For other versions of this document, see http://wikileaks.org/wiki/CRS-RL30718 ------------------------------------------------------------------------------ Order Code RL30718 CRS Report for Congress Received through the CRS Web Medicaid, SCHIP, and Other Health Provisions in H.R. 5661: Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 Updated January 4, 2001 Jean Hearne Elicia Herz Specialists in Social Legislation Evelyne Baumrucker Analyst in Social Legislation Domestic Social Policy Division Congressional Research Service ~ The Library of Congress Medicaid, SCHIP and Other Health Provisions in H.R. 5661: Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 Summary While largely comprised of Medicare provisions, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (H.R. 5661), a compromise agreement between House and Senate committees and the leadership, includes a number of important changes to Medicaid and the State Children's Health Insurance Program (SCHIP). It also includes major provisions amending other programs. The provisions of H.R. 5661 are incorporated, by reference into H.R. 4577, the Consolidated Appropriations Act 2001. H.R. 4577 was passed by the House and Senate on December 15, 2000 and was signed into law on December 21 (P.L. 106- 554). Among the major Medicaid modifications are several provisions affecting disproportionate share hospital (DSH) payments provided to hospitals that treat a disproportionate share of uninsured and Medicaid enrollees. The agreement increases the disproportionate share hospital allotments for states. It also extends a special DSH payment rule for public hospitals in California to qualifying facilities in all states, and provides additional funds to certain public hospitals not receiving DSH payments. In addition to these DSH provisions, the bill replaces cost-based reimbursement with a prospective payment system for Federally Qualified Health Centers (FQHCs) and Rural Health Centers (RHCs). The agreement also modifies proposed rules governing upper payment limits on inpatient and outpatient services provided by certain types of facilities, and requires that the final regulations be issued by the end of 2000. One major SCHIP provision extends the availability of unused funds from FY1998 and FY1999 and redistributes these unused funds among both those states that spend and those that do not spend their full original allotments for these years. Current law requires that these unused funds be distributed only to those states that spend their allotments. Among other major provisions, the agreement requires that outreach efforts be implemented to identify individuals who may be eligible for Medicaid payment of Medicare cost-sharing and to notify these persons of the availability of such assistance. It increases the authorization of annual appropriations for the Maternal and Child Health Services Block Grant under Title V. In addition, the bill extends for 1 year, to FY2003, the authority for grants to be made for both the Special Diabetes Program for Type I Diabetes and the Special Diabetes Programs for Indians and increases total funding for FY2001 through FY2003. Finally, the agreement provides an additional FY2001 direct appropriation for the Ricky Ray Hemophilia Relief Fund. For information on the Medicare provisions, see CRS Report RL30707, Medicare Provisions in H.R. 5661: Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (available upon request). Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Recent Legislative Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Medicaid, SCHIP, and Other Provisions in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 . . . . . . . . . . . . . . 6 Title VII. Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Disproportionate Share Hospital Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 6 New Prospective Payment System for FQHCs and RHCs . . . . . . . . . . . . . . 9 Requests for Extension of Medicaid Waivers . . . . . . . . . . . . . . . . . . . . . . . 10 Medicaid County-Organized Health Systems . . . . . . . . . . . . . . . . . . . . . . . 11 Medicaid Upper Payment Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Alaska FMAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Welfare-to-Work Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Determination of Medicaid Presumptive Eligibility for Low-Income Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Development of Uniform QMB/SLMB Application Form . . . . . . . . . . . . . 15 Technical Corrections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Title VIII. State Children's Health Insurance Program . . . . . . . . . . . . . . . . . . . . 17 Continued Availability and Redistribution of Unused SCHIP Funds . . . . . 17 Authority to Pay for Medicaid Expansion SCHIP Costs From Title XXI Appropriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Application of Medicaid Child Presumptive Eligibility Provisions . . . . . . 19 Title IX. Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Extension of Transition for Current PACE Waivers . . . . . . . . . . . . . . . . . . 20 Continuing Certain PACE Operating Arrangements . . . . . . . . . . . . . . . . . . 21 Flexibility in Exercising Waiver Authority . . . . . . . . . . . . . . . . . . . . . . . . . 21 Outreach for Medicare Beneficiaries Eligible for Medicaid Cost-Sharing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Maternal and Child Health Block Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Diabetes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Appropriations for Ricky Ray Hemophilia Relief Fund . . . . . . . . . . . . . . . 23 Information on Nurse Staffing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Medicaid, SCHIP and Other Health Provisions In H.R. 5661: Medicare, Medicaid, And SCHIP Benefits Improvement and Protection Act of 2000 Introduction Medicaid is a joint federal-state entitlement program that pays for medical assistance primarily for low-income persons who are aged, blind, disabled, members of families with dependent children, and certain other pregnant women and children. Within broad federal guidelines, each state designs and administers its own program. Total program outlays in FY1999 were $180.9 billion. Federal outlays were $102.5 billion and state outlays were approximately $78.4 billion. The federal government shares in a state's Medicaid costs by means of a statutory formula designed to provide a higher federal matching rate to states with lower per capita incomes. In FY1999, federal matching rates ranged from 50% to 76% of a state's expenditures for Medicaid items and services. Overall, the federal government finances about 57% of all Medicaid costs. CRS-2 The 105th Congress made important changes to the Medicaid program through the Balanced Budget Act of 1997 (BBA 