Proposed Rule2021-16430
Medicaid Program; Reassignment of Medicaid Provider Claims
Primary source
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Published
August 3, 2021
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This proposed rule would reinterpret the scope of the general requirement that state payments for Medicaid services under a state plan must be made directly to the individual practitioner providing services, in the case of a class of practitioners for which the Medicaid program is the primary source of revenue. Specifically, this proposal, if finalized, would explicitly authorize states to make payments to third parties to benefit individual practitioners by ensuring health and welfare benefits, training, and other benefits customary for employees, if the practitioner consents to such payments to third parties on the practitioner's behalf.
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<title>Federal Register, Volume 86 Issue 146 (Tuesday, August 3, 2021)</title>
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[Federal Register Volume 86, Number 146 (Tuesday, August 3, 2021)]
[Proposed Rules]
[Pages 41803-41809]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-16430]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 447
[CMS-2444-P]
RIN 0938-AU73
Medicaid Program; Reassignment of Medicaid Provider Claims
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would reinterpret the scope of the general
requirement that state payments for Medicaid services under a state
plan must be made directly to the individual practitioner providing
services, in the case of a class of practitioners for which the
Medicaid program is the primary source of revenue. Specifically, this
proposal, if finalized, would explicitly authorize states to make
payments to third parties to benefit individual practitioners by
ensuring health and welfare benefits, training, and other benefits
customary for employees, if the practitioner consents to such payments
to third parties on the practitioner's behalf.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by September 28, 2021.
ADDRESSES: In commenting, please refer to file code CMS-2444-P.
Comments, including mass comment submissions, must be submitted in one
of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2444-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2444-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Christopher Thompson, (410) 786-4044.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. CMS will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the individual will take actions to harm the individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
I. Background
A. Prohibition on Payment Reassignment
The Medicaid program was established by Congress in 1965 to provide
health care services for low-income and disabled beneficiaries. Section
1902(a)(32) of the Social Security Act (the Act) imposes certain
requirements on how states may make payments for services furnished to
Medicaid beneficiaries. Section 1902(a)(32) of the Act provides that
generally no payment under the plan for any care or service provided to
an individual shall be made to anyone other than such individual or the
person or institution providing such care or service, under an
assignment, power of attorney, or otherwise. This prohibition is
followed by four enumerated exceptions. On September 29, 1978, CMS
codified these exceptions under 42 CFR 447.10, the regulations
implementing section 1902(a)(32) of the Act, in the ``Payment for
Services'' final rule (43 FR 45253). The 1978 final rule simply
reorganized and redesignated existing Medicaid regulations at Sec.
449.31. Since the 1990s, we have mostly understood this provision as
governing only assignments and other similar Medicaid reimbursement
arrangements.
Consistent with this understanding, from 2012 to 2014, we engaged
in rulemaking to make it explicit that section 1902(a)(32) of the Act
did not apply to certain payments made by the state Medicaid program on
behalf and for the benefit of individual Medicaid practitioners whose
primary source of revenue is the state Medicaid program. We finalized
this regulation in the ``State Plan Home and Community Based Services,
5-Year for Waivers, Provider Payment Reassignment, and Home and
Community-Based Setting Requirements for Community First Choice and
Home and Community Based Services (HCBS) Waivers'' final rule published
in the January 16, 2014 Federal Register (79 FR 2948 through 2949, 3001
through 3003, and 3039) (hereinafter referred to as the ``2014 final
rule''). In that rulemaking, we reasoned that this policy was permitted
by the statute because the apparent purpose of section 1902(a)(32) of
the Act was to prohibit factoring arrangements, the practice by which
providers sold reimbursement claims for a percentage
[[Page 41804]]
of their value to companies that would then submit the claims to the
state. The purpose was not to preclude a Medicaid program that is
functioning as the practitioner's primary source of revenue from
fulfilling the basic employer-like responsibilities that are associated
with that role, a scenario that was not contemplated by section
1902(a)(32) of the Act and was outside of the intended scope of the
statutory prohibition.
This policy was codified as a regulatory exception under Sec.
447.10(g)(4) to permit withholding from the payment due to the
individual practitioner for amounts paid by the state directly to third
parties for health and welfare benefits, training costs and other
benefits customary for employees. In an August 3, 2016 Center for
Medicaid and CHIP Services (CMCS) Informational Bulletin (CIB), we
outlined suggested approaches for strengthening and stabilizing the
Medicaid home care workforce, including by supporting home care worker
training and development. We noted that under Sec. 447.10(g)(4), state
Medicaid agencies could facilitate this goal by, with the consent of
the individual practitioner, making payment on behalf of the
practitioner to a third party that provides benefits to the workforce
such as health insurance, skills training, and other benefits customary
for employees.\1\
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\1\ <a href="https://www.medicaid.gov/federal-policy-guidance/downloads/cib080316.pdf">https://www.medicaid.gov/federal-policy-guidance/downloads/cib080316.pdf</a>.
