                                                                                     ACCEPTED
                                                                                 03-15-00657-CV
                                                                                         7810967
                                                                      THIRD COURT OF APPEALS
                                                                                 AUSTIN, TEXAS
                                                                          11/12/2015 11:26:21 PM
                                                                               JEFFREY D. KYLE
                                                                                          CLERK
                         No. 03-15-00657-CV

                   In the Court of Appeals                       FILED IN
                                                          3rd COURT OF APPEALS
                for the Third Judicial District               AUSTIN, TEXAS
                                                         11/12/2015 11:26:21 PM
                       at Austin, Texas                     JEFFREY D. KYLE
                                                                  Clerk


Chris Traylor, as Executive Commissioner of the Texas
     Health and Human Services Commission, et al.
                                 Appellants,
                                  v.

      Diana D., as Next Friend of KD, a Child, et al.
                                   Appellees.


                          On Appeal from the
         200th Judicial District Court of Travis County, Texas


                       Appellants’ Brief


  Ken Paxton                        Scott A. Keller
  Attorney General of Texas         Solicitor General

  Charles E. Roy                   Kristofer S. Monson
  First Assistant Attorney General Assistant Solicitor General
                                   State Bar No. 24037129

                                    Office of the Attorney General
                                    P.O. Box 12548 (MC 059)
                                    Austin, Texas 78711-2548
                                    Tel.: (512) 936-1820
                                    kristofer.monson@texasattorneygeneral.gov

                                    Counsel for Appellants
 Oral Argument Requested
                  Identity of Parties and Counsel

Appellants:

Chris Traylor, as Executive Commissioner of the Texas Health and Human
Services Commission, et al.

Lead Appellate Counsel:

Kristofer S. Monson                     Office of the Attorney
Assistant Solicitor General             General
State Bar No. 24037129                  P.O. Box 12548 (MC 059)
                                        Austin, Texas 78711-2548
                                        [Tel.] (512) 936-1820
                                        kristofer.monson@texasattorneygeneral.gov

Appellee:

Diana D., as Next Friend of KD, A Child, et al.

Lead Appellate Counsel:

Daniel R. Richards                      Richards Rodriguez & Skeith
State Bar No. 00791520                  816 Congress Avenue
Benjamin H. Hathaway                    Suite 1200
State Bar No. 09224500                  Austin, Texas 78701
                                        [Tel.] (512) 476-0005
                                        drichards@rrsfirm.com
                                        bhathaway@rrsfirm.com
                                         Table of Contents

Identity of Parties and Counsel ............................................................................... i

Table of Contents .................................................................................................. ii

Index of Authorities ...............................................................................................vi

Statement of the Case .......................................................................................... xvi

Issues Presented ................................................................................................. xvii

Statement of Facts ................................................................................................. 2

Summary of Argument.......................................................................................... 14

Standards of Review ............................................................................................. 17

Argument.............................................................................................................. 18

         I.       The Live Petition Does Not Attempt to Tie the Causes of
                  Action it Pleads to the Remedies it Seeks. ................................ 18

         II.      Plaintiffs’ Lawsuit Has No Arguable Basis in Law.................... 20

                  A.       Plaintiffs Fail to Address the Distinction Between Review
                           and Adjustment. ................................................................ 20

                  B.       Plaintiffs Fundamentally Misunderstand Rider 50. ............... 22

                           1.        The rider’s plain text is not optional. ......................... 23

                           2.        The post-enactment legislative history proffered by
                                     plaintiffs cannot change statutory text. ....................... 26

                  C.       There is No Basis in Texas Law For Obtaining Judicial
                           Review of Medicaid Rates that Are Not Required to be
                           Adopted Through Contested-Case Proceedings. .................. 27




                                                           ii
               1.      Plaintiffs’ approach of using § 2001.038 to attack
                       Medicaid rates has been rejected by the Texas
                       Supreme Court......................................................... 28

               2.      The ultra vires cause of action cannot be used to
                       retroactively undo rules that became effective on
                       October 1, but for the district court’s improper
                       counter-supersedeas order. ....................................... 29

III.   That Texas Law Does Not Provide a Judicial Review
       Mechanism Under Which Texas Courts Set Medicaid Rates
       Makes Sense, Because Such a System Would Be Preempted
       by Federal Law.......................................................................... 30

       A.      The Medicaid Act Makes Rates Subject to the Exclusive
               Jurisdiction of the Secretary, Subject Only to Potential
               Federal-Court Proceedings. ................................................ 31

       B.      The Medicaid Act Preempts Texas Remedies Related to
               Medicaid Rates By Creating Exclusive Jurisdiction in the
               Secretary. .......................................................................... 32

       C.      Both the Texas and Federal Constitutions Prohibit Judicial
               Orders that Interfere with the Relationship Between the
               State and Federal Governments. ......................................... 34

IV.    Plaintiffs Lack a Vested Property Right in Medicaid Rates. ..... 36

       A.      Neither the Providers Nor the Beneficiaries Have a Vested
               Property Right, and Cannot Raise Either A Due-Course or
               Inherent-Judicial-Review Claim. ......................................... 36

               1.      The provider plaintiffs lack a vested property right...... 37

               2.      The beneficiary plaintiffs lack a vested property
                       right—in fact, they will suffer no cognizable change
                       in their legal status by a change in the rates. ................ 38

       B.      The Court Should Follow Justice Scalia’s Lead in
               Armstrong and Hold that Providers and Beneficiaries Lack


                                            iii
             Constitutional Standing to Bring Suit Under the
             Ratemaking Criteria of the Medicaid Act. ............................ 39

V.   Even if plaintiffs have constitutional standing, they cannot
     successfully invoke § 2001.038 or the Ultra Vires Cause of
     Action. ...................................................................................... 40

     A.      Section 2001.038 and the Ultra Vires Cause of Action
             Cannot Be Used to Obtain Judicial Review........................... 40

             1.       The ultra vires cause of action does not apply
                      retroactively because it is not a form of judicial
                      review...................................................................... 40

             2.       Section 2001.038 does not create judicial power to
                      review substantive agency actions, only agency
                      rules. ....................................................................... 41

             3.       Plaintiffs’ lawsuit is barred because it seeks to use
                      these causes of action retroactively and specifies no
                      remedy appropriate to the causes of action pleaded.
                       ............................................................................... 43

     B.      Plaintiffs’ § 2001.038 Claims Are Barred. ............................ 44

             1.       Plaintiffs lack a right or privilege. ............................... 45

             2.       Plaintiffs have not “identified” an administrative
                      rule.......................................................................... 47

                      a.       Plaintiffs cannot reverse engineer a rule
                               challenge from a rate challenge. ........................ 47

                      b.       Plaintiffs ignore the application of
                               § 355.201(d). .................................................. 48

     C.      Plaintiffs’ Ultra Vires Claims Would Fail Even if they Had
             Been Properly Pleaded. ...................................................... 49




                                           iv
                            1.        Plaintiffs’ position regarding § 355.8021 would fail
                                      to trigger an ultra vires claim in any event. .................. 50

                            2.        Plaintiffs’ remaining claims likewise cannot
                                      describe an ultra vires act. .......................................... 53

         VI.       Because there is no potential for recovery, the Court Should
                   vacate the Temporary Injunction. ................................................. 55

Prayer ................................................................................................................... 57

Certificate of Service............................................................................................. 58

Certificate of Compliance ..................................................................................... 58




                                                             v
                                   INDEX OF AUTHORITIES

Cases

Adams v. Calvert,
     396 S.W.2d 948 (Tex. 1965) ........................................................................ 35

Armstrong v. Exceptional Child Ctr., Inc.,
      135 S.Ct. 1378 (2015)...............................................................2, 31, 32, 35, 39

Butnaru v. Ford Motor Co.,
     84 S.W.3d 198 (Tex. 2002) ................................................................... 55, 56

Charlie Thomas Ford v. A.C. Collins Ford,
      912 S.W.2d 271 (Tex. App.—Austin 1995, writ dism’d) ............................ 42

City of Amarillo v. Hancock,
       150 Tex. 231, 239 S.W.2d 788 (1951) ..................................................... 36, 42

City of Austin v. Cannizzo,
       153 Tex. 324, 267 S.W.2d 808 (1954) .......................................................... 25

City of Austin v. Chandler,
       428 S.W.3d 398 (Tex. App.—Austin 2014, no pet.) .................................... 33

City of El Paso v. Heinrich,
       284 S.W.3d 366 (Tex. 2009) ....................................................................... 41

City of Houston v. Williams,
       216 S.W.3d 827 (Tex. 2007) (per curiam) .................................................. 40

Colorado Health Care Ass’n v. Colorado Dep’t of Soc. Servs.,
      842 F.2d 1158 (10th Cir. 1988) ......................................................................3

Combs v. City of Webster,
     311 S.W.3d 85 (Tex. App.—Austin 2009, pet. denied).......................... 36, 47

Creedmoor-Maha Water Supply Corp. v. Tex. Comm’n on Envt’l Quality,
     307 S.W.3d 505 (Tex. App.—Austin 2010, no pet.) ...............................29-30



                                                    vi
Cullen Center Bank & Trust Co. v. Tex. Commerce Bank,
      841 S.W.2d 116 (Tex. App.—Houston [14th Dist.] 1992, writ
      denied)........................................................................................................ 25

Dallas Cnty. Mental Health & Mental Retardation v. Bossley,
      968 S.W.2d 339 (Tex. 1998) ...................................................................17, 18

Douglas v. Indep. Living Ctr. of S. Calif., Inc.,
      132 S.Ct. 1204 (2012) ....................................................................................3

El Paso Cnty. Hosp. Dist. v. Tex. Health & Human Servs. Comm’n,
      400 S.W.3d 72 (Tex. 2013) ............................................................. 28, 44, 48

El Paso Hospital District v. Tex. Health & Human Services Commission,
      247 S.W.3d 709 (Tex. 2008) ................................................................. 28, 44

Eldercare Props., Inc. v. Dep’t of Human Servs.,
      63 S.W.3d 551 (Tex. App.—Austin 2001, pet. denied) ................................ 37

Entergy Gulf States, Inc. v. Pub. Util. Comm’n,
      173 S.W.3d 199 (Tex. App.—Austin 2005, pet. denied) .............................. 32

Entergy Gulf States, Inc. v. Summers,
      282 S.W.3d 433 (Tex. 2009) .......................................................................26

Equal Access for El Paso, Inc. v. Hawkins,
      509 F.3d 697 (5th Cir. 2007) ........................................................................ 4

Ex Parte Mitchell,
      783 S.W.2d 703 (Tex. App.—El Paso 1989, no writ) ................................... 25

Finance Commission of Texas v. Norwood,
      418 S.W.3d 566 (Tex. 2013) ........................................................................ 45

Garcia v. Kubosh,
      377 S.W.3d 89 (Tex. App.—Houston [1st Dist.] 2012, no pet.) ................. 44




                                                          vii
Gattis v. Duty,
       349 S.W.3d 193 (Tex. App.—Austin 2011, no pet.) ..................................... 17

Gen. Servs. Comm’n v. Little-Tex Insulation Co.,
      39 S.W.3d 591 (Tex. 2001) ......................................................................... 40

Gerst v. Nixon,
       411 S.W.2d 350 (Tex. 1966) ........................................................................ 34

Gulf Land Co. v. Atl. Ref. Co.,
      134 Tex. 59, 131 S.W.2d 73 (1939) ......................................................... 33, 41

Harris County v. Sykes,
      136 S.W.3d 635 (Tex. 2004) ........................................................................ 18

Heckman v. Williamson Cnty.,
     369 S.W.3d 137 (Tex. 2011) ................................................................... 38, 39

Houston Mun. Emps. Pension Sys. v. Ferrell,
      248 S.W.3d 151 (Tex. 2007) .................................................................. 33, 42

In re Doe,
       19 S.W.3d 346 (Tex.2000) .................................................................... 26, 27

In re Entergy Corp.,
       142 S.W.3d 316 (Tex. 2004) ........................................................................ 33

In re Sw. Bell Tel. Co., L.P.,
       226 S.W.3d 400 (Tex. 2007) ....................................................................... 18

Jessen Assocs., Inc. v. Bullock,
       531 S.W.2d 593 (Tex. 1975) ......................................................................... 34

Lopez v. Pub. Util. Comm’n,
      816 S.W.2d 776 (Tex. App.—Austin 1991, writ denied) ............................. 42

Mills v. Warner Lambert Co.,
       157 S.W.3d 424 (Tex. 2005) ........................................................................ 32




                                                    viii
N. Alamo Water Supply Corp. v. Tex. Dep’t of Health,
      839 S.W.2d 455 (Tex. App.—Austin 1992, writ denied) .............................30

Nat’l Fed’n of Indep. Bus. v. Sebelius,
      132 S.Ct. 2566 (2012) .................................................................................. 31

Ojo v. Farmers Group,
       356 S.W.3d 421 (Tex. 2011) ........................................................................ 27

Pers. Care Prods. v. Hawkins,
       635 F.3d 155 (5th Cir. 2011)......................................................................... 37

Pharm. Research & Mfrs. of Am. v. Walsh,
     538 U.S. 644 (2003) (plurality op. ......................................... 31, 32, 34, 35, 36

Prairie View A&M Univ. v. Chatha,
       381 S.W.3d 500 (Tex. 2012) ....................................................................... 42

R.R. Comm’n v. Tex. Citizens for a Safe Future and Clean Water,
      336 S.W.3d 619, 624-25 (Tex. 2011) ............................................................ 51

Richardson v. First Nat’l Life Ins. Co.,
      419 S.W.2d 836 (Tex. 1967) ........................................................................ 17

S.C. San Antonio, Inc. v. Tex. Dep’t of Human Servs.,
      891 S.W.2d 773 (Tex. App.—Austin 1995, writ denied) .............................. 37

Spring Branch Indep. Sch. Dist. v. Stamos,
      695 S.W.2d 556 (Tex. 1985) ........................................................................ 36

SSC Mo. City Operating Co., LP v. Tex. Dep’t of Aging & Disability Servs.,
     No. 03-09-00299-CV, 2009 WL 4725286 (Tex. App.—Austin
     2009, pet. denied) (mem. op.) ..................................................................... 37

State Bar of Tex. v. Gomez,
       891 S.W.2d 243 (Tex. 1994) ........................................................................ 18

State v. Holland,
       221 S.W.3d 639, 644 (Tex. 2007) ................................................................ 19



                                                       ix
Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n,
      408 S.W.3d 549 (Tex. App.—Austin 2013, pet. denied) ........................19, 37

Tex. A&M Univ. Sys. v. Koseoglu,
      233 S.W.3d 835 (Tex. 2007) ........................................................................ 17

Tex. Ass’n of Bus. v. Tex. Air Control Bd.,
      852 S.W.2d 440 (Tex. 1993) ............................................................ 17, 18, 38

Tex. Comm’n of Licensing & Regulation v. Model Search Am., Inc.,
      953 S.W.2d 289 (Tex. App.—Austin 1997, no writ) ....................................30

Tex. Comm’n on Envtl. Quality v. Slay,
      351 S.W.2d 532 (Tex. App.—Austin 2011, pet. denied) .............................. 45

Tex. Dep’t of Parks & Wildlife v. Miranda,
      133 S.W.3d 217 (Tex. 2004) ...................................................................17, 18

Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc.,
      145 S.W.3d 170 (Tex. 2004) .................................................................. 29, 41

Tex. Dep’t of Pub. Safety v. Salazar,
      304 S.W.3d 896 (Tex. App.—Austin 2009, no pet.) ................................... 45

Tex. Dep’t of State Health Servs. v. Balquinta,
      429 S.W.3d 726 (Tex. App.—Austin 2014, pet. dism’d)....................... 44, 45

Tex. Health & Human Servs. Comm’n v. Advocates for Patient Access, Inc.,
      399 S.W.3d 615 (Tex. App.—Austin 2013, no pet.)..................................... 56

Tex. Health & Human Servs. Comm’n v. El Paso Cnty. Hosp. Dist.,
      351 S.W.3d 460 (Tex. App.—Austin 2011) ........................................... 28, 44

Tex. Parks & Wildlife Dep’t v. Sawyer Trust,
      354 S.W.3d 384 (Tex. 2011) ....................................................................... 40

Thomas v. Groebl,
     147 Tex. 70, 212 S.W.2d 625, 630 (1948) ................................................... 24




                                                     x
U.S. v. L.A. Tucker Truck Lines, Inc.,
      344 U.S. 33 (1952) ..................................................................................... 44

Walling v. Metcalfe,
      863 S.W.2d 56 (Tex. 1993) (per curiam) ..................................................... 17

Water Dev’pt Bd. v. Hearts Bluff Game Ranch, Inc.,
      313 S.W.3d 479 (Tex. App.—Austin 2010), aff’d 381 S.W.3d 468
      (Tex. 2012) ............................................................................................ 19-20

Wichita Falls State Hosp. v. Taylor,
      106 S.W.3d 692 (Tex. 2003) ........................................................... 42, 45, 46

Constitutional Provisions, Statutes & Rules

TEX. CONST. art. I, § 28 ........................................................................................ 33

TEX. CONST. art. II, § 1 ......................................................................................... 33

TEX. CONST. art. IV, § 10 ..................................................................................... 35

U.S. Const. art. VI, cl. 2 ........................................................................................ 32

1 TEX. ADMIN. CODE § 353.411(a)(5)............................................................... 13, 54

1 TEX. ADMIN. CODE ch. 355 subch. B .................................................................... 6

1 TEX. ADMIN. CODE § 355.201 ...............................................................................5

1 TEX. ADMIN. CODE § 355.201(c) ..................................................................... 8, 10

1 TEX. ADMIN. CODE § 355.201(c)(4) ............................................................ 3, 8, 53

1 TEX. ADMIN. CODE § 355.201(d) .............................................................. 9, 21, 22

1 TEX. ADMIN. CODE § 355.201(d)(1)(A) ......................................... 9, 10, 12, 21, 48

1 TEX. ADMIN. CODE § 355.201(d)(1) (D) ................................... 9, 10, 12, 21, 48

1 TEX. ADMIN. CODE § 355.201(e) ........................................................... 7, 9, 10, 13



                                                         xi
1 TEX. ADMIN. CODE § 355.201(f) ................................................................ 7, 10, 13

1 TEX. ADMIN. CODE § 355.8021 ....................................................................... 8, 13

1 TEX. ADMIN. CODE § 355.8021(a)(2) ........................................................8, 22

1 TEX. ADMIN. CODE §355.8021(a)(2)(A) ........................................ 8, 21, 22, 50

1 TEX. ADMIN. CODE §355.8021(a)(2)(B) .............................................. 8, 21, 22

1 TEX. ADMIN. CODE 355.8021(B)........................................................................49

1 TEX. ADMIN. CODE § 355.8063(k)(1)(A) (2010), repealed by 35 TEX.
      REG. 6511, 6513 (2010) ............................................................................... 28

1 TEX. ADMIN. CODE § 355.8085 ..................................................................... 13

1 TEX. ADMIN. CODE § 355.8085(g)(3) ................................................................... 8

1 TEX. ADMIN. CODE § 355.8441.................................................................. 8, 13

1 TEX. ADMIN. CODE § 355.8441(3)(B) .................................................................. 8

1 TEX. ADMIN. CODE § 355.8441(5)(B) ............................................................. 8

1 TEX. ADMIN. CODE § 355.8441(6)(B) ............................................................. 8

1 TEX. ADMIN. CODE § 355.8441(7)(B) ............................................................. 8

42 U.S.C. § 1396a(a) .............................................................................................. 2

42 U.S.C. § 1396a(a)(3) ..........................................................................................3

42 U.S.C. § 1396a(a)(5) ..........................................................................................5

42 U.S.C. § 1396a(a)(30)(A) ....................................................................... 3, 54, 26

42 U.S.C. § 1396b ............................................................................................31, 53

42 U.S.C. § 1396b(a) ...............................................................................................3



                                                        xii
42 U.S.C. § 1396b(m)(1)(A)(i) .............................................................................. 55

42 U.S.C. § 1396c ...............................................................................................2, 4

5 U.S.C. § 702 ...................................................................................................... 41

TEX. CIV. PRAC. & REM. CODE § 37.011 ................................................................ 33

TEX. GOV’T CODE § 2001.022 ......................................................................... 53

TEX. GOV’T CODE § 2001.022(a) ............................................................... 13, 46

TEX. GOV’T CODE § 2001.023(a) .......................................................... 13, 46, 53

TEX. GOV’T CODE § 2001.024 ................................................................... 13, 54

TEX. GOV’T CODE § 2001.038 ......................................................................... 41

TEX. GOV’T CODE § 2001.038(a) .............................................................. 16, 42, 43

TEX. GOV’T CODE § 2001.171 ......................................................................... 42

TEX. GOV’T CODE § 2001.174 .................................................................... 41, 42

TEX. GOV’T CODE § 2006.002 ....................................................................13, 53

TEX. GOV’T CODE § 2006.002(c) ....................................................................46

TEX. GOV’T CODE § 311.016 ................................................................................ 24

TEX. GOV’T CODE § 311.034 ................................................................................ 42

TEX. GOV’T CODE ch. 531 .......................................................................................5

TEX. GOV’T CODE ch. 531 subch. B .........................................................................5

TEX. GOV’T CODE § 531.021(b-1)............................................................................5

TEX. GOV’T CODE § 531.021(d) .......................................................................... 8, 9

TEX. GOV’T CODE § 531.021(e) ........................................................................ 9


                                                         xiii
TEX. GOV’T CODE § 531.02113.......................................................................... 5, 13

TEX. GOV’T CODE § 531.02113(1) ......................................................................... 53

TEX. GOV’T CODE § 531.0212(b)(2) ...................................................................... 38

TEX. GOV’T CODE § 533.005(a)(21) ...................................................................... 13

TEX. GOV’T CODE § 533.005(a)(21)(c) ................................................................. 54

TEX. HUM. RES. CODE ch. 32 ..................................................................................5

TEX. HUM. RES. CODE § 32.002 ........................................................................5

TEX. HUM. RES. CODE § 32.021 .................................................................. 5, 35

TEX. HUM. RES. CODE § 32.021(a) ..........................................................................5

TEX. HUM. RES. CODE § 32.028 ................................................................... 3, 31, 53

TEX. HUM. RES. CODE § 32.028(a)...................................................................... 5, 6

TEX. HUM. RES. CODE § 32.0281.......................................................................5

TEX. HUM. RES. CODE § 32.0281(b)(1)............................................................. 6

TEX. HUM. RES. CODE § 32.0281(d)....................................................................... 6

TEX. HUM. RES. CODE § 32.0281(e) ............................................................ 6, 29

TEX. HUM. RES. CODE § 32.0282 ................................................................ 6, 10, 52

TEX. HUM. RES. CODE § 32.0282(a) .......................................................................7

TEX. R. CIV. P. 683 ................................................................................................ 56

Rule 24........................................................................................................... 22, 52




                                                         xiv
Other Authorities

2016-17 Gen. Appropriations Act,
      84th Leg., R.S., ch. 1281, art. II, 2015 TEX. SESS. LAW SERV. 4343,
      4547 (Health & Human Servs. Comm’n), Rider 50..................................... 11

A DICTIONARY OF MODERN LEGAL USAGE (2d ed. 1995) ................................ 24, 46

AMER. HERITAGE DICTIONARY 691 (4th ed. 1994) ................................................ 21

AMER. HERITAGE DICTIONARY 1612 (4th ed. 1994) ............................................. 24

BLACK’S LAW DICTIONARY 1436 (9th ed. 2009) ....................................................46

Gen. Appropriations Act, 2012-13 Biennium, 82d Leg., R.S., ch. 1355, art.
      II, § 16, 2011 TEX. GEN. LAWS 4025, 4241 (Special Provisions Re:
      All Health & Human Servs. Agencies, Provider Rates) ............................... 10




                                               xv
                              STATEMENT OF THE CASE

 Nature of the Case:                          Plaintiffs    sought to       impede     the
                                              implementation of a set of Medicaid rates
                                              for home therapy services that were to go
                                              into effect on October 1. They attempted to
                                              invoke § 2001.038 of the APA and the ultra
                                              vires cause of action, and asked the district
                                              court to foreclose the Commission from
                                              superseding the judgment.

 Trial Court:                                 200th Judicial District Court,
                                              Travis County
                                              The Hon. Tim Sulak Presiding


 Trial Court Disposition:                     The trial court denied the plea, CR.673
                                              (Appendix Tab B),1 and granted a
                                              temporary       injunction,  CR.587-672
                                              (Appendix Tab A). The court foreclosed
                                              supersedeas based on a bond of $500; that
                                              matter is being challenged by a separate
                                              motion in the same cause.




1 References to the Clerk’s Record appear as “CR.__,” with a numeral indicating the page number

and, as appropriate, a paragraph reference. References to the Reporter’s Record appear as
__.RR.__, with the first numeral indicating a volume and the second a page number, sometimes
followed by a line number. The Supplemental Reporter’s Record is referred to as “SRR.”


                                             xvi
                                ISSUES PRESENTED

Plaintiffs sought ultra vires and declaratory relief under the Administrative
Procedure Act related to the Commission’s adjustment of Medicaid rates for certain
therapy services, which were arrived at as a rate adjustment triggered by a decreased
appropriation for Medicaid funding. Plaintiffs allege in their trial-court briefing (but
not in their live petition) that they are entitled to relief related to the rates, because
they are implicitly in conflict with separate administrative rules governing periodic
rate review related to costs. Claims regarding the amount of Medicaid rates are
subject to the exclusive jurisdiction of the federal Secretary of Health and Human
Services, and Texas law does not provide for an administrative process or judicial
review related to the rate-setting process.

      1.     Does plaintiffs’ petition establish jurisdiction based on any of the
             causes of action asserted? Are the jurisdictional defects
             incurable?

      2.     Are Texas-law claims and remedies related to the amount
             of Medicaid rates preempted by the federal Medicaid Act?
             Does Texas law purport to create an independent basis for
             challenging Medicaid rates in state court?

      3.     Do plaintiffs have a standing to challenge the Medicaid rates or a
             vested right in a particular level of Medicaid rates?

      4.     Do plaintiffs have a vested property right on which to base
             a constitutional due-course-of-law claim or seek inherent
             judicial review?




                                           xvii
                                No. 03-15-00657-CV

                          In the Court of Appeals
                       for the Third Judicial District
                              at Austin, Texas

   CHRIS TRAYLOR, AS EXECUTIVE COMMISSIONER OF THE TEXAS HEALTH AND
                    HUMAN SERVICES COMMISSION, et al.
                                           Appellants,
                                          v.

                 DIANA D., AS NEXT FRIEND OF KD, A CHILD, et al.
                                               Appellees.


                                On Appeal from the
               200th Judicial District Court of Travis County, Texas


                                APPELLANTS’ BRIEF


TO THE HONORABLE THIRD COURT OF APPEALS:

      Plaintiffs seek to challenge the result of a Medicaid rates adjustment, through

a series of procedural mechanisms governing the adoption of the administrative rules

governing the Medicaid process. The remedy plaintiffs seek—to keep the old

rates—is incompatible with the exceptions to sovereign immunity on which they

rely. Those exceptions apply at most to rules, not rates; there is no Texas-law

mechanism to challenge the amount of Medicaid rates. The lack of a Texas-law

remedy for ratemaking is entirely sensible, because federal law preempts all state law
remedies that impact the amount of Medicaid fees related to considerations such as

access to care. The federal Secretary of Health and Human Services has exclusive

authority to review the amount of Medicaid rates, subject to the remedy of

withdrawing federal funds if state levels are too low. 42 U.S.C. § 1396c.

      Because there is no Texas-court lawsuit that can change the rates, plaintiffs

should direct their concerns about access to care to the Secretary. The lawsuit should

be dismissed.

                             STATEMENT OF FACTS

      Plaintiffs would engraft a substantive Texas-law access requirement on the

federal Medicaid Act, and to establish a new legal basis for judicial review of

Medicaid rates through statutes that allow review of the underlying administrative

rules. A full understanding of the procedural and jurisdictional issues in this case

requires an understanding of the Medicaid Act’s rate structure and the Texas-law

requirements for adopting administrative rules, periodically setting Medicaid rates,

and adjusting those rates in other circumstances.

      Medicaid

      Medicaid is a Spending Clause program, cooperatively managed by the state

and federal governments. E.g., Armstrong v. Exceptional Child Ctr., Inc., 135 S.Ct.

1378, 1382 (2015). The program functions as a contract between the states and the

federal government: to qualify for funding, the State tenders and the federal

government accepts a Medicaid “plan,” see 42 U.S.C. § 1396a(a), to be administered

                                          2
by the State, see Douglas v. Indep. Living Ctr. of S. Calif., Inc., 132 S.Ct. 1204, 1210

(2012) (federal governments’ acceptance of Medicaid plan, within its expertise,

precluded rate claim against state and required plaintiffs to go to federal forum). The

availability of funds is predicated on the availability of money appropriated to pay

Medicaid benefits. 42 U.S.C. § 1396b(a) (setting amount to be distributed to states

“[f]rom the sums appropriated therefor”); accord, e.g., TEX. HUM. RES. CODE

§ 32.028, 1 TEX. ADMIN. CODE § 355.201(c)(4) (requiring consideration of “levels

of appropriated state . . . funds . . . that limit, restrict, or condition the availability of

appropriated funds for medical assistance”). A shortfall in Medicaid appropriations

requires either further appropriations, or, more rarely, cuts to Medicaid rates. E.g.,

Colorado Health Care Ass’n v. Colorado Dep’t of Soc. Servs., 842 F.2d 1158, 1171-72

(10th Cir. 1988).

       The state plan must meet a number of requirements, such as providing a

hearing before a State agency for any individual whose claim for medical assistance

under the plan is denied. E.g., 42 U.S.C. § 1396a(a)(3). One requirement of the

Medicaid Act is “access.” Rates must be:

       sufficient to enlist enough providers so that care and services are
       available under the plan at least to the extent that such care and services
       are available to the general population in the geographic area

42 U.S.C. § 1396a(a)(30)(A).




                                              3
      Consistent with the contractual nature of the program, many of its

requirements are subjected to the discretion of the federal Secretary of Health and

Human Services, who has ultimate authority to suspend Medicaid payments to the

states for non-compliance with the Act, 42 U.S.C. § 1396c. For example, the Fifth

Circuit has held that the “access” requirement cannot give rise to a statutory cause

of action in federal court, because discretion over setting rates to meet the access

requirement is vested in the Secretary, rather than the courts. Equal Access for El

Paso, Inc. v. Hawkins, 509 F.3d 697, 701 (5th Cir. 2007).

      The amount of rates is, ultimately, reviewed by the Secretary through the

Centers for Medicare and Medicaid Services (“CMS”). This review currently takes

place on an ad hoc basis, but CMS is currently pursuing a formal rulemaking that

would standardize the data requirements and standards for demonstrating access to

care. Medicaid Program; Methods for Assuring Access to Covered Medicaid

Services, 80 Fed. Reg. 67576 (Nov. 2, 2015) (to be codified at 42 C.F.R. pt. 447)

(Appendix, Tab C). This new rule will establish specific criteria for establishing

access to care, including documentation requirements. Id.

      Texas Statutes and Rules

      In Texas, Medicaid is governed by Chapter 32 of the Human Resources Code

and some provisions in subchapter B of Chapter 531 of the Government Code. See



                                          4
TEX. HUM. RES. CODE ch. 32., TEX. GOV’T CODE ch. 531 subch. B. The statutory

provisions—unsurprisingly—mirror federal law. See TEX. HUM. RES. CODE

§ 32.002 (requiring Chapter be construed in light of federal law and that any

provisions that would render Texas ineligible to receive funds inoperative to that

extent).

      The program is administered by the Health and Human Service Commission,

and the Commissioner is charged with adopting the necessary administrative rules

to implement the system. See id. § 32.021; see also TEX. GOV’T CODE ch. 531 (setting

out Commission’s authority and duties). Consistent with the Medicaid Act, the

Commission is charged with presenting the State’s medical assistance plan to the

federal government for approval by the Secretary. See TEX. HUM. RES. CODE

§ 32.021(a) (referring to 42 U.S.C. § 1396a(a)(5)). A separate provision of the

Government Code creates a general duty to “optimize” Medicaid financing by,

among other things, maximizing the receipt of federal funds, creating incentives to

use preventive care, increasing and retaining providers in the system to maintain an

“adequate provider network.” TEX. GOV’T CODE § 531.02113.

      Rulemaking:

      Rates are adopted under a system set out by administrative rule. TEX. HUM.

RES. CODE § 32.028(a), § 32.0281; TEX. GOV’T CODE § 531.021(b-1); see 1 TEX.

ADMIN. CODE § 355.201. These rules are promulgated under the formal rulemaking



                                         5
requirements of the Administrative Procedure Act. TEX. HUM. RES. CODE

§ 32.0281(d).2

       Ratemaking:

       The rate making process, by contrast to the underlying rulemaking, is

governed by requirements that are different in form and substance from the APA’s.

See TEX. HUM. RES. CODE § 32.0282 (setting out public-hearing requirement,

different from APA’s). The Human Resources Code makes clear that something

different from formal APA process is required. Id. §§ 32.028(a), 32.0281(b)(1). The

Medicaid-rate-specific process further distinguishes between the processes for

“establishment” and “periodic review,” on the one hand, and “adjustment” on the

other. See 1 TEX. ADMIN. CODE ch. 355 subch. B.




2Somewhat confusingly, § 32.0281 states that the adoption of rules is subject both to the APA’s
rulemaking provisions, TEX. HUM. RES. CODE § 32.0281(d), and that the same rules are subject to
an “appeal” under the contested-case provisions of the APA, id. § 32.0281(e). Subsection (e) is
not implicated in this case, which involves no contested-case proceeding. See infra, n. 9.


                                              6
      Ratemaking: Establishment and Periodic Review

      When a rule is “established,” the Commission considers the information

detailed in § 355.201(c). HHSC ratemaking staff regularly review new rates based on

all required inputs, and consider stakeholder comments regarding potential access-

to-care issues. Periodic rate changes are adopted at a public hearing “to allow

interested persons to present comments relating to proposed payment rates for

medical assistance.” TEX. HUM. RES. CODE § 32.0282(a). By contrast to public

hearing requirements for APA rulemaking, there is no requirement that the

Commission respond to public comment before the new rate goes into effect, only a

notice requirement.

      The notice requirement is satisfied by publication in the Texas Register, no

later than 10 state working days before the effective date of the adjustment. 1 TEX.

ADMIN. CODE § 355.201(e). The published notice must include a description of the

specific increase or reduction, the date on which it will take effect, a description of

the legal and factual bases therefor, a description of any rate setting requirements

that cannot be met, and instructions for interested parties to submit written

comments prior to the hearing on the rates. 1 TEX. ADMIN. CODE § 355.201(f).

      Substantively, periodic rate changes are circumscribed by the Commission’s

rules, the requirements of state and federal law, economic factors, and “levels of

appropriated state and federal funds or state or federal laws or enactments that limit,



                                          7
restrict, or condition the availability of appropriated funds for medical assistance.”

See id. §§ 355.201(c), 355.201(c)(4); see also TEX. GOV’T CODE § 531.021(d).

         With regard to home health programs, an additional provision § 355.8021,

governs rates for establishment and periodic review of services. See 1 TEX. ADMIN.