97; P.L. 105-33).1 That legislation included provisions to achieve net Medicaid savings of about $13 billion between FY1998 and FY2002, largely from reductions in supplemental payments to hospitals that serve a disproportionate share of Medicaid and low-income patients. BBA 97 also significantly increased the flexibility that states have to manage their Medicaid programs. In particular, it gave states the option of requiring most beneficiaries to enroll in managed care plans without seeking a federal waiver, and replaced federal reimbursement requirements imposed by the Boren amendments with a public notice process for setting payment rates for institutional services. The Act also required that the previously existing cost-based reimbursement system for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) be phased out over a 6- year period. Spending items in the Act included Medicaid coverage for additional children, and increased assistance for low-income individuals to pay Medicare Part B premiums. The 106th Congress made additional changes to Medicaid in 1999. On November 29 of that year, the President signed the Consolidated Appropriations Act for FY2000 (P.L. 106-113). Included in that bill by reference was the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA 99), a bill largely comprised of Medicare provisions, but which also included a number of changes to Medicaid and the State Children's Health Insurance Program (SCHIP; described below). In addition to technical amendments to BBA 97, BBRA 99 included provisions allowing for increased Medicaid disproportionate share payments to hospitals for certain states and the District of Columbia, and for extended access to a special $500 million fund to pay for Medicaid eligibility determinations resulting from welfare reform for a longer period of time than allowed under previous law. BBRA 99 also modified the schedule for phasing out cost-based reimbursement for FQHCs and RHCs that had been included in the BBA 97. SCHIP, enacted in BBA 97, is targeted at uninsured children who live in families with income below twice the federal poverty level and who would not otherwise be eligible for Medicaid. The program began in October 1997 with total federal funding of nearly $40 billion for the period FY1998 through FY2007. States may use SCHIP funds to provide coverage through health insurance that meets specific standards for benefits and cost-sharing (known as separate state programs), or through expansions of eligibility under Medicaid, or through a combination of both options. SCHIP entitles states with approved SCHIP plans to pre-determined, annual federal allotments based on a distribution formula set in law. Each state has flexibility to define the group of targeted, low-income children who are eligible for its SCHIP. Eligibility criteria may include, for example, geography, age, income and resources, residency, disability status, access to other health insurance, and duration of eligibility for SCHIP. All 50 states, the District of Columbia and five territories had approved SCHIP plans. Among these, 22 are Medicaid expansions, 16 are new 1 For a detailed description of the changes to Medicaid under BBA 97, see CRS Report 98- 132, Medicaid: 105th Congress, by Melvina Ford and Richard Price. CRS-3 or expanded separate state programs, and 17 will use both a Medicaid expansion and a separate state program. Changes to SCHIP in BBRA 99 included provisions to improve state-level data collection; to evaluate the SCHIP (and Medicaid) programs with respect to outreach and enrollment practices; and to create a clearinghouse to coordinate and consolidate federal databases and reports on children's health. In addition, BBRA 99 included a number of changes to the formula used to distribute federal SCHIP funds among the states, increased the amounts available for U.S. territories, and minor technical changes.2 BBA 97 established the Program of All-Inclusive Care for the Elderly (PACE) as a permanent provider under Medicare and as a special optional benefit under Medicaid. Individuals eligible for PACE are those over age 55 who require a nursing facility level of care covered in a state Medicaid program, and who meet other eligibility requirements imposed under the program agreement. PACE providers include public entities or private, not-for-profit organizations providing health and long-term services on a capitated basis to eligible beneficiaries. They must provide all items and services covered under Medicare and Medicaid. There are no limits on amount, duration or scope of services and there are no cost-sharing requirements for PACE enrollees. The Maternal and Child Health (MCH) Services Block Grant Program (Title V of the Social Security Act) has three components ­ formula block grants to 56 states and territories for primary care services to mothers and children, Special Projects of Regional and National Significance (SPRANS), and Community Integrated Service Systems (CISS) grants. The formula grant program uses appropriated funds for a wide variety of activities, including but not limited to, capacity and systems building, public information and education, outreach and program linkage, technical assistance, and direct health care services where no services are available. SPRANS activities include maternal and child health research, training, genetic services, hemophilia diagnostic and treatment centers, and maternal and child health improvement projects. CISS grants seek to reduce infant mortality and improve the health of mothers and children through development and expansion of integrated services at the community level. The block grant requires that states match $3 in funds or resources for every $4 in federal funds received, and that a minimum of 30% of block grant funds be used to support programs for children with special health care needs. For FY1994 forward, Title V authorizes to be appropriated $705 million annually. BBA 97 created two diabetes grant programs under the Public Health Service Act. One grant program supports research into the prevention and cure of type I diabetes, or insulin-dependent diabetes. The second grant program supports prevention and treatment of diabetes in Indians. For FY1998 through FY2002, each 2 For a detailed description of changes to Medicaid and SCHIP under BBRA 99, see CRS Report RL30400, Medicaid and the State Children's Health Insurance Program (SCHIP): Provisions in the Consolidated Appropriations Act for FY2000, by Jean Hearne and Elicia Herz. CRS-4 program receives $30 million annually through funds transferred from the SCHIP appropriation. BBA 97 also required evaluations of these grant programs with an interim and final report due to Congress on January 1, 2000 and January 1, 2002, respectively. The Ricky Ray Hemophilia Relief Fund Act