# Medicaid, Children's Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2013-00659

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** January 22, 2013
- **Citation:** 78 FR 4594

## Text

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 430, 431, 433, 435, 440, 447, and 457
Office of the Secretary
45 CFR Part 155
[CMS-2334-P]
RIN 0938-AR04
Medicaid, Children's Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing

AGENCY:

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

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would implement provisions of the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act), and the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). This proposed rule reflects new statutory eligibility provisions; proposes changes to provide states more flexibility to coordinate Medicaid and the Children's Health Insurance Program (CHIP) eligibility notices, appeals, and other related administrative procedures with similar procedures used by other health coverage programs authorized under the Affordable Care Act; modernizes and streamlines existing rules, eliminates obsolete rules, and updates provisions to reflect Medicaid eligibility pathways; revises the rules relating to the substitution of coverage to improve the coordination of CHIP coverage with other coverage; implements other CHIPRA eligibility-related provisions, including eligibility for newborns whose mothers were eligible for and receiving Medicaid or CHIP coverage at the time of birth; amends certain provisions included in the “State Flexibility for Medicaid Benefit Packages” final rule published on April 30, 2010; and implements specific provisions including eligibility appeals, notices, and verification of eligibility for qualifying coverage in an eligible employer-sponsored plan for Affordable Insurance Exchanges. This rule also proposes to update and simplify the complex Medicaid premiums and cost sharing requirements, to promote the most effective use of services, and to assist states in identifying cost sharing flexibilities.

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on February 13, 2013.

ADDRESSES:

In commenting, please refer to file code CMS-2334-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (please choose only one of the ways listed):

1.
Electronically.
You may submit electronic comments on this regulation to
http://www.regulations.gov.
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-2334-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-2334-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4.
By hand or courier.
Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period:

a. For delivery in Washington, DC—

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. For delivery in Baltimore, MD—

Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.

Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

For information on viewing public comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.

FOR FURTHER INFORMATION CONTACT:

Sarah deLone, (410) 786-0615, or Stephanie Kaminsky, (410) 786-4653, for provisions related to revisions to eligibility notice and fair hearing appeal processes and additional eligibility changes for Medicaid and CHIP.

Melissa Harris, (410)786-3397, for provisions related to essential health benefits.

Leigha Basini, (301) 492-4307, for provisions related to Affordable Insurance Exchanges.

SUPPLEMENTARY INFORMATION:

Executive Summary

This proposed rule would implement provisions of the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act), and the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). This rule reflects new statutory eligibility provisions, proposes changes to provide states more flexibility to coordinate Medicaid and CHIP eligibility notices, appeals, and other related administrative procedures with similar procedures used by other health coverage programs authorized under the Affordable Care Act. This proposed rule also modernizes and streamlines existing rules, eliminates obsolete rules, and updates provisions to reflect new or revised Medicaid eligibility pathways. This rule also implements CHIPRA eligibility-related provisions, including eligibility for newborns whose mothers were eligible for and receiving Medicaid or CHIP coverage at the time of birth.

This proposed rule amends the final rule published on April 30, 2010, titled “State Flexibility for Medicaid Benefit Packages,” which implemented the provisions of section 1937 of the Social Security Act (the Act), and established a state option to provide Medicaid benefits using benchmark or benchmark-equivalent coverage. In an

effort to bring consistency and clarity to part 440, we are removing the terms “benchmark and benchmark-equivalent plan” where they appear together and are replacing these terms with “Alternative Benefit Plan.”

Beginning in 2014, individuals and small businesses will be able to purchase private health insurance through competitive marketplaces called Affordable Insurance Exchanges, or “Exchanges.” This proposed rule would: (1) Set forth standards for adjudicating appeals of individual eligibility determinations and exemptions from the individual responsibility requirements, as well as determinations of employer-sponsored coverage, and determinations of SHOP employer and employee eligibility for purposes of implementing section 1411(f) of the Affordable Care Act, (2) set forth standards for adjudicating appeals of employer and employee eligibility to participate in the SHOP, (3) outline criteria related to the verification of enrollment in and eligibility for minimum essential coverage through an eligible employer-sponsored plan, and (4) further specify or amend standards related to other eligibility and enrollment provisions. The intent of this rule is to afford states substantial discretion in the design and operation of an Exchange, with greater standardization provided where directed by the statute or where there are compelling practical, efficiency or consumer protection reasons.

This rule also proposes to update and simplify the complex Medicaid premiums and cost sharing requirements to promote the most effective use of services and to assist states in identifying cost sharing flexibilities. To that end, we propose to update the maximum allowable cost sharing levels, in particular expanding upon the flexibilities related to drugs and emergency department (ED) usage. We propose new options for states to establish higher cost sharing for non-preferred drugs, and to impose higher cost sharing for non-emergency use of the ED.

Besides the specific updates to nominal amounts, we propose to greatly simplify and streamline the entire premiums and cost sharing regulation “in a manner that is consistent with simplicity of administration and the best interests of the recipients,” in accordance with section 1902(a)(19) of the Act. This proposed rule would no longer distinguish between the two statutory authorities for premiums and cost sharing (sections 1916 and 1916A of the Act) and instead would simply lay out the parameters under which premiums and cost sharing are permitted.

Finally, this rulemaking provides notice that we are considering, for purposes of the initial open enrollment period for enrollment in a Qualified Health Plan through the Exchange, whether various provisions of the Medicaid and CHIP regulations should be effective October 1, 2013, or whether a later effective date is appropriate.

Table of Contents

To assist readers in referencing sections contained in this document, we are providing the following table of contents.

Executive Summary

I. Medicaid Eligibility Expansion Part II

A. Background

1. Introduction

2. Legislative Overview

3. Overview of the Proposed Rule

B. Provision of the Proposed Rule

1. Appeals

2. Notices

3. Medicaid Eligibility Changes under the Affordable Care Act

4. Medicaid Enrollment Changes under the Affordable Care Act needed to achieve coordination with the Exchange

5. Medicaid Eligibility Requirements and Coverage Options established by other Federal Statutes

6. Verification Exceptions for Special Circumstances

7. Verification Procedures for Individuals Attesting to Citizenship or Satisfactory Immigration Status

8. Elimination or Changes to Unnecessary and Obsolete Regulations

9. Coordinated Medicaid/CHIP Open Enrollment Process

10. Children's Health Insurance Program Changes

11. Premium Assistance

12. Electronic Submission of the Medicaid and CHIP State Plan

13. Changes to Modified Adjusted Gross Income and MAGI Screen

14. Single State Agency: Delegation of eligibility determination to Exchanges

15. Medical Support and Payments

16. Conversion of Federal Minimum Income Standards for Section 1931

II. Essential Health Benefits in Alternative Benefit Plans

A. Background

B. Provision of the Proposed Rule: Part 440—Medicaid Program; State Flexibility for Medicaid Benefit Packages

1. Subpart C—Benchmark Benefit and Benchmark-Equivalent Coverage

2. Other Changes to Simplify, Modernize and Clarify Medicaid Benchmark Requirements and Make Technical Corrections to Coverage Requirements

III. Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges

A. Background

1. Legislative Overview

2. Stakeholder Consultation and Input

3. Structure of the Proposed Rule

4. Alignment with Related Rules and Published Information

B. Provisions of the Proposed Regulations: Part 155—Exchange Establishment Standards and Other Related Standards Under the Affordable Care Act

1. Definitions

2. Approval of a State Exchange

3. Functions of an Exchange

4. Consumer Assistance Tools and Programs of an Exchange

5. Certified Application Counselors

6. Authorized Representatives

7. General standards for Exchange notices

8. Definitions and general standards for eligibility determinations

9. Options for conducting eligibility determinations

10. Eligibility standards

11. Eligibility process

12. Verification process related to eligibility for enrollment in a QHP through the Exchange

13. Verifications related to eligibility for insurance affordability programs

14. Eligibility redetermination during a benefit year

15. Annual eligibility redetermination

16. Administration of advance payments of the premium tax credit and cost-sharing reductions

17. Coordination with Medicaid, CHIP, the Basic Health Program, and the Pre-existing Condition Insurance Plan

18. Special eligibility standards and process for Indians

19. Enrollment of qualified individuals into QHP's

20. Special enrollment periods

21. Termination of coverage

22. Subpart F—Appeals of Eligibility Determinations for Exchange Participation and Insurance Affordability Programs

23. Definitions

24. General Eligibility Appeals Requirements

25. Appeals Coordination

26. Notice of Appeal Procedures

27. Appeal Requests

28. Eligibility Pending Appeal

29. Dismissals

30. Informal Resolution and Hearing Requirements

31. Expedited Appeals

32. Appeal Decisions

33. Appeal Record

34. Employer Appeals Process

35. Functions of a SHOP

36. SHOP Employer and Employee Eligibility Appeals

IV. Medicaid Premiums and Cost Sharing

A. Background

B. Provisions of Proposed Rule

V. Collection of Information Requirements

VI. Response to comments

VII. Summary of Preliminary Regulatory Impact Analysis

Acronyms

Because of the many organizations and terms to which we refer by acronym in this proposed rule, we are listing these acronyms and their corresponding terms in alphabetical order below:

[the] Act Social Security Act

Affordable Care Act The Affordable Care Act of 2010 (which is the collective term for the Patient Protection and Affordable Care Act (Pub. L. 111-148) and the Health Care and Education Reconciliation Act (Pub. L. 111-152))

AFDC Aid to Families with Dependent Children

BBA Balanced Budget Act of 1997

BHP Basic Health Program

CHIP Children's Health Insurance Program

CHIPRA Children's Health Insurance Program Reauthorization Act of 2009

CMS Centers for Medicare & Medicaid Services

[the] Code Internal Revenue Code of 1986

DHS Department of Homeland Security

DOL U.S. Department of Labor

DRA Deficit Reduction Act of 2005

EITC Earned Income Tax Credit

EPSDT Early and periodic screening, diagnosis, and treatment

FEHBP Federal Employees Health Benefits Program (5 U.S.C 8901, et seq.)

FFE Federally-facilitated Exchange

FFP Federal financial participation

FMAP Federal medical assistance percentage

FPL Federal poverty level

HCERA Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted March 30, 2010)

HHS [U.S. Department of] Health and Human Services

IHS Indian Health Service

INA Immigration and Nationality Act

IRA Individual Retirement Account

IRC Internal Revenue Code of 1986

IRS Internal Revenue Service

MAGI Modified adjusted gross income

OMB Office of Management and Budget

OPM U.S. Office of Personnel Management

PHS Act Public Health Service Act

PRA Paperwork Reduction Act of 1985

PRWORA Personal Responsibility and Work Opportunity Reconciliation Act of 1996

QHP Qualified Health Plan

SHOP Small Business Health Options Program

SMD State Medicaid Director

SNAP Supplemental Nutrition Assistance Program

SPA State Plan Amendment

SSA Social Security Administration

SSI Supplemental Security Income

SSN Social Security number

TANF Temporary Assistance for Needy Families

I. Medicaid Eligibility Expansion Part II

A. Background

1. Introduction

The Patient Protection and Affordable Care Act (Pub. L. 111-148, enacted on March 23, 2010), was amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010). These laws are collectively referred to as the Affordable Care Act. In addition, section 205 of the Medicare & Medicaid Extenders Act of 2010 (Pub. L. 111-309, enacted December 15, 2010) (MMEA) and the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. No. 112-96, enacted February 22, 2012) made additional amendments to the Social Security Act (the Act) provisions affected by the Affordable Care Act.