CODE § 355.8021. The Commission will “update” schedules for home care “as

needed.” Id. § 355.8021(a)(2). Fees are to be based on an analysis of other fees

authorized by the federal government for similar services, Medicaid fees paid by

other states, a survey of costs reported by home health agencies, the Medicare Low

Utilization Payment Adjustment (LUPA) fees; previous payments for these services,

or “some combination thereof.” Id. § 355.8021(a)(2)(A).

         Periodic rate reviews “include,” but are not “limited to, payments for as well

as costs associated with providing” home health services. Id. § 355.8021(a)(2)(B).

Rates for early-intervention therapeutic intervention are subject to the same inquiry.

See 1 TEX. ADMIN. CODE § 355.8441(3)(B); (5)(B); (6)(B); (7)(B) (referring back to

§ 355.8021 when discussing “EPSDT”3 services by home health agencies); 1 TEX.

ADMIN. CODE § 355.8085(g)(3) (specifying that EPSDT services are governed by

§ 355.8441). Thus, for services governed by § 355.8021(a)(2), review is related to

costs.




3   “EPSDT” stands for “Early and Periodic Screening, Diagnosis, and Treatment.”


                                               8
      Ratemaking: Adjustments

      While rates are ‘established’ and periodically ‘reviewed’ under the relevant

administrative rules, separate provisions govern adjusting rates. 1 TEX. ADMIN. CODE

§§ 355.201(d)(1)(A), (D) (mirroring factors set out in § 531.021(d) of the

Government Code for changing rates notwithstanding other legal requirements),

355.201(e) (discussing procedural requirements therefor). Echoing the Government

Code’s requirement that rates be adjusted “[n]otwithstanding any other provision”

to accommodate the factors such as reduced appropriations, TEX. GOV’T CODE

§ 531.021(d), (e), the rules provide:

      Adjustment of fees, rates, and charges. Notwithstanding any other
      provision of this chapter, the Commission may adjust fees, rates, and
      charges paid for medical assistance if:

      (1)    state or federal law is enacted, amended, judicially interpreted,
             or implemented to:

             (A)    require the Commission to increase or reduce a fee, rate or
                    charge paid to a provider for medical assistance;

                                         * * *

             (D)    restrict, limit, or condition the availability of appropriated
                    funds to the Commission for payment or reimbursement
                    of medical assistance.

1 TEX. ADMIN. CODE § 355.201(d). The substantive requirements for an adjustment,

under subsection (d), are different from those for establishment or periodic review

of a rate, under subsection (c), compare id. (allowing a change in rates when



                                           9
appropriations are cut “notwithstanding” other law), with § 355.201(c) (setting out

various data to be considered in establishing rates).

      Adjustments are subject to the same procedural requirements as the rate

establishment and review process; interested parties are entitled to submit written

comments and attend a public hearing. Id. § 355.201(f) (requiring same type of

hearing as for establishment of rule under TEX. HUM. RES. CODE § 32.0282). The

administrative rules expressly contemplate the changes in legislation will require

new rates, specifying that such changes will not take effect until the new law does.

Id. § 355.201(e). One example of a non-periodic rate adjustment occurred in the

2012-13 biennium, when the Legislature mandated specific cuts to particular rates.

Gen. Appropriations Act, 2012-13 Biennium, 82d Leg., R.S., ch. 1355, art. II, § 16,

2011 TEX. GEN. LAWS 4025, 4241 (Special Provisions Re: All Health & Human

Servs. Agencies, Provider Rates). By contrast to periodic review based on cost,

adjustments are triggered by discreet events such as a decrease in appropriations for

Medicaid reimbursement. 1 TEX. ADMIN. CODE §§ 355.201(d)(1)(A), (D); see TEX.

GOV’T CODE § 531.021(d), (e).

      The Current Dispute

      The current state budget contains a rider cutting $186,500,000 in General

Revenue Funds and $249,349,498 in Federal Funds in 2016, and similar numbers in



                                          10
2016. 2016-17 Gen. Appropriations Act, 84th Leg., R.S., ch. 1281, art. II, 2015 TEX.

SESS. LAW SERV. 4343, 4547 (Health & Human Servs. Comm’n), Rider 50 (“Rider

50”) (Appendix Tab D). The rider specifies cuts for acute care therapy services

(including physical, occupational, and speech therapies. Id. It states:

      HHSC shall reform reimbursement methodology to be in line with
      industry standards, policies, and utilization for acute care therapy
      services (including physical, occupational, and speech therapies) while
      considering stakeholder input and access to care. Out of the amount in
      subsection (a), in each fiscal year at least $50,000,000 in General Revenue
      Funds savings should be achieved through rate reductions.

Id. (emphasis added).

      The rider separately addresses $25,000,000 to be made through various

medical policy initiatives, setting out initiatives the Commission “may” undertake.

Id. Thus, by contrast to the rate cuts, the Commission has flexibility regarding efforts

such as “[c]larifying policy language,” Rider 50(c)(1), and requiring “a primary care

or treating physician to initiate a signed order or referral prior to an initial therapy

evaluation,” id. 50(c)(4).

      In response, the Commission attempted to change the rates in accordance

with Rider 50(c). See CR.18-39. That attempt triggered this lawsuit.

      The first notice of changed rates under Rider 50 failed to mention the

adjustment process, see CR.20 (reciting other rate-related provisions). Following

public comment, an internal memorandum suggested that the original rates be



                                          11
changed for various reasons and suggested that the new rates be based on a

modification of the prior announcement and hearing, see CR.235-261. As explained

above, however, the internal memorandum by Commission staff could not trigger

changed rules, because there is no formal requirement or mechanism for addressing

the public’s concerns. Accordingly, the Commission withdrew the entire first rate

proposal, in light of the internal memorandum plaintiffs describe as a second rate

proposal (but which never attempted to meet the procedural requirements to change

the rates). CR.235-261. It then proposed the new, October 1, rates. CR.351-373

(Appendix Tab E). The October 1 rates were proposed under the “adjustment”

procedure. CR.352 (citing 1 TEX. ADMIN. CODE §§ 355.201(d)(1)(A), (D)).

      The District Court

      Plaintiffs instituted suit Travis County district court while the first set of rates

was in the administrative process, see CR.4-17, and amended their petition following

the internal memorandum, which they have described as a second set of rates,

CR.196-210. After the agency announced the October 1 rates, plaintiffs amended

their petition again and sought a temporary injunction precluding the Commission

from applying the rates while this lawsuit is pending. CR.336-392 (Appendix Tab F).

      The second amended petition asserted that the providers would go out of

business, and the beneficiaries might no longer be able to obtain services. CR.342-43

¶ 24. They asserted that the rates were adopted without complying with the

administrative rules governing establishment and periodic review of rates (1 TEX.

                                           12
ADMIN. CODE §§ 355.8021, 355.8441, 355.8085); several provisions related to formal

rulemaking (TEX. GOV’T CODE §§ 2001.022(a), 2001.023(a), 2001.024, 2006.002);

that there had been no published notice under the Medicaid Rate setting rule (1 TEX.

ADMIN. CODE § 355.201(e), (f)). CR.343 ¶ 25, CR.505 ¶ 2. They further asserted

substantive rights to (1) have Medicaid rates ‘maximized,’ CR.343-44 ¶ 26 (citing

TEX. GOV’T CODE § 531.02113); and (2) ensure access to care for each beneficiary

under the provisions governing MCO rates, CR.344 ¶ 27 (citing TEX. GOV’T CODE

§ 533.005(a)(21) and 1 TEX. ADMIN. CODE § 353.411(a)(5)). Finally, plaintiffs

asserted a due-course of law claim. CR.344-45 ¶ 28.

      The Commission and Commissioner filed a plea to the jurisdiction and

opposed the temporary injunction in the hearing. CR.581-84. The district court

granted the temporary injunction and denied defendants’ plea. CR.673, CR.587-672

(Appendix Tab A).The district court’s analysis of the probable right of recovery

element accepted plaintiffs’ argument that it is appropriate to enjoin a change in

rates because the rate adjustment allegedly violated the administrative rules

governing rate establishment and periodic rate review or adoption of an administrative

rule under the APA. See CR.591 ¶ 18. The district court incorporated a counter-

supersedeas order into the temporary injunction, requiring a bond of $500 to cover

the potential expense to the State of not implementing Rider 50(c). CR.596-97. That

order is currently being challenged in this Court under Rule of Appellate Procedure

24.

                                         13
      While the Rule 24 motion was pending, the trial court heard Appellants’

motion to modify the temporary injunction. The district court denied the motion and

stated that the scope of the injunction could be determined in subsequent sanctions

proceedings, if the State did not choose to comport with plaintiffs’ view of how rates

should be set. SRR.37-39.

                            Summary of Argument

      Plaintiffs have not stated a claim within either of the exceptions to sovereign

immunity they attempt to invoke. That defect is incurable, because (1) Rider 50

mandates the cuts resulting in the rate adjustment that became effective October 1;

(2) plaintiffs’ complaints are all about the standards for rate review, not rate

adjustment; and (3) consistent with the exclusive federal, executive-department

remedy provided by the Medicaid Act, Texas law does not provide judicial review of

Medicaid rates.

      Plaintiffs’ petition avers that the adoption of rates in this case violated several

administrative rules (although they never say how), that (implicitly) the adoption of

the rate constituted an amendment of some rule (though they don’t say which), and

they throw in a substantive argument based on the access requirements for

Medicaid-paying managed care organizations (which are not covered by these rates).

In short, their petition fails to invoke trial-court jurisdiction regardless of what the

record shows. A plaintiff cannot rely on the notice-pleading standard against the



                                          14
State; it must articulate a legal theory within a waiver of immunity from suit and

allege facts to support it.

       The next step would ordinarily be to look at the record to see whether it

supports remand for repleading. It does not, as explained below. But the ordinary

next step does not apply, because it is first necessary to determine whether plaintiffs

can obtain the remedy they seek, regardless of the facts. To the extent plaintiffs

complain about the October 1 rates, qua rates, their lawsuit is preempted by federal

law. The Medicaid Act preempts contrary state remedies by making claims regarding

“access to care”—a claim that is governed exclusively by federal law and is the only

cited basis for attacking the substance of the rates—subject to the sole remedy of the

federal Secretary of Health and Human Service’s control over rate settings. While

the United States Supreme Court has left open the question whether the Secretary’s

actions are subject to further federal court proceedings, there can be no doubt that

those proceedings must be in federal court, because they will be against, or brought

by, the United States.

       That any right to particular rates is contingent on the Secretary’s actions

precludes constitutional standing, any due-course-of-law claim, and any invocation

of inherent judicial review.

       And to the extent plaintiffs complain about the adoption and application of

administrative rules, they cannot obtain relief regarding the rate amounts under the

causes of action they attempt to invoke. Section 2001.038 cannot be used to

                                          15
challenge particular applications of administrative rules: it is limited to

“applicability,” not application, and does not provide for injunctive relief. TEX.

GOV’T CODE § 2001.038(a). Nor can the ultra vires cause of action result in the

reversal of a particular action taken pursuant to a rule: it operates prospectively only.

If plaintiffs’ view of jurisdiction were correct, both § 2001.038 and the ultra vires

cause of action would constitute independent bases for judicial review. The Supreme

Court and this Court have long rejected both propositions.

      Finally, the pleadings and evidence affirmatively negate any alternative claim.

(1) Plaintiffs have not, as a matter of law, “identified” an administrative rule as

required by Third Court precedent, because the only substantive arguments they

make are that the rules have been misapplied. That cannot result in a declaration

regarding the rules themselves. (2) Their ultra vires claim fails because the

Commissioner has done, and threatens to do, nothing that is not provided by law. As

with any application of administrative rules, if there is no statutory basis for judicial

review and no constitutional basis for inherent review, the defendant’s actions

cannot be the basis for an ultra vires claim. And (3), even assuming (in the face of

overwhelming precedent), that there could be an ultra vires claim, it fails because as

a matter of law the ratemaking was proper exercise of the power to adjust rates

pursuant to decreased appropriations.




                                           16
                            Standards of Review

      A plaintiff must demonstrate that the allegations in his petition fall within the

court’s jurisdiction. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446

(Tex. 1993) (citing Richardson v. First Nat’l Life Ins. Co., 419 S.W.2d 836, 839 (Tex.

1967). Notice pleading is not enough: the “real substance” of the petition must state

a valid legal theory within an exception to sovereign immunity. E.g., Dallas Cnty.

Mental Health & Mental Retardation v. Bossley, 968 S.W.2d 339, 343 (Tex. 1998). A

defendant’s plea to the jurisdiction based on sovereign immunity is analyzed in two

steps: (1) examining the plaintiff’s petition to see if it articulates a claim within the

scope of a valid waiver of immunity and (2) determining whether undisputed

evidence of jurisdictional facts negates the trial court’s jurisdiction. Tex. Dep’t of

Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). The legal question

whether the alleged facts invoke an exception to immunity can require an inquiry

into the merits of the claim; conclusory legal allegations are insufficient, without

supporting facts, to establish jurisdiction. E.g., Gattis v. Duty, 349 S.W.3d 193, 201

(Tex. App.—Austin 2011, no pet.) If either the pleadings themselves or the evidence

affirmatively negates jurisdiction over the claim, the claim must be dismissed. Tex.

A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 847 (Tex. 2007).

      A temporary injunction is reviewed for abuse of discretion. E.g., Walling v.

Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (per curiam). A trial court abuses its



                                           17
discretion when it fails to analyze or apply the law correctly. In re Sw. Bell Tel. Co.,

L.P., 226 S.W.3d 400, 403 (Tex. 2007).

                                     Argument

I.     THE LIVE PETITION DOES NOT ATTEMPT TO TIE THE CAUSES OF
       ACTION IT PLEADS TO THE REMEDIES IT SEEKS.

      To invoke an exception to immunity a petition must, based on alleged facts,

articulate a legal theory that falls within an exception to sovereign immunity as a

matter of law. E.g., Bossley, 968 S.W.2d at 343. Plaintiffs’ petition makes no such

effort: it merely alleges inconsistencies between the rate-adoption and various

administrative rules and statutes. Nowhere does it articulate how the alleged facts

support a claim within a waiver of sovereign immunity.

      It is the plaintiffs’ burden to file a petition that invokes the court’s jurisdiction.

Tex. Ass’n of Bus., 852 S.W.2d at 446. Jurisdiction must appear based on the

allegations, because the defendant is entitled to a ruling on the plea as early as

possible. E.g., State Bar of Tex. v. Gomez, 891 S.W.2d 243, 245 (Tex. 1994). The

petition is tested to see whether the pleading party has “alleged facts that

affirmatively demonstrate a trial court’s subject-matter jurisdiction.” Tex. Dep’t of

Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). It is not enough

merely to mention a cause of action for which immunity is waived: the plaintiff must

allege facts sufficient to support the waiver. See Harris County v. Sykes, 136 S.W.3d

635, 639-640 (Tex. 2004) (lawsuit of plaintiff who does not amend petition to include


                                            18
sufficient facts to trigger immunity waiver must be dismissed); see also State v.

Holland, 221 S.W.3d 639, 644 (Tex. 2007) (dismissing takings claim that was based

on invalid legal theory). More specifically, if the case involves an ultra vires claim

against an official, the plaintiff must plead acts that are, as a matter of law, ultra vires.

E.g., Sw. Pharmacy Solutions, Inc. v. Tex. Health & Human Servs. Comm’n, 408

S.W.3d 549, 557-58 (Tex. App.—Austin 2013, pet. denied) (ultra vires analysis

involves legal inquiry to determine whether alleged acts are prohibited). In sum, a

petition that merely names a waiver of immunity, but does not attempt to allege facts

and assert a legal claim invoking that waiver of immunity, must be dismissed on a

plea to the jurisdiction.

       The live petition makes no attempt to tie the relief it requests to the legal

theories or causes of action invoked in the petition (and is thus jurisdictionally

defective), plaintiffs try to circle the square in their trial-court briefing and in the

district court’s temporary-injunction order. There, they assert that the adoption of

the rules manifests an implicit amendment of the administrative rules. That briefing

can’t fix the disconnect between the waivers of immunity plaintiffs invoke and the

legal theories on which they rely. The proper inquiry in this lawsuit is not whether

plaintiffs’ allegations in the petition successfully trigger jurisdiction, but whether

there is any basis for repleading. Holland, 21 S.W.3d at 643, 644; Water Dev’pt Bd. v.

Hearts Bluff Game Ranch, Inc., 313 S.W.3d 479, 485, 490 (Tex. App.—Austin 2010),



                                             19
aff’d 381 S.W.3d 468 (Tex. 2012) (no takings claim asserted in pleadings where

State’s actions were subsidiary to actions of federal government).

II. Plaintiffs’ Lawsuit Has No Arguable Basis in Law.

       The core of plaintiffs’ lawsuit—which is found not in their live petition but

rather in their briefing, CR.509 ¶ 6, and in the text of the temporary injunction order,

CR.590 ¶ 11—is that the rate adjustment resulting in the October 1 rates implicitly

invalidates the underlying administrative rules by amending them to reach the

current rates. Thus, plaintiffs seek to use the mechanism for challenging formal

administrative rules under the APA as a collateral vehicle for obtaining judicial

review when there is none. And even if they had pleaded a valid rule challenge—

which they have not, see infra, Part V.B.2—it would fail as a matter of law because

plaintiffs allege violations of the APA and the administrative rules relating to the

establishment and periodic review of Medicaid rates. The October 1 rates, however,

result from a rate “adjustment” triggered by Rider 50. CR.352. So even if plaintiffs’

view of the procedural requirements of Texas law were correct, there lawsuit would

fail for want of jurisdiction.

       A.     Plaintiffs Fail to Address the Distinction Between Review and
              Adjustment.

       Plaintiffs’ view of this case depends primarily on the assertion that the

October 1 rates are invalid because there is evidence that the Commission did not

comply with § 355.8021 and, by extrapolation, with various other procedural


                                          20
requirements and with the APA. CR.343 ¶ 25. They suggest that § 355.8021 has been

violated because the rates have not been set according to a particular “formula” set

out therein.4 CR.508 ¶ 2.

       More specifically, plaintiffs appear to suggest that there is a violation of

§ 355.8021(a)(2), which relates to the periodic review of rates. 1 TEX. ADMIN. CODE

§ 355.8021(a)(2)(A), (B). Those provisions do not apply at all. And if they did apply,

plaintiffs’ lawsuit would nonetheless be jurisdictionally barred because plaintiffs

misconstrue their requirements. See infra, Part V.C.1.

       The October 1 rate notice references §§ 355.201(d)(1)(A) and (D). CR.352.

Those provisions are triggered when state law is amended to (1) require the

Commission to increase or reduce a rate, 1 TEX. ADMIN. CODE § 355.201(d)(1)(A),

or when a law restricts the availability of appropriate funds to the Commission for

the payment or reimbursement of medical assistance, 1 TEX. ADMIN. CODE

§ 355.201(d)(1)(D). When § 355.201(d) is triggered, the Commission may “adjust”

rates “notwithstanding any other provision” in the administrative rules. 1 TEX.

ADMIN. CODE § 355.201(d) (“Adjustment of fees, rates, and charges”).




4  Far from imposing a formula, § 355.8021 (and its dependent provisions, § 355.8441 and
§ 355.8085) creates no substantive requirement except that the Commission consider various data
in some combination and form. A list of data, stating that it can be considered in any combination,
is hardly a “formula.” See AMER. HERITAGE DICTIONARY 691 (4th ed. 1994) (“A method of doing
or treating something that relies on an established uncontroversial model or approach.”).


                                                21
      All the procedural rules invoked by plaintiffs, CR.343 ¶ 25, expressly apply to

the establishment and periodic review of Medicaid rates. E.g., 1 TEX. ADMIN. CODE

§§ 355.8021(a)(2) (the Commission will “update the fee schedules . . . as needed);

(a)(2)(A) (fee schedules arrived at in these reviews will be made using a list of data

“or some combination thereof”); (a)(2)(B) (the Commission “may conduct

periodic rate reviews that will include, but not be limited to, payments for as well as

the costs associated with providing” these services). Those provisions do not on

their face apply to the adjustment of the rates resulting in the October 1 rates because

§ 355.8021(a)(2) expressly relates to periodic review of rates. By contrast, when the

Legislature changes the underlying funding for Medicaid, the adjustment process

occurs “notwithstanding” the other requirements of the chapter. 1 TEX. ADMIN.

CODE § 355.201(d).

      To sum up: Rider 50 triggered the adjustment process of § 355.201(d), which

occurs notwithstanding other requirements of the Commission’s rules. Plaintiffs

complain exclusively about rules that apply to the periodic review of rules based on

cost, not the adjustment of rules based on a change in appropriations.

      B.     Plaintiffs Fundamentally Misunderstand Rider 50.

      Plaintiffs suggest that Rider 50 creates the option to cut the rates, not a

mandate to do so. See Rule 24 Resp. at 5 n.2, 6 ¶ 8. Not so: Rider 50(c) made rate

cuts for these services a mandatory element of the broader cuts to the Medicaid

reimbursement program.

                                          22
               1.     The rider’s plain text is not optional.

         The rate cuts in Rider 50(c) are not optional. Part 50(a) makes clear that

funding has already been cut from the Medicaid portion of the budget. Rider 50(a).

(“Included in appropriations above in Goal B, Medicaid, is a reduction of . . . a

biennial total of $373,000,000 in General Revenue Funds and $496,570,428 in

Federal Funds.”) Portions of this larger cut “may” include various initiatives. Rider

50(b) (“This reduction shall be achieved through the implementation of the plan

described under subsection d which may include any or all of the following

initiatives:”).

         Rider 50(c) is the kicker. After requiring a change in reimbursement

methodology to meet industry standards, “while considering stakeholder input and

access to care,” the Rider makes specific requirements regarding Medicaid therapy

rates:

         Out of the amount [already cut] in subsection (a), in each fiscal year at
         least $50,000,000 in General Revenue Funds savings should be
         achieved through rate reductions. . . . .

Rider 50(c). Plaintiffs’ view that the rate cuts are optional hangs entirely on the word

“should,” which addresses “rate cuts” that are to be used to account for money that




                                            23
was already cut from the budget, according to Rider 50(a).5 In this context, the word

“should” creates a mandatory obligation.

       Rider 50(a), not Rider 50(c), cuts funds from the budget. The word “should”

is an instruction to the Commission regarding the proportion of the total cuts that

are to be directed to Medicaid therapy rate reductions.

       A sentence containing “should” can, in context, create a mandatory

obligation. The word “should” is not included in the list of words given a

background meaning by the Code Construction Act, see TEX. GOV’T CODE § 311.016,

nor is there a large body of case law governing its use as opposed to the more common

statutory terms “shall” and “may,” see Thomas v. Groebl, 147 Tex. 70, 78-79, 212

S.W.2d 625, 630 (1948) (“shall” can mean “may,” and vice versa). “Should” is the

past tense of “shall,” and, though it is sometimes used to express “probability or

expectation,” it also serves to indicate “obligation or duty.” AMER. HERITAGE

DICTIONARY 1612 (4th ed. 1994). Thus, like “shall” and “may,” the word “should”

can create a mandatory standard in some contexts. See A DICTIONARY OF MODERN

LEGAL USAGE (2d ed. 1995) (“Oddly, should, like may . . . is sometimes used to create


5The response suggests that the word “may” also applies to the rate cuts. Resp. at 16 ¶ 21. This is
wrong. The word “may” applies to the various initiatives in which the Commission is empowered
to initiate to cut an additional $25 million in funding. Rider 50(c). Moreover, while the later
reference in Rider 50(d) to Rider 50(c) addresses some optional programs, it is referring to the
optional programs to cut the additional $25 million. Rider 50(d) does not make the rate cuts in
Rider 50(c) optional, contrary to the plain text of Rider 50(c) and its reference back to Rider 50(a).




                                                 24
mandatory standards, as in the ABA Code of Judicial Conduct”). Texas courts have

routinely applied decrees using the word “should” as creating mandatory duties in

statutes, orders, and instructions.6

       It makes sense to treat ‘should’ as mandatory in this context. Rider 50(a) sets

out a total amount of cuts, and Rider 50(c) sets out instructions for how to achieve

at least $100,000,000 of those cuts during the biennium. Given that the word

“should” is directed at a portion of the cuts already made, nothing in the context

suggests that the cuts themselves, or their amount, is either conditional or

conditioned upon any particular data or analysis.

       Plaintiffs have implied that the reference to “access to care” impacts the rate

changes. See Resp. at 16 ¶ 21 (putting “access to care” next to the rate cuts with an

ellipsis). This is misleading: Rider 50 ties access to reformation of reimbursement

methodology, not to rate cuts. Rider 50(c). The rate cuts are in a separate sentence.

And even if the rate cuts were subject to procedural requirement to perform an

“access to care” inquiry, the reference to “access to care” necessarily invokes the



6 See City of Austin v. Cannizzo, 153 Tex. 324, 331, 267 S.W.2d 808, 813 (1954) (“Whatever
distinctions may be made between the words will and should by lexicographers and between the
phrases ‘the price which the property will bring’ and ‘the price which the property should bring’
by grammarians, the ordinary signification of the latter word and phrase would, by contrast at least,
be calculated to lead the jury to award a greater sum, including purely speculative elements of
damages.”); Ex Parte Mitchell, 783 S.W.2d 703, 705 (Tex. App.—El Paso 1989, no writ) (support
order enforceable even though it says obligor “should” pay); Cullen Ctr. Bank & Trust Co. v. Tex.
Commerce Bank, 841 S.W.2d 116, 125 (Tex. App.—Houston [14th Dist.] 1992, writ denied) (use of
word “should” does not render finding speculative).


                                                 25
Medicaid Act’s interpretation of the term, because there is no contrary definition in

Texas law and because Medicaid is a Spending Clause program. 42 U.S.C.

§ 1396a(a)(30)(A). Thus, the only potential legal question is whether the data

supporting the adjustment pass muster under federal law—and that inquiry is in the

hands of the Secretary.

               2.     The post-enactment legislative history proffered by plaintiffs
                      cannot change statutory text.

       Plaintiffs appear to believe that the number of legislator signatures they can

marshal in support of their lawsuit changes the law. E.g., CR.679 ¶ 14, 731-32.7 But

such letters are of little, or no, value in determining the meaning of a Legislative

enactment. In re Doe, 19 S.W.3d 346, 352 (Tex. 2000) (“[C]ourts construing

statutory language should give little weight to post-enactment statements by

legislators. Explanations produced, after the fact, by individual legislators are not

statutory history, and can provide little guidance as to what the legislature

collectively intended.”).

       “The very notion of ‘subsequent legislative history’ is oxymoronic.” Entergy

Gulf States, Inc. v. Summers, 282 S.W.3d 433, 470 n.46 (Tex. 2009). Like all post-



7 Plaintiffs attach even more letters to their response to the Commission’s rule 24 motion. These
examples prove the rule: far from indicating the Legislature’s intent, these letters include policy
statements from members of the Legislature and even letters from a members of Congress, who
have no insight whatsoever into the intent behind Rider 50. Medicaid policy is beyond the judicial
power.


                                                26
enactment legislative history, the Legislator letters are of little use to the courts,

because they represent the views of the Legislators, not the Legislature as a body at

the time of enactment. See Ojo v. Farmers Group, 356 S.W.3d 421, 433 (Tex. 2011)

(using Commissioner of Insurance report implemented pursuant to statute as

evidence of Legislature’s knowledge of report’s contents). The letters attached to

plaintiffs reply are the type of oxymoronic attempt to sway the outcome of a case on

political grounds the Supreme Court has long decried: they “are not statutory

history.” Doe, 19 S.W.3d at 352. They should not sway the Court to take an

unrealistic view of the word “should,” read—as it must be—in light of the

Legislature’s choice to cut far more money from the Medicaid budget and dedicate

$100 million of that cut to rate cuts—as opposed to other aspects of therapy

provision, which are subject to separate cuts of different amounts of money—

addressed to home therapy.

      C.     There is No Basis in Texas Law For Obtaining Judicial Review of
             Medicaid Rates that Are Not Required to be Adopted Through
             Contested-Case Proceedings.

      Plaintiffs have repeatedly asserted, though curiously enough not in their live

petition, that it is permissible to bring suit to challenge the amount of Medicaid rates

through the vehicle of §2001.038, which governs rule challenges. The district

court’s temporary-injunction order erroneously presupposes that a rule challenge




                                          27
can be used to obtain injunctive relief requiring a change in Medicaid rates. CR.592-

93. The Supreme Court has expressly rejected that proposition.

             1.    Plaintiffs’ approach of using § 2001.038 to attack Medicaid
                   rates has been rejected by the Texas Supreme Court.

      Plaintiffs justify their attempt to obtain substantive relief regarding Medicaid

rates through the vehicle of a § 2001.038 suit based on El Paso Hospital District v.

Tex. Health & Human Services Commission, 247 S.W.3d 709, 711, 714-15 (Tex. 2008)

(“El Paso Hospital District I”). The Supreme Court held that the plaintiff hospitals

could seek review of their rates in already-pending, exhausted administrative

proceedings based on a new rule. Id. at 715 (allowing Hospitals to obtain “review of

the disputed calculation” under then-existing administrative rule, former 1 TEX.

ADMIN. CODE § 355.8063(k)(1)(A) (2010), repealed by 35 TEX. REG. 6511, 6513

(2010)).

      The crux of plaintiffs’ argument is that, by challenging a rule, a plaintiff can

necessarily obtain judicial relief regarding the rates adopted under that rule. E.g.,

CR.507-508. That is precisely the approach that this Court and the Supreme Court

rejected following remand. El Paso Cnty. Hosp. Dist. v. Tex. Health & Human Servs.

Comm’n, 400 S.W.3d 72, 81 (Tex. 2013) (“El Paso Hospital District II”) (“our prior

opinion and judgment did not create a remedy for the hospitals’ past reimbursement

claims”); see also Tex. Health & Human Servs. Comm’n v. El Paso Cnty. Hosp. Dist.,

351 S.W.3d 460, 487 (Tex. App.—Austin 2011) aff’d 400 S.W.3d 72 (Section


                                         28
2001.038’s scope is limited “solely to the extent of permitting suits against state

agencies for declaratory relief concerning the validity or applicability of their

rules”).8 The former rule gave the only relief related to rates, not § 2001.038.

               2.      The ultra vires cause of action cannot be used to retroactively
                       undo rules that became effective on October 1, but for the
                       district court’s improper counter-supersedeas order.

       Plaintiffs’ argument appears to be that, because they believe that the rates

were improperly adopted, they are entitled to injunctive relief against the

Commissioner to prevent his implementation of the rates. E.g., CR.246 ¶ 34. But the

Commissioner is expressly entitled to implement the Medicaid plan according to the

rates adopted through the ratemaking process. Thus, even if the rates were wrong,

there could be no ultra vires claim based upon them, because the Commissioner is

expressly entitled by law to implement the existing rates.9

       An ultra vires claim must be based on an act outside the defendant official’s

discretion. E.g., Creedmoor-Maha Water Supply Corp. v. Tex. Comm’n on Envt’l



8Tellingly, in plaintiffs’ sur-reply related to the Rule 24 motion, the only response to this point
about El Paso Hospital District II is to double down on El Paso Hospital District I. See Rule 24 Sur-
Reply (served but not yet filed) at 5 ¶6.
9 The Human Resources Code includes a provision, now superseded by case law, see see Tex. Dep’t

of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 198 (Tex. 2004)
(providing that if a statute requires a contested-case proceeding, the APA allows judicial review),
mandating judicial review when rates are required to be adopted through contested-case
procedures, TEX. HUM. RES. CODE § 32.0281(e). The rates in question are not subject to
contested-case proceedings by the current text of the Code, but rather to the non-APA “review”
and “adjustment” procedures. See supra, n.2.


                                                29
Quality, 307 S.W.3d 505, 517-18 (Tex. App.—Austin 2010, no pet.). The violation

must be more than a mistake in judgment: mistaken exercise of a clear grant of

executive power is not subject to common-law judicial remedy. Tex. Comm’n of

Licensing & Regulation v. Model Search Am., Inc., 953 S.W.2d 289, 292 (Tex. App.—

Austin 1997, no writ) (that officials “might decide ‘wrongly’” does not vitiate its

authority to act (quoting N. Alamo Water Supply Corp. v. Tex. Dep’t of Health, 839

S.W.2d 455, 459 (Tex. App.—Austin 1992, writ denied)). If the Commission acted

consistent with the adjustment rules and Rider 50(c) (which requires that access be

considered, but does not mandate a particular form that analysis will take), the

Commissioner cannot act ultra vires in implementing the resulting rates.

III. That Texas Law Does Not Provide a Judicial Review
     Mechanism Under Which Texas Courts Set Medicaid
     Rates Makes Sense, Because Such a System Would Be
     Preempted by Federal Law.

      The reason that plaintiffs allege a series of causes of action in state law related

to administrative rules, but then seek a series of remedies related to rates based upon

those rules, is that Texas law allows challenges to the rules but not the rates. See

supra, Part II.A. While there is no jurisdiction over plaintiffs’ claims by operation of

Texas law, there could be no jurisdiction over plaintiffs’ only requested relief—

declarations regarding the amount of money in the rates and injunctive relief

foreclosing application of a particular rate—because any claim related to the amount

of Medicaid rates themselves is preempted by federal law.


                                          30
      A.     The Medicaid Act Makes Rates Subject to the Exclusive
             Jurisdiction of the Secretary, Subject Only to Potential Federal-
             Court Proceedings.

      Armstrong rejected the idea that there is a free-standing right to sue in federal

court to enforce provisions of the Medicaid Act that are not, themselves, amenable

to judicial enforcement, 135 S.Ct. at 1385, 1387 (judicial right of action must be

“unambiguously conferred” in Spending Clause context). This makes sense in light

of the broad discretion given to the Secretary to determine whether Medicaid rates

meet the Act’s requirements. Moreover, rates are always subject to prior

appropriations, which means that there is not only executive discretion in play, but

also legislative discretion. 42 U.S.C. § 1396b; TEX. HUM. RES. CODE § 32.028.

      Spending Clause preemption entails the very specific question whether the

State has agreed to the condition of the federal-law remedy by accepting federal

funds. See Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S.Ct. 2566, 2606 (2012) (holding

that § 1396a would be unconstitutional as applied to withhold funding from states

based on failure to comply with newly imposed Medicaid requirements, absent

voluntary state acceptance). There is no doubt that Spending Clause statutes have

preemptive effect. See Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 661-

69 (2003) (plurality op.). Supremacy Clause provisions preempt state law, although

statute in question was not preempted); id. at 684-690 (O’Connor, J., dissenting on

ground that statute was preempted); id. at 675 (Scalia, J., concurring on ground that



                                          31
exclusive remedy of § 1396c has preemptive effect); id. at 683 (Thomas, J.,

concurring, expressing doubt that private parties have standing to enforce Spending

Clause program requirements). But the scope of that preemption must be tied to the

State’s acceptance of funding.

      B.     The Medicaid Act Preempts Texas Remedies Related to Medicaid
             Rates By Creating Exclusive Jurisdiction in the Secretary.

      The Supremacy Clause makes federal law “the supreme Law of the Land.”

U.S. Const. art. VI, cl. 2. The existence of an exclusive federal forum deprives the

Texas courts of jurisdiction over a claim. See Mills v. Warner Lambert Co., 157 S.W.3d

424, 427-28 (Tex. 2005). Accordingly, federal statutes that empower federal

executive department agencies to act impose a remedy regarding a particular subject

matter preempt Texas judicial proceedings. E.g., Entergy Gulf States, Inc. v. Pub. Util.