of 1998 (P.L. 105-369) established a 5-year trust fund to make compassionate payments of $100,000 to certain individuals with blood clotting disorders, such as hemophilia, who contracted HIV (human immunodeficiency virus) through the use of anti-hemophiliac factor between July 1, 1982 and December 31, 1987. The Act authorized appropriations to the trust fund totaling $750 million. The fund received an initial appropriation of $75 million in FY2000. H.R. 5661 provides a direct appropriation of $475 million for FY2001, in addition to $105 million appropriated in the FY2001 Miscellaneous Appropriations Act (H.R. 5666). The trust fund has, therefore, received a total of $655 million, which is estimated to be sufficient to pay all the eligible claims. Recent Legislative Activity In late September and early October of 2000, the committees with jurisdiction over the programs described above ­ the House Committee on Commerce and the Senate Committee on Finance ­ introduced legislation that would affect these programs. On September 27, 2000, the House Commerce Committee ordered reported a bill, the Beneficiary Improvement and Protection Act of 2000 (H.R. 5291). On October 5, 2000 William V. Roth Jr., the Senate Finance Committee Chairman, introduced the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 2000 (S. 3165). On December 15, 2000, the Consolidated Appropriations Act 2001 (H.R. 4577) was passed by the House and Senate; it was signed into law on December 21 (P.L. 106-554). It included, by reference, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (H.R. 5661), a compromise agreement between House and Senate committees and the leadership, which contained a number of important changes to Medicaid and the State Children's Health Insurance Program (SCHIP). It also included major provisions amending other health programs. With respect to Medicaid, a number of changes are made to disproportionate share hospital (DSH) funding. First, the agreement sets each state's FY2001 DSH allotment equal to its allotment for FY2000, increased by the percentage change in the consumer price index for FY2000, subject to a ceiling of 12% of that state's total medical assistance payments. A parallel change is made for FY2002 allotments. The bill also applies the 175% hospital-specific DSH limit to certain public hospitals in all states (not just those in California as under current law) for a 2-year period. Additional funds are provided for certain state public hospitals not receiving DSH payments and having a low-income utilization rate in excess of 65%. The are two other major Medicaid provisions in the agreement. The bill replaces the current cost-based reimbursement arrangements for Federally Qualified Health Centers and Rural Health Clinics with a new Medicaid prospective payment system. The agreement also modifies proposed HHS rules governing upper payment CRS-5 limits on inpatient and outpatient services provided by certain types of facilities, and requires that final regulations be issued by the end of 2000. The proposed rules and modifications made by the agreement close a loophole under which some states are maximizing federal Medicaid payments arguably beyond the intent of federal statute. Finally, the bill extends by 1 year the availability of transitional medical assistance (TMA) for certain families no longer eligible for Medicaid on the basis of meeting former Aid to Families with Dependent Children (AFDC) rules and adds several entities to those qualified to make Medicaid presumptive eligibility determinations for children. Under Medicaid presumptive eligibility rules, states are allowed to temporarily enroll children whose family income appears to be below Medicaid income standards, until a final formal determination of eligibility is made. With respect to SCHIP, the agreement extends the availability of unused FY1998 and FY1999 SCHIP allotments.3 Following specific formulas, these unspent funds are redistributed to both those states that have and those that have not fully exhausted their original allotments within required time frames. Current law redistributes unused funds only to those states that spend their allotments. The bill also authorizes the payment of costs of SCHIP Medicaid expansions and costs of benefits provided during periods of presumptive eligibility from the SCHIP appropriation rather than the Medicaid appropriation and clarifies states' authority to conduct presumptive eligibility determinations, as defined in Medicaid law, under separate (non-Medicaid) SCHIP programs. With respect to other programs, the agreement requires that outreach efforts be implemented to identify individuals who may be eligible for Medicaid payment of Medicare cost-sharing and that those individuals are notified of the availability of such assistance. The agreement increases the authorization of annual appropriations for the MCH Services Block Grant from $705 million to $850 million for FY2001 and thereafter. In addition, the bill extends for 1 year, to FY2003, the authority for grants to be made for both the Special Diabetes Programs for Type I Diabetes and the Special Diabetes Programs for Indians. It also increases total funding to $100 million each for FY2001 through FY2003. For FY2001 and FY2002, a portion of these funds are transferred from the SCHIP appropriation. Finally, the agreement provides for a direct appropriation of $475 million for FY2001, in addition to funds appropriated in the FY2001 Labor-HHS-Education appropriations bill, for the Ricky Ray Hemophilia Relief Fund. The Congressional Budget Office (CBO) has released preliminary cost estimates for the Benefits Improvement and Protection Act of 2000. CBO estimates that the Medicaid , SCHIP and other program provisions would decrease federal outlays by $16.6 billion over the 5-year period 2001 to 2005 and $69.2 billion over 10 years (2001-2010). Among all of these provisions, the most significant in terms of its impact on the federal budget is the revision to Medicaid's upper payment limit 3 For a detailed description of changes to the allotment redistribution rules, see CRS Report RS20628, State Children's Health Insurance Program (SCHIP): Proposed Funding Changes in the 106th Congress, by Evelyne P. Baumrucker (available upon request). CRS-6 (UPL). The UPL changes in the bill would result in savings of $21.5 billion over 5 years and $76.7 billion over 10 years.4 The following side-by-side comparison provides a brief description of current law and the changes to these programs under the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000. These provisions start at Title VII of the bill, the previous six titles being devoted to Medicare. See CRS Report RL30703, Medicaid and SCHIP Provisions in H.R. 5291 and S. 3165 (the 2000 Medicare "Refinement Bills") for a side-by-side comparison of the provisions in recent related bills. For detailed information on the Medicare provisions contained in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, see CRS Report RL30707, Medicare Provisions in H.R. 5661: Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (available upon request). 