The Affordable Care Act extends and simplifies Medicaid eligibility and on March 23, 2012, we issued a final rule (referred to as the “Medicaid eligibility final rule”) addressing certain key Medicaid eligibility issues.

This proposed rule provides states with additional flexibility in beneficiary appeals, notices and related procedures, updates CMS regulations to fully reflect changes in Medicaid eligibility created under the Affordable Care Act and existing legislations, and modernizes administrative procedures to further promote coordination across multiple health coverage programs, including purchase of coverage through the Exchange with advance payments of the premium tax credits and cost sharing reductions, as authorized by the Affordable Care Act, Medicaid and the Children's Health Insurance Program (CHIP). These coverage programs are collectively referred to as “insurance affordability programs.”

2. Legislative Overview

This proposed rule reflects and implements Medicaid and CHIP eligibility and enrollment provisions of the Affordable Care Act including:

• Sections 1411 and 1413, which ensure coordination in the eligibility, verification, and enrollment systems for Medicaid, CHIP, Basic Health Programs, and Exchanges. This includes ensuring verification of individuals' citizenship status.

• Section 2001, which provides for expanded Medicaid eligibility for adults under age 65.

• Section 2002, which sets out new financial eligibility methodologies for Medicaid for certain populations.

• Sections 2004 and 10201, which expand Medicaid coverage for individuals under age 26 who were receiving Medicaid when they aged out of foster care.

• Section 2101, which sets new financial eligibility methodologies for CHIP.

• Sections 2201 and 1413, which simplify and coordinate eligibility and enrollment systems across insurance affordability programs.

• Section 2202, which permits hospitals to make presumptive eligibility determinations for all Medicaid eligible populations.

• Section 2303, which provides a state option for Medicaid coverage limited to family planning or family planning related services under the state plan.

This proposed rule also makes changes to the Children's Health Insurance Program (CHIP) that reflect and implement certain provisions of the Social Security Act, Affordable Care Act and the Children's Health Insurance Program Reauthorization Act of 2009 (Pub. L 111-3, enacted on February 4, 2009) (CHIPRA) including:

• Sections 111, 113, and 211 of CHIPRA, which require automatic eligibility for newborns whose mothers were receiving medical assistance at the time of birth.

• Section 2105(c)(10) of the Social Security Act, as well as sections 1906 and 1906A of the Social Security Act, which apply a cost-effectiveness test to premium assistance set forth at Section 10203(b) of the Affordable Care Act.

3. Overview of the Proposed Rule

The proposed amendments to 42 CFR parts 430, 431, 435, and 457 in this rule propose the following policies:

• Amendments to part 430 subpart B propose electronic submission of state plans and plan amendments.

• Amendments to part 431 subpart A and part 433 subpart D propose updated, streamlined, and coordinated eligibility, beneficiary notice and appeal functions for Medicaid and CHIP.

• Amendments to part 435 subparts A, B, C and D reflect statutory changes to Medicaid eligibility. These amendments also add new or revised definitions and delete existing regulations that are rendered obsolete.

• Amendments to part 435 subparts E and F reflect statutorily-required changes to state procedures to verify citizenship or non-citizen status.

• Amendments to part 435 subpart G reflect the statutorily-required shift to MAGI-based financial eligibility methods for most populations, as set forth in the final Medicaid eligibility final rule issued on March 23, 2012 at (77 FR 17144).

• Amendment to part 435 subparts J and K and the addition of a new subpart M propose standards to promote the establishment by states of a seamless and coordinated system to determine eligibility of individuals seeking assistance and to enroll them in the appropriate insurance affordability program. Subpart M would delineate the responsibilities of the state Medicaid agency in the coordinated system of eligibility and enrollment established under the Affordable Care Act. Comparable amendments would be made to CHIP requirements at part 457.

The proposed amendments to 45 CFR part 155 in this rule also propose

requirements necessary to facilitate the creation of the Affordable Insurance Exchange eligibility and enrollment system established by the Affordable Care Act.

B. Provisions of the Proposed Rule

The following descriptions are structured to explain the provisions being proposed and do not necessarily follow the order of the regulation's text.

1. Appeals

(a) Generally (§§ 431.10, 431.205, 431.206, 431.221, 431.242, 431.244, 435.4, 435.907, 435.1200 and 45 CFR 155.302)

The Medicaid eligibility final rule published on March 23, 2012 at (77 FR 17144) (“Medicaid eligibility final rule”), along with the Exchange eligibility final rule published on March 27, 2012 (77 FR 18310), established a coordinated system of eligibility and enrollment in a QHP through the Exchange and for all insurance affordability programs, consistent with the Affordable Care Act. In this proposed rule, we propose modifications to Medicaid procedures, similar to those finalized in the Medicaid eligibility final rule, to promote coordination of notices and appeals of eligibility determinations. Consistent with sections 1413 and 2201 of the Affordable Care Act, the proposed revisions aim to coordinate Medicaid fair hearings under section 1902(a)(3) of the Act with appeals of eligibility determinations for enrollment in a QHP and for advance payment of the premium tax credit and cost-sharing reductions under section 1411(f) of the Affordable Care Act. Under the authority of section 1943(b)(3) of the Act, we propose to provide states with options for coordinating appeals to align with the options they have for eligibility determinations.

To promote coordination of appeals when there are appeals of both the level of advance payment of the premium tax credit or cost-sharing reductions granted for enrollment in a QHP through the Exchange and a denial of Medicaid, we propose at § 431.10(c)(1)(ii) to permit Medicaid agencies to delegate authority to conduct fair hearings of eligibility denials based on the applicable modified adjusted gross income (MAGI) standard to an Exchange or Exchange appeals entity (hereinafter, when we refer to a delegation of authority to conduct Medicaid fair hearings to an Exchange, we also intend this reference to include delegation to an Exchange appeals entity), provided that individuals are given the option to have the fair hearing on the Medicaid denial conducted instead by the Medicaid agency. Proposed § 431.206(d) directs that states delegating authority to conduct fair hearings to an Exchange must inform individuals of their right to opt instead for a fair hearing before the Medicaid agency and the method by which the individual may do so. Individuals would be informed of the option to opt into having the appeal heard by the Medicaid agency at the time the appeal is filed, prior to either entity conducting a hearing, and the notice provided would need to be sufficient to enable an informed choice.

The beneficiary option is required by statute, but we expect that most individuals will not opt out of having a consolidated appeal of both Medicaid and Exchange-related issues before the Exchange appeal entity, to choose instead to have two separate hearings (one before the Exchange appeals entity and one before the Medicaid agency). If the Exchange appeals entity conducts the hearing on the Medicaid denial, that hearing decision would be final under the proposed rule, subject to the state's option, proposed at § 431.10(c)(3)(iii) and discussed further below, to review conclusions of law made by the hearing officer.

An Exchange appeals entity, defined at proposed § 431.10(a)(2), would include a State-based Exchange appeals entity, as well as the HHS appeals entity, responsible for adjudicating appeals of determinations of eligibility to enroll in a QHP and for advance payment of the premium tax credit and cost-sharing reductions under section 1411(f) of the Affordable Care Act. Per proposed § 431.10(c)(2), delegation is permitted only to an Exchange that is a governmental agency that maintains merit protections for its employees. Delegation to a governmental agency is discussed in more detail at section I.B.12 of this proposed regulation, related to delegation of authority to conduct eligibility determinations. State Medicaid agencies may not delegate authority to conduct fair hearings to other state agencies, such as a sister human services agency or independent state appeals agency, under § 431.10(c)(1)(ii). States may, however, request a waiver under the Intergovernmental Cooperation Act of 1968, as codified at 31 U.S.C. 6504, as some states have done in the past. We note that these waivers, which may be requested by submitting a State Plan Amendment (SPA), are subject to the state establishing clear oversight over the agency conducting the fair hearings, similar to the standards set forth in § 431.10(c) and (d).

Medicaid agencies may delegate authority to conduct fair hearings to a State-Based Exchange that is also a state agency either under the proposed regulations or by requesting a waiver under the Intergovernmental Cooperation Act of 1968. The primary difference would be that, under the waiver approach, the state would not be required to provide individuals with the option to have the Medicaid agency conduct their fair hearing. We seek comments on whether Medicaid agencies should have authority under the regulations to delegate fair hearing authority to any state agency, subject to the same limitations as those proposed for delegations to a state-based Exchange.

For states choosing to delegate Medicaid fair hearing authority to the Exchange, we propose at § 431.10(c)(3)(iii) to provide states with an additional option under which the Medicaid agency would review decisions made by the Exchange with respect to Medicaid-related conclusions of law, including interpretations of state or federal policies. This option would not extend to reviewing factual determinations made by the Exchange appeals entity's hearing officer. Any such review by the Medicaid agency would need to be accomplished in time for a final decision to be made in accordance with § 431.244 of this part.

Under proposed § 431.10(c)(1)(ii), the agency must specify in the state plan whether it is delegating authority to conduct fair hearings to the Exchange and the scope of the delegated authority (for example, if delegation is limited to fair hearings for individuals determined ineligible for Medicaid by the Exchange or whether the delegation includes individuals determined ineligible by the Medicaid agency). We note that an Exchange must agree to any delegation of authority and we do not expect that either the federally-facilitated Exchange (FFE) or the HHS appeals entity will accept delegated authority to adjudicate appeals of any Medicaid eligibility determinations which were not made by the FFE due to resource constraints.

We propose at § 431.10(c)(3) that any delegation of fair hearing authority to the Exchange would be subject to safeguards to protect the integrity of the appeals process, such that beneficiaries receive the same due process rights and substantive review of their case as is provided in hearings conducted by the Medicaid agency. The Medicaid agency also would exercise appropriate oversight over the delegated hearing process, and take corrective action if necessary. We propose at § 431.10(d) that a delegation of fair hearing

authority would be effectuated through a written agreement specifying the respective roles and responsibilities of the Medicaid agency and Exchange to ensure compliance with the fair hearing requirements in subpart E, quality control and oversight by the Medicaid agency, including any reporting requirements to support the Medicaid agency's oversight, as well as assurances that the Exchange will comply with the terms of the delegation required under the proposed regulation.

In support of the proposed policy, we also propose to revise § 431.10(a) to add definitions of “Medicaid agency,” “appeals decision,” “Exchange” and “Exchange appeals entity” at § 431.10(a)(2), and to make conforming changes to existing regulations at § 431.205(b)(1) to reflect the possibility of delegated appeals authority to an Exchange. We propose to delete the requirements currently at § 431.10(e)(2) and § 431.10(e)(3), as these provisions are not consistent with the option to delegate appeals. However, we are retaining the current requirement at § 431.10(e)(1), redesignated at proposed § 431.10(e), that only the single state agency may supervise the plan and/or issue policies, rules and regulations on program matters.

We note that we also have streamlined and reorganized the text of the paragraphs concerning the procedures and safeguards required to permit delegation of eligibility determinations at § 431.10 in this proposed rule. These revisions, promulgated in the Medicaid eligibility final rule to strengthen the authority and oversight of the Medicaid agency, are not intended to substantively change the policy adopted in that final rule.

In order to maximize coordination of appeals involving different insurance affordability programs and minimize burden on consumers and states, regardless of whether the Medicaid agency has retained the authority to conduct Medicaid appeals or delegated such authority to an Exchange, we propose revisions to existing regulations at § 431.221 (relating to requests for a hearing), § 431.244 (relating to hearing decisions) as well as to § 435.4 (modifying the definition of “electronic account”) and § 435.1200 (relating to the Medicaid agencies' responsibility to ensure a seamless and coordinated system of eligibility and enrollment between all insurance affordability programs).