Comm’n, 173 S.W.3d 199, 207 (Tex. App.—Austin 2005, pet. denied) (Texas

agency’s failure to give effect to federal agency’s action within its exclusive

jurisdiction was preempted).

      The only potential for judicial action regarding Medicaid rates would be

recourse to the Secretary, see Armstrong, 135 S.Ct. at 1385, or potentially a suit in

federal court against the Secretary or, hypothetically, the State, id. at 1389 (Breyer,

J. concurring) (discussing same process). That exclusive remedy, regardless of

whether it allows ancillary federal-court proceedings involving the United States as

a party, necessarily preempts any state-law remedy.


                                          32
      This result is, likewise, compelled by Article II, § 1 of the Texas Constitution,

which prohibits the judicial branch from exercising authority conferred on the

executive. TEX. CONST. art. II, § 1. The Texas statutes and rules related to Medicaid

mirror the federal Act, which, in turn, creates an exclusive remedy in the federal

executive branch. Implying a judicial cause of action in contravention of the

Legislature’s choice not to create one would violate the separation of powers. E.g.,

In re Entergy Corp., 142 S.W.3d 316, 321-22 (Tex. 2004) (rejecting separation-of-

powers argument regarding executive exercise of putatively judicial determination

on ground that there is no general right to judicial review of executive-department

action). Put another way, some executive-department actions are necessarily

unreviewable by the judiciary. E.g., Gulf Land Co. v. Atl. Ref. Co., 134 Tex. 59, 73-74,

131 S.W.2d 73, 82 (1939). This is particularly true when a procedure is created by

statute, because a statute that creates rights can place them outside judicial review.

Houston Mun. Emps. Pension Sys. v. Ferrell, 248 S.W.3d 151, 157-58 (Tex. 2007). And

a statute can be designed to incorporate federal standards. E.g., City of Austin v.

Chandler, 428 S.W.3d 398, 411 (Tex. App.—Austin 2014, no pet.). Texas law

incorporates federal law in this context and, as a result, the exclusive remedy of

federal law.

      Similarly, there are constitutional limitations on the Legislature’s power to

impose remedies on the Legislative branch. The suspension of laws provision, TEX.

CONST. art. I, § 28, affirmatively limits the judiciary’s power to exercise policy

                                          33
discretion to avoid executive-branch action. E.g., Gerst v. Nixon, 411 S.W.2d 350, 354

(Tex. 1966) (striking down statute allowing court to determine the public good by

preponderance of the evidence). Accordingly, the courts lack power to change the

budget adopted by the Legislature absent a finding of a constitutional violation. E.g.,

Jessen Assocs., Inc. v. Bullock, 531 S.W.2d 593, 601-02 (Tex. 1975) (declining to

change effect of constitutionally valid budget rider).

      Judicial review of the October 1 rates would subject a federal decision to state-

court second-guessing, transfer executive department functions to the judiciary, and

result in non-constitutional review (and suspension) of Rider 50’s spending cuts.

The claims related to the amount of rates are preempted.

      C.     Both the Texas and Federal Constitutions Prohibit Judicial Orders
             that Interfere with the Relationship Between the State and Federal
             Governments.

      Put another way, the Secretary’s exclusive remedy powers make Medicaid,

like all Spending Clause programs, a continuously negotiated contract between the

state and federal governments. As Justice Thomas pointed out in his Walsh

concurrence, the Secretary’s power to terminate Medicaid funding carries with it

the power to forgive or accept particular policy outcomes for the purpose of

encouraging the state to perform better in other areas, or as a recognition of the

particular health challenges facing individual states, 538 U.S. at 680-81 (Thomas, J.,

concurring). Judicial interference with Medicaid rates would mark a direct



                                          34
interference with that discretion. Accordingly, Justice Thomas has questioned

whether Medicaid providers and beneficiaries have constitutional standing to

complain about the Secretary’s actions. Walsh, 538 U.S. at 683 (Thomas, J.,

concurring); see also Armstrong, 135 S.Ct. at 1387 (Scalia, J.); see infra, Part IV.B.

      A cognate provision of the Texas Constitution precludes Texas courts from

issuing judgments in this area. The Texas Constitution requires that the Governor

“conduct, in person, or in such manner as shall be prescribed by law, all intercourse

and business of the State with other States and with the United States.” TEX.

CONST. art. IV, § 10. The Legislature has designated the Commission as the

Governor’s agent. TEX. HUM. RES. CODE § 32.021. So long as the Commission’s

state rates are acceptable to the Secretary, and are not subject to additional, separate

requirements of Texas law, they are binding on the courts. Adams v. Calvert, 396

S.W.2d 948, 950 (Tex. 1965) (Governor’s decisions within gap between

requirements of state law and of federal law unassailable). This is the flip side of the

Secretary’s discretion. If the Commissioner and CMS agree on rates, it would violate

the Constitution for a court to set rates differently. Any judicial remedy that does not

take into account that rates are the subject of continuous back and forth between the

Commission and the federal government violates Article IV, § 10.




                                           35
IV. Plaintiffs Lack a Vested Property Right in Medicaid
    Rates.

      The amount of Medicaid rates is always contingent. It is contingent on

Legislative and Congressional appropriations. It is contingent on the Secretary’s

view of the federal Medicaid Act’s requirements. It is contingent on changes in the

market. It is contingent on the State maintaining its current model of providing

Medicaid care, and not changing to another.

      A contingent right is insufficient to invoke the Texas Constitution’s due-

course provision. Spring Branch Indep. Sch. Dist. v. Stamos, 695 S.W.2d 556, 560-62

(Tex. 1985); Combs v. City of Webster, 311 S.W.3d 85, 92 (Tex. App.—Austin 2009,

pet. denied). And a contingent right as a third-party beneficiary to a government

contract may preclude any assertion of constitutional standing. Walsh, 538 U.S. at

680-81 (Thomas, J., concurring).

      A.     Neither the Providers Nor the Beneficiaries Have a Vested
             Property Right, and Cannot Raise Either A Due-Course or
             Inherent-Judicial-Review Claim.

      Any due-course claim must be predicated on a vested right. Stamos, 695

S.W.2d at 560-62. Likewise, inherent review under the Texas Constitution requires

a vested right. City of Amarillo v. Hancock, 150 Tex. 231, 233, 239 S.W.2d 788, 790

(1951). If plaintiffs lack a vested right, there is no due-course protection and no

inherent review available.




                                        36
             1.     The provider plaintiffs lack a vested property right.

      A Medicaid provider has no vested interest in a particular level of Medicaid

rates. See S.C. San Antonio, Inc. v. Tex. Dep’t of Human Servs., 891 S.W.2d 773, 778

(Tex. App.—Austin 1995, writ denied) (dismissing rate challenge because plaintiff

provider had no vested right in amount of payment, apart from right to

reimbursement under applicable rate for services already rendered); Pers. Care Prods.

v. Hawkins, 635 F.3d 155, 158-59 (5th Cir. 2011) (no vested right in future rates). It

does not have a vested right in avoiding a decrease in rates or profitability based on

statutory changes to the Medicaid program. Sw. Pharmacy Solutions, 408 S.W.3d at

564. Nor does it have a cognizable interest in its business model based on an earlier

set of rates or rules. Eldercare Props., Inc. v. Dep’t of Human Servs., 63 S.W.3d 551,

556 (Tex. App.—Austin 2001, pet. denied).

      This does not leave providers without recourse. They have, for example, a

vested property interest in remaining part of the Medicaid system and cannot be

ejected without process. But it leaves them without a trigger for constitutional

protections in this circumstance, where they can easily remain part of the Medicaid

program, but complain that their profitability will be impaired by lower Medicaid

rates. SSC Mo. City Operating Co., LP v. Tex. Dep’t of Aging & Disability Servs., No.

03-09-00299-CV, 2009 WL 4725286, at *6 (Tex. App.—Austin 2009, pet. denied)

(mem. op.) (mere expectation of providing services insufficient to trigger providers’

inherent review claim). The lack of a vested right is fatal to their due-course claim.

                                          37
             2.     The beneficiary plaintiffs lack a vested property right—in
                    fact, they will suffer no cognizable change in their legal status
                    by a change in the rates.

      There is a difference between the beneficiary plaintiffs’ asserted potential

injuries and their legal rights under Texas law and the Medicaid Act. To be clear, the

Commission does not dispute that plaintiffs’ allegations of decreased access are

within the scope of the courts’ constitutional authority and, therefore, legally

cognizable in the abstract. But it does not follow that they have a sufficient interest

to trigger the due-course provision.

      Moreover, the beneficiaries nonetheless lack standing because their alleged

injuries are non-redressable. See Heckman v. Williamson Cnty., 369 S.W.3d 137, 155

(Tex. 2011). Failure to establish redressability is a jurisdictional bar. Tex. Ass’n of

Bus., 852 S.W.2d at 446. There is no change in the beneficiaries’ legal status to be

redressed. Nothing in the Medicaid Act or the cognate Texas statutes creates a right

to care, or a right to access care. They are entitled to have the costs of care

reimbursed if they seek care from a participating health care provider, and a

“reasonable opportunity to choose a health care plan and primary care provider,”

not an absolute right See TEX. GOV’T CODE § 531.0212(b)(2). That is all. That status

will not change under the new rates. Accordingly, their due-course claim, and any

inherent-review claim, fail.




                                          38
      B.     The Court Should Follow Justice Scalia’s Lead in Armstrong and
             Hold that Providers and Beneficiaries Lack Constitutional
             Standing to Bring Suit Under the Ratemaking Criteria of the
             Medicaid Act.

      In part IV of the Armstrong opinion, Justice Scalia referred back to a prior

concurrence by Justice Thomas suggesting that private parties cannot establish

standing to challenge Medicaid rates because they are merely third-party

beneficiaries to the ongoing contractual arrangement between the states and the

federal government, 135 S.Ct. at 1387 (Scalia, J.) (plurality op.). This renders any

claim non-redressable in the courts, which is a jurisdictional bar to standing. See

Heckman, 369 S.W.3d at 155.

      That view should prevail here. For the same reasons neither the providers nor

the beneficiaries have a vested right—primarily that the rates are subject to constant

change based on legislative appropriation and other factors, and that the Medicaid

Act contemplates resolution of those issues through the Executive Department, see

supra, Part III.C—they cannot establish constitutional standing to challenge the

amount of Medicaid rates. While they may have demonstrable inconvenience or even

injury related to the plan, there can ultimately be no judicial redress because the

Executive Department remains free to adopt a contrary view.




                                         39
V.     Even if plaintiffs have constitutional standing, they
       cannot successfully invoke § 2001.038 or the Ultra
       Vires Cause of Action.

      Even assuming plaintiffs’ asserted injuries trigger standing, their lawsuit

would be barred by sovereign immunity in any event. Plaintiffs attempt to create

judicial review of Medicaid rates through the mechanism of § 2001.038 and the ultra

vires cause of action, in derogation of the common law and the plain text of the APA.

      A.     Section 2001.038 and the Ultra Vires Cause of Action Cannot Be
             Used to Obtain Judicial Review.

      Plaintiffs rely on the ultra vires cause of action and § 2001.038 to seek relief

regarding the Commission’s application of its rules to adopt the October 1 rates. A

claim for a remedy that is not supported by the invoked waiver of immunity from suit

is jurisdictionally barred. E.g., Tex. Parks & Wildlife Dep’t v. Sawyer Trust, 354

S.W.3d 384, 388 (Tex. 2011) (citing City of Houston v. Williams, 216 S.W.3d 827,

828-29 (Tex. 2007) (per curiam)). Plaintiffs cannot achieve judicial review of the rate

determination through causes of action that don’t allow this form of relief.

             1.     The ultra vires cause of action does not apply retroactively
                    because it is not a form of judicial review.

      The background presumption of Texas administrative law is that there is no

judicial review absent a vested property right or another basis for constitutional

inquiry. Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 599 (Tex.

2001). The ultra vires cause of action is an exception to this general principle,



                                          40
allowing prospective relief to foreclose action in contravention of law. City of El Paso

v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009) (plaintiff must “allege” and

“ultimately prove” act that is outside defendant official’s authority); id. at 376 (relief

must be prospective). Ultra vires relief cannot reach back in time to undo past

executive action, even by prospectively enjoining the results of an administrative

proceeding, without becoming a common-law basis for judicial review—which Little-

Tex and Heinrich teach us does not exist.

             2.     Section 2001.038 does not create judicial power to review
                    substantive agency actions, only agency rules.

       By contrast to the federal system, in which the federal APA provides a general

right to review of executive-department action, see 5 U.S.C. § 702, Texas has a

limited system of review, in which some executive department determinations are

not subject to judicial review, e.g., Gulf Land Co, 134 Tex. at 73-74, 131 S.W.2d at 82,

and the others are generally reviewable only if the government’s actions take (or

should take) the form of a formal contested-case proceeding or rulemaking, TEX.

GOV’T CODE §§ 2001.038, 2001.174; see Tex. Dep’t of Protective & Regulatory Servs.

v. Mega Child Care, Inc., 145 S.W.3d 170, 198 (Tex. 2004) (judicial review triggered

by requirement that agency proceed under APA). That the Legislature provided for

formal administrative rules, but not a contested-case proceeding, to govern Medicaid

rates dovetails neatly with the preemptive effect of the Medicaid Act: federal law




                                            41
does not permit judicial review of rate determinations, and Texas law does not

contemplate such review. E.g., Ferrell, 248 S.W.3d at 157-58.

      The two review structures of the APA are a statutory exception to this bar on

review, but they are narrow in scope. Because the remedies are statutory, not

common law, they are subject to restrictions on statutory waivers of immunity. E.g.,

City of Amarillo, 150 Tex. at 233, 239 S.W.2d at 790. Ambiguities are resolved in

favor of immunity. Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 697 (Tex.

2003); TEX. GOV’T CODE § 311.034. And the pleading requirements are

jurisdictional. Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500, 510-513 (Tex.

2012). Section 2001.038 applies to rules. TEX. GOV’T CODE § 2001.038(a). Section

2001.174 applies to contested-case proceedings applying those rules. Id. § 2001.174.

The text of § 2001.038 forecloses its use to attack action taken under rules: it

addresses the “applicability” of rules, not their application, for a reason. See Id. §

2001.038(a). Contested-case judicial review is subject to strict exhaustion rules. Id.

§ 2001.171. If § 2001.038 could be used retroactively to challenge application of a

rule, it would be an ancillary form of judicial review and render § 2001.171’s

exhaustion requirement meaningless. See Charlie Thomas Ford v. A.C. Collins Ford,

912 S.W.2d 271, 275 (Tex. App.—Austin 1995, writ dism’d); Lopez v. Pub. Util.

Comm’n, 816 S.W.2d 776, 782 (Tex. App.—Austin 1991, writ denied).




                                         42
              3.      Plaintiffs’ lawsuit is barred because it seeks to use these
                      causes of action retroactively and specifies no remedy
                      appropriate to the causes of action pleaded.

       Plaintiffs’ petition relies on these two causes of action to enjoin the outcome

of the rate adjustment that resulted in the October 1 rates. Plaintiffs, strikingly, recite

only past actions as the basis for their ultra vires claim. See CR.346 ¶ 34 (“the actions

of Commissioner Traylor are ultra vires in that his actions taken in promulgating the

Rates are outside his statutory and legal authority”). The Commissioner’s actions

had already been taken. To the extent that the petition seeks to reach back and undo

past action, it is jurisdictionally defective.

       The ultra vires cause of action cannot be used to obtain that remedy, because

it cannot be a form of judicial review: allowing injunctive relief based on an alleged

error in past action would render the remedy retroactive, in contravention of

Heinrich, and turn it into a basis for common-law judicial review, in derogation of

Little-Tex. And § 2001.038 cannot be used to review the application of a rule, because

to do so would ignore the text of the APA and vitiate that statute’s exhaustion

requirement.10 Because the remedy plaintiffs seek is incommensurate with the either

§ 2001.038 or the ultra vires cause of action.


10 Nor does § 2001.038 provide a basis for injunctive relief. Compare TEX. GOV’T CODE
§ 2001.038(a) (providing for declaratory, not injunctive relief) with TEX. CIV. PRAC. & REM. CODE
§ 37.011 (expressly providing for injunctive relief ancillary to declaratory relief). Because the
Legislature provides a statutory basis for injunctive relief when it intends declaratory and
injunctive relief to be issued together, § 2001.038’s remedy cannot implicitly allow injunctive



                                               43
        To be clear, § 2001.038 does provide a remedy with regard to past actions

related to Medicaid rules: they can be declared invalid despite the fact that they were

implemented in the past. E.g., El Paso Hosp. Dist. I, 247 S.W.3d at 711, 714-15. But it

does not follow that invalidity triggers a right to different rates. El Paso Hosp. Dist.

II, 400 S.W.3d at 81. Likewise, the ultra vires cause of action would be available to

enjoin the Commissioner from proceeding to adopt rates without regard to the

relevant statutes and rules, but it would do so only prospectively. In each

circumstance, the invalidity of the rule or the injunction against extra-legal activity

is prospective from issuance of the mandate.

        B.      Plaintiffs’ § 2001.038 Claims Are Barred.

        As explained above, plaintiffs’ theory that they can obtain relief related to the

rates, as opposed to prospective relief related to the underlying administrative rules,

has been expressly rejected by this Court and the Texas Supreme Court, which have

both held that § 2001.038 addresses only rules, not the resulting rates. El Paso Hosp.

Dist. II, 400 S.W.3d at 81; El Paso Hosp. Dist. II, 351 S.W.3d at 487; see supra, Part

II.C. The next question is whether the jurisdictional defect caused by plaintiffs’



relief. Recognizing that the Court has relied on El Paso Hospital District I for the proposition that
injunctive relief is appropriate, Tex. Dep’t of State Health Servs. v. Balquinta, 429 S.W.3d 726, 749-
750 (Tex. App.—Austin 2014, pet. dism’d, the Commission asks the Court to reconsider that view.
The issue of injunctive relief was raised sua sponte in El Paso Hospital District I, which means that
the parties did not brief it and the issuance of injunctive relief is, as a result, non-precedential. See
U.S. v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 38 (1952); Garcia v. Kubosh, 377 S.W.3d 89, 106
(Tex. App.—Houston [1st Dist.] 2012, no pet.).


                                                  44
misplaced reliance on a foreclosed legal theory is incurable. The defect cannot be

cured.

               1.       Plaintiffs lack a right or privilege.

         To be clear, constitutional standing does not require a vested property right;

the Commission does not challenge plaintiffs’ asserted injury to their businesses, nor

does it suggest that the beneficiary plaintiffs will not be inconvenienced if they have

to find new providers. In some legal contexts, those injuries would be sufficient to

trigger constitutional standing. However, for the same reason plaintiffs have no

vested property interests, they cannot articulate a “right or privilege” sufficient to

trigger the waiver of immunity in § 2001.038. Because § 2001.038 is a statutory

waiver of immunity, e.g., Tex. Comm’n on Envtl. Quality v. Slay, 351 S.W.2d 532, 543

(Tex. App.—Austin 2011, pet. denied), its requirements are strictly construed in

favor of preserving immunity, Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692,

697 (Tex. 2003).11 Thus, failure to meet the pleading requirements of § 2001,038 is

a jurisdictional bar.


11The Commission acknowledges this Court’s prior holding that the “right or privilege” inquiry
extends to any claim for which there is constitutional standing. Balquinta, 429 S.W.3d at 742-43.
Balquinta wrongly extends Finance Commission of Texas v. Norwood, 418 S.W.3d 566, 582 n.83 (Tex.
2013). Footnote 83 of Norwood merely rejected the argument that there is a lower standing
requirement for §2001.038 claims than is required by the constitution; it did not address whether
the “right or privilege” requirement is more restrictive than the scope of allowable constitutional
standing, id. This Court has previously held that a § 2001.038 claim based on something that is not
a right or privilege results in dismissal; that is the appropriate rule. Tex. Dep’t of Pub. Safety v.
Salazar, 304 S.W.3d 896, 907-08 (Tex. App.—Austin 2009, no pet.). The issue is not squarely



                                                 45
       A “right” is “an interest or expectation guaranteed by law.” A DICTIONARY

OF MODERN LEGAL USAGE 772              (2d ed. 1995). “Privilege” is generally defined as a

“person’s legal freedom to do or not to do a given act.” Id. at 693.12 In either case,

to be a basis for a § 2001.038 suit, a claim would have to be presently enforceable,

not merely legally cognizable; having a legal existence, not merely legal potential.

That standard is more narrow than constitutional standing.

       The temporary injunction order fleshes out plaintiffs’ administrative-law

claim, with the assertion that there are formal defects in the ratemaking that render

the rates improper because the Commission did not comply with formal

requirements for adopting new administrative rules. See CR. 590-91 (asserting that

rate adoption requires application of TEX. GOV’T CODE § 2001.022(a) (employment

impact statement); § 2001.023(a) (30 days’ notice); § 2006.002(c) (small-business

impact statement)). Even assuming plaintiffs’ request for relief threads the two

needles of preemption and the prohibition on implied judicial review of past actions,

plaintiffs’ legal theory is insufficient to trigger jurisdiction.




presented here, because the claims are barred by standing and failure to invoke §2001.038, but the
analysis of each claim should be distinct.
12 Accord BLACK’S LAW DICTIONARY 1436 (9th ed. 2009) (defining a “right” as “a legally
enforceable claim that another will do or will not do a given act; a recognized and protected interest
the violation of which is a wrong”), 1316 (defining “privilege” as a “special legal right, exemption,
or immunity granted to a person or class of persons; an exception to a duty”).


                                                 46
      The providers have no legally cognizable interest in their business model or

the continued receipt of particular rates; the only recourse regarding the amount of

rates is the discretion of the Secretary. See supra, Part III. The beneficiaries’ situation

is not changed at all: they are entitled to have payments made to providers on their

behalf, at the rate indicated by law. See supra, Part IV.A. Accordingly, they have no

“interest” that can be “affected” by the relevant administrative rules or their

application in a ratemaking. For the same reason that these claims are unredressable,

they cannot trigger jurisdiction under § 2001.038.

             2.     Plaintiffs have not “identified” an administrative rule.

      Nor have plaintiffs successfully identified a particular administrative rule that

has been violated. City of Webster, 311 S.W.3d at 101. This is a rate adjustment, not a

rulemaking, so none of the Government Code provisions they cite apply. They have

cited only administrative rules that govern periodic rate review. See supra, Part II.C.

Their jurisdictional hook is that the Commission’s proceedings implicitly amended

those rules. But, if completely different rules applied, then plaintiffs have not

“identified” a rule the validity or applicability of which they challenge. Under City

of Webster, their § 2001.038 claim must be dismissed.

                    a.     Plaintiffs cannot reverse engineer a rule challenge from
                           a rate challenge.

      Plaintiffs seek to strike at the rates by arguing that the issuance of a rate within

which they disagree implicitly amends the requirements of the underlying


                                            47
administrative rules. CR.509 ¶ 6. Raising that issue in the briefing does not

“identify” it in the petition; plaintiffs have asserted only a potential, contingent

application of a rule that they assert, without merit, has been violated. In fact, the

Commission’s actions were based on different rules governing the adjustment

process, see supra, Part II.C. There is, as a result, no jurisdictional hook based on

implied amendment to support plaintiffs’ lawsuit. Certainly, that is the position

taken by the Texas Supreme Court when it held that a § 2001.038 proceeding did

not entitle plaintiffs to a change in already-final rates. El Paso Hosp. Dist. II, 400

S.W.3d at 81.

                    b.     Plaintiffs ignore the application of § 355.201(d).

      The first defect in plaintiffs’ claim is that it relies on rules that do not apply to

rate adjustments triggered by changes in appropriations. Plaintiffs cite § 355.8021

and provisions that refer to it, as well as the reporting requirements for rule adoption

under the APA. CR.343 ¶ 25. That argument fails to take into account that the

adjustment was made under § 355.201(d), which provides for rate adjustments

“notwithstanding” any other statutory or rule-based requirement, when, among

other things, the Legislature cuts funding. CR.352 (citing 1 TEX. ADMIN. CODE

§§ 355.201(d)(1)(A), (D)).

      Plaintiffs also assert that there was improper notice of the October 1 rates.

CR.343 ¶ 25. The proper notice standard is set out in §§ 355.201(e) and (f). The

Commission tendered evidence showing that the notice was properly published on

                                           48
September 4, 2015, in the Texas Register and on the Commission’s website, setting

the hearing for September 18, 2015. CR.577-580. Because the relevant statute

requires nothing more, the existence of adequate notice is a jurisdictional fact issue

that plaintiffs have failed to controvert.

      C.     Plaintiffs’ Ultra Vires Claims Would Fail Even if they Had Been
             Properly Pleaded.

      As explained above, the Commissioner cannot act ultra vires in implementing

Medicaid rates that are already final: that is his job. See supra, Part II.A. Plaintiffs’

claim might be construed to construed to be that, in issuing the current rates, the

Commission’s      cost   analysis   includes      none   of   the   data   included   in

§ 355.8021(a)(2)(A), or that it is a “periodic rate review” that includes, but is not

limited, to analysis of payments and costs for therapy. See CR.591-92.

      Even if these claims were framed prospectively—applied to future

ratemaking, an ultra vires claim could result in relief preventing the Commissioner

from acting contrary to statute or rule in future proceedings, see supra, Part II—they

would nonetheless be jurisdictionally barred, and the defect is incurable. As

explained above, the Commission was not circumscribed by § 355.8021(a)(2)(A),

complied with its requirements by providing a “combination” of the data required,

and is entitled to do so under deference principles. And § 355.8021(B) cannot be

applied to rate adjustments triggered by legislative action. At most, plaintiffs

complain that information was not in a particular format (which the rule does not in


                                             49
fact require) and that it was not analyzed using a particular methodology (even

though the rule imposes no particular methodology, but rather allows consideration

of “some combination” of data). Accordingly, implementation of the October 1 rates

is not, as a matter of law, ultra vires. And because the act described is intra vires, suit

against the Commissioner must be dismissed.

               1.      Plaintiffs’ position regarding § 355.8021 would fail to trigger
                       an ultra vires claim in any event.

       The temporary-injunction order incorrectly suggests that there has been a

violation of § 355.8021(a)(2)(A). CR.590 ¶ 9. Not so. Section 355.8021(a)(2)(A)

requires the Commission to address a series of data in setting rates or “some

combination thereof.” 1 TEX. ADMIN. CODE § 355.8021(a)(2)(A). Regardless of the

methodology, there is no dispute that the report incorporates at least some of the

elements of § 355.8021(a)(2)(A). And that fact precludes jurisdiction, because the

rule does not require consideration of all the data listed in (a)(2)(A), nor does it

require it to be in any given format. It requires only “some combination thereof.” If

the report aggregates any of the (a)(2)(A) data, in any form, it complies with

(a)(2)(A).13



13Plaintiffs’ petition might be read to imply an argument that Rider 50(c) itself requires an
independent access analysis. As explained above, that language does not apply to the rate cuts. See
supra, Part II.B & n.5. Of course, the federal access requirement still applies. But both the substance
and remedy for the access requirement preempt state law either because there is no judicial
recourse, per Justice Scalia, or because the only available judicial proceedings are a federal APA



                                                 50
       Consider how this issue would be resolved if the Legislature had provided

judicial review under the APA. The Commission would be entitled to deference on

its construction of the technical requirements of its own rule. E.g., R.R. Comm’n v.

Tex. Citizens for a Safe Future and Clean Water, 336 S.W.3d 619, 624-25 (Tex. 2011).

Because the words “some combination thereof” cannot be read to require,

unambiguously, that all the data in (a)(2)(A) be considered, or that it be considered

in some particular format, the Commission would prevail. This aspect of plaintiffs’

petition highlights the degree to which they ask for something procedurally new: to

invalidate the rule under § 2001.038, based not on the rule itself but on its

application, thereby sidestepping the Commission’s discretion—which is entitled to

deference—to interpret its own rules. There is no viable rule challenge hidden in

plaintiffs’ attack on the October 1 rates.

       The weakness of plaintiffs’ position is underscored by their trial court briefing.

At the end of the day, all of plaintiffs’ jurisdictional allegations boil down to the

assertion that the administrative rules impose a particular formula for funding, when

in fact they require only that the Commission consider certain information in no

particular format, giving none of it a particular weight. See CR.343 ¶ 25. Without a

“formula,” the Gordian knot of plaintiffs’ lawsuit is cut, and it must be dismissed.



suit against the Secretary, per Justice Breyer, see supra, Part III.B. Under neither view of the law
would it be appropriate for a Texas court to answer an access question.


                                                51
      They do not require the Commission to respond to public comment regarding

this data. They do not require the Commission to publish the contents of any studies

on which it relies. And that makes sense, because (1) there is no administrative

process in which the public can contest the studies, only a requirement of comment,

TEX. HUM. RES. CODE § 32.0282; (2) that requirement is entirely consistent with the

Medicaid Act’s provision of an exclusive executive-department remedy for access-

to-care issues, see supra, Part III; (3) and it is mandated by the Legislature’s choice,

consistent with the Medicaid Act and two centuries of Texas law, not to provide

judicial review of rate setting. What matters, at the end of the day, is whether the

Secretary is satisfied with the Commission’s access-to-care analysis. There is no

Texas-law vehicle for addressing the issue.

      The temporary injunction order likewise invokes § 355.8021(a)(2)(B). CR.590

¶ 10; see also Rule 24 Resp. at 5 ¶ 6 (citing testimony at 3.RR.229-230 to effect that

October 1 rates were not required to be based on § 355.8021(a)(2)(B)). The easy

response to this is that § 355.8021(a)(2)(B) expressly applies only to periodic

reviews, not to adjustments. See supra, Part II.A. That Commission employees

voluntarily used data that complied with § 355.8021(a)(2)(A) goes only to their

efforts to ensure that the rates are acceptable to the Secretary. And that distinction

makes sense: periodic rate review updates costs, while adjustment respond to

changes made by Congress and the Legislature. A cost study is not necessary to carry

out the Legislature’s instruction in Rider 50.

                                          52
               2.   Plaintiffs’ remaining claims likewise cannot describe an ultra
                    vires act.

      In addition to the notice and data requirements that directly apply to home

care Medicaid rights, plaintiffs raise a number other claims, based on broader

statutory requirements. Those claims necessarily fail, both as § 2001.038 and as ultra

vires claims

      Plaintiffs invoke § 531.02113 of the Government Code, which requires

“Optimization of Medicaid Financing” and instructs the Commission to “maximize

the state’s receipt of federal funds.” TEX. GOV’T CODE § 531.02113(1); CR.343-44

¶ 26. Plaintiffs appear to view the section as creating a generic vehicle for judicial

review of the policy behind setting Medicaid rates. That view is untenable in light of

Rider 50(c): the Commission cannot increase the amount of federal Medicaid funds

spent contrary to the budget. Nor can the term “maximize” be extended to create a

judicial right to a particular amount of funding to set rates at a particular level—

Medicaid rates are always subject to being cut by Congress and the Legislature. 42

U.S.C. § 1396b; TEX. HUM. RES. CODE § 32.028, 1 TEX. ADMIN. CODE

§ 355.201(c)(4).

      Plaintiffs cite several reporting requirements related to the formal rulemaking

process. CR.343 ¶ 25 (referring to TEX. GOV’T CODE § 2006.002 (economic impact

analysis and regulatory flexibility analysis for “rules with adverse economic effect”);

§§ 2001.022 (local employment impact statement for rulemaking); 2001.023(a),


                                          53
2001.24 (requiring 30 days’ notice before rulemaking, implementing requirements

notice)). None of these statutes apply, because ratemaking is not subject to the

APA’s formal rulemaking process. To the contrary, as explained above, rates are

subject to a shorter, less-involved notice requirement, do not require response to

public input, and need not be justified after the public comment period is over. See

supra, Part II.A.

      Finally, plaintiffs suggest that various statutes and rules create a separate

“access to care” requirement under Texas law that is independently actionable.

CR.344 ¶ 27 (invoking 1 TEX. ADMIN. CODE § 353.411(a)(5) (requiring MCOs to

“ensure     reasonable    availability   of     specialists);   TEX.    GOV’T     CODE

§ 533.005(a)(21)(c) (providing that “health care services will be accessible . . . to a

comparable extent that health care services would be available to recipients under a

fee-for-service or primary care case management model”). Plaintiffs suggest that,

because the rates will put the beneficiaries’ current care providers out of business, it

will violate this statute. CR.344 ¶ 27. That argument fails. It attempts to cherry-pick

language that, when excerpted, gives the impression that there is a separate, greater

Texas requirement of access to care that supplements the federal standard. But each

of these provisions is entirely coterminous with the federal standard. The federal

standard requires rates be set at a level that gives beneficiaries access to care that is

comparable to patients with private insurance in the same geographic area. 42 U.S.C.

§ 1396(a)(30)(A). Each MCO is created to cover a particular geographic area.

                                           54
Indeed, the Texas law provisions on which plaintiffs rely merely echo the language

of the Medicaid Act provision that authorizes MCOs. See 42 U.S.C.

§ 1396b(m)(1)(A)(i).14 And the Medicaid Act requires only that rates be set to ensure

there is similar provider availability as would otherwise be available under private

insurance, not a general right of all beneficiaries to access care qua care. See supra,

Part III.

 VI. BECAUSE THERE IS NO POTENTIAL FOR RECOVERY, THE COURT SHOULD
     VACATE THE TEMPORARY INJUNCTION.

       A temporary injunction must be reversed if the trial court’s decision was so

arbitrary that it exceeds the bounds of reasonable discretion. Butnaru v. Ford Motor

Co., 84 S.W.3d 198, 204 (Tex. 2002). An element of that discretion requires the

court to determine whether there is a cause of action against the defendant. Id. That

this lawsuit is barred by immunity in its entirety, yet was allowed to proceed, is an

arbitrary abuse of discretion and a failure to determine whether there is a cause of

action against defendants.

       So is issuing an order restraining a change in the amount of Medicaid rates in

contravention of the Medicaid Act’s exclusive remedy provision. See supra, Part III.

Indeed, the district court has underscored the impropriety of its order in denying


14An MCO “makes services it provides to individuals eligible for benefits under this subchapter
accessible to such individuals, within the area served by the organization, to the same extent as
such services are made accessible to individuals (eligible for medical assistance under the State
plan) not enrolled with the organization.” 42 U.S.C. § 1396b(m)(1)(A)(i).


                                               55
defendants’ motion to modify the temporary injunction. See SRR.37-39. To be

enforceable a temporary injunction—indeed any injunction in the Texas system—

must “describe in reasonable detail . . . the act or acts sought to be restrained.” TEX.

R. CIV. P. 683; Tex. Health & Human Servs. Comm’n v. Advocates for Patient Access,

Inc., 399 S.W.3d 615, 628-29 (Tex. App.—Austin 2013, no pet.) (vacating portions

of temporary injunction that did not adequately put Commission on notice of its

obligations under the injunction). The district court suggested that it was

appropriate to require the Commission to confer with plaintiffs before taking future

action, and stated that whether the Commission had violated the injunction could be

decided at the sanctions hearing. SRR.38. Taking discretion over Medicaid rates

from both the Commission and the Secretary and predicating that usurpation of

power on a $500 bond, was arbitrary.

      Likewise, it was an abuse of discretion to treat plaintiffs’ assertions of harm—

many of which were contingent on the acts of third parties, e.g., CR.342-43 ¶ 24

(asserting that beneficiaries will lose treatment because providers will go out of

business)—as satisfying the probable-right-of-recovery requirement, see Butnaru, 84

S.W.3d at 204. Plaintiffs’ claims are non-redressable as a matter of law, because their

legally protected rights and vested interests have not been impacted. See supra, Part

IV.A. Accordingly, there is no probable right of recovery.