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B. Current Medicaid Payment Assignment Regulations
Medicaid regulations at Sec. 447.10 implement the requirements of
section 1902(a)(32) of the Act by providing that state plans can allow
payments to be made only to certain individuals or entities.
Specifically, payment may only be made to the individual practitioner
that provided the service (provider) or the recipient (beneficiary), if
he or she is a non-cash recipient eligible to receive payment under
Sec. 447.25, or under one of the limited exceptions. The regulations
specifically state that payment for any service furnished to a
recipient by a provider may not be made to or through a factor, either
directly or by power of attorney.
The exceptions to the general direct payment principle at Sec.
447.10 generally mirror those enumerated in the statute. They include
payment in accordance with a reassignment to a government agency, or
pursuant to a court order. There are also exceptions permitting
payments to third parties for services furnished by individual
practitioners where certain employment or contractual conditions are
met. Additionally, there is another exception for payment to a business
agent, such as a billing service or accounting firm, that furnishes
statements and receives payments in the name of the individual
practitioner, if the business agent's compensation for this service is
related to the cost of processing the billing, and not dependent on the
collection of the payment.
In 2018 and 2019, in a departure from our prior interpretation of
this statute, we engaged in rulemaking to interpret the statutory
prohibition as applying more broadly to prohibit any type of Medicaid
payment to a third party other than the four exceptions enumerated in
the statute. In so doing, we interpreted the statutory phrase ``or
otherwise'' as encompassing any and all Medicaid reimbursement payment
arrangements involving third parties. We proposed this broad
interpretation of the statutory language in the ``Reassignment of
Medicaid Provider Claims'' proposed rule in the July 12, 2018 Federal
Register (83 FR 32252 through 32255) and finalized in ``Reassignment of
Medicaid Provider Claims'' final rule in the May 6, 2019 Federal
Register (84 FR 19718 through 19728) (hereinafter referred to as the
``2019 final rule''). This rulemaking eliminated the regulatory
exception added by the 2014 final rule.
C. California v. Azar
Six states and 11 intervenors challenged the 2019 final rule. In
California v. Azar, 501 F. Supp. 3d 830 (N.D. Cal. 2020), the district
court rejected the Department of Health and Human Services' (HHS')
arguments that section 1902(a)(32) of the Act expressly prohibited the
agency's previous interpretation of section 1902(a)(32) and states'
related practices, remanded the case to HHS for further proceedings,
and vacated the 2019 final rule. Secretary Azar then appealed to the
U.S. Court of Appeals for the Ninth Circuit in California v. Becerra,
No. 21-15091 (9th Cir.).
D. Individual Practitioner Workforce Stability and Development Concerns
Since the direct payment principle was originally enacted in
statute in 1972 and expanded in 1977, the definition of medical
assistance under section 1905(a) of the Act has been changed to permit
states to offer coverage of categories of practitioner services, such
as personal care services, that may be viewed as unique to the Medicaid
program. For these practitioners, who often provide services
independently, rather than as employees of a service provider, the
Medicaid program may be their primary, or only, source of payment. Some
states have sought methods to improve and stabilize the workforce by
offering health and welfare benefits to such practitioners, and by
requiring that such practitioners pursue periodic training.
Within Medicaid, long-term support services (LTSS) expenditures are
shifting from institutional care (hospitals, nursing facilities, etc.)
to HCBS. In FY 2013, HCBS LTSS expenditures reached 51 percent of total
Medicaid LTSS expenditures and have generally increased to 56.1 percent
in FY 2018. HCBS represented a majority of LTSS expenditures in 29
states, including the District of Columbia, and over 75 percent of
expenditures in five states in FY 2018.
Several states have requested that CMS adopt additional exceptions
to the direct payment policy to permit a state to withhold from a
payment due to the individual practitioner for amounts that the
practitioner is obligated to pay for health and welfare benefits,
training costs, and other benefits customary for employees. These
amounts would not be retained by the state, but would be paid to third
parties on behalf of the practitioner for the stated purpose. We
recognize that HCBS workforce issues, such as workforce shortages and
staff turnover, have a direct and immediate impact on the quality of
and access to services available to beneficiaries, and believe that
state Medicaid agencies play a key role in influencing the stability of
the workforce by determining wages and benefits, and provider
reimbursement.\2\
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\2\ <a href="https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-rebalancing-toolkit.pdf">https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-rebalancing-toolkit.pdf</a>.