Specifically, we propose to add new paragraph (e) to § 431.221 to provide that the Medicaid agency treat an appeal of a determination of eligibility for enrollment in a QHP in the Exchange and for advance payment of the premium tax credit or cost-sharing reductions, as a request for a fair hearing of the denial of Medicaid. This revision is intended to avoid the need for an individual to request multiple appeals. For example, an individual who is denied Medicaid and determined eligible for enrollment in a QHP with a certain level of advance payment of the premium tax credit and cost-sharing reductions may believe she should receive more assistance, but may not know in which program she belongs. So that individuals in this situation do not have to submit two appeals or hearing requests—one to the Exchange appeals entity and one to the Medicaid agency—we propose in § 431.221(e) that if such individual appeals the advance payment of the premium tax credit or cost-sharing reductions level, this appeal will automatically be treated as an appeal of the Medicaid denial, without the individual having to file a separate fair hearing request with the Medicaid agency. We are considering whether a later effective date of this provision, such as January 1, 2015, is appropriate to provide states with sufficient time to operationalize the proposed policy.

When the Medicaid agency has delegated the authority to conduct fair hearings to the Exchange and the individual does not opt to have the Medicaid hearing conducted by the Medicaid agency, this appeal of the Medicaid denial will be adjudicated by the Exchange appeal entity. However, where the Exchange appeal entity is not adjudicating the Medicaid appeal either because the individual opts to have a hearing at the Medicaid agency or the state has not delegated to the Exchange the authority to conduct hearings, we propose at § 431.244(f)(2) that a decision of the Medicaid fair hearing may be issued within 45 days from the date the Exchange appeals entity issues its decision relating to eligibility to enroll in a QHP and for advance payment of the premium tax credit and cost-sharing reductions.

In making this proposal, we are attempting to balance the interest of the individual in receiving a timely Medicaid hearing decision with the recognition that, in many cases, Medicaid fair hearings triggered automatically by appeals related to advance payment of the premium tax credit and cost-sharing reductions will involve individuals with income significantly over the applicable Medicaid income standard, who are unlikely to be found eligible for Medicaid as a result of the appeal. In states that have not delegated authority to the Exchange to conduct fair hearings, or for individuals who opt to have a fair hearing before the Medicaid agency, waiting to conduct the Medicaid fair hearing until the Exchange appeals entity has concluded its hearing may reduce burden on all parties in these cases. Doing so will give the Medicaid agency the benefit of the factual record developed by the Exchange appeals entity, avoiding the potential for duplicative, overlapping requests for additional information from the individual. In addition, permitting the appeals to be sequenced in this way will enable individuals satisfied with the adjudication their Exchange appeal, as well as those with income significantly above the Medicaid income standard, to withdraw their Medicaid fair hearing request. This is similar to how an individual may withdraw their application for Medicaid when accepting an advance payment of the premium tax credit under 45 CFR 155.302(b)(4) during an initial eligibility determination. We envision that the withdrawal of the appeal would be permitted in all modalities listed in § 435.907(a). Withdrawal of a Medicaid fair hearing request could be effectuated through a simple process, for example by checking a box on information provided with the Exchange appeals decision or in connection with the steps the individual needs to take to accept advance payment of the premium tax credit and effectuate enrollment in a QHP. If the opportunity for withdrawal of the Medicaid fair hearing is not provided electronically initially due to operational constraints, it could be provided by telephone, through paper notification, or other commonly available electronic means, such as email.

We recognize that there will be situations in which consumers' interests would be better served by the Medicaid agency initiating the Medicaid fair hearing process simultaneously with the Exchange appeal—such as in the case of an individual determined eligible for advance payment of the premium tax credit and cost-sharing reductions at an income level relatively close to the applicable Medicaid income standard—and, while this would be permitted, it would not be required, under the proposed rule. Recognizing the different interests of states and consumers in different situations, we considered a number of approaches to striking the optimal balance, including allowing 30 or 60 days, instead of the proposed 45 days, from the date the Exchange appeals entity makes its decision for the Medicaid agency to render its fair hearing decision; extending the 90 day

timeframe generally permitted for fair hearing decisions to 120 days from the date the fair hearing was requested; allowing for a decision 45 days from the date of the Exchange appeals decision or 120 days from the date the individual requested a fair hearing, whichever is earlier; and not modifying the 90-day timeframe at all. We solicit comments on the different approaches.

Finally, we anticipate that the HHS appeals entity will have an informal resolution process that will serve as a first level of review prior to the Exchange appeals entity engaging in a formal hearing process, and State-based Exchange appeals entities will have the option to adopt such a process, as well.
See
45 CFR 155.535, discussed in section III.A. of the preamble of this proposed rule. During this process, a review of the initial eligibility determination made by the Exchange will take place, and the individual will have the opportunity to submit additional evidence related to his or her appeal. States that do not delegate authority to conduct Medicaid fair hearings to the Exchange, will be able to utilize the informal resolution process at the Exchange, provided that if an individual has requested a fair hearing, including a fair hearing triggered automatically to the Medicaid agency as a result of an appeal related to advance payment of the premium tax credit and cost-sharing reductions, the fair hearing before the agency also proceeds automatically if the informal process does not result in an approval of Medicaid eligibility. An informal resolution process at the Exchange could resolve a number of individual's appeals without conducting a fair hearing at the Medicaid agency, even if a state has not delegated authority to have fair hearings conducted at an Exchange. Use of the informal resolution process, which would be specified in the agreement between the Medicaid agency and the Exchange consummated in accordance with § 435.1200(b)(3), would not affect the timeliness requirements for a final hearing decision in § 431.244.

We propose to revise the definition of “electronic account” in § 435.4 of the Medicaid eligibility final rule to include information collected or generated as part of a Medicaid fair hearing process or Exchange appeals process, so that information generated or collected during an appeal and any appeals decisions will be transferred between programs as part of the individual's electronic account. To align with that new definition, we modify § 431.242(a)(1)(i) by adding that individuals have access to an electronic account, as they currently have access to a “case file.”

In situations in which the Medicaid agency has delegated to the Exchange authority to make eligibility determinations and to conduct Medicaid fair hearings, we propose revisions at § 435.1200(c) to clarify that the Medicaid agency must receive and accept a decision of the Exchange appeals entity finding an individual eligible for Medicaid just as it accepts determination of Medicaid eligibility made by the Exchange. Moreover, as provided in the proposed revisions to § 435.1200(c), if the Exchange appeals entity to which Medicaid fair hearing authority has been delegated has adjudicated both an appeal of advance payment of the premium tax credit and cost-sharing reductions as well as a Medicaid denial, a combined appeals decision will be required.

We also propose modifications to § 435.1200(d) originally added by the Medicaid eligibility final rule to streamline and coordinate processes when the Exchange does not determine but conducts an assessment of, potential Medicaid eligibility. Under 45 CFR 155.302(b)(4)(i)(A), when the Exchange conducts an assessment, and finds an individual potentially ineligible for Medicaid and eligible for advance payment of the premium tax credit, the Exchange will provide the individual with an opportunity to withdraw the Medicaid application. To ensure coordination across the entire eligibility, enrollment and appeals process, we propose to modify § 435.907 by adding a new paragraph (h) to automatically reinstate the Medicaid application if the individual subsequently files an appeal related to the determination of their eligibility for enrollment in a QHP or for advance payment of the premium tax credit or cost-sharing reductions, and the Exchange appeals entity assesses the individual potentially eligible for Medicaid. Reinstatement of the application for Medicaid would be effective as of the date the application was initially received by the Exchange. Once assessed as potentially Medicaid eligible by the Exchange appeals entity, the individual's electronic account would be transferred to the Medicaid agency per § 435.1200(d) and the Medicaid agency would make a final determination. If the agency denies Medicaid, the individual would have the right to request a Medicaid fair hearing at that time. We note that this scenario would only arise in states that have not delegated to the Exchange the ability to conduct eligibility determinations under § 431.10(c)(1)(i). (Revisions to 45 CFR 155.302(b)(4)(A) related to reinstatement of a withdrawn application are also proposed in this rulemaking and are discussed in section III.A. of the preamble.) We also note that, under the proposed Exchange regulation at 45 CFR 155.510(b), discussed in section III.A of the preamble, the assessment of Medicaid eligibility conducted by an Exchange appeals entity will be as comprehensive as that performed by the Exchange when making the underlying assessment of Medicaid eligibility under § 155.302(b).

Under the proposed revisions to § 435.1200(d)(2), we clarify that when a Medicaid agency is determining the eligibility of an individual who has been assessed as potentially eligible for Medicaid by an Exchange appeals entity, the Medicaid agency may not request information or documentation from the individual already provided in the electronic account, or to the applicable insurance affordability program or appeals entity; similarly, as clarified in § 435.1200(d)(4), the agency must accept any finding relating to a criterion of eligibility made by another insurance affordability program's appeals entity if such finding was made in accordance with the same policies and procedures as those applied by or approved by the Medicaid agency. These procedures parallel those adopted in the Medicaid eligibility final rule with respect to eligibility determinations.

Similar to the revisions proposed at § 435.1200(d), we also propose revisions to § 435.1200(e)(1) to provide that when an individual has been determined ineligible for Medicaid pursuant to a fair hearing conducted by the Medicaid agency, the agency must assess the individual for potential eligibility for other insurance affordability programs, just as it must do under § 435.1200(e), as originally set forth in the Medicaid eligibility final rule for individuals determined ineligible for Medicaid by the agency at initial application or renewal.

Finally, we propose to add a new paragraph (g) to § 435.1200, to ensure coordination between appeals entities. Proposed paragraph (g)(1), which would apply regardless of whether the Medicaid agency delegates authority to conduct any fair hearings to the Exchange, directs the Medicaid agency to establish a secure electronic interface through which:

• The Exchange appeals entity can notify the Medicaid agency that an appeal has been filed related to eligibility to enroll in a QHP and for advance payment of the premium tax credit and cost-sharing reductions when

such appeal triggers an automatic Medicaid fair hearing request; and

• The individual's electronic account, including information provided by the individual to the Medicaid agency during the fair hearing process or the Exchange appeals entity can be transferred between programs or appeals entity.

Under proposed § 435.1200(g)(1), the secure electronic interface established between the Medicaid agency and Exchange may be used for these purposes, or a separate secure interface directly between the Medicaid agency and Exchange appeals entity may be established; therefore this provision does not propose any new requirements on Medicaid agencies. When the Exchange appeals entity conducts a Medicaid fair hearing on an individual's Medicaid denial, no notification or transfer of information through such interface would be needed at the point the individual files the appeal.

Under proposed § 435.1200(g)(2), the Medicaid agency must ensure that, as part of a Medicaid fair hearing conducted under part 431 subpart E, the Medicaid agency does not request information or documentation from the individual already included in the individual's electronic account or provided to the Exchange or Exchange appeals entity. We propose in § 435.1200(g)(3) that the Medicaid agency transmit its Medicaid fair hearing decision to the Exchange in two situations: (1) When an individual had been initially determined ineligible for Medicaid by the Exchange, in accordance with a delegation of authority under § 431.10(c)(i); and (2) when an individual who was initially determined to be ineligible for Medicaid by the Medicaid agency had his or her account transferred to the Exchange under § 435.1200(e) for evaluation of eligibility and financial assistance through the Exchange and the individual had a fair hearing conducted by the Medicaid agency. Because such individuals may have enrolled in a QHP through the Exchange and be receiving advance payment of the premium tax credit and/or cost-sharing reductions pending the outcome of the Medicaid fair hearing, the Exchange will need to know the outcome of the Medicaid fair hearing so that it will know whether to terminate or continue advance payment of the premium tax credit and cost-sharing reductions.