                                          56
                                    Prayer

      The Court should render judgment dismissing plaintiffs’ lawsuit. It should

also reverse and vacate the temporary injunction.

                                    Respectfully submitted.

                                    Ken Paxton
                                    Attorney General of Texas

                                    Charles E. Roy
                                    First Assistant Attorney General

                                    Scott A. Keller
                                    Solicitor General

                                    _/s/ Kristofer S. Monson_
                                    Kristofer S. Monson
                                    Assistant Solicitor General
                                    State Bar No. 24037129
                                    OFFICE OF THE ATTORNEY GENERAL
                                    P.O. Box 12548 (MC 059)
                                    Austin, Texas 78711-2548
                                    Tel.: (512) 936-1820
                                    Fax: (512) 474-2697
                                    kristofer.monson@texasattorneygeneral.gov

                                    Counsel for Appellants




                                        57
                          CERTIFICATE OF SERVICE

       On November 12, 2015 this document was served via File&Serve Xpress on:

       Daniel R. Richards
       Benjamin H. Hathaway
       Richards Rodriguez & Skeith LLP
       816 Congress Avenue
       Suite 1200
       Austin, Texas 78701
       drichards@rrsfirm.com
       bhathaway@rrsfirm.com


       Counsel for Appellees

                                      /s/ Kristofer S. Monson




                       CERTIFICATE OF COMPLIANCE

       In compliance with Texas Rule of Appellate Procedure 9.4(i)(2), this brief

contains 14,002 words, excluding the portions of the brief exempted by Rule

9.4(i)(1).



                                     /s/ Kristofer S. Monson
                                     Kristofer S. Monson




                                         58
APPENDIX
                                        TABLE OF CONTENTS

                                                                                                                    Tab

CR.587-672 Order Granting Temporary Injunction and Denying
Supersedeas .....................................................................................................A

CR.673 Order Denying Defendants’ Plea to the Jurisdiction
......................................................................................................................... B

Medicaid Program; Methods for Assuring Access to Covered Medicaid
Services, 80 Fed. Reg. 67576 (Nov. 2, 2015) (to be codified at 42 C.F.R. pt.
447) ................................................................................................................C

2016-17 Gen. Appropriations Act, 84th Leg., R.S., ch. 1281, art. II, 2015
Tex. Sess. Law Serv. 4343, 4547 (Health & Human Servs. Comm’n),
Rider 50 ..........................................................................................................D

CR.351-73 Tex. Health & Human Servs. Comm’n Rate Analysis Dep’t:
Notice of Proposed Adjustments .................................................................... E

CR.336-92 Plaintiffs’ Second Amended Original Petition and Application
for Injunctive Relief ........................................................................................ F

Relevant State Statutes and Rules.................................................................. G

Relevant Federal Statutes............................................................................... H
A
                                     DC          BK15274 PG1420




                                  CAUSE NO. D-1-GN-15-003263

DIANA D., as next of friend of KD, a child,      §                IN THE DISTRICT COURT
KAREN G., as next friend of TG and ZM,           §
children, GUADALUPE P., as next of friend        §
of LP, a child, SALLY L., as next of friend of   §
CH, DENA D., as next friend of BD, a child,      §                        Filed in The Distiict Court
                                                                           of Travis County, Texas
OCI ACQUISITION, LLC d/b/a                       §
CARE OPTIONS FOR KIDS,                           §
CONNECTCARE SOLUTIONS, LLC                       §                             SEP2~
d/b/a CONNECTCARE THERAPY FOR                    §                      At              'lfi!_f     M.
                                                                        Velva L. Price, District Clerk
KIDS, ATLAS PEDIATRIC THERAPY                    §
CONSULTANTS LLC, and PATHFINDER                  §
PEDIATRIC HOME CARE, INC.,                       §
                                                 §         200th JUDICIAL DISTRICT OF
        Plaintiffs,                              §
                                                 §
v.                                               §
                                                 §
CHRIS TRAYLOR, as EXECUTIVE                      §
COMMISSIONER of TEXAS                            §
HEALTH AND HUMAN SERVICES                        §
COMMISSION, and TEXAS                            §
HEALTH AND HUMAN SERVICES                        §
COMMISSION,                                      §
                                                 §
        Defendants.                              §        TRAVIS COUNTY, TEXAS


     ORDER GRANTING TEMPORARY INJUNCTION AND DENYING SUPERSEDEAS


        On the 21 51 and 22"d days of September, 2015 the Court held a hearing on Plaintiffs'

application for temporary injunction in the above entitled and numbered cause. The Court has

considered the testimony, documentary evidence, pleadings, briefs, and arguments of counsel

and GRANTS the Temporary Injunction based on the following:

General History:

1)      Plaintiffs include the parents as next friends of several minor children who suffer from

severe and disabling conditions, including seizure disorders, delayed development, autism,

speech developmental delays, epilepsy, cerebral palsy, and other conditions. These Plaintiffs and
                                                                                         II Page
                  1~~m~m~m~Mnrn~~~m~m~~~~
                      004236981                                                                          587
                                   DC            BK15274 PG1421




many other minor children suffering from similar conditions across the State of Texas can

exhibit a wide variety of disabling symptoms, including:

       a. nonverbal

       b. non-ambulatory

       c. difficulty with speech

       d. uncontrolled behavioral outbursts

       e. difficulty with motor control over their limbs

       f.   difficulty with mental processing of information.

2)     Because of these disabling conditions and symptoms, these children depend on home-

health providers for physical, occupational, and speech therapy services under the Texas

Medicaid program to develop basic skills such as walking, talking, dressing themselves, feeding

themselves, understanding simple communications, and maintaining control over their own

behavior. The Plaintiffs include several home health service providers who deliver physical,

occupational, and speech therapy services under the Texas Medicaid program to the children of

Texas who depend on such services.

3)     Texas Health and Human Services Commission ("HHSC") and Chris Traylor, as

Executive Commissioner of HHSC ("Commissioner Traylor") have developed proposed

decreases to the reimbursement rates for physical, occupational, and speech therapy services that

will probably result in a decrease, or complete elimination, of available home health services for

Medicaid-dependent children across Texas.

Proposed Rate Changes:

4)     On or about July 20, 2015, HHSC and Commissioner Traylor held a hearing regarding

new proposed reimbursement rates to be implemented on September 1, 2015 for physical,



                                                                                        21Page


                                                                                                     588
                                   DC             BK15274 PG1422




occupational, and speech therapy services under the Texas Medicaid program (the "July 20, 2015

Proposed Rates"). A copy of the July 20, 2015 Proposed Rates is attached hereto as Exhibit A.

5)     Following the commencement of this lawsuit, on or about August 20, 2015, HHSC and

Commissioner Traylor produced a different set of new proposed reimbursement rates to be

implemented on September 1, 2015 for physical, occupational, and speech therapy services

under the Texas Medicaid program (the "August 20, 2015 Proposed Rates"). A copy of the

August 20, 2015 Proposed Rates is attached hereto as Exhibit A-I.

6)     Prior to a temporary injunction hearing at which Plaintiffs sought to enjoin HHSC and

Commissioner Traylor from implementing either the July 20, 2015 Proposed Rates or the August

20, 2015 Proposed Rates, HHSC and Commissioner Traylor withdrew both sets of rates and

advised the Court that they would start over with a new rate proposal.

7)     Nine days later, on September 4, 2015, HHSC and Commissioner Traylor proposed new

rates to be implemented on October 1, 2015 for physical, occupational, and speech therapy

services under the Texas Medicaid program (the "September 4, 2015 Proposed Rates"). A copy

of the September 4, 2015 Proposed Rates is attached hereto as Exhibit A-2.

8)     Defendants have exhibited a pattern of behavior attempting to impose new rates, and

have withdrawn the rates or taken other steps, resulting in Plaintiffs' challenge to the rates

arguably becoming moot. This issue is appropriate for the Court to adjudicate, however, based

on the "capable of repetition yet evading review" exception to the mootness doctrine. Davis v.

Burnam, 137 S.W.3d 325, 333 (Tex. App.-Austin 2004, no pet.). Defendants' actions

withdrawing the proposed rates demonstrate that the action is too short in duration to be litigated

fully before the action ceases or expires. Id. Defendants' choice to withdraw the rates and

propose similar ones as soon as a hearing has passed creates a reasonable expectation that the



                                                                                         31Page


                                                                                                      589
                                    DC             BK15274 PG1423




same complaining parties will be subjected to the same action again should the Defendants

withdraw the currently pending rates and assert that this case is moot. Id.

9)     Pursuant to 1 TAC §355.8021(a)(2)(A), reimbursement rates must be based on:

       a. an analysis of the Centers for Medicare and Medicaid Services fees for similar
          services;

       b. Medicaid fees paid by other states;

       c. a survey of costs reported by Medicaid home health agencies;

       d. the Medicare Low Utilization Payment Adjustment (LUPA) fees;

       e. previous Medicaid payments for Medicaid-reimbursable therapy, nursing, and aide
          services; or

       f.   some combination thereof.

10)    Pursuant to 1 TAC §355.802l(a)(2)(B), periodic rate reviews conducted by HHSC must

include, but will not be limited to, consideration of the payments for, as well as all costs

associated with, providing these Medicaid-reimbursable therapy services.

11)    Any proposed reimbursement rates that modify or disregard the key components of the

methodology set forth in 1 TAC §355.8021(a)(2) could constitute a rule change. Accord, El Paso

Hosp. Dist. v. Tex. HHS Comm 'n, 247 S.W.3d 709, 714-15 (Tex. 2008). To be valid, rates

resulting from a rule change must be adopted through proper rule-making procedures. Id. at 715.

12)    Those rule-making procedures include:

       a. Determining whether a rule may affect a local economy before proposing the rule for
          adoption. If so, preparing a local employment impact statement for the proposed rule.
          TEX. Gov'T CODE§ 2001.022(a).

       b. Providing at least 30 days' notice of the intention to adopt the new rule. TEX. Gov'T
          CODE § 2001.023(a). The notice must comply with section 2001.024 of the Texas
          Government Code. This includes, among other things, a note about the public benefits
          and costs associated with the new rule. TEX. Gov'T CODE § 2001.024(a)(5).

       c. Preparing, for rules that may have an adverse economic impact on small businesses,:

                                                                                       4JPage


                                                                                                  590
                                    DC           BK15274 PG1424




                   i.   an economic impact statement that estimates the number of small
                        businesses subject to the proposed rule, projects the economic impact of
                        the rule on small businesses, and describes alternative methods of
                        achieving the purpose of the proposed rule; and

                  u. a regulatory flexibility analysis that includes the agency's consideration of
                     alternative methods of achieving the purpose of the proposed rule.

       TEX. Gov'T CooE § 2006.002( c).

The September 4, 2015 Proposed Rates:

13)    The September 4, 2015 Proposed Rates affect at least one local economy.

14)    The September 4, 2015 Proposed Rates may have an adverse impact on small businesses.

15)    The September 4, 2015 Proposed Rates were probably not determined in compliance with

1 TAC §355.802l(a)(2)(A).

16)    The September 4, 2015 Proposed Rates are the result of a periodic rate review under 1

TAC §355.802l(a)(2)(B) that was probably not in compliance with adequate or appropriate

consideration of payments for, as well as the costs associated with, providing these Medicaid-

reimbursable therapy services.

17)    Defendants probably did not adequately or appropriately consider the impact that the

September 4, 2015 Proposed Rates would have on access to care if implemented.

Failure to Comply with Rule 355.802l(a)(2):

18)    The Proposed Rates are probably not adequately or appropriately based on the formula

set forth in 1 TAC §355.802l(a)(2)(A); therefore, they may constitute a rule change, which must

be adopted through proper rule-making procedures.

19)    The September 4, 2015 Proposed Rates are also not based on any identifiable

documented criteria. The Truven Data is not data representing Medicaid fees paid by other states,

so even if the September 4, 2015 Proposed Rates are based on Truven Data, the September 4,



                                                                                        5 JP a g   I.'




                                                                                                         591
                                   DC             BK15274 PG1425




2015 Proposed Rates are based on something other than the key components of the formula set

forth in 1 TAC §355.8021(a)(2)(A).

20)    Should it be determined that any of the Proposed Rates comply with the methodology and

formula in 1 TAC §355.8021(a)(2)(A), those Proposed Rates could still amount to a rule change

because they are probably the result of a periodic rate re:view that failed to adequately or

appropriately consider payments for, as well as all costs associated with, providing these

Medicaid-reimbursable therapy services. 1 TAC §355.8021(a)(2)(B).

21)    The margins analysis conducted by Texas A&M University is seriously flawed and not

sufficient to meet the requirements of 1 TAC §355.8021(a)(2)(B). Defendants appear to have

performed no other competent cost analysis. Defendants' own purported analysis fails to include

overhead, administrative, benefits, employer taxes, therapy materials, testing kits and other costs

of providing these Medicaid-reimbursable therapy services.

22)    In proposing to promulgate each set of Proposed Rates, Defendants did not follow proper

rule-making procedures. Defendants did not:

       a. determine whether the rule would affect a local economy or prepare a local
          employment impact statement;

       b. provide at least 30 days' proper notice of the intention to adopt the new rule. The
          notice provided did not comply with section 2001.024 of the Texas Government
          Code;

       c. prepare an economic impact statement or a regulatory flexibility analysis.

23)    The September 4, 2015 Proposed Rates are likely a rule that HHSC did not properly

promulgate. They may be invalid and may be enjoined. El Paso Hosp. Dist., 247 S.W.3d at 715.

Access to Care:

24)    In addition to the above violations of the rule-making process, Texas law requires that

HHSC provide Medicaid recipients with proper access to care. Pursuant to the provisions of 1

                                                                                          61Page


                                                                                                      592
                                     DC            BK15274 PG1426




TAC 353.41 l(a)(S), 1 TAC 353.413(a), and 1 TAC 353.413(d), Texas law requires: that service

providers ensure the reasonable availability and accessibility of speech, occupational, and

physical therapist specialists for all Medicaid service recipients; that service providers must

provide comprehensive and timely speech, occupational and physical therapy services for all

Medicaid service recipients; and that HHSC will not delegate its responsibility to deliver speech,

occupational, and physical therapy services to all eligible children.

25)    HHSC likely neither conducted nor received an adequate, appropriate, or reliable study or

analysis on the impact of any of the Proposed Rates on access to care as required by the above

regulations.

26)    The implementation of the Proposed Rates will likely result in service providers being

unable to deliver speech, occupational, and physical therapy services to all eligible children.

Because HHSC only provides services to eligible children through service providers, the

implementation of either of the proposed rates will probably render service providers unable to

comply with 1 TAC 353.41 l(a)(S), and/or 1 TAC 353.413(a), and will probably result in HHSC

failing to comply with its responsibility to deliver speech, occupational, and physical therapy

services to all eligible children.

27)     Any proposed change to reimbursement rates for physical, occupational, and speech

therapy services under the Texas Medicaid program during the pendency of this lawsuit would

constitute a periodic rate review pursuant to 1 TAC §355.802l(a)(2)(B) and which will include a

review of payments for providing Medicaid-reimbursable therapy services and which will

include a review of costs associated with providing Medicaid-reimbursable therapy services.




                                                                                         71Page


                                                                                                     593
                                    DC            BK15274 PG1427




Additional Violations:

28)     In addition to the above violations of the rule-making process, each set of Proposed Rates

will likely violate Defendants' statutory duty to maximize the Medicaid finance system. TEX.

Gov'T CODE §531.02113.

29)     HHSC must optimize the Medicaid finance system to:

        a. maximize the state's receipt of federal funds;

        b. create incentives for providers to use preventive care;

        c. increase and retain providers in the system to maintain an adequate provider network;

        d. more accurately reflect the costs borne by providers; and

        e. encourage the improvement of the quality of care.

Id.

30)     If implemented, the Proposed Rates will likely not create incentives for providers to use

preventive care, dramatically decrease the number of providers in the system, fail to accurately

reflect the costs borne by the providers, and not encourage the improvement of the quality of

care.

31)     The September 4, 2015 Proposed Rates are probably based on arbitrary criteria that lack

adequate or appropriate consideration for the impact on service providers or recipients, and

probably lack adequate or appropriate consideration for the legal obligations of Commissioner

Traylor and HHSC with regard to the adoption of reimbursement rates. Therefore the September

4, 2015 Proposed Rates are likely in violation of the due course of law provision of the Texas

Constitution Art. I, § 19.

Need for Temporary Injunction:

32)     Plaintiffs have shown a probable right to recovery on their claim for all the above

reasons.
                                                                                         81Page


                                                                                                     594
                                      DC                BK15274 PG1428




33)    If a temporary injunction is not granted, Plaintiffs will probably suffer irreparable injury

because:

        a. the minor children represented in this lawsuit, plus thousands of other Texas children
           receiving pediatric services under the Texas Medicaid program, will probably be
           deprived of those critical services;

        b. Defendants' actions will probably cause multiple Texas Medicaid providers to go out
           of business and/or stop providing Medicaid services;

        c. Defendants' actions will probably create disincentives for Medicaid providers to use
           preventive care;

        d. Defendants' actions will probably decrease the quality of care provided to Medicaid
           recipients in Texas; and

        e. Defendants' actions will probably prevent Texas Medicaid beneficiaries from
           receiving critical services.

34)     The probable harm is imminent because the Septembt::r 4, 2015 Proposed Rates are set to

take effect on October 1, 2015, likely immediately cutting off care for Medicaid beneficiaries.

The adoption or implementation of any of the Proposed Rates may be ultra vires violations of

Texas law. Therefore the issuance of a temporary injunction causes less prejudice or harm to the

State of Texas, Commissioner Traylor, or HHSC, and the balance of the equities weighs in favor

of granting a temporary injunction.

Temporary Injunction:

        Accordingly, it is hereby ORDERED, ADJUDGED and DECREED that a Temporary

Injunction is GRANTED to Plaintiffs, and that Commissioner Traylor and HHSC are

commanded forthwith to desist and refrain from taking any action to implement the

reimbursement rates described in Exhibit A-2 from the date of entry of this Order until final trial

in this lawsuit or until further order of this Court.

        IT IS FURTHER ORDERED, ADJUDGED and DECREED that a Temporary Injunction

is GRANTED to Plaintiffs, and that Commissioner Traylor and HHSC are commanded forthwith
                                                                                         9 JP a gt'


                                                                                                      595
                                      DC             BK15274 PG1429




to desist and refrain from taking any action to propose or implement any change in

reimbursement rates for physical, occupational, and speech therapy services under the Texas

Medicaid program without conducting a review of payments for providing Medicaid-

reimbursable therapy services and conducting a review of costs associated with providing

Medicaid-reimbursable therapy services as required by 1 TAC §355.8021(a)(2)(B) from the date

of entry of this Order until final trial in this lawsuit or until fu1ther order of this Court.

        This Order does not affect HHSC's ability to seek CMS's approval of the State Plan

Amendment.

        It is further ORDERED that trial on the merits of this cause is set for January 18, 2016.

        The Court GRANTS Plaintiffs leave to deposit a check with the trial court clerk in lieu of

bond. Five hundred of the $1000.00 deposited by Plaintiffs into the Court's registry on

September 23, 2015 shall satisfy the bond requirement to make this Temporary Injunction

effective.

        It is the Court's understanding that the Defendants intend to file a Notice of Appeal and

may assert that pursuant to Civil Practice & Remedies Code §6.001 and Texas Rules of

Appellate Procedure 24.1 and 25.1, the filing of a Notice of Appeal constitutes automatic

supersedeas of this Court's Temporary Injunction. See, Jn re State Bd. for Educator

Certification, 452 S.W.3d 802, 804 (Tex. 2014). The Plaintiffs have requested that the Court

decline to permit the Temporary Injunction to be superseded. The Court finds and concludes that

permitting the Defendants to supersede the Temporary Injunction would render any relief in this

matter ineffective. In re State Bd. for Educator Certification, 452 S.W.3d 802, 808 (Tex. 2014).

Accordingly, it is ORDERED, ADJUDGED and DECREED that pursuant to Texas Rule of

Appellate Procedure 24.2(a)(3), the Court DECLINES to permit the Temporary Injunction to be

superseded. Pursuant to Texas Rule of Appellate Procedure 24.2(a)(3), the additional $500.00
                                                                                                 IO   IP age

                                                                                                               596
                                   DC            BK15274 PG1430




paid in the above-described deposited check in the amount of $1,000.00 shall serve as the

security for this Order declining to permit the Temporary Injunction to be superseded.

       The clerk of the above-entitled Court shall forthwith, on the filing by Plaintiffs of the

bond required, and on approving the same according to the law, issue a Temporary Injunction in

conformity with the law and the terms of this Order.
                                .f~
       SIGNED on this day ZS of September, 2015. °"..{-     <-f-1.1 S--   r·   M,




                                                                                         Ill Page


                                                                                                    597
B
                                                DC              BK15274 PG1653
                                                                                               Filed in The District Court
                                                                                                of Travis County, Texas

                                                                                                      SEP 2 5 2015
                                                CAUSE NO. D-1-GN-15-003263                   At                 lf.7,!l;y    M.
                                                                                             Velva L. Price Dislr.il;.LCJ.e.z:k
DIANA D., as next of friend of KD, a                        §                      IN THE DISTRICT CUlJKT
child, Et Al.,                                              §
        Plaintiffs,                                         §
                                                            §
v.                                                          §               201st JUDICIAL DISTRICT OF
                                                            §
CHRIS TRAYLOR, as EXECUTIVE                                 §
COMMISSIONER of TEXAS HEALTH                                §
AND HUMAN SERVICES                                          §
COMMISSION, Et Al.,                                         §
     Defendants.                                            §                       TRAVIS COUNTY, TEXAS


             ORDER DENYING DEFENDANTS' PLEA TO THE JURISDICTION

         On September 22, 2015, the Court took under consideration Defendants' Plea to the

Jurisdiction.      All parties appeared through their respective counsel.                         After considering the

pleadings and the arguments of counsel, the Court enters the following order.

         Having considered Defendants' plea to the jurisdiction and supporting brief, Plaintiffs'

response, and the evidence, and having heard the argument of counsel, the Court finds that the plea

to the jurisdiction should be denied.

         IT IS THEREFORE ORDERED that Defendants' Plea to the Jurisdiction is DENIED.

         JTIS SO ORDERED                this~September, 2015 . ..t-              <./-? 2-~    f•""·




 Illllll 111111111111111111111111111111111111111111111111
 004237057




                                                            1


                                                                                                                                  673
C
                                                                                                        Vol. 80                           Monday,
                                                                                                        No. 211                           November 2, 2015




                                                                                                        Part III


                                                                                                        Department of Health and Human Services
                                                                                                        Centers for Medicare & Medicaid Services
                                                                                                        42 CFR Part 447
                                                                                                        Medicaid Program; Methods for Assuring Access to Covered Medicaid
                                                                                                        Services; Final Rule
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                                                  67576            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  DEPARTMENT OF HEALTH AND                                   3. By express or overnight mail. You               the Centers for Medicare & Medicaid
                                                  HUMAN SERVICES                                          may send written comments to the                      Services, 7500 Security Boulevard,
                                                                                                          following address ONLY: Centers for                   Baltimore, Maryland 21244, Monday
                                                  Centers for Medicare & Medicaid                         Medicare & Medicaid Services,                         through Friday of each week from 8:30
                                                  Services                                                Department of Health and Human                        a.m. to 4 p.m. To schedule an
                                                                                                          Services, Attention: CMS–2328–FC,                     appointment to view public comments,
                                                  42 CFR Part 447                                         Mail Stop C4–26–05, 7500 Security                     phone 1–800–743–3951.
                                                  [CMS–2328–FC]                                           Boulevard, Baltimore, MD 21244–1850.                     Provisions for Public Comment: We
                                                                                                             4. By hand or courier. Alternatively,              are issuing this final rule with comment
                                                  RIN 0938–AQ54                                           you may deliver (by hand or courier)                  period to provide the opportunity for
                                                                                                          your written comments ONLY to the                     further comment on § 447.203(b)(5) to
                                                  Medicaid Program; Methods for
                                                                                                          following addresses prior to the close of             determine whether further adjustments
                                                  Assuring Access to Covered Medicaid
                                                                                                          the comment period: a. For delivery in                to the access review requirements
                                                  Services
                                                                                                          Washington, DC—Centers for Medicare                   would be warranted, including the
                                                  AGENCY:  Centers for Medicare &                         & Medicaid Services, Department of                    scope of regular state access reviews in
                                                  Medicaid Services (CMS), HHS.                           Health and Human Services, Room 445–                  the absence of a triggering circumstance.
                                                  ACTION: Final rule with comment period.                 G, Hubert H. Humphrey Building, 200                   After consideration of public comments,
                                                                                                          Independence Avenue SW.,                              this final rule with comment period
                                                  SUMMARY: This final rule with comment                   Washington, DC 20201.                                 limits the scope of services for which
                                                  period provides for a transparent data-                    (Because access to the interior of the             states will be required to review
                                                  driven process for states to document                   Hubert H. Humphrey Building is not                    beneficiary access, in order to balance
                                                  whether Medicaid payments are                           readily available to persons without                  the need for stronger data and processes
                                                  sufficient to enlist providers to assure                federal government identification,                    to ensure beneficiary access with
                                                  beneficiary access to covered care and                  commenters are encouraged to leave                    minimizing administrative burden. We
                                                  services consistent with section                        their comments in the CMS drop slots                  believe that additional input would be
                                                  1902(a)(30)(A) of the Social Security Act               located in the main lobby of the                      useful to determine whether
                                                  (the Act) and to address issues raised by               building. A stamp-in clock is available               modifications of these state access
                                                  that process. The final rule with                       for persons wishing to retain a proof of
                                                  comment period also recognizes                                                                                review requirements may be warranted.
                                                                                                          filing by stamping in and retaining an                Therefore, we are providing an
                                                  electronic publication as an optional                   extra copy of the comments being filed.)
                                                  means of providing public notice of                                                                           opportunity for comment specifically on
                                                                                                             b. For delivery in Baltimore, MD—                  the access review requirements,
                                                  proposed changes in rates or ratesetting                Centers for Medicare & Medicaid
                                                  methodologies that the state intends to                                                                       including the service categories required
                                                                                                          Services, Department of Health and                    for ongoing review, elements of the
                                                  include in a Medicaid state plan                        Human Services, 7500 Security
                                                  amendment (SPA). We are providing an                                                                          review, and the timeframe for
                                                                                                          Boulevard, Baltimore, MD 21244–1850.                  submission. CMS also requests
                                                  opportunity for comment on whether                         If you intend to deliver your
                                                  future adjustments would be warranted                                                                         comment on whether we should allow
                                                                                                          comments to the Baltimore address, call               exemptions based on state program
                                                  to the provisions setting forth                         telephone number (410) 786–7195 in
                                                  requirements for ongoing state reviews                                                                        characteristics (for example, high
                                                                                                          advance to schedule your arrival with                 managed care enrollment), the
                                                  of beneficiary access.                                  one of our staff members.                             provisions of this rule from which states
                                                  DATES: Effective Date: These regulations                   Comments erroneously mailed to the
                                                  are effective on January 4, 2016.                                                                             could be exempted based on these
                                                                                                          addresses indicated as appropriate for                specific program characteristics, and
                                                     Comment Date: To be assured of                       hand or courier delivery may be delayed
                                                  consideration, comments on                                                                                    alternatives to ensuring compliance
                                                                                                          and received after the comment period.                with section 1902(a)(30)(A) of the Act
                                                  § 447.203(b)(5) must be received at one                    For information on viewing public
                                                  of the addresses provided below, no                                                                           for any exempted services in lieu of the
                                                                                                          comments, see the beginning of the                    procedures described in this final rule
                                                  later than 5 p.m. on January 4, 2016.                   SUPPLEMENTARY INFORMATION section.
                                                  ADDRESSES: In commenting, please refer
                                                                                                                                                                with comment period. For example, the
                                                                                                          FOR FURTHER INFORMATION CONTACT:                      proposed rule included the requirement
                                                  to file code CMS–2328–FC. Because of                    Jeremy Silanskis, (410) 786–1592.
                                                  staff and resource limitations, we cannot                                                                     for states to conduct an access review
                                                  accept comments by facsimile (FAX)                      SUPPLEMENTARY INFORMATION:                            for all services every 5 years and this
                                                  transmission.                                              Inspection of Public Comments: All                 final rule with comment period will
                                                     You may submit comments in one of                    comments received before the close of                 require that states conduct an access
                                                  four ways (please choose only one of the                the comment period are available for                  review on five specific service
                                                  ways listed):                                           viewing by the public, including any                  categories (and other categories when
                                                     1. Electronically. You may submit                    personally identifiable or confidential               the state or CMS has received a
                                                  electronic comments on this regulation                  business information that is included in              significantly higher than usual volume
                                                  to http://www.regulations.gov. Follow                   a comment. We post all comments                       of beneficiary or provider access
                                                  the ‘‘Submit a comment’’ instructions.                  received before the close of the                      complaints for a geographic area) every
                                                     2. By regular mail. You may mail                     comment period on the following Web                   3 years. The changes in this final rule
                                                  written comments to the following                       site as soon as possible after they have              with comment period resulted in large
asabaliauskas on DSK5VPTVN1PROD with RULES




                                                  address ONLY: Centers for Medicare &                    been received: http://regulations.gov.                part from our consideration of
                                                  Medicaid Services, Department of                        Follow the search instructions on that                comments received from the public,
                                                  Health and Human Services, Attention:                   Web site to view public comments.                     including requests for additional clarity
                                                  CMS–2328–FC, P.O. Box 8016,                                Comments received timely will be                   with respect to some of these matters.
                                                  Baltimore, MD 21244–8016.                               also available for public inspection as               While we believe these changes will
                                                     Please allow sufficient time for mailed              they are received, generally beginning                assist states in implementing the access
                                                  comments to be received before the                      approximately 3 weeks after publication               review and monitoring requirements,
                                                  close of the comment period.                            of a document, at the headquarters of                 we are seeking additional comment on


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67577

                                                  these provisions so that we can                         standardized, transparent process,                    Medicaid service payment rates to
                                                  determine whether future adjustment of                  rather than setting nationwide                        providers. To align with the statutory
                                                  these requirements through additional                   standards.                                            requirements, states may employ any
                                                  rulemaking would be warranted. In                          In this final rule with comment                    number of strategies to ensure or
                                                  addition, we are publishing a request for               period, we are providing increased state              improve access to care that are targeted
                                                  information (RFI) that solicits feedback                flexibility within a framework to                     toward one or more of these factors.
                                                  from stakeholders on whether and                        document measures supporting                             We have not previously defined
                                                  which core access measures, thresholds,                 beneficiary access to services. This final            through federal regulation an approach
                                                  and appeals processes would provide                     rule with comment period implements                   to guide states in meeting the statutory
                                                  additional information or approaches                    methods for states to use in complying                access requirement at section
                                                  that would be useful to us and states in                with section 1902(a)(30)(A) of the Act                1902(a)(30)(A) of the Act. In the absence
                                                  ensuring access to care for Medicaid                    by requiring that states review data and              of federal guidance and a clear process
                                                  beneficiaries. We are interested in                     trends to evaluate access to care for                 for monitoring and ensuring access, at
                                                  access measures that would apply                        covered services and conduct public                   times budget-driven payment changes in
                                                  regardless of the service delivery                      processes to obtain public input on the               state Medicaid programs led to
                                                  approach adopted by the state, and                      adequacy of access to covered services                confusion and litigation for states and to
                                                  would include access measures                           in the Medicaid program. This                         possible access problems for
                                                  applicable for populations enrolled in                  information will be updated and                       beneficiaries. CMS’s review of state
                                                  managed care. Ultimately, our RFI-                      monitored regularly. Should the data                  payment rate methodologies for
                                                  related goals are to better measure,                    reveal short-comings in Medicaid                      compliance with this requirement was
                                                  monitor, and ensure Medicaid access                     beneficiaries’ access to care, states must            on a case-by-case basis and was
                                                  across state program and delivery                       take corrective actions. The final rule               hampered by the lack of consistent
                                                  systems and understand the economic                     with comment period also recognizes                   information related to beneficiary
                                                  and policy factors that affect access to                electronic publication as an optional                 access. We historically relied on state
                                                  care. The RFI is published elsewhere in                 means of providing public notice of                   certifications and available supporting
                                                  this Federal Register along with                        proposed changes in rates or ratesetting              information to conclude that Medicaid
                                                  information on where respondents can                    methodologies that the state intends to               payment rates met the statutory
                                                  send their responses.                                   include in a Medicaid state plan                      standards.
                                                                                                          amendment (SPA). This final rule with                    In the May 6, 2011 proposed rule, we
                                                  I. Background                                           comment period will meet the                          proposed to adopt an approach for states
                                                  A. General Information                                  expectations of the May 6, 2011                       to analyze access to care for Medicaid
                                                                                                          proposed rule to establish a transparent              services through data and information
                                                     In the May 6, 2011 Federal Register                  data-driven process that ensures that                 from beneficiaries and providers. The
                                                  (76 FR 26342), we published the                         rates are consistent with section                     approach specifically focused on: (1)
                                                  ‘‘Medicaid Program; Methods for                         1902(a)(30)(A) of the Act.                            The extent to which enrollee needs are
                                                  Assuring Access to Covered Medicaid                                                                           met; (2) the availability of care and
                                                  Services’’ proposed rule (hereinafter                   B. State Ratesetting and Access to Care               providers; and (3) changes in
                                                  referred to as the ‘‘May 6, 2011                           The Medicaid statute requires that                 beneficiary utilization. The purpose of
                                                  proposed rule’’) that outlined a                        states provide coverage to certain groups             the proposed regulation was not to
                                                  standardized, transparent, data-driven                  of individuals, and also requires that                create an access standard or rate
                                                  process for states to document that                     such coverage include certain minimum                 thresholds that each state must meet,
                                                  provider payment rates are consistent                   benefits. States may elect to cover other             but to develop a standard process for
                                                  with efficiency, economy, and quality of                populations and benefits. To give                     each state to follow in documenting
                                                  care and are sufficient to enlist enough                meaning to coverage requirements and                  access to care. The regulation proposed
                                                  providers so that care and services are                 options, beneficiaries must have                      to require that states conduct regular
                                                  available under the plan at least to the                meaningful access to the health care                  reviews of Medicaid access to care that
                                                  extent that such care and services are                  items and services that are within the                rely upon: Payment data, trends in
                                                  available to the general population in                  scope of the covered benefits. This is                utilization, provider enrollment,
                                                  the geographic area as required by                      consistent with the requirements of                   feedback from providers and
                                                  section 1902(a)(30)(A) of the Social                    section 1902(a)(30)(A) of the Act, which              beneficiaries, and other pertinent
                                                  Security Act (the Act). In the May 6,                   provides that states must have methods                information that describes access to
                                                  2011 proposed rule, we recognized that                  and procedures to assure that payments                Medicaid services. The access data
                                                  states must have some flexibility in                    to providers are ‘‘sufficient to enlist               reviews would be used to inform state
                                                  designing appropriate approaches to                     enough providers so that care and                     payment changes as well as our
                                                  demonstrate and monitor access to care,                 services are available under the plan at              approval decisions when states
                                                  which reflects unique and evolving state                least to the same extent that such care               proposed provider payment reductions.
                                                  service delivery models and service rate                and services are available to the general             In addition, the proposed rule specified
                                                  structures. Within the proposed rule, we                population in the geographic area,’’                  that states must conduct a public
                                                  discussed how a uniform approach to                     which we refer to as the ‘‘access                     process when reducing Medicaid
                                                  meeting the statutory requirement under                 requirement.’’ Many factors affect                    payment rates and monitor changes in
                                                  section 1902(a)(30)(A) of the Act could                 whether beneficiaries have access to                  access to care after payment reductions
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                                                  prove difficult given current limitations               Medicaid services, including but not                  are approved by us and go into effect.
                                                  on data, local variations in service                    limited to: The beneficiaries’ health care               Earlier this year, the Supreme Court
                                                  delivery, beneficiary needs, and                        needs and characteristics; state or local             decided in Armstrong v. Exceptional
                                                  provider practice roles. For these                      service delivery models; procedures for               Child Center, Inc., 135 S. Ct. 1378 (2015)
                                                  reasons, we proposed federal guidelines                 enrolling and reimbursing qualified                   that the Medicaid statute does not
                                                  to frame alternative approaches for                     providers; the availability of providers              provide a private right of action to
                                                  states to demonstrate consistency with                  in the community; the capacity of                     providers to enforce state compliance
                                                  the access requirement using a                          Medicaid participating providers; and                 with section 1902(a)(30)(A) of the Act in