4 For a detailed description of changes to the Medicaid upper payment limit rules, see CRS Report RS20726, Medicaid Upper Payment Limits and Intergovernmental Transfers: Current Issues and Changes Made in H.R. 5661, by Elicia J. Herz (available upon request.) CRS-7 Medicaid, SCHIP, and Other Provisions in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 Title VII. Medicaid Disproportionate Share Hospital Payments Current Law Agreement Section 701. (a) Modifications to DSH The federal share of Medicaid disproportionate share hospital For FY2001, sets each state's DSH allotment equal to its allotment Allotments (DSH) payments, i.e., payments for hospitals that treat a for FY2000 increased by the percentage change in the consumer disproportionate share of uninsured and Medicaid enrollees, is price index for that year, subject to a ceiling that would be equal to capped at specified amounts for each state for FY1998 through 12% of that state's total medical assistance payments in that year. FY2002. A state's allotment for years after 2002 will be equal to its allotment for the previous year increased by the percentage For FY2002, sets each state's DSH allotment equal to its allotment change in the consumer price index for the previous year. In for 2001 as determined above, increased by the percentage change addition, each state's DSH payments for FY2003 and beyond are in the consumer price index for FY2001, subject to a ceiling equal limited to no more than 12% of spending for medical assistance for to 12% of that state's total medical assistance payments in that that year. year. For extremely low DSH states, i.e., states whose FY1999 federal and state DSH expenditures (as reported to HCFA on August 31, 2000) are greater than zero but less than one percent of the state's total medical assistance expenditures during that fiscal year, the DSH allotments for FY2001 would be equal to 1% of the state's total amount of expenditures under their plan for such assistance during that fiscal year. For subsequent fiscal years, the allotments for extremely low DSH states would be equal to their allotment for the previous year, increased by the percentage change in the consumer price index for the previous year, subject to a ceiling of 12% of that state's total medical assistance payments in that year. Effective on the date that the final regulation for Medicaid upper payment limits is published in the Federal Register. CRS-8 Current Law Agreement Section 701. (b) Assuring Identification States are required to provide disproportionate share payments to Effective for Medicaid managed care contracts in effect on January of Medicaid Managed Care Patients those hospitals whose Medicaid inpatient utilization rate is at least 1, 2001, the provision would clarify that Medicaid enrollees of one standard deviation above the mean Medicaid inpatient managed care organizations (MCO) and primary care case utilization rate for all hospitals receiving Medicaid payments in the management organizations are to be included for the purposes of state, and those with a low-income utilization rate above 25%. The calculating the Medicaid inpatient utilization rate and the low- Medicaid inpatient utilization rate includes the number of inpatient income utilization rate. Also effective January 1, 2001, states must days attributable to Medicaid beneficiaries. The low-income include in their MCO contracts information that allows the state to utilization rate includes the total revenues paid on behalf of determine which hospital services are provided to Medicaid Medicaid beneficiaries. beneficiaries through managed care, and would also require states to include a sponsorship code for the managed care entity on the Medicaid beneficiary's identification card. CRS-9 Current Law Agreement Section 701. (c) Application of Medicaid In all states but California, DSH payments to each inpatient general Revises BBA97, as modified by BBRA 99, so that the 175% DSH Transition Rule to Public Hospitals hospital are limited to no more than the costs of providing inpatient hospital-specific DSH limit allowing DSH payments in amounts up in all states and outpatient services to Medicaid and uninsured patients at that to 175% of each hospitals cost of unreimbursed care, formerly hospital, less payments received from or on behalf of Medicaid and applied only to certain public hospitals in California, applies to uninsured patients. These costs are considered to be unreimbursed qualifying public hospitals in all states. The higher limit would costs. This cap ­ the hospital-specific or facility-specific DSH cap apply for two state fiscal years beginning on the first day of the ­ was phased-in for certain public hospitals. During state fiscal state fiscal year that begins after September 30, 2002 and ends on years beginning before January 1995, those hospitals could receive the last day of the succeeding state fiscal year. Hospitals that DSH payments equal to 200% of unreimbursed costs. After would qualify for the higher hospital-specific limit would be those January 1995, all hospitals except those in California, were limited owned or operated by a state and meet the minimum federal to no more than 100% of unreimbursed costs. Hospitals qualifying requirements for disproportionate share hospitals. The permanent for the 200% cap during the transition period were those with a ceiling for California would not be affected. "high disproportionate share". Hospitals with a "high disproportionate share" were defined as those owned or operated For states operating under waivers approved under Section 1115 of by a state (or by an instrumentality or unit of government within a the Social Security Act, increased payments for public hospitals state) with a very high Medicaid inpatient utilization rate or with under this provision would be included in the baseline expenditure more Medicaid inpatient days than any other hospital in the state. limit for the purposes of determining budget neutrality. BBA 97 increased the hospital-specific limit for public hospitals in California to 175% of unreimbursed costs. The 175% hospital specific cap for California was effective for a transition period that ended in 1999. BBRA 99 later permanently extended this hospital-specific limit for qualifying public hospitals in California. Budget neutral Section 1115 waivers allow states to forego certain Medicaid rules to implement demonstrations. Section 701. (d) Assistance for Certain No provision. Provides additional