We also make conforming amendments to § 435.1200(b) related to the coordination of appeals between the Medicaid agency and the Exchange and Exchange appeals entity. We propose to modify § 435.1200(b)(1) to incorporate new paragraph (g) in the delineation of general requirements that the Medicaid agency must meet to effectuate a coordinated eligibility system and to revise § 435.1200(b)(3)(i) to clarify that the goal of minimizing burden on consumers through coordination of insurance affordability programs also relates to coordination of appeals processes. Proposed revisions to § 435.1200(b)(3)(ii) provide that the agreement entered into between the Medicaid agency and the Exchange must ensure compliance with new paragraph (g).

Finally, it is important to note that under the proposed Exchange regulations at 45 CFR 155.302(b)(5), if the decision made by the Exchange appeals entity conflicts with a decision made by the Medicaid agency regarding an individual's Medicaid eligibility, the decision of the Medicaid agency takes precedence and is binding on the Exchange, just as a determination of eligibility or ineligibility made by the Medicaid agency takes precedence over an assessment made by the Exchange.

(b) Related Changes to the Medicaid Appeals Process (§§ 431.200, 431.201, 431.205, 431.206, 431.211, 431.213, 431.220, 431.221, 431.224, 431.230, 431.231, 431.232, 431.240, 431.241, 431.242, and 431.244)

We propose the following modifications to our current fair hearing regulations at § 431.200,
et seq.,
to align with the changes described above, to modernize our regulations, and to clarify certain provisions consistent with the Medicaid eligibility final rule. We propose to:

• Revise § 431.200 to list sections 1943(b)(3) of the Act and 1413 of the Affordable Care Act as statutory authority for establishing a system and procedures to coordinate eligibility, including eligibility appeals that result in a final decision about an individual's eligibility.

• Add a definition for “local evidentiary hearing” to § 431.201 to clarify terminology in our regulations.

• Modify § 431.220(a)(1) to clarify that a hearing is required when an applicant requests it because the Medicaid agency has denied the individual's eligibility, level of benefits, services, or claim or if the Medicaid agency has failed to act with reasonable promptness, as required by section 1902(a)(3) of the Act. We specify that a determination of eligibility would include, if applicable, a determination of a spend down liability or a determination of income used to impose any premiums, enrollment fees, or cost sharing under part 447 of this subchapter. We intend these modifications as clarifications and do not believe they reflect a change in policy. We modify the definition of action at § 431.201, when information be provided at § 431.206, and the issues to be considered at a hearing at § 431.241(a) and (b) to align with the modification of § 431.220 and do not believe that these changes reflect a change in policy.

• Modify § 431.221 to allow an individual to request a hearing consistent with the ways in which an application may be filed: (1) By telephone; (2) by mail; (3) in person; (4) through other commonly available electronic means; and (5) at state option, via the Internet Web site at § 435.1200(f). We expect other commonly available electronic means to include requesting a fair hearing by email, and could include facsimile or other electronic systems commonly available. In contrast to the final Medicaid eligibility rule policy related to filing applications and renewal forms at §§ 435.907 and 435.916, we have proposed using the Internet Web site at § 435.1200(f) as a state option in light of the operations implications of requiring this method for requesting a hearing. We are considering instead making this option a requirement at a date sometime after January 2014 to allow time for implementation and we solicit comments on this proposal.

• Add § 431.224, “Expedited Appeals” to align our fair hearing process at § 431.200, et seq, with that already established for appeals in managed care at § 438.410, to permit an individual who has an urgent health need to have their appeal addressed under expedited timeframes. We do not anticipate that this will be difficult to administer or significantly add to state costs as states can use existing mechanisms such as notices they are already issuing to individuals to implement this provision.

• Modify § 431.231 to align the date an individual is considered to receive notice under this section with that proposed for the notice of reasonable opportunity period in proposed § 435.956, discussed in section I.B.7 of the preamble, to promote consistency and ease of administration. We propose that the date on which the notice is received is considered to be 5 days after the date on the notice, unless the individual shows that he or she did not receive the notice within the 5-day period. Five days from the date of notice is the standard period used by Social Security Administration for the Supplemental Security Income (SSI) (Title XVI) and Old Age and Disability

(Title II) programs to account for mailing a notice and receipt by the individual (see 20 CFR 416.1401, 20 CFR 404.901, respectively). This is also the standard used by the Exchange in 45 CFR 155.315(c)(3) regarding notices sent to resolve inconsistencies during the verification process for citizenship, status as a national, and lawful presence.

• Modify § 431.232 to clarify that the agency will inform an applicant or beneficiary that he or she has 10 days from the notice of an adverse decision of a local evidentiary hearing to appeal that decision. We also adopt in proposed § 431.232 the language discussed above related to the date an individual is considered to receive notice.

• Modify § 431.240 to specify that a hearing officer must have access to the agency's information, such as state policies and regulations necessary to issue a proper hearing decision, consistent with our proposed regulation to permit delegation of authority to the Exchange to conduct fair hearings at § 431.10(c) and (e).

• Modify § 431.242 to align our regulations related to an individual's ability to review an individual case file, to include an individual's ability to review his or her electronic account, as defined at § 435.4.

• Modify existing regulations at § 431.244(f)(1) to clarify that the 90-day timeframe to issue a decision after an individual files an appeal applies broadly to appeals decisions, not only to managed care appeals decisions. This text was inadvertently deleted in a previous rulemaking. This codifies this long-standing policy and does not reflect a change in policy.

• Revise § 431.244(f)(2) to modify the appeals decision timeframe to account for the expedited appeals process being proposed at § 431.224, aligning with the existing expedited decision process for managed care appeals decisions at § 431.244(f)(2) and (f)(3).

(c) Applicability to CHIP (§§ 457.10, 457.340, 457.348, 457.350, 457.1180, 457.351)

Revisions to the regulations for CHIP are proposed to achieve similar coordination of appeals among insurance affordability programs and to minimize burden on consumers. Regulations governing the CHIP appeals, or “review” process, are set forth at subpart K of part 457 of the current regulations. Under § 457.1120, states currently have broad flexibility to delegate the CHIP review process, and no revision to permit delegation of review authority to the Exchange or Exchange appeals entity is needed. To effectuate the same coordination of CHIP appeals with other insurance affordability programs, as is proposed with respect to Medicaid fair hearings, a new § 457.351 (Coordination involving appeals entities for different insurance affordability programs) is proposed. Conforming changes to existing CHIP regulations are also proposed.

• Under § 457.10, we propose to revise the definition of electronic account to include any information collected or generated as part of a review, and to add the definition of exchange appeals entity, similar to the revision to the definition in the Medicaid regulations at § 435.4.

• Section 457.340 (Application for and enrollment in CHIP) is revised to include provision of notice of an individual's right to review, consistent with § 457.1180 and to apply § 435.907(h), proposed for addition to the Medicaid regulation in this rulemaking (Reinstatement of withdrawn applications) to CHIP.

• Section 457.348, related to the provision of CHIP for individuals found eligible by other insurance affordability programs, is revised to include individuals found eligible as a result of a decision made by the Exchange appeals entity authorized by the state to adjudicate reviews of CHIP eligibility determinations, similar to the revisions proposed for the Medicaid regulations at § 435.1200(c) and to apply the provisions for transfer of information via secure electronic interface, similar to the revisions proposed for Medicaid regulations at § 435.1200 (d).

• Proposed revisions to § 457.350 apply the rules for eligibility screening and enrollment in other insurance affordability programs to individuals determined not eligible for CHIP pursuant to a review conducted in accordance with subpart K of this part, similar to the revisions proposed for the Medicaid regulations at § 435.1200(e).

• Section 457.1180 is revised to propose that states treat an appeal to the Exchange appeals entity of a determination of eligibility for advanced payments of the premium tax credit or cost-sharing reductions as a request for a review of a denial of CHIP eligibility, if the individual was denied eligibility for CHIP by the state or other entity authorized to make such determination, similar to the revisions proposed for the Medicaid regulations at § 431.221(e).

2. Notices

An effective notification process is important to a high quality consumer experience and a coordinated eligibility and enrollment system, as provided for under section 1413 of the Affordable Care Act and section 1943 of the Act. Without revisions to current regulations, many individuals could receive multiple, uncoordinated notices from the different programs. Someone applying through the Exchange who is assessed as potentially eligible for Medicaid, for example, could receive a notice from both Medicaid (approving Medicaid) and the Exchange (denying advance payment of the premium tax credit and cost-sharing reductions). Under current rules, if the Medicaid agency disapproves rather than approves eligibility for an individual assessed by the Exchange as potentially Medicaid eligible, the individual could receive 3 notices (from the Exchange denying advance payment of the premium tax credit and cost sharing reductions, from the Medicaid agency denying Medicaid, and subsequently from the Exchange reversing its earlier denial of advance payment of the premium tax credit and cost sharing reductions).

To avoid confusion for consumers and duplicative administrative activity we propose that, to the maximum extent feasible, state Medicaid and CHIP agencies and the Exchange produce a single combined notice after all MAGI-based eligibility determinations have been made. We are also proposing to add basic content and accessibility standards for all eligibility notices, and to ensure that electronic eligibility notices are available as an option for applicants and beneficiaries. To ensure that the federal rules for all programs are aligned, we are proposing similar regulations for the Exchange.
See
§ 155.230 and § 155.345, discussed in section III of the preamble. However, as described below, given the time needed to allow for systems builds, the requirement to provide a combined eligibility notice will not be effective until January 1, 2015.

(a) Content and Accessibility Standards (§ 435.917 and § 435.918)

We are proposing to redesignate and revise § 435.913 at proposed § 435.917 to clarify the state agency's responsibilities to communicate specific content in a clear and timely manner to applicants and beneficiaries when issuing either a notice of approved eligibility or a notice of denial or other adverse action. We also propose to delete § 435.919 and to move the provisions now contained therein to proposed § 435.917.

Per proposed § 435.917(a), eligibility notices must be written in plain language and be accessible to individuals who are limited English

proficient and individuals with disabilities and comply with regulations relating to notices in part 431 subpart E and, if provided in electronic format, with § 435.918, newly proposed in this rulemaking. Notices of an approval of Medicaid eligibility must include clear and specific content, as specified in proposed § 435.917(b)(1).

Proposed § 435.917(b)(2) cross references § 431.210 for the specific notice content required for an adverse action—including a denial, termination, suspension of or change in eligibility, or a change in benefits or services. Revisions to § 431.210 are proposed to achieve similar clarity and transparency for notices of adverse actions as are proposed for notices of an approval of Medicaid eligibility. We note that a citation of the specific regulation(s) that support the action, as required by § 431.210(c), does not satisfy the requirement to provide “a clear statement” explaining the adverse action under § 431.210(a), as revised in this proposed rulemaking. CMS will work with states and other stakeholders to develop model notices meeting the requirements of the regulations.