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                                                  67578            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  federal court. As a result, provider and                services. The delivery system design                  service utilization or overall provider
                                                  beneficiary legal challenges are not                    and accompanying payment                              payments for high cost services as a
                                                  available to supplement CMS review                      methodologies can significantly shape                 result of program innovations that
                                                  and enforcement to ensure beneficiary                   beneficiaries’ abilities to access needed             emphasize preventive care and divert
                                                  access to covered services. To                          care by facilitating the availability of              individuals into more appropriate
                                                  strengthen CMS review and                               such care. In addition, the delivery                  treatment modalities, including serving
                                                  enforcement capabilities, this final rule               system model and payment                              them in the most integrated setting
                                                  with comment period provides for the                    methodologies can improve access to                   appropriate to the needs of the
                                                  development of needed information to                    care by making available care                         individual consistent with Olmstead v.
                                                  monitor and measure Medicaid access                     management teams, physician                           L.C. 527 S.Ct. 581 (1999), we do not see
                                                  to care. The final rule with comment                    assistants, community care                            those reductions as being at odds with
                                                  period will provide more transparency                   coordinators, telemedicine and                        the statutory requirements or provisions
                                                  on access in Medicaid fee-for-service                   telehealth, nurse help lines, health                  described in this final rule with
                                                  (FFS) systems than ever before and                      information technology and other                      comment period. The provisions of the
                                                  allow us to make informed data-driven                   methods for providing coordinated care                final rule with comment period allow
                                                  decisions and document our decisions                    and services and support in a setting                 states the opportunity to transparently
                                                  when considering proposed rate                          and timeframe that meet beneficiary                   discuss the methods and analyses that
                                                  reductions and other methodology                        needs.                                                they use to demonstrate compliance
                                                  changes that may reduce beneficiaries’                     We have issued a series of State                   with section 1902(a)(30)(A) of the Act.
                                                  abilities to receive needed care. In                    Medicaid Directors (SMD) letters to                   The analysis and the follow-up
                                                  addition, because the proposed rule was                 promote and provide guidance on                       monitoring data should clarify whether
                                                  issued several years prior to the                       pathways to implementing integrated                   and how changes in care and payment
                                                  Armstrong decision and therefore does                   care models which can provide higher                  data result from delivery and payment
                                                  not address CMS’ or states’ role in light               quality care at lower cost. We have also              systems reform rather than reductions in
                                                  of Armstrong’s limits on providers’ and                 worked with states to explore                         access to care.
                                                  beneficiaries’ ability to take legal action             innovative approaches to improving                       The flexibility in designing service
                                                  regarding access, CMS is also issuing a                 care and lowering cost through the                    delivery systems and provider payment
                                                  Request for Information to obtain public                Innovation Accelerator Program, the                   methodologies, as described above, is
                                                  input into additional approaches to                     Medicaid Value-Based Learning                         consistent with the requirement in
                                                  Medicaid’s statutory access                             Collaborative series, group workshop                  section 1902(a)(30)(A) of the Act that
                                                  requirements for CMS to consider.                       sessions, and one-to-one technical                    state Medicaid plans must provide:
                                                     While states will continue to have the               assistance discussions. All of these                  Such methods and procedures relating
                                                  discretion to set program rates and                     efforts seek to drive systemic changes in             to the utilization of, and the payment
                                                  improve access to care through a variety                the Medicaid program that manage                      for, care and services available under
                                                  of strategies, this final rule, and any                 program costs consistent with the                     the plan as may be necessary to
                                                  additional measures we adopt, will                      economy and efficiency provisions of                  safeguard against unnecessary
                                                  increase the information available to                   section 1902(a)(30)(A) of the Act while               utilization of such care and services. As
                                                  CMS, to ensure that rates meet the                      also promoting the quality of care.                   well, states must assure that payments
                                                  requirements of section 1902(a)(30)(A)                     As state delivery system models have               are consistent with efficiency, economy,
                                                  of the Act and that access improvement                  evolved, so have their provider payment               and quality of care and are sufficient to
                                                  strategies work to improve care delivery                systems. For most services, states                    enlist enough providers so that care and
                                                  when there are deficiencies. We are also                develop rates based on the costs of                   services are available under the plan at
                                                  developing internal standard operating                  providing the service, a review of the                least to the same extent that such care
                                                  procedures to bolster the administrative                amount paid by commercial payers in                   and services are available to the general
                                                  record that is used to document                         the private market, or as a percentage of             population in the geographic area.
                                                  compliance with the final rule for                      rates paid under the Medicare program                    Consistent with the requirement in
                                                  individual SPAs and ensure that there is                for equivalent services. Often, rates are             section 1902(a)(30)(A) of the Act to
                                                  consistent national application of these                updated based on specific trending                    provide payment for quality care in an
                                                  policies.                                               factors such as the Medicare Economic                 effective and efficient manner, states
                                                                                                          Index or a Medicaid trend factor that                 can use their ratesetting policies to seek
                                                  C. Medicaid Service Delivery Systems                    incorporates a state-determined                       the best value. Achieving best value has
                                                  and Provider Payment Methodologies                      inflation adjustment rate. Rates may                  been a key strategy for some states that
                                                    States have broad flexibility under the               include incentive payments that                       have attempted to reduce costs in the
                                                  Act to establish service delivery systems               encourage providers to serve Medicaid                 Medicaid program in these difficult
                                                  for covered health care items and                       populations and improve care. For                     fiscal times. We do not intend to impair
                                                  services, to design the procedures for                  instance, some states have authorized                 states’ abilities to pursue that goal, or to
                                                  enrolling providers of such care, and to                Medicaid providers to receive separate                impair states’ abilities to explore
                                                  set the methods for establishing                        payments for treatment services and for               innovative approaches to providing
                                                  provider payment rates. For instance,                   care coordination and care management.                services and lowering costs for other
                                                  many states provide medical assistance                  Some states have increased provider                   reasons. In this final rule with comment
                                                  primarily through capitated managed                     payments based on achievement of                      period, we hope to clarify that, although
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                                                  care arrangements, while others use FFS                 certain specified quality or health                   states must demonstrate that
                                                  payment arrangements (with or without                   outcome measures.                                     beneficiaries have access to covered
                                                  primary care case management).                             We have worked with states to design               services at least comparable to others in
                                                  Increasingly, states are developing                     payment and service delivery systems to               the geographic area, this access can be
                                                  service delivery models that emphasize                  ensure program savings are aligned with               through service delivery networks,
                                                  medical homes, health homes, or                         better care quality and promote rather                using payment methodologies different
                                                  broader integrated care models to                       than reduce access to services. Although              from other individuals in the geographic
                                                  provide and coordinate medical                          states may experience reductions in                   area. Comparable access does not


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67579

                                                  necessarily require that beneficiaries                  challenging payment rate reductions as                data used to measure and analyze access
                                                  obtain services from the same providers,                inconsistent with the statutory access                to care and mechanisms to receive
                                                  or the same number of providers, as                     provision. Further, resulting court                   information from beneficiaries and other
                                                  other individuals in the geographic area.               decisions have not offered consistent                 stakeholders.
                                                                                                          approaches to compliance. These                          This final rule with comment period
                                                  D. Modifications to State Payment Rates                                                                       recognizes the importance of stronger
                                                                                                          decisions have at times left states,
                                                     Payment rates should be neither too                  providers, and beneficiaries without                  processes and data to ensure access to
                                                  low nor too high to ensure access to care               clear and consistent guidelines and                   care while supporting state flexibility to
                                                  for Medicaid beneficiaries and to ensure                resulted in uncertainty in moving                     design the appropriate measures to
                                                  the economy and efficiency of Medicaid                  forward in designing service delivery                 demonstrate and monitor access to care,
                                                  services and spending. Setting total                    systems and payment methodologies.                    which reflect the unique and evolving
                                                  payments too high does not necessarily                  For instance, several federal Courts of               state service delivery models and
                                                  improve beneficiary access. This is                     Appeals have addressed access and                     service rate structures. A uniform
                                                  particularly true when higher payments                  payment issues, but there has been no                 approach to meeting the statutory
                                                  are targeted to select providers and do                 consensus concerning the data or                      requirement under section
                                                  not necessarily translate into improved                 standards that would be relevant in                   1902(a)(30)(A) of the Act could prove
                                                  access to services. Payment reductions                  determining compliance with the                       challenging at this time, given local
                                                  or other adjustments to payment rates                   Medicaid statute. More recently, in                   variations in service delivery,
                                                  can help to manage Medicaid program                     March 2015, the Supreme Court ruled in                beneficiary needs, provider practice
                                                  costs and ensure efficiency of service                  Armstrong v. Exceptional Child Center,                roles, and limitations on data. At this
                                                  provision, without necessarily violating                Inc., 135 S. Ct. 1378 (2015) that the                 time, we are issuing this final rule with
                                                  requirements to ensure access to care.                  Medicaid statute does not provide a                   comment period to establish approaches
                                                  For example, a state may amend its                      private right of action for providers and             for states to demonstrate consistency
                                                  program to use a selective contract to                  beneficiaries to challenge payment rates              with the access requirement using a
                                                  provide incontinence supplies which                     in federal court. The lack of a private               consistent, transparent process, rather
                                                  results in lower payment rates for those                right of action underscores the need for              than setting nationwide standards.
                                                  supplies while maintaining statewide                    stronger non-judicial processes to                    These approaches will also strengthen
                                                  access to those supplies. Or a state may                ensure access, including stronger                     our ability to make sound and data-
                                                  reduce payments for hospital                            processes at both the state and federal               driven decisions about the adequacy of
                                                  readmissions to encourage the hospital                                                                        state payment rates.
                                                                                                          levels for developing data on beneficiary
                                                  to collaborate with a primary care case                                                                          This final rule with comment period
                                                                                                          access and reviewing the effect on
                                                  management provider in the                                                                                    will not directly require states to adjust
                                                                                                          beneficiary access of changes to
                                                  community. A state may also rebalance                                                                         payment rates; nor will it require states
                                                                                                          payment methodologies. In issuing this
                                                  its long term services and supports                                                                           to adopt policies that are inconsistent
                                                                                                          final rule with comment period, we
                                                  spending consistent with Olmstead v.                                                                          with efficiency, economy, and quality of
                                                                                                          have reviewed options to ensure that
                                                  L.C. 527 S. Ct. 581 (1999) to ensure that                                                                     care. Even if access issues are
                                                                                                          states are adhering to the statute in light
                                                  older adults and individuals with                                                                             discovered as a result of the analysis
                                                                                                          of the absence of a private right of action
                                                  disabilities can receive high quality                                                                         that is required under this rule, states
                                                                                                          for noncompliance in federal court
                                                  community-based services.                                                                                     may be able to resolve those issues
                                                     However, payment reductions or                       following the Armstrong decision.
                                                                                                                                                                through means other than increasing
                                                  other adjustments can, in some                             In the May 6, 2011 proposed rule, we               payment rates. This rule requires that
                                                  circumstances, compromise beneficiary                   intended to establish consistent                      beneficiary access must be considered
                                                  access to services. Consequently, we                    procedures that all states would follow               in setting and adjusting payment
                                                  affirm in this final rule with comment                  in reviewing and understanding                        methodologies for Medicaid services. If
                                                  period that such payment rate changes                   Medicaid access to care on an ongoing                 a problem is identified, any number of
                                                  be made only with consideration of the                  basis and monitoring access after                     steps, including payment increases,
                                                  potential impact on access to care for                  reducing or restructuring rates.                      might be appropriate to address the
                                                  Medicaid beneficiaries and with                         Specifically, we proposed that states                 problem, such as: Redesigning service
                                                  effective processes for assuring access.                conduct ongoing access reviews for all                delivery strategies or improving
                                                  Payment rate changes do not comply                      Medicaid services over 5-year periods                 provider enrollment and retention
                                                  with the Medicaid access requirements                   that evaluate: The extent to which                    efforts. This final rule with comment
                                                  if they result in a denial of sufficient                enrollee needs are met; the availability              period provides that we will review
                                                  access to covered care and services.                    of care and providers; and changes in                 these access issues in making SPA
                                                  Non-compliant changes could adversely                   beneficiary utilization of covered                    approval decisions, and describes a
                                                  affect beneficiaries’ abilities to obtain               services. We proposed that within the                 more consistent and transparent way for
                                                  needed, cost-effective preventive care,                 reviews, states would need to include                 states to collect and analyze the
                                                  create stress on safety-net providers, and              information about access gathered                     necessary information to support such
                                                  counteract state delivery reform efforts                through ongoing beneficiary feedback                  reviews.
                                                  that seek to reduce cost and increase                   mechanisms and comparisons of                            We consider the requirements of this
                                                  quality.                                                Medicaid payments to Medicare,                        final rule with comment period as a
                                                     At times, budget-driven payment                      commercials rates, or Medicaid service                component of a broader strategy to
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                                                  changes have led to confusion among                     costs. We proposed that when states                   ensure access in the Medicaid program.
                                                  states and providers about the analysis                 reduce or restructure rates in ways that              However, the 2011 proposed rule did
                                                  required to demonstrate compliance                      could harm access to care, they consider              not anticipate the Supreme Court
                                                  with Medicaid access requirements at                    concerns raised by beneficiaries and                  decision: Armstrong v. Exceptional
                                                  section 1902(a)(30)(A) of the Act. States               stakeholders and develop and monitor                  Child Center, Inc., 135 S. Ct. 1378
                                                  attempting to reduce Medicaid costs                     indices to ensure sustained access after              (2015), which underscored the primacy
                                                  through payment rate changes have                       implementing the rate changes. States                 of CMS’s role in ensuring access. For
                                                  increasingly been faced with litigation                 would have the discretion to choose the               this reason, CMS may consider


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                                                  67580            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  additional approaches to promote access                 demonstrate access to care by                         states describe the measures that were
                                                  to care. We will, for example, examine                  documenting in an access monitoring                   used to conduct the review and their
                                                  the feasibility of establishing a core set              review plan their consideration of:                   relationship to enrollee needs, the
                                                  of access metrics and thresholds that                   Enrollee needs; the availability of care              availability of care and providers,
                                                  can be universally applied across all                   and providers; and the utilization of                 service utilization and Medicaid
                                                  states and services, as well as                         services. The experiences of                          payment rates as compared to other
                                                  appropriate ways to gather that                         beneficiaries should be a primary                     payment structures.
                                                  information. Additionally, we will                      determinant of whether access is                         Proposed § 447.203(b)(2) described
                                                  assess the feasibility of processes that                sufficient. We solicited comments that                the timeframe for states to conduct the
                                                  target and resolve access to care issues                would serve to help states narrow the                 data review and make the information
                                                  at an individual level, such as robust                  focus of the data review to core                      available to the public through
                                                  complaint resolution or formal hearings                 elements that would demonstrate                       accessible public records or Web sites
                                                  processes.                                              sufficient access to care. We received,               on an on-going basis for all covered
                                                     Specifically, as we issue this final rule            through public comments, many                         services. We proposed that the annual
                                                  with comment period, we are                             suggested elements that states could                  reviews begin no later than 2013, so
                                                  concurrently issuing a request for                      incorporate into access reviews, but                  states would have the discretion to
                                                  information (RFI) that solicits feedback                there was no consensus among                          determine a timeframe to review each
                                                  from stakeholders on whether and                        commenters as to measures that could                  covered Medicaid service, as long as the
                                                  which core access measures, thresholds,                 be universally applied across all                     state reviewed a subset of services each
                                                  and appeals processes would provide                     services. We will continue to study                   year and each covered service is
                                                  additional information or approaches                    whether a core set of measures and                    reviewed at least once every 5 years. We
                                                  that would be useful to us and states in                thresholds should be applied to                       provided states this 5-year cycle to
                                                  ensuring access to care for Medicaid                    Medicaid access to care and are                       reduce the burden while
                                                  beneficiaries. We are interested in                     soliciting more information from                      accommodating the need for review to
                                                  access measures that would apply                        stakeholders on this question through                 assure compliance with section
                                                  regardless of the service delivery                      the RFI process.                                      1902(a)(30)(A) of the Act.
                                                  approach adopted by the state, and                         Proposed § 447.203(b)(1)(i) through                   Because of the need to demonstrate
                                                  would include access measures                           (iii) would have required states to                   service access in the context of a
                                                  applicable for populations enrolled in                  review and make publically available                  payment rate reduction, we proposed in
                                                  managed care. Ultimately, our RFI-                      data trends and factors that measure:                 § 447.203(b)(3)(i) that states would need
                                                  related goals are to better measure,                    Enrollee needs; availability of care and              to conduct the review relevant to the
                                                  monitor, and ensure Medicaid access                     providers; and utilization of services.               affected service prior to submission of a
                                                  across state program and delivery                       Consistent with the statutory                         SPA implementing a reduction. If the
                                                  systems and understand the economic                     requirement, we proposed that states                  state had already reviewed access
                                                  and policy factors that affect access to                review this data by state designated                  relating to the types of services that are
                                                  care. The RFI is published elsewhere in                 geographic location.                                  subject to the rate reduction within 12
                                                  this Federal Register along with                           We proposed revisions to                           months prior to the proposed rate
                                                  information on where respondents can                    § 447.203(b)(1)(iii)(B) to require that the           reduction, and maintained an ongoing
                                                  send their responses.                                   review must include: (1) An estimate of               monitoring mechanism for beneficiary
                                                     In addition to issuing this final rule               the percentile which Medicaid payment                 complaints, its review relative to the
                                                  with comment period and the RFI, we                     represents of the estimated average                   rate reduction could be referenced in
                                                  also will improve our administrative                    customary provider charges; (2) an                    the previous review. To ensure
                                                  processes associated with documenting                   estimate of the percentile which                      sustained access to care, we included
                                                  the basis for approval and disapprovals                 Medicaid payment represents of one, or                provisions at § 447.203(b)(3)(ii) that
                                                  when states propose SPAs that reduce                    more, of the following: Medicare                      would require states to develop ongoing
                                                  rates or restructure payments in ways                   payment rates, the average commercial                 monitoring procedures through which
                                                  that may affect access to care. The                     payment rates, or the applicable                      they periodically review indices to
                                                  information that is gathered by states                  Medicaid allowable cost of the services;              measure sustained access to care. We
                                                  through the processes described in this                 and (3) an estimate of the composite                  also proposed at § 447.203(b)(4) to
                                                  final rule with comment, as well as                     average percentage increase or decrease               require states to have a mechanism for
                                                  through additional state and CMS                        resulting from any proposed revision in               beneficiary input on access to care, such
                                                  processes for ensuring Medicaid access                  payment rates.                                        as hotlines, surveys, ombudsman or
                                                  to care, will be the basis for our                         We proposed in                                     other equivalent mechanisms.
                                                  approval decisions and we will build                    § 447.203(b)(1)(iii)(B)(3) that the                   Additionally, we proposed at
                                                  our administrative SPA records with                     Medicaid payment rates must include                   § 447.203(b)(5) a corrective action
                                                  this information.                                       both base and supplemental payments                   procedure requiring states to submit a
                                                                                                          for Medicaid services. Since states often             remediation plan should access issues
                                                  II. Summary of Proposed Provisions                      reimburse service providers according                 be discovered through the access review
                                                     We proposed to address state                         to different payment schedules based on               or monitoring processes. These
                                                  processes for setting payment rates by                  governmental status, we proposed at                   requirements were proposed to ensure
                                                  amending existing regulations at                        § 447.203(b)(1)(iii)(C) that states stratify          that states would oversee and address
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                                                  § 447.203, § 447.204, and § 447.205. The                the access review data by state                       future access concerns.
                                                  following is a summary of our                           government owned or operated, non-
                                                                                                          state government owned or operated                    B. Medicaid Provider Participation and
                                                  proposals.
                                                                                                          and private providers.                                Public Process To Inform Access to Care
                                                  A. Documentation of Access to Care and                     In § 447.203(b)(1)(iii)(D), we proposed              In § 447.204, we proposed to
                                                  Service Payment Rates                                   to describe the minimum content that                  implement the statutory requirement
                                                    We proposed to revise § 447.203(b) to                 must be in included in the rate review.               that Medicaid payment rates must be
                                                  require state Medicaid agencies to                      Specifically, we proposed to require that             consistent with efficiency, economy,


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                           67581

                                                  and quality and are sufficient to enlist                  The following are brief summaries of                a more systematic approach than
                                                  enough providers so that services under                 the public comments received, and our                 currently exists in the Medicaid
                                                  the plan are available to beneficiaries at              responses to those public comments:                   program for states and us to evaluate
                                                  least to the extent that those services are                                                                   beneficiary access to services. The
                                                                                                          A. General Comments
                                                  available to the general population. We                                                                       regulatory framework also seeks to
                                                  proposed to revise § 447.204(a)(1)                         We received many comments that                     ensure that states will have the
                                                  through (a)(2) to require that states                   were general in nature and were not                   information necessary to consider and
                                                  consider, when proposing to reduce or                   specific to any of the provisions of the              evaluate access issues. We will continue
                                                  restructure Medicaid payment rates, the                 May 6, 2011 proposed rule. We have                    to work closely with states and other
                                                  data collected through the proposed                     summarized and responded to those                     partners to appropriately review access
                                                  requirement at § 447.203 and undertake                  comments below.                                       to care and address access issues, while
                                                                                                             Comment: Several commenters urged                  remaining cognizant that states need to
                                                  a public process that solicits input on
                                                                                                          CMS to delay implementation of the                    make program adjustments and operate
                                                  the potential impact of the proposed
                                                                                                          final rule and work with states to find               within budgets. In addition, the RFI will
                                                  reduction of Medicaid service payment
                                                                                                          alternative approaches to measuring                   solicit further information on whether
                                                  rates on beneficiary access to care. In
                                                                                                          access. Commenters also recommended                   and which core access measures,
                                                  § 447.204(b), we also proposed to clarify               that CMS convene a workgroup with
                                                  that we may disapprove a proposed rate                                                                        thresholds and appeals processes would
                                                                                                          state Medicaid agencies to develop                    provide additional information or
                                                  reduction or restructuring SPA that does                access thresholds. One commenter
                                                  not include or consider the data review                                                                       approaches that would be useful to us
                                                                                                          wrote that CMS and states would be                    and states in ensuring access to care to
                                                  and a public process. Disapproving the                  better served to work together to
                                                  SPA means that a state would not have                                                                         Medicaid beneficiaries.
                                                                                                          identify reasonable criteria under which                 Comment: A number of commenters
                                                  authority to implement the proposed                     state legislatures could make timely and              requested that CMS provide an
                                                  rate reduction or restructuring and                     meaningful adjustments to provider                    incentive mechanism to encourage
                                                  would continue to pay providers                         rates and states could document the                   states to address access issues in a
                                                  according to the rate methodology                       potential impact to access.                           timely manner. Commenters specifically
                                                  described in the state plan.                               Response: We have worked with                      suggested that an enhanced
                                                  C. Public Notice of Changes in                          states and federal partners to identify               administrative matching rate be made
                                                  Statewide Methods and Standards for                     appropriate access measures and a                     available for costs associated with the
                                                                                                          manageable process for state Medicaid                 final rule.
                                                  Setting Payment Rates
                                                                                                          agencies to meet the statutory                           Response: To receive federal financial
                                                     We proposed to clarify and modernize                 requirements of section 1902(a)(30)(A)                participation (FFP) for Medicaid
                                                  changes to the public notice                            of the Act. This included listening                   services, states must comply with the
                                                  requirement at § 447.205. We also                       sessions with the National Association                applicable statutory and regulatory
                                                  solicited comments on whether it is                     of Medicaid Directors to hear state                   requirements. To the extent that state
                                                  advisable to delete the term                            concerns regarding Medicaid access to                 activities described in this final rule
                                                  ‘‘significant’’ from § 447.205(a) and                   care and how states were working to                   with comment period are for the proper
                                                  explicitly state that notice is required                address access issues. We worked with                 and efficient administration of the
                                                  for any change in rates. Alternatively,                 many states and providers individually                Medicaid state plan, the administrative
                                                  we solicited comments on whether to                     to understand state-specific access                   match rate is available to states. We do
                                                  adopt a threshold for significance and                  issues and the types of information that              not have the statutory authority to
                                                  what that threshold might be.                           states and providers rely upon to                     provide an enhanced administrative
                                                                                                          discuss access to care. Finally, we                   match rate for these activities.
                                                     Further, we proposed to recognize                    worked with HHS’ Assistant Secretary                     Comment: Several commenters
                                                  electronic publication as an optional                   for Planning and Evaluation (ASPE) to                 requested that CMS clarify what
                                                  means of publishing payment notice. To                  investigate if there are national access              constitutes a payment change. A
                                                  do so, we proposed adding                               measures that may be applied across all               commenter noted that providers often
                                                  § 447.205(d)(iv), which would allow                     states and services for compliance with               view years when rates do not increase
                                                  notice to be published on a Web site                    section 1902(a)(30)(A) of the Act. The                as payment reductions. Another noted
                                                  developed and maintained by the single                  policies reflected in this final rule with            that the preamble of the May 6, 2011
                                                  state Medicaid agency or other                          comment period are consistent with                    proposed rule refers to ‘‘payments’’ and
                                                  responsible state agency that is                        these efforts and the public comments                 ‘‘rates’’ interchangeably but that courts
                                                  accessible to the general public on the                 we received. This final rule with                     have defined payments to include all
                                                  Internet.                                               comment period is being published after               Medicaid provider revenues rather than
                                                  III. Analysis of and Responses to Public                extensive consultation, 4 years after we              only Medicaid FFS rates. The
                                                  Comments                                                issued the proposed rule. Further                     commenter stated that if the final rule
                                                                                                          delaying this rule could result in                    considers all Medicaid revenues
                                                     We received at total of 181 comments                 confusion as to the application of the                received by providers, states may be
                                                  from states, advocacy groups, providers,                access requirements of section                        challenged to make any change to the
                                                  provider organizations and individuals                  1902(a)(30)(A) of the Act, especially                 Medicaid program that might reduce
                                                  on the May 6, 2011 proposed rule. The                   given the Supreme Court’s decision in                 provider revenues. The commenter also
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                                                  comments ranged from support for the                    Armstrong v. Exceptional Child Center,                suggested that the final rule clarify that
                                                  proposal to specific questions or                       Inc., 135 S. Ct. 1378 (2015), which                   the statute refers to specific service rates
                                                  comments regarding the proposed                         specifically stated that providers do not             under the Medicaid state plan or waiver
                                                  changes. We received some comments                      have a private right of action to enforce             rather than all Medicaid provider
                                                  that were outside of the scope of the                   section 1902(a)(30)(A) of the Act and                 payments.
                                                  proposed rule, and therefore, not                       that CMS is ultimately responsible for                   Response: The statute requires that
                                                  addressed in this final rule with                       enforcing the statutory requirements.                 states have methods and procedures
                                                  comment period.                                         This final rule with comment provides                 relating to Medicaid payment rates so


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                                                  67582            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  that such rates are sufficient to enlist                state actions pertaining to provider                    Comment: Many commenters
                                                  enough providers to ensure access to                    payment rate setting, including                       requested that we broaden the proposed
                                                  care. The final rule refers to actions to               legislatively mandated rate reductions,               regulatory framework to apply to
                                                  reduce or restructure rates which may                   are subject to the access analysis and                provider payment rates beyond those
                                                  result in less access to care. While the                public process requirements and that                  authorized under the Medicaid state
                                                  final rule applies only to Medicaid fee-                legislatively mandated rate cuts cannot               plan. Commenters specifically requested
                                                  for-service rates for state plan covered                be implemented retroactively.                         that the regulation apply to rates paid by
                                                  services, which may not include all                        Response: We agree with the                        Medicaid managed care organizations
                                                  Medicaid revenues received by a                         commenters that it is important for                   and rates paid under Medicaid waiver
                                                  provider, the rule does contemplate                     states to evaluate access any time the                programs. Many commenters were
                                                  broader payment changes that may                        state proposes a change to its Medicaid               concerned that a proposal to address
                                                  affect access, such as reductions to                    reimbursement methodologies that will                 access issues under managed care
                                                  supplemental provider payments. In                      result in a reduction or restructuring of             delivery systems is needed. Some
                                                  addition, reviewing additional data will                provider rates. This final rule with                  commenters called for specific revisions
                                                  enable CMS to better identify and work                  comment period does not provide for                   to managed care regulations to set forth
                                                  with states to address access                           exceptions to this requirement to review              clearer standards for managed care rate
                                                  deficiencies that may arise if rates are                access when there is a state legislative              reviews. One commenter suggested that
                                                  not updated for many years, and if                      requirement. But nothing in this rule                 CMS should incorporate into the
                                                  necessary to address them through                       changes the longstanding policies that                actuarial soundness review, standards
                                                  compliance action. At this time, we                     permit a state to submit a SPA with an                for transparency in rate setting for
                                                  generally do not review individual                      effective date as early as the first day of           managed care organizations and require
                                                  Medicaid payment rates as part of the                   the quarter in which a plan is submitted              states to evaluate the impact of managed
                                                  SPA process, but we review the                          (but only after public notice of the new              care rate cuts on access. Another
                                                  methodologies that states apply to set                  rates have been issued). This policy                  commenter offered that the rule should
                                                  their provider rates or payments.                       permits states flexibility to implement               be extended to apply to children
                                                     This final rule with comment period                  approvable rate changes without delay                 enrolled in managed care.
                                                  requires states to review access                        while it undergoes federal review. Thus,
                                                                                                                                                                  Response: As stated in the May 6,
                                                  information on an ongoing basis for                     states may continue to implement rate
                                                                                                                                                                2011 proposed rule, section
                                                  primary care services, including                        reductions retroactively to the first day
                                                  physician, federally qualified health                   of the quarter in which an approvable                 1902(a)(30)(A) of the Act specifically
                                                  centers (FQHC), clinic, dental care, etc.;              SPA is submitted to CMS.                              applies to payment for care and services
                                                  physician specialist services (for                         Comment: Several commenters                        available under the state plan, which we
                                                  example, cardiology, urology,                           requested that we make the following                  interpret to refer to payments to
                                                  radiology); behavioral health services,                 data public for all providers,                        providers and not to capitated payments
                                                  including mental health and substance                   beneficiaries, and stakeholders to                    to managed care entities. While
                                                  abuse disorder treatment; pre- and post-                review and comment upon: (1) Data                     Medicaid access to services under
                                                  natal obstetric services including labor                analysis and any supporting                           managed care arrangements is an
                                                  and delivery; and home health services                  documentation; (2) SPA submissions                    important issue, that issue is addressed
                                                  (as defined in § 440.70), whether or not                and supporting documentation; and (3)                 through reviews of network sufficiency
                                                  the payment methodologies change.                       all communication between CMS and                     and managed care quality review
                                                  States may also choose to select                        states pertaining to data analysis and                processes. As a result, we are not
                                                  additional services to review through                   SPAs.                                                 addressing access to care under
                                                  the access monitoring review plan. In                      Response: In this rule, we require                 managed care arrangements in this
                                                  addition, when changes to payment                       states to make the data analysis and                  rulemaking effort. Similarly, methods to
                                                  methodologies are made through the                      supporting documentation available                    assure access to care, including payment
                                                  SPA process, the state must be able to                  both to the public and to CMS. While                  methodologies, are reviewed in the
                                                  support that change with                                publication of specific information                   approval process for Medicaid waiver
                                                  documentation that access to care will                  related to SPA submissions and                        and demonstration programs (and, when
                                                  not be adversely affected, and must                     disposition is not required under this                appropriate, may be monitored in the
                                                  monitor access after the change is made.                final rule with comment period, these                 evaluation of a demonstration program).
                                                  If, for example, a state removes an                     materials may be available through                    As a result, we did not specifically
                                                  annual inflation adjustment and                         Freedom of Information Act (FOIA)                     address those programs within the
                                                  therefore freezes rates from 1 year to the              requests. We recommend that states                    context of this rulemaking process.
                                                  next when an increase in inflation was                  publish the access monitoring review                  Separate recent CMS initiatives have
                                                  anticipated, a current access review will               plans and subsequent data collected                   addressed the framework for Medicaid
                                                  be required to support approval of a                    through those plans on their Web sites                managed care and home and community
                                                  SPA, and the state will also need to                    for full transparency. Furthermore, we                based service programs, including
                                                  continue to monitor access. In addition,                continue to post approved SPAs on the                 access and quality review methods. In
                                                  whether or not the state changes                        www.Medicaid.gov Web site and will                    January 16, 2014, we issued the ‘‘Home
                                                  payment methodologies (including for                    post state access review plans so that                and Community-Based State Plan
                                                  services outside of the ongoing                         they are publicly available. Issuing all of           Services Program, Waivers, and
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                                                  monitoring and review requirements),                    the communications and documentation                  Provider Payment Reassignments’’ final
                                                  required ongoing mechanisms to receive                  associated with the SPA review process                rule (79 FR 2947–3039), and on June 1,
                                                  beneficiary and provider feedback                       as it is ongoing would add burden                     2015, we published the ‘‘Medicaid
                                                  would indicate to states and CMS access                 without adding significant relevant                   Managed Care, CHIP Delivered in
                                                  issues that arise for any Medicaid                      information, and would significantly                  Managed Care, Medicaid and CHIP
                                                  service.                                                slow the process for CMS to review and                Comprehensive Quality Strategies, and
                                                     Comment: Several commenters                          approve state submissions, many of                    Revisions related to Third Party
                                                  suggested the final rule clarify that all               which are time sensitive.                             Liability’’ proposed rule (80 FR 31097–


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                          67583