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II. Provisions of the Proposed Rule
A. Prohibition Against Reassignment of Provider Claims (Sec. 447.10)
Under title XIX of the Act, state Medicaid programs generally pay
for Medicaid-covered practitioner services through direct payments to
the treating practitioners. States may develop state plan payment rates
that include considerations for costs related to health and welfare
benefits, training, and other benefits customary for employees.
However, consistent with our previous interpretation of the statutory
provision at section 1902(a)(32) of the Act, and reflected in
regulations at Sec. 447.10 under the 2019 final rule, the entire rate
must be paid to the individual practitioner who provided the service,
unless certain exceptions apply.
[[Page 41805]]
Following the district court's decision in California v. Azar, we
examined the statutory language and legislative history, and now
conclude that the prohibition in section 1902(a)(32) of the Act is
better read to be limited in its applicability to Medicaid payments to
a third party pursuant to an assignment, power of attorney, or other
similar arrangement. In other words, the statutory prohibition is
better viewed as an anti-reassignment provision that only governs
assignment-like payment arrangements. We do not believe this provision
should be interpreted as a broad prohibition on any and all types of
Medicaid payment arrangements beyond those provided directly to
Medicaid beneficiaries and providers or enumerated in the statutory
exceptions. As such, we propose to amend Sec. 447.10 to add a new
paragraph (i), which would incorporate similar language from paragraph
(g)(4) as a new provision describing who may receive payment, rather
than as an exception to the statutory prohibition in section
1902(a)(32) of the Act.
Specifically, Sec. 447.10(i) would specify that the payment
prohibition in section 1902(a)(32) of the Act and Sec. 447.10(d) does
not apply to payments to a third party on behalf of an individual
practitioner for benefits such as health insurance, skills training,
and other benefits customary for employees, in the case of a class of
practitioners for which the Medicaid program is the primary source of
revenue.\3\
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\3\ We note that, to the extent state agencies utilize this
option to deduct union dues, union dues may only be deducted from
Medicaid payments with the affirmative consent of the practitioner;
to do otherwise would be in violation of the First Amendment. See
Janus v. Am. Fed'n of State, Cty., and Mun. Emps., Council 31, 138
S.Ct. 2448, 2486 (2018) (``Neither an agency fee nor any other
payment to the union may be deducted from a nonmember's wages, nor
may any other attempt be made to collect such a payment, unless the
employee affirmatively consents to pay.'').
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The text of the statute addresses only assignments and related
payment arrangements wherein a provider's right to claim and/or receive
full payment for services furnished to Medicaid beneficiaries is
transferred to a third party. The statute includes examples of the
types of payment arrangements intended to be prohibited, ``under an
assignment or power of attorney or otherwise.'' The general term ``or
otherwise'' is listed following two specific and related phases.
Statutory interpretation principles suggest that when general words
follow specific words in a statutory enumeration, ``the general words
are construed to embrace only objects similar in nature to those
objects enumerated by the preceding specific words.'' Sutherland
Statutory Construction Sec. 47:17; Circuit City Stores, Inc. v. Adams,
532 U.S. 105 (2001). Accordingly, the language ``or otherwise'' is best
read as referencing payments made under arrangements that are similar
to an ``assignment'' and a ``power of attorney'' such that the reach of
the prohibition under section 1902(a)(32) of the Act does not extend to
payment arrangements that are wholly distinct from such types of
arrangements. Consistent with this interpretation, we are also
proposing to amend Sec. 447.10(a) to include the phrase ``under an
assignment or power of attorney or a similar arrangement.'' This change
aligns the regulation with the applicable statutory language and our
reading of that language, and creates a consistent framework for
proposed new paragraph (i).
Black's Law Dictionary defines ``assignment'' in relevant part as
``[t]he transfer of rights or property,'' and ``power of attorney'' as
``[a]n instrument granting someone authority to act as agent or
attorney-in-fact for the grantor.'' \4\ Thus, the inclusion of these
examples of the types of arrangements intended to be prohibited under
section 1902(a)(32) of the Act supports the conclusion that the statute
was intended to address scenarios where the right to a provider's
Medicaid receivables or the right to submit claims on behalf of the
provider are transferred to a third party.