funds for certain public hospitals that are: Public Hospitals owned or operated by a state (or by an instrumentality or unit of government within a state); are not receiving DSH payments as of October 1, 2000; and have a low-income utilization rate in excess of 65% as of the same date. Funds provided under this section to states with eligible hospitals are in addition to DSH allotments. The total assistance under this section for all states cannot exceed the following amounts: $15 million for FY2002; $176 million for 2003; $269 million for 2004; $330 million for 2005; and $375 million for FY2006 and each year thereafter. CRS-10 Current Law Agreement Section 701. (e) DSH Payment Hospital BBA 97 required each state to submit to the Secretary an annual Requires the Secretary to implement accountability standards to Accountability Standards report describing the disproportionate share payments made to ensure that DSH payments are used to reimburse states and each disproportionate share hospital. hospitals that are eligible for such payments and are otherwise in accordance with Medicaid statutory requirements. CRS-11 New Prospective Payment System for FQHCs and RHCs Current Law Agreement Section 702. New prospective payment States are required to pay FQHCs and RHCs amounts that are at Creates a new Medicaid prospective payment system for FQHCs system for Federally Qualified Health least a percentage of the facilities' reasonable costs for providing and RHCs. Beginning in January of FY2001, existing FQHCs and Centers (FQHCs) and Rural Health services ­ 100% of costs for services during FY1998 and FY1999; RHCs would be paid per visit payments equal to 100% of the Centers (RHCs) 95% for FY2000, FY2001 and FY2002; 90% for FY2003; 85% for average costs incurred during 1999 and 2000 adjusted for any FY2004. Cost-based reimbursement expires in 2005. In the case increase or decrease in the scope of services furnished. For entities of a contract between an FQHC or RHC and a managed care first qualifying as FQHCs or RHCs after 2000, the per visit organization (MCO), the MCO must pay the FQHC or RHC at payments would begin in the first year that the center or clinic least as much as it would pay any other provider for similar attains qualification and would be based on 100% of the costs services. States are required to make supplemental payments to the incurred during that year based on the rates established for similar FQHCs and RHCs, equal to the difference between the contracted centers or clinics with similar caseloads in the same or adjacent amounts and the cost-based amounts. geographic area. In the absence of such similar centers or clinics, the methodology would be based on that used for developing rates for established FQHCs or RHCs or such methodology or reasonable specifications as established by the Secretary. For each fiscal year thereafter, per visit payments for all FQHCs and RHCs would be equal to amounts for the preceding fiscal year increased by the percentage increase in the Medicare Economic Index applicable to primary care services, and adjusted for any increase or decrease in the scope of services furnished during that fiscal year. In managed care contracts, States must make supplemental payments to the center or clinic equal to the difference between contracted amounts and the cost-based amounts. Alternative payment methods would be permitted only when payments are at least equal to amounts otherwise provided. Directs the Comptroller General to provide for a study on how to rebase or refine cost payment methods for the services of FQHCs and RHCs. The report would be due to Congress no later than 4 years after the date of enactment. CRS-12 Requests for Extension of Medicaid Waivers Current Law Agreement Section 703. Streamlined approval of Under Section 1115 of the Social Security Act, states may obtain Defines the process for submitting requests for and receiving continued state-wide Section 1115 waivers of compliance with a broad range of Medicaid extensions of Medicaid demonstration waivers authorized under Medicaid waivers requirements to conduct experimental, pilot, or demonstration Section 1115 of the Social Security Act that have already received projects. Waivers are approved for a period of 5 years. States initial 3-year extensions. It would require each state requesting wishing to obtain approval for periods beyond 5 years may submit, such an extension to submit an application at least 120 days prior during the 6-month period ending 1 year before the date the waiver to the expiration date of the existing waiver. No later than 45 days would otherwise expire, a written request for an extension of up to after the Secretary receives such application, the Secretary would 3 years. be required to notify the state if she intends to review the existing terms and conditions of the project and would inform the state of proposed changes in the terms and conditions of the waiver. If the Secretary fails to provide such notification, the request would be deemed approved. During the 30-day period beginning after the Secretary provides the proposed terms and conditions to the state, those terms and conditions would be negotiated. No later than 120 days after the date that the request for extension was submitted (or such later date as agreed to by the chief executive officer of the state) the Secretary would be required to approve the application subject to the agreed upon terms and conditions or, in the absence of an agreement, such terms and conditions that are determined by the Secretary to be reasonably consistent with the overall objective of the waiver, or disapprove the application. If the waiver is not approved or disapproved during this period, the request would be deemed approved in the terms and conditions as have been agreed to (if any) by the Secretary and the state. Approvals would be for periods not to exceed 3 years and would be subject to the final reporting and evaluation requirements in current law. CRS-13 Medicaid County-Organized Health Systems Current Law Agreement Section 704. Medicaid County-Organized Health insuring organizations (HIOs) are county-sponsored health Allows the current exemption for three California Health Insuring Health Systems maintenance organizations (HMOs). Up to three HIOs designated Organizations (HIOs) from certain Medicaid HMO contracting by the state of California are exempt from certain federal statutory requirements to apply as long as no more than 14% of all Medicaid requirements for Medicaid HMO contracts. The exemption only beneficiaries in California are enrolled in those HIOs. Effective as applies if the HIOs enroll no more than 10% of all Medicaid if included in the enactment of the Consolidated Omnibus Budget beneficiaries in California (not counting qualified Medicare