Proposed § 435.917(c) directs that all eligibility notices relating to a determination of eligibility based on the applicable MAGI standard include a plain language description of other bases of eligibility (such as disability, long-term care services need, or incurred medical expenses for medically needy coverage) as well as the level of benefits and services to which someone eligible on such other bases is entitled. The information provided must be sufficient to enable individuals to make an informed decision as to whether or not to seek a determination of eligibility on a MAGI-excepted basis. We note that both individuals who are approved for, as well as those who are denied, Medicaid on the basis of the applicable MAGI standard should be provided the information specified, as eligibility on another basis may better meet the individual's needs. We solicit comments on the level of detail which should be required for inclusion in the notice under § 435.917(c).

Current notice regulations require paper-based, written notices. New proposed § 435.918 would maintain the requirement for paper-based written notices, but would also require states to provide individuals with the option to receive notices through a secure electronic format in lieu of written notice by regular mail, which remains the default method of notice provision. Per proposed § 435.918, after an individual elects electronic notification, the agency would send a paper notification informing the individual of his or her election to receive eligibility notices electronically. The agency would post notices to the individual's secure electronic account, notifying the individual by text message, email, or other electronic communication that a notice had been posted and directing the individual to check his or her account. We considered permitting individuals applying on-line to provide electronic confirmation of their election, but believe that confirmation via regular mail provides stronger consumer protection. We welcome comment on this, and other consumer safeguards for electronic notification. Also, we recognize that in addition to eligibility notices, there are other communications that occur between the applicant/beneficiary and the Medicaid or CHIP agency. These communications include requests for additional information, annual renewal forms and reminders, premium payment information, changes in benefits or covered services, etc. We are considering whether all or some of these should be available to the consumer electronically by posting to the electronic account and seek comment.

As described above, newly proposed § 435.917(a), which establishes content and accessibility standards for Medicaid notices, requires that notices comply with the provisions in § 435.918, if provided in electronic format. In addition, paragraph (c)(5), which is proposed for addition to § 431.206, relating to the agency's responsibility to inform applicants and beneficiaries of adverse actions, includes a provision to permit electronic notices consistent with § 435.918. We have also modified §§ 431.211, 431.213, 431.230, and 431.231 to update and modernize the language in the regulation to remove the term “mail” and instead use “send,” which will still require states to provide paper-based written notices, but also permit states to offer beneficiaries the option of receiving notices electronically, after obtaining consent from the individual, consistent with the consumer protections in proposed § 435.918.

(b) Provision of Coordinated Notice—Medicaid Agency Responsibilities (§ 435.1200)

We propose revisions to the Medicaid eligibility final rule to provide for a coordinated system of notices across all insurance affordability programs based on MAGI, regardless of where the individual initially submits an application or whether the Exchange is authorized to make Medicaid and CHIP eligibility determinations. Under the proposed rule, to the maximum extent feasible, individuals will receive a single notice communicating the determination or denial of eligibility for all applicable insurance affordability programs and for enrollment in a QHP through the Exchange, rather than separate notices from the Medicaid and/or CHIP agencies and the Exchange.

Our proposal is effectuated primarily in revisions to § 435.1200, as published in the Medicaid eligibility final rule. In support of our proposed policy, we also propose to add definitions of “combined eligibility notice” and “coordinated content,” in § 435.4. “Combined eligibility notice” is an eligibility notice that informs an individual, or household when appropriate, of his or her eligibility for multiple insurance affordability programs, including all or most of the information required for inclusion per proposed § 435.917 and § 431.210, as revised in this proposed rule. “Coordinated content” refers to information included in an eligibility notice relating to the transfer of the individual's electronic account to another program, and the status of that other program's review of the account. Coordinated content will be important when the eligibility determination for all programs cannot be finalized for inclusion in a single coordinated notice.

In § 435.1200, we propose adding sub paragraph (b)(3)(iv) to provide that the agreements between the Medicaid agency and other insurance affordability programs delineate the responsibilities of each program to provide combined eligibility notices and coordinated content, as appropriate. We note that under these agreements, the Medicaid and CHIP agencies and the Exchange must work together to provide, to the maximum extent possible, a single combined notice of eligibility that includes all family members of the same household applying for coverage together. We include at paragraph (d) of proposed § 435.917, discussed generally in section I.B.2.a of the preamble, above, that the agency's responsibility to provide an eligibility notice is satisfied by a combined notice provided by the Exchange or another insurance affordability program pursuant to an agreement between the agency and the Exchange or such program.

We propose to add sub paragraph (3) to § 435.1200(c) to provide that when the Exchange or other agency administering an insurance affordability program is authorized to, and does make, a determination of Medicaid eligibility, the agreement described in paragraph (b)(3) stipulates that the Exchange or other agency will provide the applicant with a combined

eligibility notice including information about the individual's Medicaid eligibility (approval or denial). For example, if the Exchange receives an application and determines the applicant eligible for Medicaid, the Exchange will issue a combined notice including information related both to the approval of Medicaid eligibility and the denial of eligibility for advanced payments of the premium tax credit and cost-sharing reductions.

We propose for clarity to redesignate paragraph § 435.1200(d)(5) at paragraph (d)(2) and to redesignate the other paragraphs of paragraph (d) accordingly. We further propose to revise redesignated § 435.1200(d)(4) to add new language at clause (d)(4)(i) to specify that, when an individual is assessed by the Exchange or other program as potentially Medicaid eligible and is transferred to the Medicaid agency for a final determination, if the Medicaid agency approves eligibility, the Medicaid agency will provide the combined eligibility notice for all applicable programs. For example, if the Exchange assesses an individual as potentially Medicaid eligible and transfers the individual's electronic account to the Medicaid agency, and the agency approves eligibility, the agency would issue a combined notice, including information related to the approval of Medicaid eligibility as well as the denial of eligibility for advance payment of the premium tax credit and cost-sharing reductions.

Finally, we propose revisions to § 435.1200(e) to provide at new paragraph (e)(1)(ii) that the Medicaid agency include in the agreement consummated under § 435.1200(b)(3) that the Exchange or other program will issue a combined eligibility notice, including the Medicaid agency's denial of Medicaid eligibility, for individuals denied eligibility by the agency at initial application (or terminated at renewal) and assessed and transferred to the Exchange or other insurance affordability program as potentially eligible for such program. For example, if the Medicaid agency determines that an individual is not Medicaid eligible, but transfers the individual's account to the Exchange as potentially eligible for enrollment in a QHP, the Exchange would issue a combined notice of the individual's eligibility for enrollment in a QHP, advance payment of the premium tax credit, cost-sharing reductions, and the denial of Medicaid.

Our proposed policy of a single combined eligibility notice does not apply in the case of individuals determined eligible on a basis other than MAGI, because the Medicaid agency may be continuing its evaluation of an individual's eligibility on such other bases at the same time that the individual is being evaluated for, or is enrolled in, another insurance affordability program pursuant to § 435.911(c)(2) of the Medicaid eligibility final rule. In such cases, while a single, combined notice containing the agency's final determination on all bases would not be required, per proposed § 435.1200(e)(2)(ii), the Medicaid agency would provide notice to the individual, in accordance with § 431.210(a) and § 435.917, that the agency has determined the individual ineligible for Medicaid on the basis of MAGI, and that the agency is continuing to evaluate Medicaid eligibility on other bases. Under the proposed regulation, this notice also would contain coordinated content advising the applicant that the agency has assessed the individual as potentially eligible for, and transferred the individual's electronic account to, another program. Proposed § 435.1200(e)(2)(iii) requires the agency to provide the individual with notice of the final eligibility determination on the non-MAGI bases considered. If the individual is later determined eligible for Medicaid on a basis other than MAGI, the individual would receive a combined notice that includes information of the approval of Medicaid eligibility and ineligibility for advance payment of the premium tax credit and cost-sharing reductions.

There are a few additional situations we have identified under the proposed regulation in which a single notice will not be required—in such situations notices would include coordinated content appropriate to the situation. First, when an individual who is assessed by the Exchange as not potentially Medicaid eligible based on MAGI and determined eligible for advance payment of the premium tax credit and cost-sharing reductions, a notice of eligibility for advance payment of the premium tax credit and cost-sharing reductions (issued by the Exchange) will be needed. If the individual requests a full determination of Medicaid or CHIP eligibility by the state agency, as permitted under the Exchange final regulation at § 155.302(b)(4)(B), a second notice will be needed once the Medicaid or CHIP agency has made a decision on the application. Depending on whether the state agency approves or denies Medicaid or CHIP, either a coordinated notice or coordinated content with information relating to the individual's eligibility for advance payment of the premium tax credit and cost-sharing reductions will be needed.

Second, when different members of the same household are determined eligible for different programs, a single combined notice for all members of the household may not be feasible. In such situations, as described in § 435.1200(b)(4), notices would include appropriate coordinated content related to the status of other members of the individual's household. We welcome comments as to whether there are other situations, besides the two situations identified, when a combined eligibility notice is not feasible.

We also note that, in consultation with states, consumer groups and plain-language experts, we intend to develop language to be released in 2013, which could be adapted by states as a model for delivering combined eligibility notices. Because some states have specific content which will need to be included in notices issued by an Exchange in their state, state Medicaid and CHIP agencies will work with the Exchange on any state-specific content to be included in a combined notice and/or may issue supplementary notices if the Exchange is unable to deliver all required state-specific content.

Finally, given the time needed to allow for systems builds, we are proposing that the policy to provide a combined eligibility notice will not be effective until January 1, 2015. At state option, based on the operational readiness of all programs, combined eligibility notices may be implemented earlier. States with an FFE will only be able to provide a combined eligibility notice prior to January 1, 2015 for eligibility determinations made by the FFE. In the absence of a combined eligibility notice, coordinated content ensures that applicants and beneficiaries are informed of the status of their application with respect to other insurance affordability programs. We also considered a later effective date of October 15, 2015 for the requirement to provide a combined eligibility notice in all circumstances provided for in the proposed rule, which would coincide with the beginning of open enrollment for January 2016. We welcome comments on the proposed effective date of January 1, 2015 and the later effective date of October 15, 2015.

We also make a technical correction to § 435.1200. We update paragraph (a) to correct an erroneous statutory citation.

(c) CHIP Eligibility Notices and Information Requirements (§§ 457.10, 457.110, § 457.340, 457.348 and 457.350)

We propose to modernize and amend the existing CHIP regulations pertaining to notices at § 457.110 and § 457.340(e) to correspond to the regulation changes and additions proposed for Medicaid at § 435.917, and § 435.918. We also propose to add a definition of “combined notice” and “coordinated content” in § 457.10 and to revise paragraphs (a), (b), (c) and (d) of § 457.348 and paragraphs (f) and (i) in § 457.350 to mirror the proposed revisions to the Medicaid regulations in § 435.1200 (b), (c), (d), and (e) to maximize achievement of a system of coordinated notices across all insurance affordability programs, including CHIP.

Per proposed § 457.350(f)(3), we seek to clarify that the requirement that a state find an individual ineligible, provisionally ineligible, or suspend the individual's application for CHIP unless and until the Medicaid application for the individual is denied applies only at application. We propose to clarify this provision in response to concerns expressed by states that if this provision is applied to CHIP enrollees at redetermination, a gap in coverage could result.

We also propose to update § 457.350(g), relating to the states' responsibility to provide information to CHIP applicants regarding the Medicaid program, to extend to all insurance affordability programs. We also propose to update § 457.350(h)(2), which describes the state's responsibility to inform a CHIP applicant on a waiting list that if circumstances change, the applicant may be eligible for other insurance affordability programs, in addition to Medicaid, so that the Exchange, Medicaid, and CHIP can work together to ensure that eligible applicants are enrolled in the appropriate program.