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\4\ See Black's Law Dictionary (11th ed. 2019); see also Merriam
Webster, available at <a href="https://www.merriam-webster.com/dictionary/assignment">https://www.merriam-webster.com/dictionary/assignment</a> (defining the term ``assignment'' in the ``law'' as ``the
transfer of property''); Merriam Webster, available at <a href="https://www.merriam-webster.com/dictionary/power%20of%20attorney">https://www.merriam-webster.com/dictionary/power%20of%20attorney</a> (defining
the term ``power of attorney'' as ``a legal instrument authorizing
one to act as the attorney or agent of the grantor'').
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Moreover, the introductory language in section 1902(a)(32) of the
Act specifies that no payment under the plan for any care or service
furnished to an individual shall be made to anyone other than such
individual or the person or institution providing such care or service.
This prohibition applies only to payments ``for any care or service,''
which we interpret to prohibit full diversion of the right to claim
and/or receive such payments to third parties absent an exception, but
not to apply to partial deductions from payments at the request or with
the consent of the provider, in order to make payments to third parties
on behalf of the provider.
An examination of the statutory exceptions to the general
prohibition also supports the conclusion that the prohibition under
section 1902(a)(32) of the Act does not extend to payment arrangements
that are outside the category of payments with assignments or
assignment-like arrangements. The excepted arrangements or transactions
are all similar to assignments in that they involve third parties
submitting claims directly to the state Medicaid agency for
reimbursement or having the right to receive the full amount of all
payments due to the provider for services furnished to Medicaid
beneficiaries. More specifically, section 1902(a)(32) of the Act
contains several specific exceptions to the general principle of direct
payment to individual practitioners. There are exceptions for payments
for practitioner services where payment is made to the employer of the
practitioner, and the practitioner is required as a condition of
employment to turn over fees to the employer; payments for practitioner
services furnished in a facility when there is a contractual
arrangement under which the facility bills on behalf of the
practitioner; reassignments to a governmental agency, through a court
order, or to a billing agent; payments to a practitioner whose patients
were temporarily served by another identified practitioner; and
payments for a childhood vaccine administered before October 1, 1994.
While these exceptions may appear to be largely unrelated, they all
involve payment arrangements where third parties are submitting claims
to the Medicaid agency and/or where the right to receive all of the
payments due to a provider for services furnished to Medicaid
beneficiaries is transferred to a third party.
The fact that the only types of transactions that are explicitly
excepted by the statute are assignment-like transactions that involve
the transfer to a third party of either a provider's right to submit
claims directly to the state and/or to receive all payments otherwise
due a provider for services furnished supports our proposed
interpretation that the scope of the statutory prohibition extends only
to payments to a third party that involve similar types of
arrangements. By contrast, partial deductions from Medicaid payments
requested by a provider in order to make separate payment to a third
party on behalf of the provider for benefits customary for employees
does not involve third parties receiving direct payment from the state
for care or services provided to Medicaid beneficiaries. Nor does this
arrangement allow such third parties to pursue independent claims
against the state for Medicaid reimbursement.
The legislative history of section 1902(a)(32) of the Act supports
our conclusion that the statutory text is best read as an anti-
assignment prohibition.
[[Page 41806]]
When Congress adopted the original version of this statute in 1972, it
was focused on the practice of factoring--a practice which often led to
the submission of inflated or false claims, raising concerns that the
factoring industry was a breeding ground for Medicaid fraud.\5\ When
Congress amended this provision in 1977, it reiterated that it
understood the provision simply as a response to and an attempt to
prevent factoring. Indeed, in 1977, Congress amended the anti-
reassignment provision to close what it perceived to be a loophole that
factoring companies were exploiting.\6\ This legislative history
supports our proposed interpretation of the statutory prohibition as
extending only to assignments and assignment-like arrangements that
involve a potential for the type of abuse that the statute was intended
to prevent.
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\5\ See, for example, H.R. REP. NO. 92-231, at 104 (1972),
reprinted in 1972 U.S.C.C.A.N. 4989, 5090; H.R. REP. NO. 92-231, at
205, reprinted in 1972 U.S.C.C.A.N. at 5090; S. REP. NO. 92-1230, at
204 S. REP. NO. 92-1230, at 204 (1972); Professional Factoring
Service Association v. Mathews, 422 F. Supp. 250, 251-52 (S.D.N.Y.
1976).
\6\ See, for example, H. REP. NO. 95-393(II), at 43, reprinted
in 1977 U.S.C.C.A.N. at 3045; H. REP. NO. 95-393(II), at 46,
reprinted in 1977 U.S.C.C.A.N. at 3048; H. REP. NO. 95-393(II), at
48-49 (1977), reprinted in 1977 U.S.C.C.A.N. 3039, 3051; S. REP. NO.