Reconciliation Act of 1985. beneficiaries). CRS-14 Medicaid Upper Payment Limits Current Law Agreement Section 705. Deadline for Issuance of Medicaid statute requires states to set payment rates for services Requires the Secretary to issue final regulations governing upper Final Regulation Relating to Medicaid that are consistent with efficiency and economy. In accordance payment limits (UPLs) for inpatient and outpatient services Upper Payment Limits with these requirements, the Secretary has established, through provided by certain types of facilities no later than December 31, regulation, upper payment limits (UPLs) for inpatient and 2000. Requires that the final regulation establish a separate UPL outpatient services provided by certain types of facilities. for non-state-owned or operated government facilities based on a Payments may not exceed estimates of what would have been paid proposed rule announced in October, 2000. for those services under Medicare payment principles. Recently, the Secretary determined that current regulations create a financial Requires the final regulation to stipulate a third set of rules incentive for states to make higher than usual payments to non- governing the transition period for certain states. This additional state government facilities (e.g., county and city providers) set of rules would apply to states with payment arrangements allowing them to claim higher federal matching dollars. Those approved or in effect on or before October 1, 1992, or under which matching funds may be transferred from these facilities back to the claims for federal matching were paid on or before that date, and state and used to cover the state share of Medicaid costs and/or for for which such payments exceed the UPLs established under the other purposes. Proposed rules to modify Medicaid UPLs establish final regulation. For these states, a 6-year transition period would a separate UPL for inpatient services provided by non-state apply, beginning with the period that begins on the first state fiscal government facilities. Aggregate payments for inpatient services year that starts after September 30, 2002 and ends on September provided by non-state public hospitals may not exceed 150% of 30, 2008. For each year during the transition period, applicable estimated payments based on Medicare payment principles. states must reduce excess payments by 15%. Full compliance with Parallel rules are proposed for outpatient hospital and clinic final regulations is required by October 1, 2008. services. The proposed rules also specify two transition periods for states that are currently noncompliant. These rules vary by when enhanced payment arrangements were in effect (before versus on or after October 1, 1999), the starting point for the phase-out of existing payment arrangements, the percentage reduction in payments each year, and the overall length of time permitted for full phase-out. State fiscal year 2000 will serve as the base period for determining the amount of excess payments above proposed UPLs that must be phased out. CRS-15 Alaska FMAP Current Law Agreement Section 706. Alaska FMAP The federal share of the cost of Medicaid services is equal to the Changes the formula for calculating the state percentage and thus federal medical assistance percentage (FMAP) of those costs. It is the federal matching percentage for Alaska for FY2001 through determined annually according to a statutory formula designed to FY2005. The state percentage for Alaska would be calculated by pay a higher federal matching assistance percentage to states with using an adjusted per capita income calculation instead of the lower per capita incomes relative to the national average. state-wide average per capita income generally used. The adjusted per capita income for Alaska would be calculated as the BBA 97 included a provision that set the FMAP for Alaska at three year average per capita income for the state divided by 1.05. 59.8% for FY1998 through FY2000. CRS-16 Welfare-to-Work Transition Current Law Agreement Section 707. 1-Year Extension of Welfare-to-Work In 1996, Temporary Assistance for Needy Families Extends by 1 year (to September 30, 2002) the availability Transition. (TANF) replaced Aid to Families with Dependent of TMA for families no longer eligible for Medicaid on Children (AFDC) as the major cash assistance program for the basis of meeting former AFDC rules. low-income families. TANF eligibility does not confer automatic Medicaid eligibility. Medicaid entitlement was retained for individuals who meet the requirements of the former AFDC program in effect on July 16, 1996 (and subsequently modified, if applicable). Transitional medical assistance (TMA) is provided for individuals who would otherwise lose Medicaid due to certain changes in employment or income. Specifically when eligibility under old AFDC rules is lost due to hours of or income from employment, or loss of a time-limited earned income disregard, (and the person qualified for Medicaid on the basis of old AFDC rules in at least 3 of the preceding 6 months), TMA is available for the subsequent 6 to 12 months. TMA will sunset at the end of FY2001. CRS-17 Determination of Medicaid Presumptive Eligibility for Low-Income Children Current Law Agreement Section 708. Additional Entities Qualified to Determine Under Medicaid presumptive eligibility rules, states are Adds several entities to the list of those qualified to make Medicaid Presumptive Eligibility for Low-Income allowed to temporarily enroll children whose family Medicaid presumptive eligibility determinations for Children. income appears to be below Medicaid income standards, children. These include agencies that determine eligibility until a final formal determination of eligibility is made. for Medicaid or the State Children's Health Insurance For children, entities qualified to make presumptive Program (SCHIP); certain elementary and secondary eligibility determinations include Medicaid providers, and schools; state or tribal child support enforcement agencies; agencies that determine eligibility for Head Start, certain organizations providing emergency food and subsidized child care, or the Special Supplemental Food shelter to the homeless; entities involved in enrollment Program for Women, Infants and Children (WIC). under Medicaid, TANF, SCHIP, or that determine eligibility for federally funded housing assistance; or any other entity deemed by a state, as approved by the Secretary of HHS. Effective upon enactment. Development of Uniform QMB/SLMB Application Form Current Law Agreement Section 709. Development of Uniform QMB/SLMB No provision. Requires the Secretary of HHS to develop a simplified, Application Form national application form to be used, at state option, by Qualified Medicare Beneficiaries (QMBs) and