                                                  31297) which proposed to align the                      provider costs. Ultimately Medicaid                   be exempt from conducting the ongoing
                                                  rules governing Medicaid managed care                   payment rates must sufficient to ensure               access data reviews and/or the rate
                                                  with those of other major sources of                    beneficiary access to care, whether or                reduction monitoring procedures and
                                                  coverage, including coverage through                    not providers are shifting costs to other             what threshold for such exemptions
                                                  Qualified Health Plans and Medicare                     payers.                                               would be appropriate. We understand
                                                  Advantage plans. The Medicaid                              Comment: A commenter suggested                     that many states carve out certain
                                                  managed care proposed rule specifically                 that CMS exempt the effects of care                   services from managed care capitation
                                                  discusses requirements for network                      coordination initiatives from access                  rates and continue to pay for those
                                                  adequacy.                                               documentation requirements. Other                     services through FFS. We also
                                                     Comment: A commenter requested                       commenters more specifically suggested                understand that many of the individuals
                                                  that the regulation explicitly state that               that CMS should exempt from access                    who remain in state FFS systems may
                                                  all Medicaid long-term services and                     documentation requirements services to                have complex care needs. We note that
                                                  supports options must be included in                    which beneficiary access is limited by                states already have significant flexibility
                                                  these reviews.                                          coordination of care activities of home               within the final provisions of the rule to
                                                     Response: All Medicaid services                      and community based providers,                        choose measures within their access
                                                  covered under the state plan are                        especially when these activities may                  monitoring review plans that are
                                                  included within the scope of the                        result in loss of access to care in                   tailored to state delivery systems. This
                                                  regulatory requirements of this final rule              medically underserved or rural areas.                 could allow, for instance, a state with
                                                  with comment period. We will require                       Response: Care coordination is an                  high levels of managed care enrollment
                                                  an access analysis to support a request                 important aspect of a well-designed                   to focus on specific care needs of the
                                                  for approval of any rate reduction or                   health care system and this regulation                populations that remain in FFS after a
                                                  restructuring for any service in the state              does not intend to discourage states                  managed care transition.
                                                  plan. As a baseline, the final rule with                from implementing care coordination                      Comment: A number of commenters
                                                  comment period will require that states                 programs or other efforts that seek to                offered that the rule inhibits a state’s
                                                  review and publish access studies for                   lower cost and improve the quality of                 ability to make adjustments to payment
                                                  primary care services; physician                        care. Such activities should enhance                  rates that may be necessary to deal with
                                                  specialist services; behavioral health                  access to care by arranging for                       state economic and fiscal crisis.
                                                  services, including mental health and                   individuals to receive appropriate care               Commenters also noted that CMS
                                                  substance abuse disorder treatment; pre-                when needed. Therefore, we do not                     should acknowledge that states cannot
                                                  and post-natal obstetric services                       agree that exemptions to the                          dismiss local budgetary issues or
                                                  including labor and delivery; and home                  requirements of this final rule with                  casually increase revenue to address
                                                  health services on an ongoing basis.                    comment period should be applied to                   perceived access to care issues. Other
                                                  States may also select additional                       states that offer care coordination.                  commenters stated that the rule will
                                                  services to add to this list. In addition,                 Comment: Commenters requested                      infringe on states’ abilities to make
                                                  access studies and continued                            specific exceptions to the procedures                 budget decisions. Some commenters
                                                  monitoring will be required for covered                 described in the final rule based on state            raised concerns that the timing of a state
                                                  services when payment rates have been                   Medicaid program features. As                         legislative session makes it difficult for
                                                  reduced or restructured, or when the                    examples, commenters requested                        states to comply with the due dates of
                                                  state receives a significant volume of                  exceptions for states with a majority of              the access monitoring review plans.
                                                  public input raising access to care                     individuals enrolled in managed                          Response: The final rule with
                                                  issues. We are requesting public                        Medicaid and relatively few enrolled in               comment period does not prohibit states
                                                  comment on the service categories                       FFS systems, states with all payer                    from implementing (through a SPA)
                                                  selected for inclusion in baseline access               payment systems, states that pay                      payment rate reductions, as long as
                                                  analysis. Additional services will need                 Medicare rates, and for services where                beneficiaries will maintain sufficient
                                                  to be reviewed as reductions to payment                 Medicaid is the only or primary payer                 access to care. In the May 6, 2011
                                                  rates or as access issues become                        of care. The commenters stated that                   proposed rule, we acknowledged the
                                                  apparent. These additional services                     requiring states with these program                   reality that state budgets often play a
                                                  must be monitored periodically for a                    features to follow the procedures                     role in Medicaid rate-setting. This final
                                                  minimum of 3 years following the initial                described in the rule would be                        rule with comment period requires that
                                                  rate reduction.                                         inefficient.                                          states have a process in place to review
                                                     Comment: One commenter stated that                      Response: This final rule with                     and monitor access to care to determine
                                                  providers can practice cost-shifting by                 comment period applies to all covered                 the impact various program changes
                                                  overcharging some patients to make up                   services under the state plan for which               have on beneficiary access. The rule
                                                  for low Medicaid rates. The commenter                   payment is made on a FFS basis.                       does not prescribe specific state actions
                                                  noted that cost-shifting permits equal                  However we are soliciting comments                    to address access to care issues. The rule
                                                  access even if Medicaid rates are not                   through the final rule with comment                   instead requires procedures that will
                                                  consistent with economy and efficiency.                 period on whether we should consider                  inform states and CMS of access
                                                     Response: The focus of this rule is to               further rulemaking or guidance, as                    concerns before SPA approval and on an
                                                  provide a reasonable approach for states                appropriate, to allow for such                        ongoing basis. This information should
                                                  to document access to care for Medicaid                 exemptions to the scope of required                   be useful to state legislators as they
                                                  services under the state plan. While we                 access reviews required under                         make budgetary decisions and is not
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                                                  agree with the commenter that the                       § 447.203(b)(5), including whether to                 intended to hamper the legislative
                                                  adequacy of payment rates in meeting                    permit streamlined approaches to                      process.
                                                  provider costs are not necessarily the                  measuring access to care based on                        Comment: A commenter requested
                                                  only or the decisive factor in ensuring                 specific circumstances within states. For             that we clarify how CMS would handle
                                                  access to care, in this final rule with                 instance, we are particularly interested              access issues that arise due to events
                                                  comment period, we do not require that                  in whether states with higher                         that are not within the state’s control,
                                                  states establish access by reviewing the                percentages of beneficiaries enrolled                 such as through competitive bidding
                                                  relationship of payment rates to                        with managed care organizations should                programs for certain Durable Medical


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                                                  Equipment, Prosthetics, Orthotics, and                  state plan rates, and thus would need to              concerns. We are soliciting comments in
                                                  Supplies (DMEPOS).                                      make corrective payments if the                       this final rule with comment period on
                                                     Response: There may be any number                    amendment is disapproved.                             whether additional categories of service
                                                  of issues that contribute to inadequate                   Comment: Many commenters offered                    should be added to the list of required
                                                  service access within state Medicaid                    that CMS should require higher                        ongoing reviews included in the rule.
                                                  programs. Though some causes of access                  standards for services with known                        Comment: Commenters suggested that
                                                  issues may be out of a state’s control,                 access issues. Many providers and                     as part of the final rule, CMS should
                                                  the statutory requirements still apply                  provider groups highlighted access                    recognize that some states are entirely or
                                                  and a state must implement appropriate                  challenges unique to the services that                in part Health Professional Shortage
                                                  remediation measures in an effort to                    they provide. These providers noted                   Areas (HPSA) or Medically Underserved
                                                  address access issues. The strategies for               access challenges specific to many                    Areas (MUA) which makes increasing
                                                  remediation are not limited to increases                services, including, but not limited to:              access a more difficult challenge,
                                                  in payments and states may employ any                   Primary care services; mental health                  particularly in a 12-month frame.
                                                  number of approaches to assuring better                 services; maternity services; long term                  Response: We appreciate that some
                                                  access to Medicaid state plan services.                 care and supports; family planning and                states or geographic areas within states
                                                  To competitively bid for medical                        contraception; pharmacy; specialty care;              are in HPSAs or MUAs, which present
                                                  devices and supplies, states are                        dental care; hospital services; End Stage             challenges in improving access to care.
                                                  currently required to waive ‘‘freedom of                Renal Disease (ESRD) services; physical               We are restating that this final rule with
                                                  choice’’ through the exception provided                 therapy; transplants for essential body               comment period does not require
                                                  under section 1915(a)(1)(B) of the Act                  organs; and community and ambulatory                  specific improvements or timeframes for
                                                  and federal regulation at 42 CFR                        care. Similarly, commenters wrote that                improvement in access to care when
                                                  431.54(d). Section 1915(a)(1)(B)(i) and                 state access reviews should be                        Medicaid access is consistent with the
                                                  the regulation at § 431.54(d) expressly                 segmented to identify the needs of                    statute and the availability of care for
                                                  require that adequate services or devices               children and individuals with particular              the general population in a geographic
                                                  must be available to recipients under a                 health care needs that may go unmet.                  area. We recognize that some areas
                                                  competitive bidding program. States                       Response: We agree that there are                   within states may face particular
                                                  should consider this requirement in                     unique qualities in service categories,               challenges in meeting the health needs
                                                  structuring their competitive bidding                   delivery systems, and populations that                of the individuals residing in those
                                                  programs and drafting requests for bids.                require independent analysis and that                 areas, and states should describe the
                                                  If a state’s competitive bidding program                certain categories of service are known               challenges within their access reviews
                                                  does not meet this standard, than it is                 to be more prone to access to care issues             and discuss how they affect the
                                                  not in compliance with § 431.54(d) and                  in the Medicaid program. This is one of               Medicaid program in particular.
                                                  section 1915(a)(1)(B) of the Act.                       the challenges that CMS and states face                  Comment: Some commenters stated
                                                     Comment: One commenter requested                     in selecting access data and measures                 that the proposed rule did not provide
                                                  that CMS clarify whether states would                   that are appropriate and also addressing              an appropriate balance between
                                                  need to have CMS approval for a change                  concerns on the part of states regarding              economy and efficiency and access by
                                                  to payment rates or methodologies prior                 administrative burden. Based on the                   allowing states to invoke cost as a
                                                  to implementing a change. The                           public comments we received, the final                constraint only when they can address
                                                  commenter noted that a SPA should be                    rule with comment period requires that                access issues in some way other than an
                                                  necessary any time a state proposes to                  ongoing access reviews focus on the                   increase in payment rates. Other
                                                  implement changes in law, policy, or                    following categories of services: Primary             commenters noted that emphasizing
                                                  practice that may result in reduction of                care services; physician specialist                   access to care over economy and
                                                  payment, regardless of whether it                       services (for example, cardiology,                    efficiency is at odds with many state
                                                  requires modification of existing plan                  urology, radiology); behavioral health                innovation strategies that aim to lower
                                                  language. Similarly, commenters urged                   services, including mental health and                 cost and improve care.
                                                  that state Medicaid programs cannot                     substance abuse disorder treatment; pre-                 Response: The rule does not limit a
                                                  implement provider payment reductions                   and post-natal obstetric services                     state’s ability to reduce or restructure
                                                  until they have complied with the                       including labor and delivery; and home                rates based on information that the rates
                                                  proposed regulatory process for assuring                health services. We believe these                     are not economic and efficient; rather, it
                                                  access to care and CMS has approved                     services are both in high demand and                  ensures that states take appropriate
                                                  the state’s SPA to reduce provider                      commonly utilized by Medicaid                         measures to document access to care
                                                  payments.                                               beneficiaries (see: The Kaiser                        consistent with section 1902(a)(30)(A) of
                                                     Response: Without exception, our                     Commission on Medicaid and the                        the Act. Under the Act, rates are neither
                                                  policy, as set forth in § 447.201(b), is                Uninsured. Medicaid Moving Forward.                   economic nor efficient if they do not
                                                  that states must receive approval                       Julia Paradise. March 2015). States may               also ensure that individuals have
                                                  through the SPA process to modify                       also select additional services to add to             appropriate access to covered services.
                                                  Medicaid payment methodologies. CMS                     this list. This final rule with comment               We interpret section 1902(a)(30)(A) of
                                                  approval ensures that the changes in                    period also requires that all services that           the Act as a balanced approach to
                                                  service payment methodologies comply                    are subject to reduced rates or                       Medicaid rate-setting and we encourage
                                                  with all applicable regulatory and                      restructured rates and that could impact              states to utilize appropriate information
                                                  statutory requirements and are eligible                 access will also need to be reviewed and              and program experience to develop rates
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                                                  for FFP. SPAs may be effective no                       monitored as part of a state’s access                 to meet all of its requirements. Further,
                                                  earlier than the first day of the quarter               monitoring review plan.                               we expect states to document that
                                                  in which a state submits an amendment.                    We will work with states to identify,               Medicaid rates are economic and
                                                  While there is no specific regulatory or                based on feedback from beneficiaries                  efficient when the state submits changes
                                                  statutory requirement that a state wait                 and providers and other available                     to payment methodologies through a
                                                  until SPA approval to implement a                       information and data, additional                      SPA. We will continue to document as
                                                  reduction in payment rates, the state                   services that may require more regular                part of our SPA review process why the
                                                  must reimburse providers at approved                    review based on data analysis or known                methodology is in line with statutory


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                          67585

                                                  requirements. We will continue to work                     Response: The statute requires                     and the comparison of Medicaid rates to
                                                  with state leaders and stakeholders and                 Medicaid payment rates to be sufficient               other payer systems.
                                                  will consider issuing policy guidance on                to ensure access to care and services for                Response: We agree that state
                                                  standards for economy and efficiency                    beneficiaries, and this final rule with               oversight efforts and rate setting policies
                                                  through future rulemaking efforts. We                   comment provides considerable                         should discourage over-utilization. We
                                                  are actively working with states toward                 flexibility to consider relevant factors              support state efforts to identify
                                                  innovative delivery system designs that                 including market rates. The requirement               utilization associated with
                                                  promote economy and efficiency                          to assure access to services is not                   inappropriate care through processes
                                                  through person centered coordinated                     limited in scope to when a state is                   that can include prior authorization,
                                                  care and value-based purchasing. We do                  proposing a change to its payment rate                claims review, and care management
                                                  not view the requirements described in                  methodology, but rather, applies to                   initiatives. Regulations at 42 CFR part
                                                  this final rule with comment period or                  current rates as well. If a state has not             456 specifically discuss the
                                                  the access provisions under section                     changed its Medicaid payment                          requirements concerning control of the
                                                  1902(a)(30)(A) of the Act in conflict                   methodology for many years, we believe                utilization of Medicaid services in
                                                  with these efforts.                                     it is just as important to assess those               certain settings, or for certain services.
                                                     Comment: A commenter noted that by                   rates to determine if the rates are still             The regulatory framework presented in
                                                  using only access metrics, it would be                  sufficient to ensure access as it is to               this final rule with comment period
                                                  very unlikely that state access reviews                 evaluate the effect of proposed changes               describes several data points that may
                                                  would ever show that emergency room                     to rate methodologies. The provisions of              be indicators of access within a given
                                                  rates violate the statute because                       the final rule with comment period                    state; however, we recognize that no one
                                                  hospitals, in practice, usually do not opt              allow for state flexibility to take into              measure offers a precise indication of
                                                  out of serving Medicaid patients. The                   account market conditions in carrying                 sufficient or insufficient access to care.
                                                  commenter further stated that rates to                  out their access monitoring review                    If a state experiences a severe decline in
                                                  Medicaid hospitals could sustain equal                  plans. We have considered state                       service utilization without a plausible
                                                  access to emergency room services, but                  concerns with the burden associated                   explanation, there may be an access
                                                  could simultaneously be entirely                        with the rule and have focused the                    concern worthy of investigation. The
                                                  inconsistent with efficiency, economy,                  ongoing access reviews on: primary care               same is true of beneficiary needs. If a
                                                  and quality of care.                                    services; physician specialist services               state experiences a spike in beneficiaries
                                                     Response: This final rule with                       (for example, cardiology, urology,                    who experience difficulty receiving a
                                                  comment period focuses specifically on                  radiology); behavioral health services,               particular service in a geographic
                                                  documenting compliance with the                         including mental health and substance                 region, this could indicate access issues
                                                  access to care requirements of section                  abuse disorder treatment; pre- and post-              and should be investigated. Because the
                                                  1902(a)(30)(A) of the Act. This rule                                                                          statutory provisions at section
                                                                                                          natal obstetric services including labor
                                                  includes a multi-faceted approach to                                                                          1902(a)(30)(A) of the Act refer to
                                                                                                          and delivery; and home health services.
                                                  reviewing access data, soliciting                                                                             payment rates and comparisons to the
                                                                                                          Access to these services should be
                                                  feedback from beneficiaries, providers                                                                        general population, it is necessary for
                                                                                                          indicators that beneficiaries have
                                                  and other stakeholders, and public                                                                            states to compare Medicaid payment
                                                                                                          ongoing access to primary sources of
                                                  processes to raise issues specific to state                                                                   rates to the rates of Medicare or private
                                                                                                          care. States may also select additional
                                                  rate actions that may impact access to                                                                        payers. We expect that states will
                                                                                                          services to add to this list. Ongoing
                                                  care. We do not disagree that providers                                                                       evaluate access in consideration of
                                                                                                          access concerns with other services can
                                                  that have a requirement or mission to                                                                         outcome-based care as new approaches
                                                                                                          be addressed through public input
                                                  provide care could still receive                                                                              to payment and deliver systems take
                                                  Medicaid payment that falls short of                    processes also required under this final
                                                                                                                                                                form. The final rule with comment
                                                  their full cost of providing the care                   rule with comment period. We note that
                                                                                                                                                                period allows states broad flexibility to
                                                  furnished. This is an issue that is                     the final rule with comment period does
                                                                                                                                                                consider the impact of new types of
                                                  relevant to the state’s rate-setting                    not require a payment floor for any
                                                                                                                                                                payments and care delivery in the
                                                  process, but not necessarily an access                  Medicaid service.
                                                                                                                                                                access monitoring review plans.
                                                  issue. These issues could be raised by                     Comment: One commenter                                Comment: One commenter requested
                                                  hospitals in the rate-setting procedures                recommended that CMS clearly explain                  that CMS specifically examine out-of-
                                                  required under section 1902(a)(13)(A) of                in the rule that the statute includes                 state Medicaid payments, particularly in
                                                  the Act, but we agree that there could                  strong policy against over-utilization of             states with historically high-volume,
                                                  be additional opportunities for public                  medical services, and it is both                      out-of-state use of services.
                                                  input. We are including in the final rule               appropriate and desirable that states                    Response: We have not set out
                                                  with comment period, requirements that                  adopt rate policies that will discourage              specific requirements for out-of-state
                                                  states develop mechanisms for ongoing                   unnecessary utilization of services and               providers in this final rule with
                                                  provider feedback, which should allow                   embody incentives for more efficient                  comment period. To the extent that
                                                  hospitals and other providers who seek                  use of health care resources.                         individuals in the state obtain access to
                                                  higher rates to raise concerns to states.               Commenters wrote that measuring                       a particular type of service through out-
                                                     Comment: A commenter stated that                     utilization of covered services to                    of-state providers, including through
                                                  the proposed rule does not provide                      determine appropriate access is in                    telemedicine or telehealth, or to the
                                                  sufficient discretion to consider market                conflict with and ignores many states’                extent that individuals in a geographic
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                                                  considerations and expressed concern                    efforts to ensure appropriate utilization.            area generally obtain services through
                                                  that the proposed rule should require                   To remedy this conflict, commenters                   out-of-state providers, the state will
                                                  states to implement a process to                        suggested that CMS clarify the law                    need to consider such providers in
                                                  evaluate access regardless of whether a                 requires states to enroll enough                      reviewing access to care.
                                                  state is seeking changes to rates.                      providers to ensure access rather than                   Comment: One commenter stated that
                                                  Further, the commenter expressed                        ensure that people are actively seeking               the regulatory effort should be expanded
                                                  concern regarding the establishment of                  treatment. These commenters also                      to address section 1902(a)(30)(A) of the
                                                  a price floor for Medicaid services.                    objected to measuring enrollee needs                  Act’s quality of care requirements.


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                                                  67586            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                     Response: We currently have several                  consideration to comments from those                  obstetric services including labor and
                                                  initiatives in place to improve upon                    who advocate on behalf Medicaid                       delivery; and home health services. We
                                                  quality within Medicaid delivery                        beneficiaries.                                        have made this change in consideration
                                                  systems and strengthen quality                             Response: The public comment                       of state burden and to focus ongoing
                                                  measures. We are actively engaged with                  period is a unique opportunity for the                access monitoring on highly needed and
                                                  states and other stakeholders in                        public to contribute to the regulatory                utilized services. States may also select
                                                  developing quality guidelines, for                      process. All comments are considered in               additional services to add to this list.
                                                  example the Child and Adult Core                        the development of final regulations.                 While the suspension of a rate reduction
                                                  Health Care Quality Measurement Sets                    Input from beneficiaries and their                    may be an appropriate corrective action,
                                                  developed in conjunction with the                       advocates is essential because that input             we are not requiring a specific approach
                                                  National Quality Forum. While the                       most directly reflects the success or                 to addressing access issues within the
                                                  focus of this final regulation is limited               failure to obtain beneficiary access to               final rule with comment period and we
                                                  in scope to access to care, we will                     care. And the importance of that input                will work with states on appropriate
                                                  continue our work to promote quality                    is not limited to the rulemaking process.             remedies.
                                                  improvement within state Medicaid                       This is why this final rule with                         Comment: A commenter requested
                                                  programs and may, in the future,                        comment period requires that states                   that CMS provide a list of the covered
                                                  develop regulatory or subregulatory                     maintain ongoing systems to collect and               services and benefits that fall under the
                                                  guidance on quality standards. We also                  analyze beneficiary comments and                      5-year access review cycles described in
                                                  recognize that access and quality can be                complaints concerning access to care.                 the May 6, 2011 proposed rule to ensure
                                                  related and beneficiaries may provide                   The importance of beneficiary needs                   that all services are included.
                                                  beneficial input to states on this                      and ongoing feedback are highlighted in                  Response: We proposed that states
                                                  relationship through the processes states               the framework described in the                        review all services covered in the
                                                  develop in accordance with this rule.                   proposed and final rules.                             Medicaid state plan over 5-year cycles.
                                                     Comment: Several commenters stated                                                                         Medicaid allows states the option to
                                                                                                          B. Documentation of Access to Care and                cover certain services and the list of
                                                  that the requirements of the notice of
                                                                                                          Service Payment Rates (§ 447.203)                     services that individual states would
                                                  proposed rule-making create a stricter
                                                  standard than what is required under                       Comment: Many commenters agreed                    have been required to review would
                                                  the statute. Some commenters offered                    that it is important for states to conduct            vary. The scope of services proposed for
                                                  that the requirement will be difficult to               access reviews to examine access and                  review are described in regulation at 42
                                                  meet and would effectively preclude a                   related data in different geographic                  CFR part 440. Based on public
                                                  state from making program changes.                      regions throughout the state.                         comments, we have revised the access
                                                     Response: Prior to the issuance of this                 Response: We appreciate support for                review requirements in this final rule
                                                  final rule with comment period, several                 the proposed data analysis                            with comment period to be more
                                                  states implemented a number of the                      requirements. We have adopted without                 targeted so as to only require
                                                  regulatory provisions we proposed in                    change many of the proposed                           measurement of a discrete set of
                                                  the May 6, 2011 proposed rule. These                    requirements in this final rule with                  services, which provides additional data
                                                  states recognized the need to review and                comment period.                                       on access while reducing administrative
                                                  monitor data and to work with                              Comment: Many commenters                           burden on states. States must conduct
                                                  stakeholders to address potential access                suggested that we modify the access                   access monitoring reviews every 3 years
                                                  issues in light of cuts to Medicaid                     review procedures to require baseline                 for the following categories of service:
                                                  payment rates. Based on the work of                     access analysis prior to taking action to             Primary care services; physician
                                                  these states, we consider the                           approve provider rate reductions,                     specialist services (for example,
                                                  requirements of the final rule with                     ongoing monitoring to detect problems,                cardiology, urology, radiology);
                                                  comment period to be reasonable and                     and corrective action when problems                   behavioral health services, including
                                                  achievable. As discussed in the May 6,                  are detected. Some commenters offered                 mental health and substance abuse
                                                  2011 proposed rule and in this final rule               that CMS should suspend the rate                      disorder treatment; pre- and post-natal
                                                  with comment period, the requirements                   reduction until corrective measures are               obstetric services including labor and
                                                  of the rule do not limit state flexibility              taken.                                                delivery; and home health services.
                                                  in program operation. Nor do the                           Response: Consistent with the                      States may also need to add additional
                                                  regulatory requirements go beyond the                   commenters’ suggestion, this final rule               services to the access monitoring review
                                                  scope of what is necessary to reasonably                with comment period requires that                     plan based on access to care concerns
                                                  document beneficiary access to care.                    states conduct baseline reviews of the                that arise out of the information
                                                  Instead, the rule provides states with                  core services defined in this regulation              received by states through the public
                                                  procedures to document compliance                       and monitor access data to ensure                     input processes described in this final
                                                  with the statutory requirement to ensure                compliance with section 1902(a)(30)(A)                rule with comment period. We note that
                                                  access to care. These procedures permit                 of the Act. States are also required to               states may have additional alternative
                                                  states considerable flexibility in the                  review and submit access data when                    processes to identify access to care
                                                  analysis of data reflecting access, and in              states submit rate proposals that may                 issues for services in addition to those
                                                  the measures that a state must take to                  have a negative impact on access to care              required under the final rule. This rule
                                                  respond to access concerns.                             and continue monitoring for 3 years                   is not intended to preclude states from
                                                     Comment: One commenter stated that                   afterwards through the process outlined               continuing to use those processes and
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                                                  Medicare and Social Security have not                   in the access monitoring review plan. In              does not intend to limit additional state
                                                  experienced the same challenges facing                  addition, we have revised the ongoing                 access to care review activities for
                                                  Medicaid, likely because their                          access monitoring review plan activities              Medicaid services that are already
                                                  beneficiaries have considerable political               to require a review of primary care                   effective.
                                                  clout. The commenter stated that                        services; physician specialist services;                 Comment: We received several
                                                  policymakers must factor in this reality                behavioral health services, including                 comments that requested additional
                                                  when reviewing the proposed rule                        mental health and substance abuse                     guidance on how states should review
                                                  comments and provide special                            disorder treatment; pre- and post-natal               access to consider geography.


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67587

                                                  Commenters recommended that CMS                         manner that appropriately reflects the                statutory requirements, and the reasons
                                                  define the relevant ‘‘geographic area’’                 local health care delivery system of each             for our determination. We continue to
                                                  that states should use for access                       state, as outlined in this final rule with            consider whether core measures and
                                                  comparisons, while others specifically                  comment period. A state’s rate of                     access thresholds would help states and
                                                  suggested that CMS should require                       insured and uninsured may not be                      CMS assure access to care in the
                                                  states to assess Medicaid beneficiary                   directly related to the ability of an                 Medicaid program and we are
                                                  access in designated rural geographic                   individual on Medicaid to access a                    accordingly issuing a RFI, as well as this
                                                  locations of a state. One commenter                     covered Medicaid benefit since the                    final rule with comment period, to
                                                  suggested that we require states to                     ability to access care is different from              gather additional information on this
                                                  review trends and factors as they vary                  having the means to pay for care. While               topic.
                                                  by state geography and to emphasize the                 the final rule with comment period does                  Comment: Commenters requested that
                                                  importance of geographic variation                      not specify how states should make                    we clarify scenarios when restructuring
                                                  through specific changes to the                         such comparisons to the general                       rate methodologies would result in
                                                  regulatory text.                                        population, we note that a state’s                    access issues and trigger the
                                                     Response: To clarify, states must                    analysis should be robust and consider                requirements of this rule.
                                                  assure that access is available to                      both demands for care and whether                        Response: There may be any number
                                                  Medicaid beneficiaries to the extent that               individuals have an ability to pay for                of payment methodology changes that
                                                  care is available to the general                        such care if individuals without                      could harm access to care and we
                                                  population in a geographic area. The                    coverage are included in the analysis.                cannot set forth an exhaustive list. One
                                                  actual definition of geographic area may                   Comment: Several commenters noted                  common type of restructuring is a
                                                  vary by state and the extent and need to                that courts have determined that the                  change in the targeting of supplemental
                                                  which states review and monitor access                  term ‘‘general population’’ only means                payments. States may alter payments in
                                                  based on geographic area may depend                     people who have private insurance and                 ways that are budget neutral as a whole
                                                  on the data and other information that                  not the uninsured and requiring                       for the amendment action, but would
                                                  states are required to review as part of                Medicaid to compare its coverage to                   reduce payments for some providers.
                                                  the framework of this final rule with                   private plans without accounting for the              For instance, some states make up for
                                                  comment period. For instance, states                    access of the uninsured is an artificial              low base payment rates through lump
                                                  may receive information that access to                  standard.                                             sum supplemental provider payments.
                                                  care is an issue in one specific region                    Response: The final rule does not                  The supplemental payments are often
                                                  within the state and focus monitoring                   define standards for measuring medical                targeted to certain providers and may be
                                                  and remediation strategies on that                      services available to the general                     dependent upon the availability of local
                                                  region. Other states may have more                      population in a geographic area. States               governments to fund the nonfederal
                                                  statewide access concerns that require a                are instead allowed to analyze access                 share of payments. A change in
                                                  county-by-county analysis and strategy                  issues within broad parameters in a                   supplemental payments that reduces the
                                                  to address access on a statewide basis.                 manner that appropriately reflects the                total amounts that providers receive or
                                                  At this time, we are not defining state                 local health care delivery system of each             shifts funds from one provider to
                                                  geographic areas or the specific                        state, as outlined in this final rule with            another could result in access to care
                                                  geographic considerations that states                   comment period.                                       issues and is one example of a potential
                                                  must include in access reviews. CMS                        Comment: Several commenters                        payment restructuring that could
                                                  will rely on states and the processes                   requested clarification as to how the                 negatively impact access to care. Where
                                                  described in this final rule with                       agency will evaluate the data from                    there is uncertainty, we will work with
                                                  comment period, including the public                    access reviews. The commenters also                   states to help identify other situations
                                                  processes that allow stakeholders to                    sought clarification as to how CMS                    where the processes described in this
                                                  comment on the access monitoring                        would apply or evaluate the data when                 final rule with comment period should
                                                  review plans, to determine appropriate                  deciding to approve or disapprove a                   apply.
                                                  geographic considerations.                              SPA.                                                     Comment: Several commenters
                                                     Comment: Commenters requested that                      Response: Under this final rule with               requested that CMS mandate that states
                                                  we clarify the difference between a                     comment period, states will follow                    make the annual data reviews publically
                                                  ‘‘comparable population’’ to Medicaid                   specific procedures to review and                     available. Commenters further requested
                                                  and statutory designation of ‘‘the                      monitor access to care and to solicit                 that CMS require states to disclose the
                                                  general population in a geographic                      feedback from stakeholders through                    reports with a sufficient amount of time
                                                  area.’’ A few commenters wrote that the                 ongoing public processes. We also                     to review the data and provide
                                                  regulations need to acknowledge that                    require a public review timeframe for                 comments prior to the state’s
                                                  the law requires Medicaid to be                         the access monitoring review plan                     submission of a SPA.
                                                  compared to the general population.                     which will allow interested parties to                   Response: We are finalizing the
                                                  Some commenters stated that the                         review and comment on states’ access                  provision to require that states make
                                                  appropriate comparison is between                       monitoring review plans for a period no               access data reviews available to the
                                                  Medicaid and those in the general                       less than 30 days before the monitoring               public and to CMS for review. In
                                                  population regardless of insurance                      plan is finalized and submitted to CMS.               addition, prior to submitting a SPA that
                                                  status, while others stated that the                    We will review this information in total              reduces or restructures Medicaid
                                                  comparison to the general population is                 when reviewing SPAs but have not, at                  payment rates or otherwise have a
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                                                  unrealistic and should be removed from                  this time, required any specific                      negative impact on access to care, states
                                                  consideration.                                          thresholds that would determine an                    are required to conduct a public process
                                                     Response: The regulation adopts the                  amendment to be approved or                           that solicits feedback from stakeholders
                                                  statutory standard of ‘‘the general                     disapproved. We will document as part                 in consideration of the access reviews
                                                  population’’ and we have applied this in                of our SPA review process that states are             conducted by the states. Access
                                                  this final rule with comment period.                    following the process described in this               monitoring review plans will be
                                                  States are allowed to analyze access                    final rule with comment period, that                  published and made available to the
                                                  issues within broad parameters in a                     access to care is consistent with the                 public for review and comment for a


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                                                  67588            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  period of no less than 30 days, prior to                review timeframe for the access                          Comment: Several comments
                                                  being finalized and furnished to CMS                    monitoring review plan which will                     suggested that the scope of access
                                                  for review.                                             allow interested parties to review and                reviews should be limited to mandatory
                                                    Comment: We received many                             comment on the state’s monitoring                     services. Other comments urged that
                                                  comments that requested more detail on                  plans for a period of no less than 30                 access reviews only be required where
                                                  how a state can sufficiently demonstrate                days before the monitoring plan is                    there is considerable empirical evidence
                                                  access to care, including thresholds for                finalized and submitted to CMS.                       of an access problem such as: Primary
                                                  sufficient access. Some commenters                         Comment: Commenters requested that                 care; and physician specialist services;
                                                  raised concerns that without mandatory                  the ongoing access reviews include the                and dental services for children.
                                                  thresholds states would never know                      agency’s summary of the views of                      Additional commenters suggested state
                                                  CMS’ expectations for meeting the                       beneficiaries and of providers of the                 access reviews should focus on access to
                                                  requirements of the statute. Other                      covered service obtained through the                  specialists, especially pediatric
                                                  commenters recommended that we                          input of medical care advisory                        subspecialists.
                                                  provide states with the flexibility to                  committee under § 431.12(e).                             Response: After careful consideration
                                                  determine the elements most                                Response: We agree that feedback                   of all the comments received, we are
                                                  appropriate for review of access to care                from beneficiaries and providers on                   revising this final rule with comment
                                                  that are meaningful for their specific                  access to care is important and should                period to eliminate the requirement that
                                                  populations and programs.                               be considered by states in evaluating                 states review all covered services within
                                                    Response: Currently, there are no                     access and as they make decisions about               a 5-year period, and instead will require
                                                  national standards to demonstrate                       Medicaid rates. This final rule with                  that states review a discrete set of
                                                  access for each Medicaid covered                        comment period requires that states                   services provided by various provider
                                                  service that would take into account                    have a mechanism for ongoing                          types and site of service that are related
                                                  differences in state geographic locations.              beneficiary input and that states log the             to particular types of beneficiary needs
                                                  Since the issuance of the May 6, 2011                   volume and nature of responses to                     every 3 years. These are: Primary care
                                                  proposed rule, we have worked with                      beneficiary input. In addition, we have               services; physician specialist services
                                                  many states to review state data sources                added a requirement that states                       (for example, cardiology, urology,
                                                  and develop monitoring plans to                         establish and maintain a similar                      radiology); behavioral health services
                                                  demonstrate compliance with the                         provider feedback mechanism. Both                     (including both mental health and
                                                  statute. That experience and the public                 feedback mechanisms are incorporated                  substance abuse disorder treatment
                                                  comments received through this                          into state access monitoring review                   services); pre- and post-natal obstetric
                                                  rulemaking process have further                         plans within the final rule with                      services including labor and delivery;
                                                  suggested that particular measures may                  comment period. CMS will rely on                      and home health services. These
                                                  be specific to individual services and                  information from the beneficiary and                  categories represent frequently used
                                                  systems and that states should have                     provider feedback mechanisms to                       services in Medicaid and can serve as
                                                  some flexibility and discretion in                      understand real-time access to care                   indicators that beneficiaries are
                                                  determining the measures and                            concerns and may require states add                   receiving access to care. States may at
                                                  thresholds, to allow states to take into                services to their access monitoring                   their discretion add additional services
                                                  account varying circumstances. We                       review plans based on this information.               to their access review monitoring plans.
                                                  requested comments on specific                          Depending on the nature of the                        In addition, we have included a
                                                  thresholds that states could use to                     concerns, states may need to take                     requirement for states to review
                                                  measure access within their Medicaid                    actions to address more immediate                     additional service categories as
                                                  programs. While we received some                        needs though, as the concerns may vary,               determined necessary based on the
                                                  comments with suggestions of                            CMS is not specifying actions or                      public input processes described in this
                                                  thresholds, we did not receive                          timeframes that states must take at this              rule. We note that states may have
                                                  suggestions for metrics that could be                   time.                                                 alternative processes to identify access
                                                  applied across all states without                          States are expected to solicit feedback            to care issues for services in addition to
                                                  additional consideration or compelling                  during the development of the access                  those required under the final rule. This
                                                  evidence that the standards offered in                  monitoring review plan and corrective                 rule is not intended to preclude states
                                                  comments would necessarily ensure                       action plans and could also use the                   from continuing to use those processes
                                                  consistency with section 1902(a)(30)(A)                 existing Medical Care Advisory                        and does not intend to limit additional
                                                  of the Act. We will continue to study                   Committees for input into the process.                state access to care review activities for
                                                  whether a core set of measures or                          Comment: Several commenters                        Medicaid services that are already
                                                  thresholds should be applied to the                     suggested that CMS should develop a                   effective.
                                                  Medicaid program and are soliciting                     template for access monitoring review                    Comment: One commenter suggested
                                                  more information from stakeholders                      plans that includes the Medicaid                      that FQHC reimbursement rates be given
                                                  through the RFI process described                       payment rate comparisons, stakeholder                 a separate category in the access review
                                                  earlier.                                                feedback, and provider feedback.                      process as they receive an advantageous
                                                    Therefore, while we continue to study                    Response: Each state Medicaid                      Medicaid reimbursement rate which
                                                  this issue, in this final rule with                     program is unique, and as such, this                  could skew the lower rates for many
                                                  comment period we are adopting the                      final rule with comment period allows                 Medicaid family planning services.
                                                  proposed multi-faceted approach to                      states the flexibility to design and                     Response: The final rule requires
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                                                  reviewing access to care that includes                  implement access measures specific to                 states to identify payment rate
                                                  data analysis and feedback from                         the characteristics of their state. At this           comparisons for service by provide type
                                                  beneficiaries, providers and                            time, we are not issuing a template or                and site of service. This should address
                                                  stakeholders rather than national                       specific format for states to conduct                 the commenters concerns. We recognize
                                                  thresholds. The analysis of this                        their access monitoring review plans.                 the important role FQHCs play in
                                                  information must also weigh relevant                    However, CMS will identify model                      delivering health care services to
                                                  state-specific circumstances. As a result,              plans for states to consider as they                  Medicaid beneficiaries. We expect that
                                                  we are requiring states to have a public                develop their own plans.                              states would include them, as