95-453, at 6-8 (1977).
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With respect to classes of practitioners for whom the state's
Medicaid program is the only or primary payer, the ability of the state
to ensure a stable and qualified workforce may be adversely affected by
the inability to deduct from Medicaid payments at the request or with
the consent of a provider in order to make separate payment to a third
party on behalf of the provider. Deductions for these purposes are an
efficient and effective method for ensuring that the workforce has
provisions for basic needs and is adequately trained for their
functions, thus ensuring that beneficiaries have greater access to such
practitioners and higher quality services. Requiring practitioner
consent for such deductions ensures Medicaid provider payments are
treated appropriately, and in a manner consistent with the wishes of
the practitioner, for purposes of receiving benefits such as health
insurance, skills training, and other benefits customary for employees.
Although we propose that these deduction practices fall outside the
scope of what the statute prohibits, we consider it important to
document the flexibility in regulation to ensure confidence in the
provider community, particularly for front line workers during the
Coronavirus Disease 2019 (COVID-19) pandemic. Within broad federal
Medicaid law and regulation, CMS has long sought to ensure maximum
state flexibility to design state-specific payment methodologies that
help ensure a strong, committed, and well-trained work force.
Currently, certain categories of Medicaid covered services, for which
Medicaid is a primary payer, such as home and personal care services,
suffer from especially high rates of turnover and low levels of
participation in Medicaid which negatively impact access to and quality
of providers available to Medicaid beneficiaries.\7\ These issues often
result in higher rates of institutional stays for beneficiaries. This
proposed rule would support previous CMS efforts to strengthen the home
care workforce by specifying what actions are permitted, to help foster
a stable and high-performing workforce.\8\ Under our proposed amendment
to Sec. 447.10, state Medicaid programs would be permitted, as
authorized under state law and with the consent of the individual
practitioner, to deduct from the practitioner's reimbursement in order
to pay third parties for health and welfare benefit contributions,
training costs, and other benefits customary for employees.
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\7\ Kim J. (2020). Occupational Credentials and Job Qualities of
Direct Care Workers: Implications for Labor Shortages. Journal of
labor research, 1-18. Advance online publication. <a href="https://doi.org/10.1007/s12122-020-09312-5">https://doi.org/10.1007/s12122-020-09312-5</a>.
\8\ <a href="https://www.medicaid.gov/federal-policy-guidance/downloads/cib080316.pdf">https://www.medicaid.gov/federal-policy-guidance/downloads/cib080316.pdf</a>.
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In late 2017, we requested input from states indicating whether
they had implemented the types of payment arrangements permitted under
Sec. 447.10(g)(4) after publication of the 2014 final rule. Of the
states that voluntarily responded to CMS, we found that some states had
entered into third party payment arrangements on behalf of individual
practitioners, while others had not. This input is the most current
state stakeholder feedback we have; therefore, we anticipate the impact
of such payment arrangements to be positive for both states and
practitioners. For states, the third-party payment arrangements
authorized by this proposed rule would be optional and if a state
chooses to implement them, then states can use existing administrative
processes to make deductions, with consent of the individual
practitioner, from a practitioner's Medicaid reimbursement for
benefits. For practitioners, this proposed rule will enhance the
ability of the practitioners, regardless of their employment
arrangement, to perform their functions as health care professionals,
and thus, support beneficiary access to quality home health care. The
Medicaid program, at both the state and federal levels, has a strong
interest in ensuring the development and maintenance of a committed,
well-trained workforce.
With the majority of LTSS expenditures spent on HCBS, rather than
institutional services, the importance of a strong home care workforce
in Medicaid cannot be understated. Under section 9817 of the American
Rescue Plan, we continue to reinforce the importance of HCBS in
Medicaid and during the COVID-19 pandemic by providing a temporary 10
percentage point increase to the federal medical assistance percentage
for certain HCBS delivered by home care providers, as these services
are crucial to some of the most vulnerable individuals in our country.
The proposed rule would help protect the economic security for home
care providers. The ability of home care providers to choose how
deductions are made is critically important to improvements in
workforce standards. Moreover, since the majority of home health care
workers are women and people of color,\9\ permitting this type of
payment arrangement will directly benefit those populations and address
inequities.