Specified Low-Income Medicare Beneficiaries (SLMBs) applying for medical assistance with Medicare cost-sharing. Effective 1 year after the date of enactment. CRS-18 Technical Corrections Current Law Agreement Section 710. Technical Corrections Medicaid statute prohibits the distribution of federal Makes technical amendments that exempt from the upper matching funds for medical assistance provided to income limit rule those individuals made eligible for individuals whose family income exceeds 133a% of the Medicaid, at state option, under the Foster Care amount that would be paid to a family of the same size Independence Act of 1999 and under the Breast and under old AFDC rules (as modified). Certain costs to the Cervical Cancer Prevention and Treatment Act of 2000. family are subtracted to determine the applicable countable income. Specified eligibility groups are exempt from this upper income limit rule. CRS-19 Title VIII. State Children's Health Insurance Program Continued Availability and Redistribution of Unused SCHIP Funds Current Law Agreement Section 801. Special Rule for Funds for the SCHIP Program are authorized and appropriated for Establishes a new method for distributing unspent FY1998 and Redistribution and Availability of Unused FY1998 through FY2007. From each year's appropriation, a state FY1999 allotments. States that use all their SCHIP allotments (for FY1998 and FY1999 SCHIP Allotments is allotted an amount as determined by a formula set in law. each of those years) would receive an amount equal to estimated Federal funds not drawn down from a state's allotment by the end spending in excess of their original exhausted allotment. Each of each fiscal year continue to be available to that state for 2 territory that spends its original allotment would receive an amount additional fiscal years. Allotments not spent at the end of 3 years that bears the same ratio to 1.05% of the total amount available for will be redistributed by the Secretary of Health and Human redistribution as the ratio of its original allotment to the total Services (HHS) to states that have fully spent their original allotment for all territories. allotments for that year. Redistributed funds not spent by the end of the fiscal year in which they are reallocated officially expire. States that do not use all their SCHIP allotment would receive an All administrative expenses including outreach activities are amount equal to the total amount of unspent funds, less amounts subject to an overall limit of 10% of total program spending per distributed to states that fully exhausted their original allotments, fiscal year. multiplied by the ratio of a state's unspent original allotment to the total amount of unspent funds. States may use up to 10% of the retained FY1998 funds for outreach activities. To calculate the amounts available for redistribution in each formula described above, the Secretary would use amounts reported by states not later than December 15, 2000 for the FY1998 redistribution and November 30, 2001 for the FY1999 redistribution as reported on HCFA Form 64 or HCFA Form 21, and as approved by the Secretary. Redistributed funds would be available through the end of FY2002. CRS-20 Authority to Pay for Medicaid Expansion SCHIP Costs From Title XXI Appropriation Current Law Agreement Section 802. Authority to Pay for States' allotments under SCHIP pay only the federal share of costs Authorizes the payment of the costs of SCHIP Medicaid Medicaid Expansion SCHIP costs from associated with separate (non-Medicaid) SCHIP programs. The expansions and the costs of benefits provided during periods of Title XXI Appropriation federal share of costs associated with SCHIP Medicaid expansions presumptive eligibility from the SCHIP appropriation rather than are paid for under Medicaid. State SCHIP allotments are reduced from the Medicaid appropriation, and as a conforming amendment, by the amounts paid under Medicaid for SCHIP Medicaid would eliminate the requirement that state SCHIP allotments be expansion costs. reduced by these (former) Medicaid payments. In addition, codifies proposed rules regarding the order of payments for Presumptive eligibility allows pregnant women and children in benefits and administrative costs from state-specific SCHIP families with income that appears to be below a state's Medicaid allotments. For fiscal years 1998 through 2000 only, authorizes income standards to enroll temporarily in Medicaid, until a final the transfer of unexpended SCHIP appropriations to the Medicaid formal determination of eligibility is made. There is no express appropriation account for the purpose of reimbursing payments provision for presumptive eligibility under SCHIP. However, the associated with SCHIP Medicaid expansion programs. Secretary of HHS permits states to develop equivalent procedures for separate (non-Medicaid) SCHIP programs through other Title XXI authority. CRS-21 Application of Medicaid Child Presumptive Eligibility Provisions Current Law Agreement Section 803. Application of Medicaid Child Presumptive Under Medicaid presumptive eligibility rules, states are Clarifies states' authority to conduct presumptive Eligibility Provisions. allowed to temporarily enroll children whose family eligibility determinations, as defined in Medicaid law, income appears to be below Medicaid income standards, under separate (non-Medicaid) SCHIP programs. until a final formal determination of eligibility is made. There is no express provision for presumptive eligibility under separate (non-Medicaid) SCHIP programs. However, the Secretary of HHS permits states to develop, for separate (non-Medicaid) SCHIP programs, procedures that are similar to those permitted under Medicaid. CRS-22 Title IX. Other Provisions Extension of Transition for Current PACE Waivers Current Law Agreement Section 901. Extension of Transition for Current Waivers OBRA 86 required the Secretary to grant waivers of Permits the Secretary to continue to operate the Program certain Medicare and Medicaid requirements to not more of All-Inclusive Care for the Elderly (PACE) under than 10 public or non-profit private community-based waivers for a period of 36 months (rather than 24 months), organizations to provide health and long-term care and states may do so for 4 years (rather than 3 years). services on a capitated basis to frail elderly persons at risk of institutionalization. These projects, known as the Program of All-Inclusive Care for the Elderly (PACE), were intended to determine whether an earlier demonstration program, On-Lok, could be replicated across the country. OBRA 90 expanded the number of organizations eligible for waivers to 15. BBA 97 established PACE as a permanent provider under Medicare and as an optional benefit under Medicaid. State Medicaid programs