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Notice

Medicaid Program; State Allotments for Payment of Medicare Part B Premiums for Qualifying Individuals: Federal Fiscal Year 2002

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Information about this document as published in the Federal Register.

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AGENCY:

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

ACTION:

Final notice.

SUMMARY:

In this notice, we are adopting as final the proposed expenditures allotted under sections 1902(a)(10)(E)(iv)(I) and (II) of the Social Security Act (the Act) to participating State agencies to pay all, or some portion of, Medicare Part B premium costs for a specified category of eligible low-income Medicare beneficiaries called qualifying individuals (QIs) during Federal fiscal year 2002. The proposed notice announcing the update was published in the August 30, 2002 Federal Register. Federal fiscal year 2002 is the final year that these allotments are authorized under the Act. However, the Congress has extended funding at the same level for one group of QIs for fiscal year 2003.

EFFECTIVE DATE:

This final notice is effective on October 21, 2003.

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FOR FURTHER INFORMATION CONTACT:

Robert Nakielny, (410) 786-4466.

I. Background

A. Before the Balanced Budget Act of 1997

Before enactment of the Balanced Budget Act of 1997 (BBA), section 1902(a)(10)(E) of the Social Security Act specified that State Medicaid plans must provide Medicare cost-sharing for three groups of eligible low-income Medicare beneficiaries. These three groups include: qualified Medicare beneficiaries (QMBs), specified low-income Medicare beneficiaries (SLMBs), and qualified disabled and working individuals (QDWIs).

A QMB is an individual entitled to Medicare Part A (Hospital Insurance) with an income that falls at or below the Federal poverty level and resources below $4,000 for an individual and $6,000 for a couple. An SLMB is an individual who meets the QMB criteria, except that his or her income is between a State-established level (at or below the Federal poverty level) and 120 percent of the Federal poverty level. A QDWI is an individual who is entitled to enroll in Medicare Part A, whose income does not exceed 200 percent of the Federal poverty level for a family of the size involved, whose resources do not exceed twice the amount allowed under the Supplementary Security Income program, and who is not otherwise eligible for Medicaid.

The definition of Medicare cost-sharing at section 1905(p)(3) of the Act includes payment for Medicare premiums, although QDWIs only qualify to have Medicaid pay their Medicare Part A premiums, and SLMBs only qualify to have Medicaid pay their Medicare Part B premiums.Start Printed Page 50791

B. After Enactment of the Balanced Budget Act of 1997

Section 4732 of the BBA amended section 1902(a)(10)(E) of the Act to require that States provide for Medicaid payment of all, or a portion of, Medicare Part B (Supplementary Medical Insurance) premiums, during the period beginning January 1998 through December 2002, for selected members of two eligibility groups of low-income Medicare beneficiaries, referred to as qualifying individuals (QIs).

Under section 1902(a)(10)(E)(iv)(I) of the Act, State agencies are required to pay the full amount of the Medicare Part B premium for selected QIs who would be QMBs except that their income level is at least 120 percent but less than 135 percent of the Federal poverty level for a family of the size involved. These individuals cannot otherwise be eligible for medical assistance under the approved State Medicaid plan.

The second group of QIs, under section 1902(a)(10)(E)(iv)(II) of the Act, includes Medicare beneficiaries who would be QMBs except that their income is at least 135 percent but less than 175 percent of the Federal poverty level for a family of the size involved. These QIs may not be otherwise eligible for Medicaid under the approved State plan, but are eligible for a portion of Medicare cost-sharing consisting only of a percentage of the increase in the Medicare Part B premium attributable to the shift of Medicare home health coverage from Part A to Part B (as provided in section 4611 of the BBA).

Section 4732(c) of the BBA also added section 1933 of the Act, which specifies the provisions for State coverage of the Medicare cost-sharing for additional low-income Medicare beneficiaries.

Section 1933(a) of the Act specifies that a State agency must provide, through a State plan amendment, for medical assistance to pay for the cost of Medicare cost-sharing on behalf of QIs who are selected to receive assistance.

Section 1933(b) of the Act sets forth the rules that State agencies must follow in selecting QIs and providing payment for Medicare Part B premiums. Specifically, the State agency must permit all QIs to apply for assistance and must select individuals on a first-come, first-served basis in the order in which they apply.

Section 1933(c) of the Act limits the total amount of Federal funds available for payment of Part B premiums each fiscal year and specifies the formula to be used to determine an allotment for each State from this total amount. For State agencies that execute a State plan amendment in accordance with section 1933(a) of the Act, a total of $1.5 billion was allocated over 5 years as follows: $200 million in FY 1998; $250 million in FY 1999; $300 million in FY 2000; $350 million in FY 2001; and $400 million in FY 2002.

The Federal matching rate for Medicaid payment of Medicare Part B premiums for QIs is 100 percent for expenditures up to the amount of the State's allotment. No Federal matching funds are available for expenditures in excess of the State's allotment amount. Administrative expenses associated with the payment of Medicare Part B premiums for QIs remain at the 50 percent matching level and may not be taken from the State's allotment.

The amount available for each fiscal year was allocated among States according to the formula set forth in section 1933(c)(2) of the Act.

