions of       physician referenced in paragraph (a)(2)
                                                                                              of this section documents that there was
industries, (65 FR 69432, November 17,          Executive O¡der 12866, this regulation
                                                                                              a face-to-face   encounter with the
2000). IndividuaÌs and States are not           was reviewed by the Office of
included in the definition of a small           Mãnagement and Budget.                        recipient that meets the following
entity. We are not preparing an iuralysis                                                     requirements:
                                                List ofSubjects in 42 CFR Part 44o              (1) For the initiation of services, the
for the RFA because the Secretary has
determined that this proposed rule                Grant programs-health, Medicaid.            face-to-face encounter must be related to
would not have a significant economic             For the reasons set forth in the            the primary reâson the recipient
impact on a substantial number of small         preamble, the Centers for Medicare &          requires home health services and must
entities,                                       Medicaid Servíces proposes to amend           occur within the 90 days prior to or
   In addition, section 1102(b) ofthe           42 CFR chapter IV as set fortl below:         within the 30 days after the start of the
Social Security Act requires us to                                                            servlces.
prepare a regulatory impact analysis if         PART 440-5ERVICES: GENERAL                      (2) The face-to-face encounter may be
a rule may have a significant impact on         PROVISIONS                                    conducted by one of the following
the operations of a substantial number                                                        practitioners:
                                                  1. The authority citation for part 440        (i) The physician referenced in
of small rural hospitals. This analysis         continues to read as follows:
must conform to the provisions of                                                             paragraph (a)(2) ofthis section;
section 603 of the RFA. For purposes of           Authority: Sec.1102 ofthe Social Security     (ii) A nurse practitioner or clinical
                                                Act (42 u.s.c. 1302).                         nurse specialist, as those terms are
section "11o2(b) of the Act, we define a
small rural hospital as a hospital that is                                                    defined in section 1s61(aa)(5) ofthe
                                                Subpart A-Definitions                         Act, working in collaboration with the
located outside of a Metropolitan
Statisticaì Area and has fewer than 100            2. Section 44O.7O is amended    bY-        physician described in paragraph (a) of

                                                                                                         Appendix - 13
                    Federal Register/Vol. 76, No. 133/Tuesday, July 1,2, 2o1'1'lProposed Rules                                   41039

this section, in accordance with State      the associated home health'services, the      equipment under the Medicare program,
law;                                        physician responsible for ordering the        unless the physician referenced in
   (iii) A certified nurse midwife, as      services must:                                paragraph (a)(2) ofthis section
defined in section 1861(gg) of the Act,        (i) Document the face-to-face              documents a face-to-face encounter with
as authorized by State law;                 encounter as a separate and distinct area     the recipient consistent with the
   (iv) A physician assistant, as defined   on the order itself, as an easily             requirements of paragraph (Ð of this
in section 1861(aa)(5) of the Act, under    identifiable and clearìy titled addendum      section except as indicated below.
the supervision ofthe physician             to the order, or a separate document            (2) The face-to-face encounter may be
described in subparagraph (a) ofthis        easily identifiable and clearly titled in     performed by any of the practitioners
section; or                                 the recipient's medical record, to
   (v) For recipients admitted to home                                                    described in paragraph (Ð(2)of this
                                            describe how the health status of the         section, with the exception of certified
health immediately after an acute or        recipient at the time of the face-to-face
post-acute stay, the attending acute or                                                   nurse-midwives, as described in
                                            encounter is related to the primary           paragraph (fX2Xiii)of this section.
oost-acute nhvsician.                       reason the recipient requires home
^ (s) The allo'*"d nonphysician                                                           (Catalog of Federal Domestic Assistance
                                            healtl   services.
practitioner, as described in paragraph         (ii) Must indicate the practitioner who   Program No. 93.778, Medicaì Assistance
(fl(3xiÐ through (iv) of this section, or                                                 Program).
                                            conducted the encounter, and be clearly
the attending acute or post-acute
                                            titled and dated on the documentation          Dated: Ma¡ch 2,2oIl.
physician, as described in paragraph
(fJ(sX") of this section, performing the    of the face-to-face encounter.                Donald M. Berwick,
                                                (5) The face-to-face encounter may        Administroto¡, Centers for Medicare   t
face-to-face encounter must
communicate the clinical findings of        occur through telehealth, as                  Medicoid Seruices.
that face-to-face encounter to the          implemented by the State.
                                                                                            Approved: June 3, 2011,
ordering physician. Those clinical              (gXr) No payment maY be made for
                                                                                          Kathleen Sebelius,
findings must be incorporated into a        medical equipment, supplies, or
                                            appliances referenced in paragraph            Secrelory, Department of Heolth antl Humon
written or electronic document included                                                   Senrices,
in the recioient's medical record.          (bX3) of this section to the extent that
   (4) To as'sure clinical correlation      a face-to-face encounter requirement          IFR Doc. 2011-16s37 Filed 7-s-11; 4:15 pm]

between the face-to-face encounter and      would apply as durable medical                BILLING CODE 412O-O1-P

                                                                                                      Appendix - 13
TEXAS MEDICÂID PROVIDER PROCEDURES MANUAL: VOL.2

     2.2.25 Procedure Codes That Do Not Require Prior Authorization
     The procedure codes listed in the following table do not require prior authorization for clients who are
     receiving services under Home Health Services. Although prior authorization is not required, providers
     must retain a completed Home Health Services (Title XIX) Durable Medical Equipment
     (DME)/Medical Supplies Physician Order Form for these clients. For medical supplies not requiring
     prior authorization,  a completed Home Health Services (Title XIX) Durable Medical Equipment
     (DME)/Medical Supplies Physician Order Form may be valid for a maximum of six months unless the
     physician indicates the duration ofneed is less. Ifthe physician indicates the duration ofneed is less than
     six months, then a new Home Health Services (Title XIX) Durable Medical Equipment (DME)/Medical
     Supplies Physician Order Form is required at the end ofthe duration ofneed. It is expected that
     reasonable, medically necessary amounts will be provided.

     The use of these services is subject to retrospective review. This is not an all inclusive list.

      Procedure Codes

      80570        F,0575     E0580       s8101

      A.4310      4431 r      1'4312      44313        L43t4         1'43L5       /'43L6       44320           1'4327   44322
      /'4326       44327      44328       44330         /'433s       44338        1.4340       ¡^4344          1'4346   /'435r
      1'4352       1^4353     1'4354      /'4355        /'4356       1.4357       A'43s8       /^4402          1.4554   Asr02
      A'510s       L5L12      45113       45114         A5L2O                     Asr22        45131
                                                                     ^5r27
      L4614        44627
      ' Prior authorizatio¡r is required for certlin diagnoses and ifliurit¡rtions ¡re exceeded. Refer to Subsection
      2.2.l9,2, "Nebulizers" irl this handbook.
      " Prior autlrorization is required for solne procedure codes if the lnlxiutur¡t limitation is excectled, Refer to
      Subsectiolt 2.2.l2.9, "Irrcontirrencc Proce