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\9\ <a href="https://www.kff.org/coronavirus-covid-19/event/march-30-web-event-unsung-heroes-the-crucial-role-and-tenuous-circumstances-of-home-health-aides-during-the-pandemic/">https://www.kff.org/coronavirus-covid-19/event/march-30-web-event-unsung-heroes-the-crucial-role-and-tenuous-circumstances-of-home-health-aides-during-the-pandemic/</a>.
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Further, the increasing shortage of home care providers due to high
turnover, low participation in Medicaid, low wages, and lack of
benefits and training has significantly reduced access to home health
care services for older adults and people with disabilities. State
Medicaid agencies can play a key role in increasing such access by
improving workforce stability of these practitioners by addressing
training, wages and benefits, and provider reimbursement.\10\ Under
this proposed rule, state Medicaid agencies would be authorized to
deduct from a practitioner's Medicaid payment, with the consent of the
individual practitioner, in order to pay a third party on behalf of the
individual practitioner for benefits that provide the workforce with
freedom to advocate for higher wages and career advancement, access
necessary trainings, and options for other customary employee benefits.
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\10\ <a href="https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-rebalancing-toolkit.pdf">https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-rebalancing-toolkit.pdf</a>.
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States typically have an established administrative process for
their own employees' deductions for benefits that
[[Page 41807]]
can also be applied to classes of practitioners for whom Medicaid is
the only or primary payer. Additionally, state Medicaid agencies often
act as employers without a formal relationship to classes of
practitioners for whom Medicaid is the only or primary payer, such as
home care providers or personal care assistants. Using the state's
established administrative processes to deduct funds to pay third
parties on behalf of the practitioner, with the consent of the
individual practitioner, may simplify administrative functions and
program operations for the state and provide advantages to
practitioners. For example, a practitioner could receive continuous
health care coverage because the state automatically deducts funds for
health insurance premiums on behalf of the practitioner. Providing
state Medicaid agencies with the authority to make deductions from
Medicaid reimbursements, with the consent of the individual
practitioner, in order to make payments to a third party on behalf of
the individual practitioner for benefits such as health insurance,
skills training and other benefits customary for employees will ensure
many of the country's most vulnerable workers, who care for the
country's most vulnerable individuals, retain benefits which help them
support themselves and their families.
We note that this proposed rule would not authorize a state to
claim as a separate expenditure under its approved Medicaid state plan,
amounts that are deducted from payments to individual practitioners
(that is, health and welfare benefit contributions, training, and
similar benefits customary for employees). Under the proposed rule,
should a state wish to recognize such costs, they would need to be
included as part of the rate paid for the service in order to be
eligible for federal financial participation. No federal financial
participation would be available for such amounts apart from the
federal match available for a rate paid by the state for the medical
assistance service. These costs also could not be claimed by the
Medicaid agency separately as an administrative expense. As a result,
this proposed rule would have little to no impact on federal Medicaid
funding levels.
As discussed in the January 16, 2014 final rule (79 FR 2947, 3039),
the policies proposed within this rule would not require any change in
state funding to the extent that practitioner rates have already
factored in the cost of benefits, skills training, and other benefits
customary for employees. This rule would simply ensure flexibility for
states to pay for such costs directly on behalf of practitioners and
ensure uniform access to benefits, such as health insurance, skills
training and other benefits customary for employees. Indeed, should
this proposed rule be finalized, there may be cost savings resulting
from the collective purchase of such benefits and greater workforce
stability.
We are specifically soliciting public comments on the extent to
which the proposed payment arrangements would benefit states and
practitioners, particularly if and how practitioner's access to
benefits would be impacted, as well as any adverse impacts that may
have not been anticipated. Additionally, we are seeking comments on
other permissible actions based on our proposed statutory
interpretation that might similarly simplify and streamline states'
operations of their Medicaid state plans and payment processes.
III. Collection of Information Requirements
To the extent a state changes its payment as a result of finalizing
this proposed rule, the state would be required to obtain practitioner
consent and update its payment system. We believe the associated burden
is exempt from the Paperwork Reduction Act (PRA) in accordance with 5
CFR 1320.3(b)(2). We believe that the time, effort, and financial
resources necessary to exercise this flexibility would be incurred by
the state during the normal course of their activities, and therefore
should be considered usual and customary business practices.
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We would consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we would respond to
the comments in the preamble to that document.
V. Regulatory Impact Analysis
A. Statement of Need
In California v. Azar, the district court vacated the 2019 rule and
remanded to HHS for further proceedings. Accordingly, we examined the
statute anew, and determined that the prohibition in section
1902(a)(32) of the Act is better read to be limited in its
applicability to Medicaid payments to a third party pursuant to an
assignment, power of attorney, or other similar arrangement. Although
the court vacated the 2019 rule, our current statutory interpretation
requires this rulemaking in order to reclassify the exception in Sec.