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                          67589

                                                  appropriate, in the ongoing access to                      Comment: Several commenters                        instance, one commenter suggested that
                                                  care reviews for the types of services                  requested that CMS clarify the                        CMS require an impact analysis of rate
                                                  that they provide. The statute requires                 anticipated approach for reviewing                    cuts on the ability of high Medicaid
                                                  that states pay an all-inclusive                        access when a state adds a new service                volume providers to meet staffing
                                                  prospective payment system (PPS) rate                   or benefit.                                           requirements and quality and safety
                                                  to FQHC providers or an alternative                        Response: This final rule with                     standards. Other commenters
                                                  payment methodology that results in                     comment period clarifies that states                  recommended that the numbers of
                                                  payment at least at the PPS rate. The                   must conduct a baseline access review                 providers willing to care for Medicaid
                                                  PPS rate recognizes costs associated                    for new services within 3 years of the                patients be compared to some measure
                                                  with all of the Medicaid services that                  effective date of the SPAs that                       of patient need to provide an indication
                                                  FQHCs provide and is not specific to                    authorizes the service for FFP if the                 of whether access is adequate.
                                                  particular service. So, while services                  service falls under a certain subset of               Commenters lamented that the rule did
                                                  furnished by FQHCs may increase                         service categories defined in this                    not specifically address circumstances
                                                  beneficiary access to certain categories                regulation. All other new services will               related to care in hospitals, family
                                                  of care, payments made to FQHCs are                     fall under the rate reduction or payment              planning centers, long term services and
                                                  not going to be relevant to the payments                restructuring protocol outlined in this               supports and many additional benefit
                                                  made to other types of providers.                       final rule with comment period whereby                categories.
                                                     Comment: Several commenters                          SPAs reducing or restructuring payment                   Response: While we are not adopting
                                                  suggested that state-level reviews of                   rates for the services are submitted with             any specific metrics at this time, we are
                                                  beneficiary access to specialty                         an analysis of access to care and are                 continuing to evaluate the feasibility of
                                                  pharmacies are critically important for                 monitored periodically for a minimum                  establishing a set of core metrics and
                                                  assisting states in determining whether                 period of 3 years.                                    thresholds and are soliciting input from
                                                  Medicaid beneficiaries’ access to                          Comment: Some commenters                           stakeholders on these approaches
                                                  specialty pharmacy services under the                   suggested that CMS allow independent                  through the RFI. We considered these
                                                  state plan is at least equivalent to that               third parties to conduct the access                   comments in developing this final rule
                                                  available to the general population is                  reviews, stating that access reviews                  with comment period, and hope that the
                                                  the geographic area. Commenters also                    should be objective and conducted by                  information provided through the
                                                  noted that access issues may already                    an organization/academic institution                  public comment process informs state
                                                  exist in most states due to the                         that is impartial.                                    access monitoring review plans. We
                                                                                                             Response: Ultimately, states are                   included examples of a number of
                                                  combination of low dispensing fee rates
                                                                                                          responsible for ensuring compliance                   metrics that states should consider
                                                  and insufficient reimbursement for
                                                                                                          with statutory and regulatory                         within the regulatory text. These
                                                  specialty products.
                                                                                                          requirements. States have flexibility in              measures represent the type and scope
                                                     Response: As discussed, this final rule
                                                                                                          determining the available resources to                of information that states should review
                                                  with comment period will require states
                                                                                                          meet the regulatory requirement                       through the access monitoring review
                                                  to review a certain subset of services
                                                                                                          described in this final rule with                     process. As we review state access
                                                  every 3 years, including primary care
                                                                                                          comment period. While we are not                      monitoring review plans, our
                                                  services; physician specialist services;
                                                                                                          requiring use of an independent third                 expectation will be that the plans are
                                                  behavioral health services, including                                                                         robust and are carefully designed to
                                                                                                          party to conduct access reviews, the
                                                  mental health and substance abuse                                                                             indicate access to care issues as they
                                                                                                          option is certainly available to states.
                                                  disorder treatment; pre- and post-natal                                                                       develop. We also anticipate that
                                                                                                          Additionally, we will consider
                                                  obstetric services including labor and                                                                        stakeholders will provide feedback on
                                                                                                          alternative approaches to addressing
                                                  delivery; and home health services.                                                                           state access monitoring review plans,
                                                                                                          Medicaid access issues that
                                                  While we have not included specialty                                                                          including on proposed, baselines,
                                                                                                          beneficiaries face through a hearing or
                                                  pharmacies, we have included the                                                                              metrics and thresholds, and that states
                                                                                                          complaint driven process. We intend to
                                                  requirement for states to review access                                                                       will review the feedback and make
                                                                                                          solicit feedback on the feasibility and
                                                  for additional services based on a                                                                            appropriate changes to their monitoring
                                                                                                          implementation options for such an
                                                  significantly higher than usual level of                                                                      plans.
                                                                                                          approach through an RFI process.
                                                  beneficiary or provider access                                                                                   Comment: Some commenters
                                                  complaints. States may also select                      1. Access Review Data Requirements                    suggested that the proposed regulations
                                                  additional services to add to reviews at                   Comment: Several commenters                        should be revised to allow for some
                                                  their discretion.                                       suggested that CMS should require                     metrics that establish a prima facie
                                                     Comment: Another commenter                           states to disclose payment and other                  assurance that care and services for
                                                  expressed concern that states will                      claims data states use to conduct their               Medicaid enrollees are available at least
                                                  attempt to satisfy pharmacy access                      access reviews.                                       to the extent that they are available to
                                                  requirements simply by demonstrating                       Response: Section 447.203(b)(1) will               the general population in the geographic
                                                  or offering the availability of mail order              require states to review and make                     area. For instance, if at least 80 percent
                                                  pharmacy, which may not be adequate                     publically available data trends and                  or more of the service providers for a
                                                  for certain Medicaid beneficiaries.                     factors that measure access, as                       particular service such as hospitals,
                                                     Response: Access requirements are                    represented by beneficiary needs,                     physicians, labs, etc. in a geographic
                                                  not met by the ‘‘availability’’ of provider             availability of care and providers,                   area are enrolled in the Medicaid
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                                                  types if the Medicaid population cannot                 utilization of services, and service                  program, the commenter offered that
                                                  obtain needed services from those                       payment information. These publically                 would reasonably mean access is
                                                  provider types. To the extent that mail                 available measures will support the SPA               available.
                                                  order pharmacies are not adequate or                    submission.                                              Response: As we discussed in the
                                                  appropriate for some Medicaid                              Comment: Comments suggested                        preamble of the May 6, 2011 proposed
                                                  beneficiaries, availability of mail order               provider and service specific metrics,                rule, CMS is not currently proposing
                                                  pharmacies would not constitute access                  threshold, and considerations should be               national standards to be applied across
                                                  to pharmacy services.                                   incorporated into the final rule. For                 all service categories or uniformly for all


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                                                  67590            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  states. We also think it is important to                services. While some states pay for                   future rulemaking or subregulatory
                                                  note that enrollment alone in the                       services through rates based on                       guidance and are reviewing ways to
                                                  Medicaid program does not mean                          Medicare fee structures, many services                standardize access monitoring and
                                                  sufficient access is available. There are               are reimbursed through cost                           remediation efforts. In this rule, we
                                                  other factors that must be considered.                  reconciliation or other methodologies                 require that states review data that
                                                  However, we are continuing to study                     that do not follow Medicare approaches.               considers enrollee needs, the
                                                  whether a core set of measures or                       Therefore, it would be difficult to                   availability of care and providers, and
                                                  thresholds should be applied to                         standardize an analysis similar to the                service utilization. Within the
                                                  Medicaid, and, if so, what those specific               MedPAC approach for assessing                         framework, this final rule with comment
                                                  measures would be, and are soliciting                   adequate Medicare payments. As                        period continues to provide states with
                                                  input through the RFI process.                          previously discussed, this final rule                 significant flexibility in reviewing data
                                                     Comment: Several commenters                          with comment period allows states                     to demonstrate and monitor access to
                                                  suggested that specific information for                 considerable discretion to review access              care which reflects their local healthcare
                                                  specific populations be required data                   based on a state’s program and local                  delivery systems. States also have the
                                                  elements within the access reviews. In                  considerations as long as the review is               ability to add to the framework to better
                                                  particular, one commenter suggested                     consistent with the standardized and                  represent access to services within the
                                                  children and young adults with ESRD                     transparent process described in this                 state.
                                                  should have specific consideration in                   final rule with comment period.                          Comment: Several commenters
                                                  access reviews since they have complex                     Comment: Some commenters                           recommended that CMS consider
                                                  care needs. Other commenters suggested                  suggested that the framework described                identifying a set of uniform measures
                                                  that states should examine the needs of                 in the rule relies heavily on Medicaid                that states must collect data on or that
                                                  adolescents ages 12 to 21 as a distinct                 provider reimbursement rates,                         CMS weighs more heavily in its
                                                  subgroup in the pediatric population                    beneficiary surveys, and provider                     analysis, based on CMS experience and
                                                  due to their significant unmet health                   engagement, with the latter two                       existing studies. While some
                                                  needs. Others requested that CMS                        considerations being subjective and                   commenters suggested such uniform
                                                  articulate that child and adolescent                    potentially at odds with one another.                 data elements would enable access
                                                  mental health services are a high                          Response: This final rule with                     comparisons across states and facilitate
                                                  priority for monitoring access in                       comment period requires that states                   best practices, other commenters
                                                  recognition of the severe shortages of                  review access information focused on:                 suggested that CMS provide flexibility
                                                  child and adolescent mental health                      the availability of care and providers,               to states by permitting the use of other
                                                  professionals.                                          enrollee needs, and service utilization.              measures based on the strength of the
                                                     Response: We do not dispute the                      In addition, states must consider                     alternatives.
                                                  importance of these types of services                   information from beneficiaries and                       Response: We appreciate the value of
                                                  and we understand the commenters’                       providers, as well as provider payments.              common data sets to help compare
                                                  concerns. To the extent that states                     We do not view this information as                    access across states; however, we also
                                                  understand that there are specific access               conflicting, but instead a comprehensive              recognize the importance of allowing
                                                  issues for certain populations, it would                review of access to care that considers               states flexibility in designing and
                                                  be prudent to develop remediation                       a number of factors that may indicate                 implementing appropriate access
                                                  plans that focus on improving access for                compliance with the statute.                          measures which reflect each state
                                                  those populations. States will be                          Comment: We received many                          Medicaid program. Because each state
                                                  required to review, at a minimum,                       comments that were critical of the                    Medicaid program faces unique
                                                  primary care services; physician                        framework of the May 6, 2011 proposed                 challenges and it is difficult to create
                                                  specialist services; behavioral health                  rule which focused on the availability of             data sets that uniformly apply across all
                                                  services, including mental health and                   care and providers, enrollee needs and                service categories, we are not at this
                                                  substance abuse disorder treatment; pre-                service utilization. One commenter                    time requiring specific access measures
                                                  and post-natal obstetric services                       suggested that CMS should incorporate                 in the final rule with comment period.
                                                  including labor and delivery, home                      measures through future rulemaking                    As discussed, we will continue to study
                                                  health services, and other service                      and guidance, but only after Medicaid                 and solicit feedback on standard data
                                                  categories when the state or CMS has                    and CHIP Payment and Access                           sets through a RFI process.
                                                  received a significantly higher than                    Commission (MACPAC) completes its                        Comment: Several commenters
                                                  usual volume of beneficiary or provider                 process of identifying a set of measures              suggested that consideration be given to
                                                  access complaints for a geographic area.                to determine and track access levels.                 race, ethnicity, rural, and urban,
                                                  States may also select additional                       The commenter further suggested that                  primary language spoken, eligibility
                                                  services to add to this list. We are                    for purposes of the final rule, CMS                   subgroup, geography, age and income of
                                                  requesting comments on the selected                     should identify existing data and                     Medicaid beneficiaries.
                                                  categories of services outlined above.                  measures based on its experience and                     Response: We appreciate these
                                                     Comment: One commenter suggested                     existing resources rather than the                    suggestions. We have not specified the
                                                  that CMS should require that Medicaid                   framework described in the proposed                   level of detail at which states are
                                                  payment analyses determine the degree                   rule.                                                 required to investigate access to care.
                                                  to which Medicaid payments are                             Response: While we appreciate the                  States have the option to add the above
                                                  sufficient by, at a minimum, following                  comment and intend to continue to                     elements to their access monitoring
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                                                  the same set of analyses that MedPAC                    work with states to identify appropriate              efforts and we hope that the access
                                                  undertakes when assessing the                           access measures, the components of the                monitoring review plans become more
                                                  adequacy of Medicare Payments.                          broad framework that are described in                 sophisticated over time.
                                                     Response: States have significant                    this final rule with comment period are
                                                  discretion in establishing payment                      viewed by industry experts as good                    2. Beneficiary Information
                                                  methods across services, providers, and                 indicators of access to health care                      Comment: Most commenters
                                                  states, whereas Medicare uses national                  services. We are considering providing                expressed support for the provisions
                                                  rates adjusted for geography for all                    states with additional guidance through               requiring a mechanism to solicit


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67591

                                                  feedback from beneficiaries on access                   will be independently heard by a                      payment rate analysis should only
                                                  issues. In addition to the feedback                     hearings officer. We may propose this                 include the net amount of payments,
                                                  mechanisms for beneficiaries, many                      process through future rulemaking,                    including supplemental payments, to
                                                  commenters also suggested mechanisms                    which will include notice and                         the provider, and that payment data
                                                  to gain feedback from service providers,                opportunity for public comment.                       should appropriately deduct, or account
                                                  caregivers, and advocates. A few                           Comment: One commenter                             for any taxes or assessments that are
                                                  commenters urged that we target                         encouraged CMS to work with state                     required to be paid by Medicaid
                                                  feedback on specific issues (for                        Medicaid agencies to collect Consumer                 providers. Some commenters even
                                                  example, mental health, and women’s                     Assessment of Healthcare Providers and                suggested a separate payment rate
                                                  health) and mandate types of feedback                   Systems (CAHPS) data for FFS                          metric to reflect public hospitals and
                                                  mechanisms, while other commenters                      beneficiaries in a similar manner to                  providers that pay the non-federal share
                                                  urged CMS to allow states flexibility to                what is collected for Medicare FFS                    of the Medicaid payments.
                                                  determine the best tools to obtain                      beneficiaries.                                           Response: Section 1902(a)(30)(A) of
                                                  feedback. Commenters also requested                        Response: We are currently working                 the Act describes payment rates for
                                                  clarification regarding the types of                    with state Medicaid agencies to collect               Medicaid care and services. Our
                                                  feedback mechanisms CMS would                           and use the CAHPS survey data for                     regulatory purview is to review all state
                                                  consider acceptable and the standards                   institutional and primary care settings               payment rate methodologies through the
                                                  that CMS would use when reviewing                       and we will continue to assist states in              SPA process to ensure the payment rates
                                                  beneficiary input.                                      collecting this or similar data in the                are economic, efficient, and sufficient to
                                                     Response: We appreciate the                          future. To the extent possible, we will               assure access. The requirements
                                                  commenters’ support for this provision                  work with states to use the CAHPS                     contained in this final rule with
                                                  and we are finalizing § 447.203(b)(4)                   survey data to support the analysis and               comment period set forth a framework
                                                  that requires states to have mechanisms                 oversight procedures described in this                for states to use to demonstrate their
                                                  for obtaining ongoing beneficiary                       final rule with comment period.                       payment rate methodologies are
                                                  feedback through hotlines, surveys,                        Comment: Commenters suggested that                 sufficient to ensure access. To the extent
                                                  ombudsman, or other equivalent                          states should also obtain provider and                that payments are made to providers
                                                  mechanisms. We continue to offer states                 beneficiary feedback during the                       outside of a state plan rate methodology
                                                  the ability to implement feedback                       development of corrective action plans                (for example, uncompensated care pool
                                                  mechanisms tailored to their program                    so that beneficiary and provider                      payments, Medicaid DSH, or HIT
                                                  characteristics and to use feedback                     experience may better inform the state’s              payments), such payments would not be
                                                  mechanisms that are already in place                    actions.                                              directly included in the state’s rate
                                                  and working to meet the objectives of                      Response: We are finalizing                        analysis. But rate analysis is only one
                                                  this final rule with comment period. In                 § 447.203(b)(4), which requires states to             part of an overall access analysis, and
                                                  consideration of comments from                          have a mechanism for obtaining ongoing                these other payments may affect
                                                  providers and provider groups, we are                   beneficiary feedback through hotlines,                provider’s participation rates in
                                                  adding a requirement within the final                   surveys, ombudsman, or other                          Medicaid by providing additional
                                                  rule with comment period that states                    equivalent mechanisms. We are also                    incentive to serve Medicaid patients.
                                                  have a mechanism for ongoing provider                   adding a provision that requires states to               Comment: We received a significant
                                                  feedback. While CMS will not formally                   have similar mechanisms in place for                  number of comments regarding the
                                                  approve state feedback mechanisms,                      provider feedback. One mechanism that                 proposed requirement to compare
                                                  states are required in this final rule with             states could use is the Medical Care                  Medicaid rates to the rates of other
                                                  comment period to maintain a record of                  Advisory Committees that are already                  payers; some commenters supported the
                                                  the volume and nature of responses to                   required in federal regulations. We                   proposed requirement while other
                                                  beneficiary feedback.                                   believe that states should solicit                    commenters opposed it. One commenter
                                                     Comment: One commenter suggested                     feedback during the development of                    suggested that the only way CMS could
                                                  that CMS establish a mechanism for                      corrective action plans or use the                    demonstrate that Medicaid access is at
                                                  beneficiaries and stakeholders to raise                 existing Medical Care Advisory                        least comparable to that of the general
                                                  concerns about access issues directly to                Committees for input into the process.                population is through a comparison to
                                                  CMS.                                                                                                          commercial rates. Another commenter
                                                     Response: Because each state designs                 3. Access Review Medicaid Payment
                                                                                                                                                                contended that it is difficult to
                                                  and administers its own Medicaid                        Data
                                                                                                                                                                determine actual commercial rates
                                                  program within the federal framework,                      Comment: We received numerous                      because often this information is
                                                  we believe it is most appropriate for                   comments regarding which factors                      considered proprietary. One state
                                                  beneficiaries and stakeholders to raise                 should or should not be included in the               expressed concern about not being able
                                                  access concerns with the state directly,                payment rate analysis. Many                           to meet this requirement because there
                                                  rather than to CMS. To the extent that                  commenters requested CMS exclude                      are no large commercial plans within
                                                  a beneficiary or stakeholder’s access                   Disproportionate Share Hospital (DSH)                 the state. Other commenters suggested
                                                  concerns are not addressed by the state                 payments in the analysis, while other                 that it is ineffective to base rate
                                                  adequately, those concerns may be                       commenters stated these payments                      comparisons on other payers’ rates
                                                  raised to CMS although we are not                       should be included. Commenters also                   alone and some states may be relying on
                                                  establishing a formal process at the                    suggested that uncompensated care pool                unsound data for comparisons. A few
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                                                  federal level. As part of the final rule                payments, Health Information                          commenters cautioned against using
                                                  with comment period, states will be                     Technology (HIT) payments and other                   Medicare rates as a comparison, citing
                                                  required to promptly respond to specific                types of supplemental payments be                     that Medicare does not offer the same
                                                  access problems, with an appropriate                    excluded from the rate analysis. One                  benefits as Medicaid (for example,
                                                  investigation, analysis, and response. In               commenter suggested that states should                comprehensive dental and pediatric)
                                                  addition, we are exploring the feasibility              separately show percentiles with and                  and that the Medicare payment rates do
                                                  of requiring a state level formal hearings              without supplemental payments.                        not reflect the costs incurred by the
                                                  process where access to care concerns                   Additional commenters stated the                      Medicare provider to provide the


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                                                  services. One commenter sought                          or restructured or where a significantly              rates are sufficient to enlist providers
                                                  clarification on whether the review                     higher than usual volume of beneficiary,              into the Medicaid program or not, since
                                                  must include all three proposed                         provider, or stakeholder access                       generally providers do not determine
                                                  comparisons or could be limited to at                   complaints. Within primary care                       whether to provide care to an individual
                                                  least one.                                              services, we are including dental care as             based on the rate for a single service.
                                                     Response: The framework in the final                 one of the service categories states must             This final rule with comment period
                                                  rule with comment period recognizes                     review as part of the access monitoring               requires states to provide an analysis to
                                                  that access to covered services may be                  review plan. We also agree that access                compare Medicaid rates to other private
                                                  affected by multiple factors. One such                  needs may vary between pediatric and                  and public health payer rates. This
                                                  factor is the Medicaid payment rates in                 adult populations and we are requiring                analysis will only serve as an indicator
                                                  comparison to other payers. We                          states to describe within their plans, the            of whether low rates may be a source of
                                                  maintain that a comparison can be a                     characteristics of the beneficiary                    access issues. A better determination of
                                                  useful tool for states in determining the               populations, including considerations                 whether the rates are sufficient to enlist
                                                  adequacy of their rates; however, it                    for care, services, and payment                       providers into the Medicaid program
                                                  should not be relied upon without                       variations for pediatric and adult                    will be the analysis of enrollee needs,
                                                  taking into account other factors that                  populations, as well as individuals with              the availability of providers and
                                                  impact access. To the extent a state has                disabilities.                                         utilization trends, as well as beneficiary
                                                  issues making comparisons to private or                    Comment: One commenter urged                       and stakeholder feedback that will be
                                                  public health payer rates because the                   CMS not to require the publication of all             received through the processes
                                                  data is not available for a particular                  payers’ rates.                                        described in this rule.
                                                  service, we would expect the state to                      Response: This final rule with                        Comment: A commenter noted an
                                                  explain this as part of its analysis and                comment period does not require a state               error in the proposed regulatory text.
                                                  conduct other appropriate reviews of                    to publish the rates used by other                    Specifically, the May 6, 2011 proposed
                                                  Medicaid rates.                                         payers. Although we are finalizing the                rule would have required that states
                                                     Comment: Some commenters                             requirement for states to conduct a                   calculate the ‘‘percentile’’ estimate
                                                  expressed support for a two-pronged                     percentage comparison of Medicaid                     which Medicaid payment represents of
                                                  review: One comparing Medicaid FFS                      payment rates to other payers within the              one, or more, of the following: Medicare
                                                  payments in relation to Medicare                        state, this is not intended to require the            payment rates, the average commercial
                                                  payment rates; and Medicaid FFS                         publication of other payers’ specific                 rates, or the applicable Medicaid
                                                  payments in relation to the payment                     rates.                                                allowable cost of the service. The
                                                  rates used by Medicaid managed care                        Comment: Commenters offered that                   commenter notes that CMS likely
                                                  organizations within the state.                         the May 6, 2011 proposed rule does not                intended states to calculate the
                                                     Response: The final rule with                        clarify that access reviews of Medicaid               ‘‘percentage’’ of which Medicaid
                                                  comment period requires that states                     payment data should be collected and                  payment represents the other payer or
                                                  include percentage comparisons of                       provided for each individual item or                  cost amounts.
                                                  Medicaid payment rates to other public                  service rather than in the aggregate.                    Response: We agree with the
                                                  and private health coverage rates within                Commenters requested that CMS require                 commenter and we have corrected this
                                                  the state for all services reviewed under               transparency of the state’s analysis of               in this final rule with comment period.
                                                  the access monitoring review plan by                    provider rates and access determination               We also note that, based on comments,
                                                  provider type and site of service (e.g.                 for stakeholders to provide meaningful                we revised the payment analysis so that
                                                  primary care providers within office                    input of the changes to the state and                 states are required to determine the
                                                  settings). We would expect the state to                 CMS. The commenters noted that                        percentage of which Medicaid payments
                                                  include Medicaid managed care                           aggregate numbers would not allow an                  represent other public or private payer
                                                  payment rates in these comparisons to                   adequate review of potential access                   rates for the services subject to the
                                                  the extent practical.                                   issues and would lack the specificity to              access monitoring review plan
                                                     Comment: Some commenters                             identify any needed corrective action for             requirements by provider type and site
                                                  suggested CMS specify that children’s                   individual types of Medicaid services.                of service.
                                                  access to primary care, specialty care                  Some commenters suggested that CMS                       Comment: Some commenters agreed
                                                  and oral health services must be                        analyze rates for each code and that                  that the proposed use of fee percentiles
                                                  included in the first reviews conducted                 committees be established to determine                as an effective way of representing the
                                                  by states. Additionally, other                          if rates for each code are sufficient.                distribution of fees charged by providers
                                                  commenters suggested that CMS should                    Additionally, commenters stressed the                 in a particular area.
                                                  specify that children’s access to dental                importance that states gather and                        Response: We are revising the
                                                  services must be included in the first                  compare similar data sets from                        regulations to require that states review
                                                  review conducted by states, as HHS has                  commercial insurers, Medicare, and                    percentage comparisons of Medicaid
                                                  placed considerable emphasis on this                    other payers within their state.                      payment rates to other public or private
                                                  issue and 5 years is an eternity in the                    Response: We approve states’ rate                  health coverage rates within geographic
                                                  lifetime of a child.                                    methodologies for compliance with                     areas of the state.
                                                     Response: This final rule with                       regulation and statute, but generally do                 Comment: Many commenters
                                                  comment period requires that the access                 not approve individual service rates                  suggested that CMS require states to
                                                  monitoring review plan include a                        unless a state presents a final rate, or a            compare Medicaid payment rates to the
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                                                  review of primary care services;                        fee schedule, as the output of a rate                 provider’s actual cost as part of the
                                                  physician specialist services; behavioral               methodology. This final rule with                     access review. Some commenters stated
                                                  health services, including mental health                comment period does not change that                   CMS should specifically clarify that
                                                  and substance abuse disorder treatment;                 policy or imply that CMS will review                  provider rates need not be tied to, or
                                                  pre- and post-natal obstetric services                  individual rates for sufficiency.                     based on provider costs, while others
                                                  including labor and delivery, home                      Reviewing individual rates within a fee               suggested CMS should mandate that
                                                  health services, and for services where                 schedule would not necessarily provide                rates meet a certain percentage of
                                                  either payment rates have been reduced                  a better determination of whether the                 provider cost. One commenter suggested


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67593

                                                  that CMS should require the access                      proposed requirements, we considered                  4. Stratification Requirements
                                                  reviews to account for average                          comments related to burden in                           Comment: Some commenters
                                                  customary provider charges and also the                 developing this final rule with comment               supported the proposed stratification
                                                  extent to which providers in the                        period. The requirements of the final                 requirement for the access review, while
                                                  geographic area are requiring these                     rule with comment period are not                      other commenters opposed such a
                                                  charges to be paid in full. Still other                 predicated upon a significant change in               requirement.
                                                  commenters stated that healthcare                       payment policy, but whether the                         Response: After careful consideration,
                                                  charges have virtually no relationship to               proposed changes could negatively                     we are not finalizing this requirement.
                                                  the true cost of procuring services, and                impact access. Where there is confusion               Section 1902(a)(30)(A) of the Act does
                                                  therefore, are not a valid reference for                over whether a change may cause harm                  not specify that beneficiaries have
                                                  comparison.                                             to access to care, we will work with                  access to care within specific provider
                                                     Response: The framework described                    states to make a determination.                       ownership categories, but rather that
                                                  in this final rule with comment period                     Comment: Some commenters stated
                                                                                                                                                                access be viewed within the service
                                                  addresses how states can demonstrate                    that Medicaid payment rates should be
                                                                                                                                                                categories as a whole and within
                                                  and monitor sufficient access to care as                reviewed and analyzed as new
                                                  required by section 1902(a)(30)(A) of the               technology is introduced into the                     associated geographic areas. We
                                                  Act. Neither provider cost nor charges is               medical community to determine                        understand that payments do vary based
                                                  a required review element in meeting                    whether access to the new technology is               on provider ownership status and we
                                                  the requirements of the final rule with                 limited. Commenters also suggested that               intend to review those differences
                                                  comment period. We acknowledge and                      medical conditions affecting Medicaid                 outside of the scope of this final rule
                                                  support states’ efforts in working toward               populations may develop that                          with comment period.
                                                  delivery system reforms that promote                    substantially affect the need for certain             5. Access Review Timeframe
                                                  more effective care and lower cost. We                  covered items and services, such as the
                                                                                                                                                                   Comment: Several commenters
                                                  have issued several guidance letters on                 rise in HIV infection in the early 1980s.
                                                                                                                                                                addressed the timeframe of the on-going
                                                  reform models that can be supported                     The commenters concluded that any
                                                                                                                                                                reviews and offered alternatives to the
                                                  under the Medicaid program and,                         similar health-related changes should
                                                                                                                                                                timeframe in the May 6, 2011 proposed
                                                  within those letters, have cautioned that               require review of provider payments
                                                  access to care should be considered as                  rates to ensure continued access to                   rule. One commenter suggested
                                                  part of a reform model.                                 necessary items and services; this is not             requiring that each state complete a full
                                                     Comment: Commenters suggested that                   reflected in the proposed 5-year review               program access review by the end of the
                                                  the regulations be revised to address                   structure.                                            second full calendar year following the
                                                  ‘‘payment’’ as referring to both                           Response: Our intent is to define a                effective date of the regulations, request
                                                  individual health care service rates, as                process by which states can effectively               that all services be reviewed every 3
                                                  well as payments for care and services                  and consistently measure beneficiary                  years, and that one-third of all services
                                                  on an aggregate basis such as total                     access to medical services in the                     be reviewed each year. Other
                                                  payments for all care and services or                   Medicaid program. To the extent that                  commenters suggested that rates be
                                                  total payments for all acute hospital care              advances in technology and/or                         reviewed more frequently than every 5
                                                  and services.                                           unforeseen challenges arise that have an              years and suggested various alternative
                                                     Response: This rule only addresses                   impact on the delivery of care in the                 for more frequent review. While other
                                                  how states can demonstrate and monitor                  Medicaid program, we expect these                     commenters suggested that yearly
                                                  sufficient access to care as required by                types of changes to be considered when                reviews are excessive without a change
                                                  section 1902(a)(30)(A) of the Act, which                reviewing access to care but only to the              in payments and that it is more
                                                  describes payment rates for Medicaid                    extent that it increases or decreases                 appropriate to monitor access after
                                                  care and services. The requirements                     access to services as established in                  implementation of rate changes to
                                                  contained in this final rule with                       section 1902(a)(30)(A) of the Act. As                 determine the impact of the change.
                                                  comment period set forth a framework                    such, this final rule with comment                       Response: The timeframe outlined in
                                                  for states to use to demonstrate their                  period offers flexibility to states to                the May 6, 2011 proposed rule was
                                                  payment rate methodologies are                          demonstrate access within the context                 designed to ensure a timely review of
                                                  sufficient to ensure access. We                         of each state’s local health care delivery            access, while accommodating the time,
                                                  appreciate the comment but, as                          system.                                               manpower, and data constraints of state
                                                  previously discussed, we are not                           Comment: We received some                          Medicaid agencies. After considering
                                                  requiring states to review access for                   comments indicating that establishing a               the public comments, we have
                                                  each individual item, service, or                       standard equivalent to commercial                     determined that a full program review
                                                  procedure payment rate.                                 insurance would need to be established                over 5 years is too burdensome.
                                                     Comment: One commenter expressed                     by the Congress and doing so through                  Therefore, we have revised this
                                                  concern that the proposed requirement                   the proposed rule is an administrative                requirement to include a review of:
                                                  in § 447.203(b)(3) is unreasonable and                  expansion of the Medicaid entitlement,                Primary care services; physician
                                                  impedes the efficient operation of the                  one that may or may not be achievable                 specialist services; behavioral health
                                                  Medicaid program because all changes                    even if substantial increases in state and            services (including mental health and
                                                  in payment policy can be considered                     federal program funding were possible.                substance abuse disorder treatment);
                                                  ‘‘significant’’.                                           Response: We did not propose to                    pre- and post-natal obstetric services
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                                                     Response: Reviews of access to care                  establish a standard equivalent to                    including labor and delivery; and home
                                                  are necessary to ensure the state                       commercial insurance. Rather, this rule               health services; services where either
                                                  Medicaid program is providing                           will require states to make comparisons               payment rates have been reduced or
                                                  sufficient services to its beneficiaries.               of Medicaid service rates to private or               restructured; and services for which a
                                                  We discussed the reasons for issuing                    public health payer rates. We are aware               higher than usual volume of
                                                  this regulation at length in the May 6,                 that a number of states already perform               beneficiaries, providers, or stakeholders
                                                  2011 proposed rule. Although there is                   these types of calculations for varying               have raised access to care issues. The
                                                  some burden associated with the                         administrative purposes.                              ongoing reviews will be conducted