II. Provisions of the Proposed Notice

The August 30, 2002 (67 FR 55851) proposed notice announced the proposed allotments that were made available to individual States for Federal fiscal year 2002 for the Medicaid payment of Medicare Part B premiums for QIs identified under sections 1902(a)(10)(E)(iv)(I) and (II) of the Act. Specifically, the Federal fiscal year 2002 allotments have been calculated as follows:

AT = Total amount to be allocated

M1i= 3-year average of the number of Medicare beneficiaries in State i who are not enrolled in Medicaid and whose incomes are at least 120 percent but less than 135 percent of Federal poverty line

M2i = 3-year average of the number of Medicare beneficiaries in State i who are not enrolled in Medicaid and whose incomes are at least 135 percent but less than 175 percent of Federal poverty line.

Then, the allotment reserved for State i is determined by the following formula:

We note that the formula used to calculate these allotments is the same we have used since 1998 for calculating the annual QI allotments. In applying the formula for the allotments presented in this document, we have used the latest data available to us as of August 30, 2002, the date we published our proposed allotments for Fiscal Year 2002.

FY 2002 State Allotments for Payment of Part B Premiums Under Sec. 4732 of the BBA of 1997

State(a) M11(b) M22(c) 2 × (a) + (b)State Share of (c)State FY 2002 allocation ($000)
AK1350.08%321
AL25681181.907,584
AR2346921.485,913
AZ20631031.656,620
CA1143075358.6034,383
CO1137590.953,792
CT1155771.244,949
DC35110.18707
DE510200.321,285
FL1142494777.6630,656
GA31691312.108,419
HI313190.311,221
IA2049891.435,720
ID718320.512,057
IL381382143.4413,753
IN46881802.8911,568
KS1233570.923,663
KY19651031.656,620
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LA27571111.787,134
MA40851652.6510,604
MD26491011.626,491
ME723370.592,378
MI421272113.3913,560
MN27461001.616,427
MO29601181.907,584
MS1744781.255,013
MT511210.341,350
NC49891873.0012,018
ND513230.371,478
NE934520.843,342
NH314200.321,285
NJ351091792.8811,504
NM1128500.803,213
NV723370.592,378
NY922334176.7026,799
OH521672714.3517,416
OK1465931.495,977
OR1532621.003,985
PA811873495.6122,429
RI713270.431,735
SC34581262.028,098
SD413210.341,350
TN37611352.178,676
TX822183826.1424,550
UT716300.481,928
VA45831732.7811,118
VT38140.22900
WA2156981.576,298
WI24871352.178,676
WV1144661.064,242
WY37130.21835
Total137434766224100.00$400,000
1 Three-year average (1999-2001) of number (000) of Medicare beneficiaries in State who are not enrolled in Medicaid but whose incomes are at least 120% but less than 135% of the Federal Poverty Level (FPL).
2 Three-year average (1999-2001) of number (000) of Medicare beneficiaries in State who are not enrolled in Medicaid but whose incomes are at least 135% but less than 175% of the Federal Poverty Level (FPL).

III. Analysis of and Responses to Public Comments and Provisions of the Final Notice

We received no public comments on the August 30, 2002 Federal Register proposed notice. We are adopting the provisions of the proposed notice as final.

IV. Regulatory Impact Statement

We have examined the impacts of this final notice as required by Executive Order 12866 (September 1993, Regulatory planning and review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.

Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year).

We have determined this notice is not a major rule because we are simply giving notice of FY 2002 allotments that were available to States of up to $400 million for a specialized category of low-income Medicare beneficiaries. We note that these funds were already budgeted and expended. In fact, State expenditures claimed for fiscal year 2002 were less than 25 percent of the total amount allotted, which is below the $100 million threshold for economically significant rulemaking under Executive Order 12866. Therefore, consistent with Executive Order 12866, we are not providing an impact analysis.

The RFA requires agencies to analyze options for regulatory relief for small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity.

This final notice will allocate, among the States, Federal funds to provide Medicaid payment for Medicare Part B premiums for QIs. The total amount of Federal funds available during a Federal fiscal year and the formula for determining individual State allotments are specified in the law. Because the formula for determination of State Start Printed Page 50793allotments is specified in the statute, there were no other options to be considered. Therefore, we have applied the statutory formula for the State allotments except for the use of specified data. Because the data specified in the law were not available, we have used comparable data from the United States Census Bureau on the number of possible QIs in the States, as described in detail in the January 26, 1998 Federal Register. Since the statutory formula calls for an estimate of individuals who could qualify for QI status rather than the number of individuals who actually have that status, the exact numbers of those individuals will always be uncertain. These new allotments for FY 2002 incorporated the latest data from the United States Census Bureau from 1999 to 2001, as specified in the footnotes to the preceding table.

We believe that announcing the final allocations in this notice will have a positive effect on States and individuals. Federal funding at the 100 percent matching rate was available for Medicare Part B premiums (or for a portion of those premiums) for QIs.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside a Metropolitan Statistical Area and has fewer than 100 beds.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or any the private sector, of $110 million. This final notice does not mandate expenditure by State, local or tribal governments in the aggregate or the private sector of $110 million.

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.

Because this final notice provides notice of funding ceilings, as determined under the statute, we have determined that this final notice will not significantly affect the rights, roles, and responsibilities of States.

We are not preparing analyses for either the RFA or section 1102(b) of the Act, because we have determined, and we certify, that this final notice will not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this final notice was reviewed by the Office of Management and Budget.

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(Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program)

Dated: April 18, 2003.

Thomas A. Scully,

Administrator, Centers for Medicare & Medicaid Services.

Dated: May 13, 2003.

Tommy G. Thompson,

Secretary.

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[FR Doc. 03-21440 Filed 8-21-03; 8:45 am]

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