A technical correction is made to § 457.350(b). We update paragraph (b) to clarify that the requirement to screen for potential eligibility for other insurance affordability programs applies to any applicant or enrollee who submits an application or renewal form to the state which included sufficient information to determine CHIP eligibility. This includes not only those determined ineligible for CHIP but also individuals subject to a waiting period or those screened as not potentially eligible for Medicaid based on MAGI and enrolled in CHIP but also assessed as potentially eligible for Medicaid on another basis and referred to the Medicaid agency for a full Medicaid determination.

3. Medicaid Eligibility Changes Under the Affordable Care Act

(a) Former Foster Care Children (§ 435.150)

Sections 2004 and 10201(a) and (c) of the Affordable Care Act add a new section 1902(a)(10)(A)(i)(IX) of the Act, under which states must provide Medicaid coverage starting in 2014 for individuals under age 26 who were in foster care and receiving Medicaid. Note that states still have the option to cover a similar eligibility group for independent foster care adolescents, which has slightly different requirements (see § 435.226 of this proposed rule).

Consistent with the statute, we propose to add § 435.150 establishing this new mandatory eligibility group for individuals who:

• Are under age 26;

• Are not eligible for and enrolled in mandatory Medicaid coverage under sections 1902(a)(10)(A)(i)(I) through (VII) of the Act, eligibility under which is codified in §§ 435.110 through 435.118 and §§ 435.120 through 435.145 of subpart B of the regulations; and

• Were in foster care under the state's or tribe's responsibility (whether or not under title IV-E of the Act) and also enrolled in Medicaid under the state's Medicaid state plan or 1115 demonstration (or at state option were in foster care and Medicaid in any state rather than “the” state where the individual is now residing and applying for Medicaid) when the individual attained age 18 or such higher age at which the state's federal foster care assistance ends under title IV-E of the Act.

We are proposing an interpretation of the statute that an individual qualifies for this mandatory Medicaid coverage if the individual was concurrently enrolled in foster care and Medicaid either when attaining age 18 or at the point of “aging out” of foster care. This interpretation is based on the statute's use of the word “or” to permit either alternative. We considered a different interpretation that would limit eligibility to individuals who “age out” of foster care. Among the states that have extended foster care programs beyond age 18, all but two states end foster care at age 21.

The statute requires that an individual be in foster care under the responsibility of “the state” and be enrolled in Medicaid under “the state plan” or an 1115 demonstration. In this proposed rule, we are interpreting that requirement as meaning that the individual was in foster care and enrolled in Medicaid in the same state in which coverage under this eligibility group is sought. However, we are proposing to give states the option to cover individuals under this group who were in foster care and Medicaid in any state at the relevant point in time. We request comments on this interpretation of the statute.

In accordance with the statute, there is no income or resource test for this group. Individuals may apply and be determined eligible at any time between attaining age 18 and losing eligibility under this group upon attaining age 26. In accordance with longstanding general Medicaid policy clarified at § 435.916(f) of the Medicaid eligibility final rule, when an individual loses eligibility under this group, coverage shall not be terminated unless the individual is not eligible under any other group (for example, the new adult group at § 435.119 of the Medicaid eligibility final rule.)

Eligibility under the adult group at § 435.119 of the regulations (as specified in the March 23, 2012 Medicaid eligibility final rule) will not take precedence over coverage under the mandatory group of former foster care children. In accordance with the second subclause (XVI) in the matter following subparagraph (G) of section 1902(a)(10) of the Act, as added by section 10201(a)(2) of the Affordable Care Act, individuals eligible for both the former foster care group and the adult group should be enrolled in the former foster care group.

(b) Financial Methodologies for Individuals Excepted From Application of MAGI-Based Methodologies (§ 435.601 and § 435.602)

Due to changes in the Affordable Care Act, we propose technical amendments to § 435.601(b) and § 435.602(a) to specify that these sections, related to general application of financial eligibility methodologies and financial responsibility of relatives and other individuals, only apply to individuals excepted from application of the MAGI-based methodologies in accordance with § 435.603(j). Also, as required by section 1902(e)(14)(B) of the Act, which prohibits income disregards other than those expressly included in MAGI methodologies for the MAGI-related populations, we propose to amend paragraph (d) of § 435.601 to remove “MAGI-related” eligibility groups (financial eligibility for which will be determined using MAGI-based methodologies set forth in § 435.603) from the groups to which a state may

use the authority of section 1902(r)(2) of the Act to adopt less restrictive income and resource methodologies than those under the most-closely related cash assistance program.

(c) Family Planning (§ 435.214)

Section 2303 of the Affordable Care Act adds new sections 1902(a)(10)(A)(ii)(XXI) and 1902(ii) of the Act, as well as the first new clause (XVI) in the matter following 1902(a)(10)(G) (there are two paragraph (XVI)s; the first is the one related to family planning), under which states have the option to provide Medicaid coverage to women and men that is limited to family planning or family planning related services under the state plan.

Consistent with the statute, we propose to add § 435.214 establishing this new eligibility group for individuals who:

• Are not pregnant;

• Have income that does not exceed the income eligibility level established by the state, as discussed below. Section 1902(ii)(1) specifically allows for income eligibility up to the highest income eligibility level established by the state for pregnant women in the Medicaid or CHIP state plan. We have interpreted this to also include the income level established by the state for pregnant women under the state's Medicaid or CHIP demonstration approved under the authority of section 1115 of the Act.

Because section 1902(e)(14) applies a “notwithstanding any other provision of Title XIX,” and individuals eligible for family planning are not an exempt group listed at 1902(e)(14)(D), beginning January 1, 2014, financial eligibility for this group will be determined using the MAGI-based methodologies set forth at § 435.603 of the regulations. However, section 1902(ii)(3) of the Act, permits states to consider only the income of the individual applying for family planning benefits in determining eligibility under this section. Accordingly, at § 435.603 we are proposing to codify the current policy outlined in the July 2, 2010 state Medicaid Director Letter (
http://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SMD10013.pdf
Error! Bookmark not defined.). Under this policy about determining financial eligibility for the new eligibility group at proposed § 435.214, states may consider the individual's household to consist only of the individual, may consider only the income of the individual applying for coverage (while retaining other members of the household for purposes of determining family size), and may increase the family size used for determining eligibility for coverage under this group by one, similar to the increase in family size for pregnant women.

Finally, we are proposing to amend the definition of a targeted low income child at § 457.310(b)(2) to indicate that eligibility for limited coverage of family planning services under § 435.214 does not preclude an individual from being eligible for CHIP. In circumstances where an individual is enrolled in both CHIP and Medicaid family planning coverage, Medicaid would be secondary payer to CHIP in accordance with 1902(a)(25) of the Act and 42 CFR 433 Subpart D.

4. Medicaid Enrollment Changes Under the Affordable Care Act Needed to Achieve Coordination With the Exchange

(a) Certified Application Counselors (§ 435.908 and § 457.330)

Some individuals require assistance with completing an application, enrolling in coverage or with ongoing communications with the agency once determined eligible. While many may seek informal assistance with applications from friends or relatives, others may seek assistance from trusted community-based organizations, providers, or other organizations with expertise in social service programs. Staff and volunteers from such organizations provide important assistance in completing application and renewal forms, and in explaining and helping individuals to meet any documentation requirements, but do not sign forms, receive notices or other communications, or otherwise act on behalf of the individual being assisted. Individuals able to perform those types of functions (often a family member, legal guardian, or attorney) are referred to as “authorized representatives” and are discussed in the next section, below.

Many state Medicaid and CHIP agencies have a long history of enabling providers and other organizations to serve as “application assisters,” which we refer to in this proposed rulemaking as “application counselors” to provide such direct assistance to individuals seeking coverage, and these counselors play a key role in promoting enrollment among low-income individuals. These proposed regulations seek to ensure that application counselors, who we expect to continue to play an essential role in many states, will have the training and skills necessary to provide reliable, effective assistance to consumers, and that they will meet the confidentiality requirements that apply to the data they will be able to access in their role as assisters, including those established in accordance with section 6103 of the Internal Revenue Code and section 1902(a)(7) of the Act.

We anticipate that, beginning with the initial open enrollment period, an increasing number of individuals will seek to apply for coverage on line, and while some states already have web infrastructure which allows application counselors to track their clients' applications and manage caseloads, we expect that practice to increase as states improve their electronic application systems. Other applicants may still submit applications on paper. The proposed regulation recognizes the role that may be played by application counselors in helping individuals with the process through either the paper or online channels.

To effectively provide application assistance, counselors may have access to personal data, including tax data from the Internal Revenue Service that is subject to the confidentiality rules established under section 6103 of the Internal Revenue Code (“Code”). State Medicaid agencies will need to ensure that their application counselors, and any web infrastructure used by them, comply with applicable privacy and security rules associated with the disclosure and receipt of this data and other personal information as well as with the overall eligibility and enrollment process. Accordingly, we propose to add a new paragraph (c) to § 435.908, as published in the Medicaid eligibility final rule, to establish standards for authorizing application counselors to assist individuals with the application and renewal process, including use of a dedicated web portal, as well as with managing their case between the eligibility determination and regularly scheduled renewals. We apply these provisions to state CHIP agencies through the addition of a cross-reference in § 457.340, and propose similar regulations for certification of application counselors for the Exchange (see proposed § 155.225 and section III.B.4 of this rulemaking). As recipients of federal financial participation, state Medicaid and CHIP agencies are reminded of their obligation to ensure that their programs, including their application counselor programs, provide equal access to individuals with limited English proficiency and individuals with disabilities under applicable federal civil rights laws. As part of this obligation, state Medicaid and CHIP agencies should ensure the availability and provision of appropriate application assistance services, such as language assistance services and auxiliary aids

and services, to meet the needs of these populations. Sometimes this obligation can be met by referral of individuals with limited English proficiency or individuals with disabilities to appropriate counselors participating in the agency's program. Many people applying for coverage also seek informal help from family, friends and local community-based organizations not identified on the application or authorized to communicate with the agency about the application. The proposed regulations do not pertain to such informal assistance.

We note that similar regulations for certified application counselors are proposed for the Exchange at § 155.225. See discussion in section III.B.4. of the preamble. Application counselors would not need to go through two different certification processes. State Medicaid and CHIP agencies and the Exchange generally are charged under the § 435.1200 and § 457.348 of the Medicaid eligibility final rule and § 155.345 of the Exchange final rule to work together to create a seamless and coordinated application and enrollment process for individuals applying for all insurance affordability programs. To achieve this in the case of certified application counselors, states could elect, for example, to create a single certification process for all insurance affordability programs, or each program could accept application counselors certified by another program.

(b) Authorized Representatives (§ 435.923 and § 457.340)

Authorized representatives have historically helped ensure access to coverage for vulnerable individuals, such as seniors and those with disabilities. Although there is no formal limit on the number of individuals an authorized representative may assist—for example, at some institutions or an attorney may serve as such a representative for several clients—most authorized representatives serve in that capacity for one individual, for example for a parent or incapacitated relative. Under current regulations at 42 CFR 435.907, retained in the Medicaid eligibility final rule, states must accept applications from authorized representatives acting on behalf of an applicant. In this rulemaking, we propose to add § 435.923 establishing minimum requirements for the designation of authorized representatives. Proposed § 435.923, which is applied to state CHIP agencies through the addition of a cross reference in proposed § 457.340, is intended to ensure a consistent set of rules and standards for authorized representatives across all insurance affordability programs. We believe the proposed regulation is consistent with current policies and practice in most states today and therefore will not substantially affect state programs.