are permitted to limit the number of persons enrolled in PACE programs. The Secretary was required to issue regulations establishing requirements for PACE providers (and did so with an effective date of November 24, 1999). The Secretary may continue to operate programs under the prior law waivers for a transition period of 24 months after publication of the regulations, and states may elect to continue to operate a PACE program under special arrangements for 3 years after the Secretary's regulations. CRS-23 Continuing Certain PACE Operating Arrangements Current Law Agreement Section 902. Continuing of Certain Operating BBA 97 established PACE as a permanent part of the If prior to becoming a permanent component of Medicare, Arrangements Permitted Medicare and Medicaid programs and provided for a a PACE demonstration project had contractual or other transition of PACE from demonstration project status to operating arrangements that are not recognized under permanent program status. permanent program regulations, requires the Secretary, in consultation with the state agency, to permit it to continue under such arrangements as long as it is consistent with the objectives of the PACE program. Flexibility in Exercising Waiver Authority Current Law Agreement Section 903. Flexibility in Exercising Waiver Authority The law and regulations for PACE require that programs Enables the Secretary to exercise authority to modify or operate according to a protocol. waive Medicare or Medicaid requirements to respond to the needs of PACE programs related to employment and the use of community care physicians. The Secretary must approve requests for such waivers within 90 days of the date the request for waiver is received. CRS-24 Outreach for Medicare Beneficiaries Eligible for Medicaid Cost-Sharing Assistance Current Law Agreement Section 911. Outreach on Availability of Medicaid covers the costs of certain Medicare financial obligations Requires the Commissioner of the Social Security Administration Medicare Cost-sharing Assistance to for qualified Medicare beneficiaries (QMBs), specified low income to conduct outreach efforts to identify individuals who may be Eligible Low-income Medicare Medicare beneficiaries (SLMBs) and two groups of "qualified eligible for Medicaid payment of Medicare cost sharing and to Beneficiaries individuals" referred to as QI-1s and QI-2s. QMBs are aged or notify these persons of the availability of such assistance. The disabled persons with incomes at or below the federal poverty line Commissioner would also be required to furnish, at least annually, and assets below twice the SSI level. The other groups are a list of such individuals who reside in each state to that state's comprised of other low income-individuals who meet all but the agency responsible for administering the Medicaid program as well income definition for QMB eligibility. as to any other appropriate state agency. The list should include the name and address, and whether such individuals have experienced reductions in Social Security benefits. Also requires the General Accounting Office to conduct a study of the impact of the outreach activities of the Commissioner to submit to Congress no later than 18 months after such outreach begins. Effective 1 year after date of enactment. Maternal and Child Health Block Grant Current Law Agreement Section. 921. Increase in Authorization Title V of the Social Security Act authorizes an appropriation of Increases the authorization of appropriations for this grant program of Appropriations for the Maternal and $705 million for FY1994 and each fiscal year thereafter for the to $850 million for FY2001 and each fiscal year thereafter. Child Health Services Block Grant Maternal and Child Health Services Block Grant. CRS-25 Diabetes Current Law Agreement Section 931. Increase in Appropriations The Balanced Budget Act of 1997 amended Title III of the Public Extends for 1 year, to FY2003, the authority for grants to be made for Special Diabetes Programs for Type Health Service Act to create two grant programs supporting the for both the Special Diabetes Program for Type I Diabetes and for I Diabetes and Indians prevention and treatment of, and research relating to, diabetes. The the Special Diabetes Programs for Indians. Also expands funding first targets diabetes research and the second supports the available for these programs. For each grant program, increases prevention and treatment services of diabetes in Indians. Each total funding to $100 million each for FY2001, FY2002 and program receives $30 million for each of the fiscal years 1998 FY2003. For FY2001 and FY2002, $30 million of the $100 through 2002, transferred from the SCHIP appropriation. million for each program would be transferred from SCHIP; the remaining $70 million would be drawn from the Treasury out of funds not otherwise appropriated. In FY2003, the entire $100 million would be drawn from the Treasury out of funds not otherwise appropriated. In addition, extends the due date on final evaluation reports for these two grant programs from January 1, 2002 to January 1, 2003. Appropriations for Ricky Ray Hemophilia Relief Fund Current Law Agreement Section 932. Appropriations for Ricky The Ricky Ray Hemophilia Relief Fund Act of 1998 (P.L. 105- Provides for a direct appropriation to the Ricky Ray trust fund of Ray Hemophilia Relief Fund 369) established a 5-year trust fund to make compassionate $475 million for FY2001. [Note: an additional $105 million was payments of $100,000 to hemophiliacs who contracted HIV appropriated to the fund in the FY2001 Miscellaneous through the use of anti-hemophiliac factor between July 1, 1982 Appropriations Act (H.R. 5666).] and December 31, 1987. The Act authorized appropriations to the fund totaling $750 million. The trust fund received an initial appropriation of $75 million in FY2000. CRS-26 Information on Nurse Staffing Current Law Agreement Section 941. Posting Of Information on Nursing Facility Medicare and Medicaid statute delineates certain Requires Medicare skilled nursing facilities and Medicaid Services requirements for skilled nursing and nursing facilities, nursing facilities to post licensed and unlicensed nurse respectively. With regard to staffing, facilities must staffing information daily for each shift in the facility, and provide 24-hour licensed nursing service sufficient to meet to make such information publicly available, upon request. the nursing needs of residents and must, in general, use the Effective January 1, 2003. services of a registered nurse at least 8 consecutive hours a day, 7 days a week. Nurse aides must complete training and competency evaluation programs. No staffing-to- resident ratios are specified in federal statute. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL30718