447.10(g)(4) as instead describing arrangements that are beyond the
scope of prohibition in section 1902(a)(32) of the Act. Furthermore,
while we now believe these arrangements are beyond the scope of the
statute, we nevertheless consider it important to document and ensure
clarity and flexibility for individual practitioners. Finally, this
rule provides us an opportunity to reinforce the important caveat that
such deductions may only be made with the consent of the individual
practitioner.
B. Overall Impact
We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule that may: (1)
Have an annual effect on the economy of $100 million or more in any 1
year, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) create a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially alter the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raise novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100
[[Page 41808]]
million or more in any 1 year). We estimate that this proposed rule
will be budget neutral or have a minimal economic impact that is
unlikely to have an annual effect on the economy in excess of the $100
million threshold of Executive Order 12866. Based on our estimates, the
Office of Management and Budget's Office of Information and Regulatory
Affairs has determined that this rulemaking is ``significant'' and
``not major'' under Subtitle E of the Small Business Regulatory
Enforcement Fairness Act of 1996 (also known as the Congressional
Review Act).
Although we are establishing a new regulatory provision, the change
is merely in the statutory approach, while the effect is largely the
same as under Sec. 447.10(g)(4). As such, as discussed in the January
16, 2014 final rule (79 FR 2947, 3039) that initially established the
authority for these arrangements, we believe that this proposed rule
ensures Medicaid funding additional operational flexibilities for
states to ensure a strong provider workforce. There is also no impact
on individual practitioners, even though the proposed rule would allow
states to deduct payments from provider's payment with their consent
under the specific circumstances described in the proposed rule. State
budgets will not likely be significantly affected because the
operational flexibilities in the proposed rule would only facilitate
the transfer of funds between participating entities, rather than the
addition or subtraction of new funds.
Since the 2014 and 2019 final rules, we are not aware of any state
plan amendments submitted by state Medicaid agencies that intended to
modify provider payments rates in response to these previous regulatory
changes. In addition, we do not formally track the payment amounts that
state Medicaid agencies pay to third parties as affected by the
proposed regulatory provision. As such, the Department invited public
comments to help refine this analysis in the 2018 proposed rule, but no
substantive analysis of the economic impact of this rule was provided
as noted in the 2019 final rule. Again, we are seeking comment on this
estimate, and particularly on types and amounts deducted from
individual providers for payment to third parties, broken down by
benefit that may be included under Sec. 447.10(i).
C. Anticipated Effects
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
less than $8.0 million to $41.5 million in any 1 year. Individuals and
states are not included in the definition of a small entity. We are not
preparing an analysis for the RFA because we have determined, and the
Secretary proposes to certify, that this proposed rule would not have a
significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is located outside of a metropolitan statistical area for Medicare
payment regulations and has fewer than 100 beds. We are not preparing
an analysis for section 1102(b) of the Act because we have determined,
and the Secretary proposes to certify, that this proposed rule would
not have a significant impact on the operations of a substantial number
of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2021, that
threshold is approximately $158 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on state
and local governments, preempts state law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on state
or local governments, the requirements of Executive Order 13132 are not
applicable.
D. Alternatives Considered
We considered incorporating additional regulatory text under Sec.
447.10(i) requiring explicit written consent from a practitioner before
state Medicaid agencies may make a payment on behalf of the
practitioner to a third party that provides benefits to the workforce
such as health insurance, skills training, and other benefits customary
for employees. We also considered identifying specific employee
benefits for which payments may be deducted and paid to a third party
in the regulatory text under Sec. 447.10(i), such as federal income
taxes, Federal Insurance Contributions Act (FICA) taxes, state and
local taxes, retirement benefits (for example, 401k, profit-sharing),
health insurance, dental insurance, vision insurance, long-term care
insurance, disability insurance, life insurance, gym memberships,
health savings accounts (HSA), job-related expenses (for example, union
dues with affirmative consent, uniforms, tools, meals, and mileage),
and charitable contributions. Rather than listing the universe of
benefits for which payments may be deducted and paid by state Medicaid
agencies to third parties with consent of the provider, we also
considered whether to exclude certain benefit deductions from the scope
of this proposed rule. Finally, we considered requiring practitioner
consent only for specific types of deductions, rather than all types of
benefits, for which Medicaid payment amounts may be deducted and paid
to a third party in the regulatory text under Sec. 447.10(i).