Specifically, we propose that, consistent with longstanding practice, applicants and beneficiaries may choose to designate an individual or organization to act on the applicant or beneficiary's behalf, or may have such a representative through operation of state law (for example, through a legal guardianship arrangement). The state may not restrict the ability of applicants and beneficiaries to have an authorized representative to only certain groups of applicants and beneficiaries.

Under proposed paragraph § 435.923(a), applicants and beneficiaries who do not designate an authorized representative on their application must be able subsequently to do so, through both electronic and paper formats, as well as the other modalities described in § 435.907(a). Legal documentation of authority to act on behalf of an applicant or beneficiary under state law, such as a court order establishing legal guardianship or a power of attorney may serve in the place of the applicant or beneficiary's designation. The option to submit such documentation is intended to enable applicants who do not have the capacity to provide a signature to authorize representation. Authorized representatives must agree, or be bound by requirements, to maintain the confidentiality of any information regarding the applicant or beneficiary provided by the agency. An applicant or beneficiary may authorize the representative to act on his or her behalf in the activities set forth in proposed § 435.923(b). In accordance with proposed paragraph (c), the applicant or beneficiary may change or withdraw his or her authorization at any time. The authorized representative also may withdraw his or her authorization of representation by notifying the agency. Under proposed § 435.923(d), authorized representatives are responsible for fulfilling the responsibilities encompassed within the scope of the representation to the same extent as the individual he or she represents and must agree to maintain the confidentiality of information provided by the agency. Under proposed paragraph (e), providers and staff members or volunteers of other organizations serving as authorized representatives must agree to adhere to relevant confidentiality and conflict of interest protections, similar to the rules applied to eligibility workers at outstation locations set forth in § 435.904(e) of the regulations. We note that, before data can be released to an authorized representative, the representative must meet the authentication and data security standards of the releasing entity. For example, information relating to an applicant's modified adjusted gross income from the Internal Revenue Service cannot be requested by or released to an authorized representative unless the representative meets the authentication and security standards established by the IRS under section 6103 of the Code. In the event that such authentication or security standards are not met, the agency would need to continue to process the individual's application to the extent possible without use of the data at issue.

We intend that the single streamlined application described in § 435.907(b)(1) of the regulations will provide applicants the opportunity to designate an authorized representative and will collect the information necessary for such representative to enter into any associated agreements with the agency as part of the application process. States developing alternative applications under § 435.907(b)(2) must collect the same information through their alternative applications or supplemental forms. Per proposed § 435.923(f), the agency must accept electronic, including telephonically recorded, signatures authorizing representation as well as handwritten signatures transmitted by facsimile or other electronic transmission. Designations of authorized representatives under the proposed regulation must be accepted through all of the modalities described in § 435.907(a).

(c) Accessibility for Individuals Who Are Limited English Proficient (§ 435.905)

We are proposing to clarify regulations at § 435.905(b) relating to the provision of information to persons who are limited English proficient in order to assure access to coverage for eligible individuals and to achieve alignment between the regulations governing Medicaid and CHIP with existing Exchange regulations at 45 CFR 155.205(c), issued in the Exchange eligibility final rule on March 27, 2012. We propose that providing language services means providing oral interpretation, written translations, and taglines (which are brief statements in a non-English language that inform individuals how to obtain information in their language). These language services will allow individuals who are

limited English proficient to obtain information accessibly.

Longstanding § 435.901 directs states to comply with the Civil Rights Act of 1964, as well as section 504 of the Rehabilitation Act of 1973, and all other relevant provisions of federal and state laws. Guidance published on August 8, 2003 (68 FR 47311) provides some parameters on language assistance services for persons who are limited English proficient, including oral interpretation and written translation services; this guidance is located at
http://www.justice.gov/crt/about/cor/lep/hhsrevisedlepguidance.pdf
. Guidance was subsequently released on the availability of enhanced federal matching funds available for translation and interpretation services in connection with improving outreach to, enrollment of, retention of, and use of services by children in Medicaid and CHIP. Federal Medicaid reimbursement is available for the provision of oral and written translation and interpretation services provided to Medicaid and CHIP beneficiaries as either administration or a medical-assistance related expenditure, at varying matching rates, depending on the specific circumstances involved. (For more information, see our letter to State Health Officials (SHO) dated July 1, 2010, available at
http://www.cms.gov/smdl/downloads/SHO10006.pdf
and the CMCS Information Bulletin on translation services dated April 26, 2011, available at
https://www.cms.gov/CMCSBulletins/downloads/Info-Bulletin-4-26-11.pdf
.)

These proposed policies are consistent with sections 1413 and 2201 of the Affordable Care Act, sections 1902(a)(8), 1902(a)(19) and 1943(b)(1)(F) of the Act and § 435.902 and § 435.906 of the regulations. The proposed regulation at § 435.905(b)(1) is designed to provide flexibility to states and to accommodate differences in populations and languages spoken in a state. As stated in our Medicaid eligibility final rule, after consultation with states and stakeholders, future sub-regulatory guidance will implement the regulatory standards proposed as well as coordinate our accessibility standards with those applied to other insurance affordability programs and other programs overseen by HHS, as appropriate. We also propose at § 435.905(b)(3) to require the state to inform individuals of availability of these services, and how to access them. Proposed paragraph (b)(3) would apply to informing individuals of accessibility services described in § 435.905(b)(2) of the Medicaid eligibility final rule (relating to services available to individuals with disabilities).

We note that under regulations adopted in the Medicaid eligibility final rule, application and renewal forms, Web sites and other electronic systems used to enroll individuals, and assistance provided to individuals must meet the accessibility standard in proposed § 435.905(b) (
see
§§ 435.907(g), 435.916(g), 435.908, 435.1200(f) of the Medicaid eligibility final rule). Thus, to align with the current Exchange regulations issued in the Exchange Eligibility final rule at § 155.205(c) and amending the accessibility standards in this proposed rule, we would also be modifying the standards for such forms, Web sites, and systems. In §§ 435.917(a)(2), 431.205(e), 431.206(d), and 435.956(g), we propose to apply these accessibility standards at § 435.905(b) to notices and appeals procedures. We note that the proposed modification of § 431.206 is intended to provide that all notices and communications across our regulation at part 431, subpart E be accessible to people who are limited English proficient and with disabilities, including but not limited to references to notices in §§ 431.211, 431.224, and 431.245. We also propose to modify § 457.110(a) and § 457.340(e) to apply these accessibility standards to the CHIP program.

5. Medicaid Eligibility Requirements and Coverage Options Established by Other Federal Statutes

To facilitate development of the streamlined eligibility and enrollment system envisioned under the Affordable Care Act, we propose new or amended regulations to simplify several eligibility pathways established by other federal statutes, as follows:

(a) Coverage of Children and Families

(i) Mandatory Coverage of Children With Title IV-E Adoption Assistance, Foster Care, or Guardianship Care Under Title IV-E (§ 435.145)

Section 471(a)(28) of title IV-E of the Act, as added by the Fostering Connections to Success and Increasing Adoptions Act of 2008 (Pub. L. 110-351), gives states and federally-recognized Tribes the option to provide kinship guardianship assistance payments on behalf of children placed with family members under certain conditions. Under section 473(b)(3)(C) of the Act, children on whose behalf such payments are made are mandatorily eligible for Medicaid to the same extent as children for whom federal foster care maintenance payments are made under title IV-E. Revisions to current regulations at § 435.145 are proposed to implement these statutory provisions. Also, we are proposing to eliminate a duplicative rule at § 435.115(e) for this group and to include in § 435.145 certain provisions from § 435.115(e) that are consistent with the statutory requirements, namely that an adoption assistance agreement is considered to be in effect regardless of whether adoption assistance is being provided or an interlocutory or other judicial decree of adoption has been issued. These proposed changes clarify current policy and have no meaningful impact on state programs.

(ii) Extended Eligibility for Low-Income Families (§ 435.112 and § 435.115)

(1) Families With Medicaid Eligibility Extended Because of Increased Earnings or Hours of Employment (§ 435.112)

Sections 408(a)(11)(A), 1902(e)(1)(A), and 1931(c)(2) of the Act, implemented at existing § 435.112, require a 4-month Medicaid extension for low-income families (including pregnant women without other children) eligible under section 1931 of the Act (because they met prior AFDC income eligibility requirements as modified at state option under section 1931(b)(2) of the Act) who otherwise would lose coverage due to a household member's increased earnings or a parent's increased working hours. This section applies if a Medicaid extension for at most 12 months under Transitional Medical Assistance (TMA) in accordance with section 1925 of the Act is not available (for example, because the federal authority for TMA has sunset). We propose revisions to § 435.112 to align with the implementation of section 1931 of the Act in the Medicaid eligibility final rule for parents and other caretaker relatives at § 435.110, pregnant women at § 435.116, and children at § 435.118.

(2) Families With Medicaid Eligibility Extended Because of Increased Collection of Spousal Support (§ 435.115)

Sections 408(a)(11)(B) and 1931(c)(1) of the Act, implemented at existing § 435.115(f)-(h), require a 4-month Medicaid extension for low-income families eligible under section 1931 of the Act who otherwise would lose coverage due to increased income from collection of child or spousal support under title IV-D of the Act. We propose to revise § 435.115 to limit this requirement to spousal support because, while spousal support is counted as income under the MAGI-based methodologies described in § 435.603,

child support is not. Therefore, increased collection of child support will not affect Medicaid eligibility for parents or children once MAGI-based methodologies take effect in 2014. Also, we propose to delete the obsolete paragraphs (a) through (d) of § 435.115 relating to individuals “deemed to be receiving AFDC” and to delete paragraph (e) relating to eligibility for children receiving assistance under title IV-E of the Act as duplicative of § 435.145.

(iii) Extended and Continuous Eligibility for Pregnant Women (§ 435.170) and Hospitalized Children (§ 435.172)

(1) Pregnant Women Eligible for Extended or Continuous Eligibility (§ 435.170)

Section 435.170 of the existing regulations implements section 1902(e)(5) of the Act, requiring extended Medicaid eligibility through the last day of the month in which the 60-day post-partum period ends for women who were covered while pregnant. Section 1902(e)(6) of the Act requires states to provide “continuous eligibility” to pregnant women, once determined eligible under any eligibility group, regardless of changes in household income through the last day of the month in which the post-partum period ends. Pregnant women eligible for extended coverage under either provision are entitled to receive pregnancy-related services covered under the state plan in accordance with § 435.116(d)(3) of the Medicaid eligibility final rule. We further clarify in a proposed new paragraph (d) of § 435.170, consistent with section 1902(e)(6) of the Act, that extended or continuous eligibility does not apply to pregnant women only covered during a period of presumptive eligibility. These changes clarify current policy and have no meaningful impact on state programs.

(2) Continuous Eligibility for Hospitalized Children (§ 435.172)

Section 1902(e)(7) of the Act requires that infants and children under age 19 eligible under sections 1902(a)(10)(A)(i)(III), (IV), (VI), and (VII) and (ii)(IX) of the Act remain eligible for Medicaid until the end of a Medicaid-covered inpatient stay, if they otherwise would lose eligibility because of attaining the maximum age for coverage under the applicable section of the Act. We propose to add a new section § 435.172 implementing this requirement for children eligible under § 435.118 of the Medicaid eligibility final rule. This section clarifies current policy and has no meaningful impact on state programs.

