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Notice

Notice of Hearing: Reconsideration of Disapproval of New York State Plan Amendment (SPA) 96-40a

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AGENCY:

Center for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Notice of hearing.

SUMMARY:

This notice announces an administrative hearing on October 3, 2001; 10 a.m.; Room 38-110a; Thirty-Eighth Floor; Jacob Javits Federal Building; 26 Federal Plaza; New York, New York 10278, to reconsider our decision to disapprove New York SPA 96-40a.

Closing Date:

Requests to participate in the hearing as a party must be received by the presiding officer by August 27, 2001.

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FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes, Presiding Officer, CMS C1-09-13, 7500 Security Boulevard, Baltimore, Maryland 21244; Telephone: (410) 786-2055.

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SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider our decision to disapprove New York SPA 96-40a. New York submitted this SPA on September 30, 1996. The issue is whether the effective date of a change in the method of Medicaid payment that increases Medicaid payments to hospitals may be earlier than the first day of the calendar quarter in which New York submitted a SPA for approval by the Secretary. This amendment proposes to increase payments under the Medicaid State plan by reclassifying certain amounts, originally paid outside the scope of the Medicaid program by State contractors for the cost of care for persons eligible for the State Home Relief program, as Medicaid disproportionate share hospital (DSH) payments. As the State's public notice made clear, the proposed change in Medicaid payment methodology was not simply to use an intermediary to make payments already authorized under the existing State plan, but would increase Medicaid payments by adding to the DSH payments to certain hospitals. Federal regulations at 42 CFR 447.256(c) and 430.20(b), however, preclude the Centers for Medicare & Medicaid Services (CMS), formerly the Health Care Financing Administration, from approving a SPA that changes the method of payment prior to the first day of the calendar quarter in which the SPA was submitted. In addition, Federal regulations at 42 CFR 447.205(a) require a State to provide public notice of any significant proposed change in its methods and standards for setting payment rates for services. Federal regulations at 42 CFR 447.205(d) require that the notice be published before the proposed effective date of the change. Therefore, the earliest permissible effective date for this amendment based on the date of public notice (i.e., September 25, 1996) and on the calendar quarter in which the SPA was submitted (i.e., September 30, 1996), was September 26, 1996. After consulting with the Secretary as required by 42 CFR 430.15(c), CMS informed New York of its decision to disapprove this amendment. SPA 96-40a was originally submitted as SPA 96-40, which affected DSH payments beginning on July 1, 1994. CMS suggested the State split the original amendment into two separate amendments to allow payments beginning on September 26, 1996, to be approved. The State agreed to this suggestion. The first amendment, 96-40a, affects Medicaid payments from July 1, 1994, through September 25, 1996, and was disapproved by CMS on May 14, 2001, after consultation with the Secretary as required under 42 CFR430.15(c)(2). The second amendment, 96-40b, affecting Medicaid payments from September 26, 1996, forward, was approved.

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

Dr. Antonia C. Novello,

Commissioner, New York State Department of Health, Corning Tower, Empire State Plaza, Albany, New York 12237.

Dear Dr. Novello: I am responding to your request for reconsideration of the decision to disapprove New York State Plan Amendment (SPA) 96-40a. This SPA was submitted on September 30, 1996.

The issue is whether the effective date of a change in the method of Medicaid payment that increases Medicaid payments to hospitals may be earlier than the first day of the calendar quarter in which New York submitted a SPA for approval by the Secretary. This amendment proposes to increase payments under the Medicaid State plan by reclassifying certain amounts, originally paid outside the scope of the Medicaid program by State contractors for the cost of care for persons eligible for the State Home Relief program, as Medicaid disproportionate share hospital (DSH) payments. As the State's public notice made clear, the proposed change in Medicaid payment methodology was not simply to use an intermediary to make payments already authorized under the existing State plan, but would increase Medicaid payments by adding to the DSH payments to certain hospitals.Start Printed Page 42233

The State requested an effective date of July 1, 1994. Federal regulations at 42 CFR 447.256(c) and 430.20(b), however, preclude the Centers for Medicare & Medicaid Services (CMS) (formerly the Health Care Financing Administration) from approving a SPA that changes the method of payment prior to the first day of the calendar quarter in which the SPA was submitted. In addition, Federal regulations at 42 CFR 447.205(a) require a State to provide public notice of any significant proposed change in its methods and standards for setting payment rates for services. Federal regulations at 42 CFR 447.205(d) require that the notice be published before the proposed effective date of the change. Therefore, the earliest permissible effective date for this amendment based on the date of public notice (i.e., September 25, 1996) and on the calendar quarter in which the SPA was submitted (i.e, September 30, 1996), was September 26, 1996. After consulting with the Secretary as required by 42 CFR 430.15(c), CMS informed New York of its decision to disapprove this amendment.

The SPA 96-40a was originally submitted as SPA 96-40, which affected DSH payments from July 1, 1994, forward. CMS suggested the State split the original amendment into two separate amendments to allow payments beginning on September 26, 1996, to be approved. The State agreed to this suggestion.

The first amendment, 96-40a, affects Medicaid payments from July 1, 1994, through September 25, 1996, and based on the above, was disapproved on May 14, 2001. The second amendment, 96-40b, affecting Medicaid payments from September 26, 1996, forward, was approved.

I am scheduling a hearing on your request for reconsideration to be held on October 3, 2001, at 10:00 a.m. in Room 38-110a; Thirty-Eighth Floor; Jacob Javits Building; 26 Federal Plaza; New York, New York 10278. If this date is not acceptable, we will be glad to set another date that is mutually agreeable to the parties. The hearing will be governed by the procedures prescribed at 42 CFR, Part 430.

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

  Sincerely,

Ruben J. King-Shaw, Jr.,

Deputy Administrator and Chief Operating Officer, Centers for Medicare & Medicaid Services.

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

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

Dated: August 7, 2001.

Ruben J. King-Shaw, Jr.,

Deputy Administrator and Chief Operating Officer, Centers for Medicare & Medicaid Services.

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[FR Doc. 01-20236 Filed 8-9-01; 8:45 am]

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