We considered but did not propose to require explicit written
provider consent for deductions out of concern that codifying a
requirement for written consent could unintentionally result in a
conflict with state law. As proposed, we would defer to state Medicaid
agencies to ensure consent is obtained and for further implementation
of provider payment deductions consistent with state law and regulation
for state employee benefit deductions. We are requesting public comment
on whether to include a CMS requirement for written provider consent or
to remain silent on the form such consent must take and to defer to
existing state law and regulation. Specifically, we are seeking
comments on what constitutes appropriate consent (that is, letter,
email, form), descriptions of state law that require consent, and how
CMS could minimize burden on state Medicaid agencies and prevent
conflict with state laws and regulations if specific consent
requirements were finalized within the regulatory text. Thus, we are
providing in this proposed rule that a provider must voluntarily
consent to payments to third parties on the provider's behalf, but
propose to leave to each state to determine the best means of
confirming the provider's consent in each case.
We also considered but did not propose to codify a defined list of
allowable benefits or excluded benefits within the regulatory text
based on
[[Page 41809]]
concerns that such a list may not accurately reflect all employee
benefits available to practitioners and would need frequent updates
through the rulemaking process in order to remain relevant. The
available benefits may vary between states and we would, again, defer
to specific state laws and regulations as the basis for implementing
the proposed rule. We are soliciting public comments on whether to
codify a defined list of benefits that may be deducted from a
provider's payment and, on behalf of the provider, be made to third
parties. We are also soliciting public comments on whether there are
additional types of benefits that state Medicaid agencies make to third
parties on behalf of a provider receiving benefits that were not
contemplated in the examples described in this section. In particular,
we are seeking comments on whether the described list of benefits is
generally permissible and consistent with deductions or payments made
by states on behalf of state employees, as well as examples of
potential impermissible arrangements we may exclude from the final
rule. Finally, we are requesting that commenters further explain why
the benefits they provide as examples within their comments are
permissible or impermissible under the proposed Sec. 447.10(i). As
noted in the Overall Impact section, we are also seeking public
comments, as well as data on the type and amount of benefit deductions
broken down by benefit that may be included under Sec. 447.10(i).
We considered but did not propose to require consent only for
specific types of deductions, rather than all types of benefits, for
which Medicaid payment amounts may be deducted and paid to a third
party in the regulatory text based on the concern that we may not
accurately capture all of the employee benefits practitioners believe
should require consent. Additionally, identifying certain types of
employee benefits for which payments may be deducted and paid to a
third party in the regulatory text would also need frequent updates
through the rulemaking process in order to remain relevant. We are
soliciting public comments on whether to codify that consent is only
required for deductions for certain types of employee benefits, which
benefits, and why those benefits should require consent from the
practitioner. We are also soliciting public comments on whether
requiring consent for certain types of employee benefits is
advantageous or disadvantageous for the state and practitioner rather
than requiring consent for all types of employee benefits.
E. Conclusion
In accordance with the provisions of Executive Order 12866, this
proposed rule was reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on July 21, 2021.
List of Subjects in 42 CFR Part 447
Accounting, Administrative practice and procedure, Drugs, Grant
programs--health, Health facilities, Health professions, Medicaid,
Reporting and recordkeeping requirements, Rural areas.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:
PART 447--PAYMENTS FOR SERVICES
0
1. The authority citation for part 447 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1396r-8.
0
2. Amend Sec. 447.10 by revising paragraph (a) and adding new
paragraph (i) to read as follows:
Sec. 447.10 Prohibition against reassignment of provider claims.
(a) Basis and purpose. This section implements section 1902(a)(32)
of the Act which prohibits State payments for Medicaid services to
anyone other than a provider or beneficiary, under an assignment, power
of attorney, or similar arrangement, except in specified circumstances.
* * * * *
(i) Payment prohibition. The payment prohibition in section
1902(a)(32) of the Act and paragraph (d) of this section does not apply
to payments to a third party on behalf of an individual practitioner
for benefits such as health insurance, skills training, and other
benefits customary for employees, in the case of a class of
practitioners for which the Medicaid program is the primary source of
revenue, if the practitioner voluntarily consents to such payments to
third parties on the practitioner's behalf.
Dated: July 28, 2021.
Andrea Palm,
Deputy Secretary, Department of Health and Human Services.
[FR Doc. 2021-16430 Filed 7-30-21; 4:15 pm]
BILLING CODE 4120-01-P
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</html>Indexed from Federal Register on August 3, 2021.
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