(iv) Optional Eligibility Groups and Coverage Options

(1) Optional Eligibility for Parents and Other Caretaker Relatives (§ 435.220)

Optional eligibility for pregnant women and parents or other caretaker relatives under section 1902(a)(10)(A)(ii)(I) of the Act is currently implemented at § 435.210. Optional eligibility for pregnant women, effective January 1, 2014, is implemented at § 435.116 of the Medicaid eligibility final rule. Optional eligibility for most parents and other caretaker relatives now covered under § 435.210 (those with MAGI-based income at or below 133 percent FPL) will be subsumed under the adult group at § 435.119, if they are not elderly and not Medicare eligible. Eligibility for parents and other caretaker relatives with MAGI-based income above the limits for mandatory coverage under § 435.110 and § 435.119 will remain an option under § 435.220 as proposed in this rule. The eligibility group defined in the existing regulations at § 435.220 (for individuals who would meet the income and resource requirements under AFDC if child care costs were paid from earnings) will be rendered obsolete with the prohibition against income disregards under MAGI-based methods per § 435.603(g).

Consistent with our efforts to streamline and simplify eligibility in the Medicaid eligibility final rule, we propose in this rulemaking to delete pregnant women and parents or other caretaker relatives from the scope of the current regulation at § 435.210 and to replace the obsolete provision currently provided for in § 435.220 with optional eligibility of parents and other caretaker relatives based on MAGI. A state may cover parents and other caretaker relatives under this section, including individuals who are elderly or Medicare eligible, if their household income does not exceed the income standard established by the state for this group. The income standard may not exceed the higher of the state's AFDC payment standard in effect as of July 16, 1996 or the state's highest effective income level for optionally eligible parents and other caretaker relatives under the state plan or 1115 demonstration as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard per section 1902(e)(14)(A) and (E) of the Act, in accordance with guidance as issued by the Secretary. States will also have the option to provide Medicaid to parents and other caretaker relatives, along with other individuals under age 65, with income above 133 percent FPL under the new optional eligibility group codified at § 435.218 of the Medicaid eligibility final rule.

(2) Optional Coverage for Reasonable Classifications of Individuals Under Age 21 (§ 435.222)

The existing regulation at § 435.222 implements sections 1902(a)(10)(A)(ii)(I) and (IV) of the Act to give states the option to cover all individuals under age 21 (or, at state option, under age 20, 19, or 18) or reasonable classifications of such individuals, who either meet the state's AFDC income and resource requirements or would meet them if not institutionalized. We propose revisions to § 435.222 to reflect the need for states to convert their current AFDC-based net income standard to an equivalent MAGI-based standard, unless the state currently disregards all income for a reasonable classification under this group. The income standard, if any, established by the state for all individuals or each reasonable classification under this group which may not exceed the higher of the state's AFDC payment standard in effect as of July 16, 1996 or the state's highest effective income level for the group or reasonable classification under the state plan or 1115 demonstration as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard.

(3) Optional Eligibility for Individuals Needing Treatment for Breast or Cervical Cancer (§ 435.213)

We propose to add a new § 435.213 to codify section 1902(a)(10)(A)(ii)(XVIII) of the Act, consistent with existing guidance, which provides states with the option to cover individuals needing treatment for breast or cervical cancer. The eligibility criteria for this optional eligibility group are set forth at section 1902(aa) of the Act. Guidance on this group was provided in a state Health Official letter (SHO) dated January 4, 2001,
http://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/sho010401.pdf
. Inasmuch as the proposed regulation codifies this guidance, which remains effective, this section should not have any meaningful impact on state programs.

This optional eligibility group covers individuals under age 65 who are not eligible and enrolled for mandatory coverage under the Medicaid state plan; do not otherwise have creditable coverage for treatment of their breast or cervical cancer; and have been screened

as needing treatment for breast or cervical cancer under a state's Centers for Disease Control and Prevention (CDC) breast and cervical cancer early detection program (BCCEDP). This may include any men screened under the state's screening program for breast cancer. The state entity administering the BCCEDP, not the state Medicaid agency, determines who is considered to have been “screened under the program” and establishes the scope of screening provided, regardless of funding source, so that if the state entity considers a man to have been screened under the BCCEDP program, a state electing to cover this Medicaid eligibility must cover such man under this group.

(4) Optional Eligibility for Independent Foster Care Adolescents (§ 435.226)

We propose to add a new § 435.226 to codify section 1902(a)(10)(A)(ii)(XVII) of the Act, which provides states with the option to cover “independent foster care adolescents” as described at section 1905(w) of the Act. This existing optional eligibility group covers individuals who are under age 21 (or, at state option, under age 20 or 19) and were in foster care under the responsibility of a state or Tribe on the individual's 18th birthday. As with reasonable classifications of individuals under § 435.222, states which covered such group under the Medicaid state plan or an 1115 demonstration as of March 23, 2010 or December 31, 2013 will need to convert the effective income level, if any, to a MAGI-based standard. The income standard may not exceed the higher of the state's AFDC payment standard in effect as of July 16, 1996 or the state's highest effective income level for this population under the state plan or 1115 demonstration as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard. Many individuals now covered under this optional group will be eligible for coverage as of 2014 under either the new group for former foster care children at the proposed § 435.150 or the adult group at § 435.119, both of which are mandatory eligibility groups under the statute. Unlike the group at § 435.150, this optional group at § 435.226 does not require enrollment in Medicaid upon attaining age 18 in foster care, but coverage in this group ends upon attaining age 21 rather than age 26.

(5) Optional Eligibility for Individuals Under Age 21 Who Are Under State Adoption Assistance Agreements (§ 435.227)

We propose to amend § 435.227 for children with a state adoption assistance agreement in effect (other than an agreement under title IV-E of the Act) to reflect the need for states to convert the current AFDC-based net income standard, if any, to an equivalent MAGI-based standard. If the state covered this group under the Medicaid state plan or an 1115 demonstration as of March 23, 2010 or December 31, 2013 with no income test or MAGI-based effective income level, converted to a MAGI-equivalent standard, exceeding the state's income standards for § 435.118 and § 435.119, that policy may remain in effect. Otherwise, consistent with the existing regulation at § 435.227(a)(3)(i) and retained at proposed § 435.227(b)(3)(i) of this rulemaking, an individual must have been eligible under the Medicaid state plan prior to the adoption agreement being entered into. We request comments on our proposal to delete the alternative eligibility requirement in existing regulations at § 435.227(a)(3)(ii) that the individual would have been eligible if the state's title IV-E foster care financial eligibility standards and methodologies were used, because the Medicaid eligibility requirements at § 435.118 of the Medicaid eligibility final rule are more expansive. Also, we propose language at § 435.227(b)(2), revising the language in existing regulations at § 435.227(a)(2), to clarify that it is the state agency which entered into the adoption agreement with the adoptive parents, which is not necessarily the state determining the child's Medicaid eligibility, that determines whether those eligibility requirements are met.

(6) Optional Targeted Low-Income Children (§ 435.229)

We propose to amend § 435.229 for optional targeted low-income children, as defined at § 435.4, for whom states may claim enhanced match under section 1905(b) and title XXI of the Act, in order to reflect the need for states to convert the current AFDC-based net income standard to an equivalent MAGI-based standard. A state's income standard may not exceed the higher of 200 percent FPL; an FPL percentage which exceeds the state's Medicaid applicable income level, defined at § 457.10, by no more than 50 percentage points; or the highest effective income level for this group in effect under the Medicaid state plan or an 1115 demonstration as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard.

(7) Optional Continuous Eligibility for Children (§ 435.926 and § 457.342)

We propose to add a new § 435.926 codifying section 1902(e)(12) of the Act, which provides states with the option to provide up to 12 months of continuous eligibility for children under age 19, or a younger age selected by the state, once determined eligible for Medicaid, regardless of changes in income or most other circumstances which otherwise would render the child ineligible for Medicaid. These proposed standards codify and clarify past guidance on the continuous eligibility options and have no meaningful impact on state programs. Under the option, continuous eligibility is provided to all children younger than the state's specified age who are covered under subpart B or C of this part, but not those covered as medically needy under subpart D, those eligible only for emergency medical services for non-citizens, or those eligible during a period of presumptive eligibility. Thus, consistent with the statute, states electing the option for continuous eligibility under proposed § 435.926 must provide such coverage to children eligible under § 435.118 as well as all children covered under any other mandatory or optional group covered by the state, including children eligible based on receipt of SSI, disability, institutionalization, or enrollment in a section 1915(c) home and community-based services waiver. Also proposed is § 457.342 for continuous eligibility of children under a state's separate CHIP.

Under proposed § 435.926(c), the state would specify in its state plan the length of a continuous eligibility period, not to exceed 12 months. A continuous eligibility period begins on the effective date of the individual's most recent determination or renewal of eligibility and ends at the end of the length of the continuous eligibility period specified by the state. Under proposed paragraph (d), children remain eligible during a continuous eligibility period regardless of any change in circumstances except attaining the maximum age elected by the state for this option, death, voluntary disenrollment, change in state residence, state error in the eligibility determination, or fraud, abuse, or perjury attributed to the child or the child's representative.

(8) Optional Tuberculosis Eligibility Group (§ 435.215)

We propose to add a new § 435.215 for optional tuberculosis (TB)-infected individuals to codify section

1902(a)(10)(A)(ii)(XII) and (z)(1) of the Act. These provisions provide states with the option to provide Medicaid to TB-infected individuals who are not eligible for Medicaid under subpart B of this part (relating to Mandatory Coverage of the Categorically Needy) and meet certain income and resource requirements. The medical assistance available to individuals eligible in this category is limited to TB-related services, which are defined in section 1902(z) of the Act as: prescribed drugs; physicians' services and services described in section 1905(a)(2); laboratory and X-ray services (including services to confirm the presence of infection); clinic services and federally-qualified health center services; case management services (as defined in section 1915(g)(2)); and services (other than room and board) designed to encourage completion of regimens of prescribed drugs by outpatients, including services to observe directly the intake of prescribed drugs.

The statute limits eligibility in this group to TB-infected individuals whose incomes and resources do not exceed the maximum amount a disabled individual described in subpart B of this part may have and obtain medical assistance under the state plan. The income and resource tests are both based on SSI standards and methodologies, and these rules remain in effect until January 1, 2014.

However, except as provided in section 1902(e)(14)(D) of the Act, section 1902(e)(14)(A) of the Act provides that notwithstanding any other provision of title XIX, financial eligibility for Medicaid for all individuals effective January 1, 2014, will be based on the MAGI-based methodologies set forth in section 1902(e)(14) of the Act. Because TB-infected individuals who qualify for Medicaid on that basis do not meet any of the exceptions from the MAGI-based income rules listed in section 1902(e)(14)(D) of the Act, implemented in § 435.603(j) of the Medicaid eligibility final rule, we propose that, effective January 1, 2014, income eligibility for this group must be determined in accordance with the MAGI rules in § 435.603. States electing to cover this eligibility group need to establish an income standard in their state plan. Under proposed § 435.215(b)(3), the income standard must not exceed the higher of the maximum income standard applicable to disabled individuals for mandatory coverage under subpart B of part 435 of the regulations, or the effective income level for coverage of TB-infected individuals under the state plan in effect as of March 23, 2010 or December 31, 2013, if higher, converted, at state option, to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act. Per § 435.603(g) of the Medicaid eligibility final rule, there will be no resource test for eligibility under this section effective January 1, 2014.

We considered an interpretation of the statute under which,

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2013-00659. Public record. Not legal advice.