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                                                  every 3 years and intend to measure the                 methodology changes made through                         Response: We agree with the
                                                  current status of access to services                    SPAs, as well as ongoing feedback from                commenters though the list of services
                                                  within the state. We chose to require                   beneficiaries, providers and other                    that commenters suggested that states
                                                  that states conduct the ongoing reviews                 stakeholders.                                         prioritize would have required levels of
                                                  every 3 years based on comments                            Comment: Some commenters                           state effort similar to what we proposed.
                                                  indicating that the 5 year proposed                     suggested as an alternative to the                    For the reasons discussed in more detail
                                                  review periods were too infrequent to                   proposed timeline, that states should be              above, we will require that the access
                                                  adequately capture changes in access to                 required to conduct a comprehensive                   monitoring review plan include a
                                                  care. In addition, SPAs reducing                        and public access review within 180                   review of primary care services;
                                                  payment rates for the services other than               days prior to submission of the                       physician specialist services; behavioral
                                                  those mentioned above must be                           proposed payment rate change.                         health services, including mental health
                                                  submitted with an analysis of access to                    Response: We believe that the changes              and substance abuse disorder treatment;
                                                  care and then reviewed for a minimum                    in access to care that occur within 180               pre- and post-natal obstetric services
                                                  period of 3 years. States may also select               days between a review and SPA                         including labor and delivery; home
                                                  additional services to review at their                  submission and a year between review                  health services, and for services where
                                                  discretion.                                             and submission would be negligible.                   either payment rates have been reduced
                                                    Comment: Some commenters                              Furthermore, states are required to                   or restructured or where a significantly
                                                  requested that CMS require states to                    monitor access ongoing for 3 years once               higher than usual level of beneficiary,
                                                  post their access review online by                      a rate reduction goes into effect so any              provider or stakeholder access
                                                  January 15th each year since access                     access to care issues that arise between              complaints have been received. States
                                                  reviews are to be completed by January                  the initial review and SPA submission                 may also select additional services to
                                                  1st.                                                    will be detected through state                        review at their discretion.
                                                    Response: We consider the                             monitoring procedures.
                                                  completion date to be synonymous with                                                                         6. Special Provisions for Proposed
                                                                                                             Comment: We received some                          Provider Rate Reductions
                                                  the date the access monitoring review
                                                                                                          comments suggesting that the regulation
                                                  plan should be published or readily                                                                              Comment: We received many
                                                                                                          carve out a separate effective date of                comments on the requirement that
                                                  made available upon request. We have
                                                                                                          January 1, 2013 for the first rate review             access monitoring review plans
                                                  revised the final rule with comment
                                                                                                          required under the regulation and the                 accompany SPAs that proposed rate
                                                  period to require that states issue the
                                                                                                          subsequent rate reviews be conducted                  reductions. Many commenters suggested
                                                  access monitoring review plan by July 1
                                                  of each review year. This coincides with                every 5 years thereafter. Other                       that we modify the access review
                                                  the beginning of most state fiscal years                commenters stated that CMS should                     procedures to require baseline access
                                                  and allows states sufficient time after                 require states to begin the access                    analysis prior to taking action to reduce
                                                  the issuance of this final rule with                    reviews as soon as possible. Some                     provider rates, ongoing monitoring
                                                  comment period to conduct the first                     commenters stated that CMS could                      processes to detect problems, and
                                                  review for service categories subject to                require states to begin reviews on the                corrective action when problems are
                                                  ongoing review.                                         sooner of the first day of the state fiscal           detected. Some of the commenters
                                                    Comment: Many commenters                              year or the first day of the calendar year            stated that CMS should suspend the rate
                                                  suggested revisions to the timeline for                 after the final rule with comment period              reduction until corrective measures are
                                                  review that would require states to                     becomes effective.                                    taken. Other commenters requested that
                                                  conduct access studies and monitor                         Response: We had proposed that                     CMS eliminate the requirement that
                                                  program changes on an annual basis.                     states make available the first access                proposed rate changes be accompanied
                                                  For example, commenters suggested                       data reviews beginning January 1 of the               by an analysis of access or face
                                                  CMS require states to conduct annual                    year beginning no sooner than 12                      disapproval.
                                                  reviews and compare information from                    months after the effective date of the                   Response: In the May 6, 2011
                                                  year-to-year and analyze trends,                        final rule with comment period. Based                 proposed rule, we discussed the basis
                                                  averages, and notations of changes in                   on comments regarding the delay in                    and reasoning behind requiring access
                                                  access to care over time.                               access review information, we are                     information in making SPA decisions.
                                                    Response: We agree that                               revising the proposed timeframe and                   This final rule with comment period
                                                  comprehensive studies of access are                     will require states to publish the access             requires that states conduct baseline
                                                  important. However, we have also                        monitoring review plans by July 1 after               reviews and monitoring procedures
                                                  considered concerns from states over                    the effective date of this final rule with            when implementing rate reductions or
                                                  the burden associated with the data                     comment period. The access monitoring                 restructuring rates in ways that may
                                                  requirements discussed in the May 6,                    review plans must be updated by July                  negatively affect access to care.
                                                  2011 proposed rule and the resources                    1st every 3 years thereafter. As                      Consistent with commenters’
                                                  that states estimate would be required to               discussed, this timeframe corresponds                 suggestions, this rule requires that states
                                                  collect and analyze access information                  with the start of state fiscal years for the          conduct baseline reviews and ongoing
                                                  for all covered Medicaid services.                      majority of states and provides states                monitoring of access data to ensure
                                                  Therefore, to comply with section                       with time to gather the necessary data                compliance with section 1902(a)(30)(A)
                                                  1902(a)(30)(A) of the Act, we focus                     and resources to perform accurate and                 of the Act.
                                                  access review requirements on ongoing                   detailed access reviews.                                 Based on feedback from states that
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                                                  reviews of primary care services,                          Comment: Several commenters                        ongoing 5-year access reviews for all
                                                  physician specialist services, mental                   suggested that priority be given to                   services would overly burden state
                                                  health services, pre- and post-natal                    certain services for which access                     agencies, we determined a process
                                                  obstetric services including labor and                  problems have been documented. The                    similar to the commenters’ to be the
                                                  delivery, and home health services and                  list of services included physician                   appropriate regulatory framework. Such
                                                  to focus state efforts on review and                    services, dental services, mental health              a process will include a review of
                                                  monitoring access to care for all other                 services, and many specialty care                     primary care services, physician
                                                  Medicaid services specific to rate                      services.                                             specialist services, behavioral health


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                        67595

                                                  services including mental health, pre-                  providers, and that the requirement be                methodology restructuring or only those
                                                  and post-natal obstetric services                       comparability to the private sector.                  that result in rate reductions.
                                                  including labor and delivery, home                         Response: Section 1902(a)(30)(A) of                   Response: A state must develop
                                                  health services and for services where                  the Act requires that payments be                     procedures to monitor continued access
                                                  either payment rates have been reduced                  sufficient to enlist enough providers so              to care after implementation of state
                                                  or restructured or for which a                          that care and services are available                  plan service rate reduction or payment
                                                  significantly higher than usual level of                under the plan at least to the extent that            restructuring that may reduce access to
                                                  beneficiary, provider or stakeholder                    such care and services are available to               care. The procedures must define a
                                                  complaints have been received. While                    the general population in the geographic              periodic review of state determined
                                                  the suspension of a rate reduction may                  area. We expect states to address access              indices that will serve to demonstrate
                                                  be an appropriate corrective action, we                 issues, whether through a formal                      sustained service access, consistent with
                                                  will not require a specific approach to                 corrective action plan, or if more                    efficiency, economy, and quality of care.
                                                  addressing access issues within this                    appropriate, on a case by case basis.                    Comment: One commenter requested
                                                  rule, and we will work with states on                      Comment: Some commentators                         that CMS clarify how a state would
                                                  appropriate remedies given the facts and                requested more specific requirements                  demonstrate sustained access after
                                                  nuances of particular situations. We                    for monitoring access after a rate                    implementation of a SPA that reduces or
                                                  intend to work with states to monitor                   reduction is implemented, including the               restructures rates.
                                                  access data and determine an                            request that CMS set specific timeframes                 Response: The monitoring procedures
                                                  appropriate course of action should                                                                           required in § 447.203(b)(6)(ii) require
                                                                                                          for the required monitoring procedures.
                                                  access issues arise.                                                                                          that a state develop procedures to
                                                                                                             Response: Section 447.203(b)(6)(ii)
                                                                                                                                                                monitor access after implementation of
                                                  7. Compliance With Access                               allows the state flexibility to develop
                                                                                                                                                                a SPA that results in rate reduction or
                                                  Requirements                                            access monitoring strategies. While
                                                                                                                                                                payment restructuring. Such monitoring
                                                                                                          monitoring procedures are required of
                                                     Comment: Some commenters                                                                                   should include enrollee needs,
                                                                                                          states, each state may develop the
                                                  suggested that CMS approve an access                                                                          availability of care and providers,
                                                                                                          monitoring plan that best accommodates                utilization of services, and service
                                                  review within 90 days of receipt and if                 its data and other resources, while still
                                                  the review is deemed unacceptable, that                                                                       payment information. States must
                                                                                                          adequately monitoring access to                       conduct reviews periodically over a
                                                  CMS disapprove a SPA submittal or take                  services. This final rule with comment
                                                  corrective action to address inadequate                                                                       minimum 3-year period following
                                                                                                          period incorporates a specified time                  implementation of a SPA that reduces or
                                                  access to care.                                         period of 3 years for monitoring
                                                     Response: While we will not formally                                                                       restructures rates.
                                                                                                          following the implementation of a SPA                    Comment: Several commenters
                                                  approve or disapprove access reviews,
                                                                                                          that reduces or restructures payment                  recommended changes to the review
                                                  all reviews must include the elements
                                                                                                          rates.                                                and monitoring requirements of the
                                                  described in the regulations and we will
                                                  review the plans using this standard.                      Comment: Some commenters                           proposed rule. Some commenters
                                                  We will not approve SPAs that are                       suggested that we provide clear and                   requested that CMS provide additional
                                                  unsupported by data and the processes                   broad discretion to states in managing                flexibility to states in establishing
                                                  described in this final rule with                       rates, and a clear path toward expedient              appropriate methods for measuring and
                                                  comment period, and will pursue                         approval of a rate reduction, provided                monitoring beneficiary access to
                                                  compliance action should a state fail to                that the states have mechanisms in                    services. Other commenters suggested
                                                  conduct the baseline access data                        place to monitor and correct adverse                  that states should periodically review
                                                  reviews.                                                impacts to access.                                    and monitor access and states determine
                                                                                                             Response: This final rule with                     the measures of access and beneficiary
                                                  8. Monitoring Procedures                                comment period continues to offer                     information included in such reviews
                                                     Comment: Some commenters                             states broad discretion to manage rates               allowing states to take a more balanced
                                                  suggested that we revise the access                     and includes procedures to ensure that                approach to evaluating access.
                                                  demonstration to state that states must                 proposed changes in the program do not                   Response: This final rule with
                                                  ‘‘consider’’ the access impact and                      violate section 1902(a)(30)(A) of the Act.            comment period offers states significant
                                                  commit to ongoing monitoring when                          Comment: Some commenters                           flexibility in determining the measures
                                                  appropriate.                                            suggested that CMS should define in the               of access and beneficiary information
                                                     Response: We agree that states should                regulation its role in post-                          included in the review as the
                                                  conduct ongoing monitoring efforts on                   implementation monitoring.                            commenter suggests. However, we
                                                  access to care and included oversight                      Response: We will review access to                 believe that a defined time period for
                                                  and monitoring procedures within this                   care data each time a state submits a rate            completion of the access to care reviews
                                                  final rule with comment period. To the                  reduction or restructuring of payment                 allows the collected data to serve as an
                                                  extent that states find access to care                  SPA or any time the agency is made                    acceptable comparative analytical tool
                                                  issues as part of the access monitoring                 aware of access to care issues. The                   over a number of years whenever states
                                                  review plan processes that are ongoing                  monitoring procedures in the regulation               proposes to restructure or reduce rates
                                                  or associated with specific rate actions,               are intended to be used to inform the                 or when beneficiaries alert the agency to
                                                  we expect the state to take actions to                  state and federal government of the                   access to care issues. Timely reviews
                                                  remediate those issues. If a state does                 overall status of access to care in their             also allow states to demonstrate ongoing
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                                                  not take remediation actions, the state                 program. In addition, CMS may use the                 compliance with the section
                                                  would not be in compliance with the                     access to care data to monitor the                    1902(a)(30)(A) of the Act. Section
                                                  statute and would be at risk of losing                  adequacy of rates over time, and may                  447.203(b)(6)(ii) will require states to
                                                  FFP.                                                    use it to address areas in which access               develop ongoing monitoring procedures
                                                     Comment: Commenters requested that                   is insufficient.                                      through which they periodically review
                                                  CMS define access issues and action                        Comment: One commenter requested                   indices to measure sustained access to
                                                  plans as system-wide rather than case-                  that CMS clarify if the monitoring                    care. Our goal is to provide a consistent
                                                  by-case as identified by beneficiaries or               requirements apply to all payment                     path for all states to document access to


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                                                  67596            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  care consistent with the Act but to also                the beneficiary and provider feedback                   Comment: Some commenters
                                                  allow states flexibility to measure and                 mechanisms must be available to Tribes                suggested advocate groups should also
                                                  monitor access within state means.                      and Indian Health providers. In                       have an opportunity for ongoing input
                                                     Comment: Some commenters stated                      addition, consistent with Executive                   which should be differentiated from the
                                                  that states should be required to use the               Order 13175, HHS Policy, and the CMS                  mechanism provided for public input.
                                                  same methodology to measure access                      Tribal Consultation Policy, states are                  Response: We understand that
                                                  once a rate reduction is put into place                 required to consult with tribes to receive            advocate groups currently have many
                                                  so that a fair comparison of the impact                 their input. We also encourage states to              opportunities to provide feedback to
                                                  of the rate reduction may be made.                      develop specialized mechanisms that                   states on Medicaid issues and offer
                                                     Response: We generally agree that                    would be responsive to input from                     important insights for state
                                                  consistency in a state’s methodology                    beneficiaries from other populations                  consideration. This final rule with
                                                  may allow for better comparisons of                     that have particular access concerns.                 comment period offers advocates and
                                                  access over a period of time; however,                    Comment: Several commenters                         other stakeholders an opportunity to
                                                  states may need to make adjustments                     requested that states or CMS establish                provide feedback on specific state rate
                                                  and changes to the analysis based on                    advisory groups to help determine                     actions through the public process
                                                  modifications of service delivery                       whether state payment rates sufficiently              procedures. In addition, we would
                                                  systems, payment rates or other program                 provide for access to care. Commenters                expect that individuals advocating on
                                                  changes that may affect access to care.                 suggested that the groups be comprised                behalf of a Medicaid beneficiary would
                                                  States and CMS may also determine that                  of a variety of stakeholders, such as                 have access to the mechanism for
                                                  an analysis is not feasible to conduct or               beneficiaries, beneficiary advocacy                   ongoing beneficiary feedback described
                                                  does not accurately demonstrate access                  groups, clinicians, and provider trade                in this rule.
                                                  after conducting a review For these                     organizations.
                                                  reasons, we are not restricting states                                                                        10. Addressing Access Questions and
                                                                                                            Response: Current § 431.12 requires                 Remediation of Access Issues
                                                  from making modifications to their
                                                                                                          that state Medicaid agencies establish                   Comment: We received several
                                                  methodology when the changes intend
                                                                                                          Medical care advisory committees that                 comments regarding the subsequent
                                                  to improve the analysis or present
                                                                                                          include provider and beneficiary                      actions if an access issue is identified.
                                                  reasonable alternative approaches to
                                                                                                          participation. We are finalizing the                  Many commenters were in support of
                                                  reviewing access to care.
                                                                                                          requirement that states have a                        the requirement for states to submit a
                                                     Comment: Some commenters
                                                                                                          mechanism for ongoing provider                        corrective action plan, while many
                                                  suggested, as part of monitoring
                                                                                                          feedback, similar to the process for                  commenters were opposed to such a
                                                  identified access issues, an annual
                                                                                                          ongoing beneficiary feedback. This                    requirement. Commenters stated
                                                  review and public town hall meetings
                                                                                                          could include the Medical care advisory               opposition and expressed concern about
                                                  should be implemented.
                                                     Response: We considered requiring                    committee required at § 431.12.                       the lack of ‘‘threshold’’ for the scope or
                                                  that states conduct a public process for                  Comment: Commenters requested that                  severity of an access issue that would
                                                  monitoring activities similar to that                   we clarify the decision to require                    require the submission of a corrective
                                                  which is described for the submission of                ongoing beneficiary feedback when                     action plan. While some commenters
                                                  SPA that reduce rate or restructure                     other requirements of the proposed rule,              sought clarification from CMS, others
                                                  payment in circumstances when the                       such as the public process, involve                   implied that the state should be able to
                                                  changes could result in access issues.                  providers and other stakeholders. In                  define such threshold, especially in
                                                  This final rule with comment period                     addition, commenters requested that                   instances that are clearly compliant
                                                  requires states to have mechanisms for                  CMS clarify the standard against which                with the statutory standard. Some
                                                  ongoing beneficiary, provider, and other                we would require states to consider                   commenters suggested that CMS should
                                                  stakeholder feedback and those                          input from beneficiaries and other                    not approve a SPA or permit a payment
                                                  mechanisms should ensure that state                     stakeholders. A commenter noted that                  reduction to be imposed until corrective
                                                  monitoring activities are effective and                 the level of input and magnitude of                   action measures are taken. Other
                                                  were properly developed.                                proposed SPA changes are not always                   commenters suggested that CMS should
                                                                                                          correlated.                                           affirmatively require states to suspend
                                                  9. Mechanisms for Ongoing Input                           Response: After considering the                     or reverse a payment reduction if an
                                                     Comment: Many commenters                             comments received, we are including in                access issue is identified. A few
                                                  supported the requirement that states                   this final rule with comment period the               commenters urged CMS to impose
                                                  have ongoing mechanisms (hotlines,                      requirement that states consider                      sanctions on states that fail to remedy
                                                  surveys, ombudsman, etc.) for                           provider feedback similar to the                      access issues timely. Still other
                                                  beneficiary input on access to care.                    requirement for ongoing beneficiary                   commenters requested that CMS remove
                                                  Some of the commenters suggested that                   feedback. This could be accomplished                  any references to remedies for access
                                                  we add a specific mechanism for                         through state Medical care advisory                   issues that do not involve increasing
                                                  feedback from tribes, tribal                            committees, logging of issues raised by               payment rates. Commenters also
                                                  organizations, and Indian Health                        providers, or other means. States must                discussed the 90-day timeframe to
                                                  Providers.                                              incorporate feedback from beneficiaries               submit corrective action plan after
                                                     Response: We appreciate the support                  and providers are part of the access                  discovery. Some concerns were raised
                                                  for the requirement that states have an                 monitoring review plan procedures.                    that the 90-day timeframe was overly
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                                                  ongoing mechanism for beneficiary                       There is no threshold or standard that                hasty, while others thought it
                                                  feedback. We have also considered                       we will apply to stakeholder feedback;                appropriate.
                                                  comments from providers and provider                    rather, the requirements will assure that                Response: After careful consideration
                                                  organizations and will require that                     states understand access to care                      of all of the comments received, we are
                                                  states have a similar mechanism for                     concerns from the community as they                   finalizing § 447.203(b)(8) requiring a
                                                  provider feedback. Tribes and Indian                    arise and consider that information as                state to develop and submit a corrective
                                                  Health providers are an important part                  they make changes to their Medicaid                   action plan to CMS within 90 days of
                                                  of the Medicaid community and both                      program.                                              discovery of an access deficiency. The


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                       67597

                                                  submitted action plan must aim to                          Response: We are finalizing § 447.203              however, the term ‘‘modified’’ is not
                                                  remediate the access deficiency within                  that will require states to publish, or               defined in the rule.
                                                  12 months. This requirement ensures                     promptly make available upon request,                    Response: We believe that in the
                                                  that the access deficiency is addressed                 the access monitoring review plan.                    context of the regulatory language and
                                                  in a timely manner while allowing the                   Within the access monitoring review                   we are confirming here that modified
                                                  state time to address underlying causes                 plan, a state must monitor continued                  means to reduce or restructure Medicaid
                                                  of the access issue, be it payment rates,               access to care following rate reduction               service payment rates in circumstances
                                                  provider participation, etc. Section                    or payment restructuring.                             when the changes could result in access
                                                  447.203(b)(8) clarifies that states have a                 Comment: A commenter suggested                     issues. To the extent that states are
                                                  number of options to address access to                  that CMS should implement a                           unsure whether a change could result in
                                                  care issues. These remediation efforts                  mechanism to fast-track any substantive               access issues, we will work with states
                                                  can include but are not limited to:                     access concerns that are uncovered                    individually to make a determination.
                                                  increasing payment rates; improving                     during state-level review; states should                 Comment: One commenter suggested
                                                  outreach to providers; reducing barriers                not be permitted to wait until the start              that CMS outline the remedies that
                                                  to provider enrollment; providing                       of the next calendar year to fix a                    beneficiaries and providers will have if
                                                  additional transportation to services; or               substantive problem.                                  access issues are discovered and the
                                                  improving care coordination. This is an                    Response: Once access issues are                   state proceeds with implementing a SPA
                                                  acknowledgement that access to care is                  identified, the state will have 90 days to            without regard to the issues.
                                                  not always about payment rates but                      submit to CMS for review a corrective                    Response: This final rule with
                                                  rather that when enough providers are                   action plan; the goal of this plan must               comment period requires that states
                                                  enlisted in the program, states may need                be to resolve the identified access issues            monitor access to care after
                                                  to find ways to connect beneficiaries                   within 12 months. This timeframe has                  implementing Medicaid payment rate
                                                  with the care and services they need.                   been developed to minimize the length                 reductions and identify and remediate
                                                     Comment: Some commenters stated                      of time beneficiaries may experience                  issues that are found as a result of the
                                                  that states need more than 12 months to                 decreased access while realistically                  access review and monitoring efforts.
                                                  implement corrective action when                        accommodating a state’s resources,                    The rule also requires an ongoing
                                                  access issues are discovered, whereas                   allowing sufficient time to address the               mechanism for beneficiaries, providers,
                                                  other commenters believed that                          underlying causes of identified access                and other stakeholders to raise concerns
                                                  allowing states 12 months to resolve the                issues.                                               over access to care. States are required
                                                  issue was too long. Commenters stated                      Comment: Commenters raised                         to maintain a record of the volume and
                                                  concerns that that the 12-month time                    concerns that the remediation process                 nature of the response to those
                                                  frame attached to the corrective action                 could result in a SPA backlog because                 concerns. We expect that the monitoring
                                                  plan could encourage longer-term                        states would need to address access                   procedures and mechanisms for ongoing
                                                  measures, which may have an adverse                     issues before moving forward with state               input will work together to raise
                                                  effect on provider participation. One                   plan changes.                                         ongoing access concerns.
                                                  commenter stated the final rule should                     Response: State plan changes must
                                                  recognize the potential need for state                                                                        C. Medicaid Provider Participation and
                                                                                                          comply with statutory and regulatory
                                                  legislative action to address identified                                                                      Public Process To Inform Access to Care
                                                                                                          requirements. To the extent a state
                                                  access issues and the 12-month                                                                                (§ 447.204)
                                                                                                          identifies areas of inadequate access to
                                                  timeframe could potentially be too short                Medicaid services, we could not                         We received several comments that
                                                  for a state to make these changes,                      approve any SPA that could potentially                discussed concerns over the proposed
                                                  especially in states with biennial                      impede access further. We will work                   changes to the public process
                                                  legislative sessions.                                   with states to address these issues on an             requirements.
                                                     Response: We are finalizing                          as needed basis.                                        Comment: One commenter stated that
                                                  § 447.203(b)(8) that requires a state to                   Comment: One commenter stated that                 the public process requirements are not
                                                  develop and submit a corrective action                  the final rule should remove the                      enforceable because they are not a
                                                  plan to CMS within 90 days of                           requirement for data gathering and focus              specific requirement in statute.
                                                  discovery of an access issue. The                       on monitoring and corrective action.                    Response: The purpose of this final
                                                  submitted action plan must aim to                       The commenter further suggested that if,              rule with comment period is to provide
                                                  remediate the access deficiency within                  and when, access issues are found, a                  states with standard processes that
                                                  12 months. This timeframe has been                      state should develop and implement a                  consider and document access to care in
                                                  developed to minimize the length of                     corrective action plan. These activities              the Medicaid program consistent with
                                                  time beneficiaries may experience                       would be supplemented through                         section 1902(a)(30)(A) of the Act. We
                                                  decreased access while realistically                    ongoing mechanisms for obtaining                      respectfully disagree that the proposed
                                                  accommodating a state’s resources and                   beneficiary input, using hotlines,                    changes to the public process are not
                                                  allowing sufficient time to address the                 surveys and other tools.                              contemplated within the requirements
                                                  underlying causes of identified access                     Response: We have revised the                      of that section. The regulatory guidance
                                                  issues. Although longer-term measures                   requirements of this final rule with                  within this rule relies upon public
                                                  may be needed to fully address the                      comment period to have a greater focus                interaction to, in part, gauge and
                                                  underlying causes of an access issue, it                on monitoring and corrective action.                  document whether beneficiaries and
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                                                  is imperative that a corrective action                  Data gathering is essential to these                  stakeholders raise concerns that
                                                  plan aim to resolve the access issue                    activities and, as previously discussed,              proposed rate changes will have a
                                                  within 12 months, in the interest of                    we are focusing the data review efforts               meaningful effect on beneficiary needs
                                                  preserving adequate beneficiary access.                 in consideration of state burden.                     and the availability of care and
                                                     Comment: Commenters suggested that                      Comment: A commenter noted that                    providers. We maintain that such
                                                  we require states to publicly report and                the May 6, 2011 proposed rule states                  information is necessary to understand
                                                  address any decline in access to services               that CMS may disapprove a SPA if a rate               state rate proposals and inform CMS
                                                  following rate reductions.                              is ‘‘modified’’ without an access review;             approval actions.


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                                                  67598            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                     Comment: Commenters noted that the                   public process should include: the                    implement on an ongoing basis. To
                                                  May 6, 2011 proposed rule may create                    proposed SPA; material submitted by                   overcome these issues, commenters
                                                  a timing problem for states by requiring                the state Medicaid agency in connection               wrote that the final rule should clarify
                                                  the public process to occur prior to the                with the proposed SPA; the information                that states have flexibility in monitoring
                                                  submission of a SPA. Commenters                         that CMS reviews to approve a SPA; and                access to care and recommend that we
                                                  anticipate that the public process does                 information on how interested parties                 remove the requirements of ongoing
                                                  not allow sufficient time for states to                 may promptly obtain such materials.                   ‘‘beneficiary input’’ since the public
                                                  prepare and submit SPAs. Commenters                     Commenters also requested that all state              process and ongoing beneficiary
                                                  also stated that the public process                     plans and proposed SPAs should be                     feedback mechanisms are duplicative.
                                                  requirement increases the time it takes                 posted on state Web sites or the CMS                     Response: This final rule with
                                                  to submit a SPA by at least 30 days. As                 Web site.                                             comment period does not require a
                                                  an alternative, some commenters                            Response: This final rule with                     particular mechanism for states to
                                                  suggested that the public process occur                 comment period does not address the                   receive feedback from beneficiaries and
                                                  prior to the effective date of the SPA                  public process under section                          other stakeholders that are affected by
                                                  consistent with the public notice                       1902(a)(13)(A) of the Act that is required            Medicaid rate-setting. The preamble to
                                                  requirement.                                            for institutional rate setting. This rule             the May 6, 2011 proposed rule
                                                     Response: Under the processes                        addresses only the procedures necessary               specifically discussed state flexibilities
                                                  required by this final rule with                        to document compliance with section                   and the ability of states to rely on
                                                  comment period, to the extent that a                    1902(a)(30)(A) of the Act to assure that              current processes to demonstrate access
                                                  state wishes to change payment rates                    provider payment rates are sufficient for             to care to the extent that states already
                                                  that may affect access, the state will                  beneficiary access to care. Those                     have such processes in place. In this
                                                  need to be up to date in following the                  procedures must include a public input                rule, we are implementing a standard
                                                  access review procedures and public                     mechanism for comments on access to                   set of procedures, including feedback
                                                  input mechanisms. If the state does not                 care. This final rule with comment                    from stakeholders, that all states must
                                                  have the required access review data, or                period provides states with considerable              follow to document access to care
                                                  has not recently prepared an access                     flexibility to determine appropriate                  consistent with section 1902(a)(30)(A) of
                                                  analysis, there could be a delay in its                 public input mechanisms. We suggest                   the Act. States develop the particular
                                                  ability to submit an approvable SPA                     that interested parties work with states              mechanisms to enact the procedures
                                                  submission. We note that this rule does                 to ensure that these mechanisms are                   either consistent with current practices
                                                  not affect the timing provisions for SPA                effective.                                            or in other ways that meet beneficiary
                                                  effective dates. States may make SPAs                      Comment: Commenters suggested that                 needs and address access concerns
                                                  effective as early as the first day within              CMS be more prescriptive in how states                within each state. The public process
                                                  the quarter in which the SPA is                         should conduct the public process                     requirements for institutional rates and
                                                  submitted so even a 30-day delay                        based upon a proven methodology. One                  the ongoing public input mechanisms
                                                  should rarely change the proposed                       commenter suggested a formal                          serve different purposes. The ongoing
                                                  effective date of a state’s SPA action.                 ‘‘Listserv’’ for comments similar to the              public input mechanisms apply to all
                                                  Furthermore, we also note that states are               federal proposed rule listserv for public             services, are not limited to input
                                                  already subject to a similar process                    access to comments. A commenter                       regarding proposed changes in rates,
                                                  related to conducting notice prior to                   requested that families, caregivers, and              and includes a clear opportunity for
                                                  SPA submissions through the Tribal                      providers be able to represent their                  beneficiary feedback on access. The
                                                  Notification processes established under                concerns to the Medicaid agencies and                 beneficiary feedback mechanism allows
                                                  section 1916 of the Act.                                have processes in place that allow them               states to understand any access to care
                                                     Comment: Commenters stated that the                  to represent the voice of Medicaid                    concerns in real time as they occur. We
                                                  proposed changes were overly                            beneficiaries where appropriate.                      respectfully disagree that those efforts
                                                  prescriptive and that CMS should allow                     Response: While we continue to allow               are duplicative.
                                                  individual states to determine how to                   for states to determine exact procedures                 Comment: Several commenters
                                                  interact with stakeholders on changes to                for soliciting input from beneficiaries               recommended that CMS strengthen the
                                                  Medicaid payment methodologies.                         and stakeholders, we appreciate the                   regulation to state that any SPAs
                                                     Response: We provided states with                    suggestion that states could use a                    submitted without having completed
                                                  the flexibility to determine the                        listserv to reach its intended audience.              the public process requirement would
                                                  appropriate mechanism to solicit input                  The mechanisms for ongoing beneficiary                be disapproved. A commenter
                                                  from beneficiaries and affected                         feedback required in this final rule with             specifically proposed that the regulatory
                                                  stakeholders. States that have these                    comment period will allow beneficiaries               text be modified so that CMS ‘‘must’’
                                                  mechanisms in place are under no                        and stakeholders to voice concerns                    disapprove a SPA if submitted without
                                                  requirement to change their approach.                   related to access to care in multiple                 a state meeting the public process
                                                  This final rule with comment period                     forums, such as hotlines and                          requirements described at § 447.204(b).
                                                  requires that a state document                          ombudsman programs. We agree that                        Response: The regulations require that
                                                  beneficiary and stakeholder feedback                    beneficiary and stakeholder feedback is               states provide a mechanism for public
                                                  and use that information to inform how                  vital to understanding access to care                 input when reducing or restructuring
                                                  they evaluate access to care to meet the                both as it pertains to specific rate                  Medicaid payment rates in
                                                  statutory requirement. This information                 proposals and on an ongoing basis.                    circumstances that could result in
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                                                  will both inform CMS’s approval actions                    Comment: Some commenters offered                   access issues. We retain the authority to
                                                  and serve as the state’s public record for              concerns that the specific requirements               consider the circumstances of and
                                                  compliance with section 1902(a)(30)(A)                  of public input is an unclear process                 content of a SPA submittal to determine
                                                  of the Act.                                             and that it is difficult for states to obtain         its compliance with statutory and
                                                     Comment: We received many                            stakeholder input on all services.                    regulatory requirements before making
                                                  comments that requested states provide                  Commenters further stated that public                 approval decisions.
                                                  specific information as part of the                     process creates a substantial                            Comment: One commenter wrote that
                                                  public process. Commenters stated that                  administrative burden for the state to                discretionary language in § 447.204(b)


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67599

                                                  ‘‘the agency may disapprove a proposed                  reduction of 10 percent or more, a CMS-               and/or a change in the scope or
                                                  SPA using the authority . . . or may                    defined threshold; or any rate reduction              definition of Medicaid benefits.
                                                  take a compliance action’’ could enjoin                 or alteration in reimbursement methods.                  Response: We did not propose an
                                                  a rate alteration or reduction based                    Many commenters also suggested that                   expansion of the public notice
                                                  solely on the fact that the SPA is not yet              CMS should delete the term                            requirement to include changes in
                                                  CMS-approved.                                           ‘‘significant’’ altogether.                           coverage policy and the public notice
                                                     Response: As we indicated above, we                     Response: The public notice                        regulation discusses notice of changes
                                                  do not intend in this rulemaking to                     requirement informs providers of                      in statewide methods and standards for
                                                  change the requirements relating to the                 changes in state plan methods and                     setting payment rates. Since this rule
                                                  effective date of approvable SPAs. How                  standards that have either a positive or              addresses policies related to section
                                                  these requirements are applied and                      negative impact on rate-setting. As                   1902(a)(30)(A) of the Act, which is
                                                  interpreted in judicial review in the                   discussed in the May 6, 2011 proposed                 specific to state plan service rates and
                                                  federal courts is an issue that is beyond               rule, it is difficult to determine a                  access to care, we are not addressing
                                                  the scope of this rulemaking.                           threshold of a significant change in                  changes to coverage policies at this
                                                     Comment: Several commenters                          payment methods and standards since                   time.
                                                  suggested requiring states to implement                 the determination to participate or                      Comment: One commenter offered
                                                  an ongoing input process for every                      continue to participate in Medicaid is                that the public notice requirement
                                                  change, regardless of the scope. Other                  provider specific. This final rule with               should be amended to tie in with the
                                                  commenters noted the rule creates a                     comment period should reduce the                      public process requirement described in
                                                  significant administrative burden for                   administrative and financial burden of                the May 6, 2011 proposed rule. The
                                                  states and stated it would be an                        issuing notice by allowing states to                  commenter offered that since the new
                                                  inefficient use of limited resources in                 publish on state agency Web site. In                  public process is required prior to a
                                                  situations where states are making                      consideration of this and comments                    state submitting a SPA, the process
                                                  minor changes. The commenters                           from providers requesting the removal                 should tie in with the requirements set
                                                  requested that CMS work with states to                  of the term ‘‘significant’’ and the past              forth in § 447.205 as to how notice
                                                  define a threshold that would trigger the               ambiguity in interpreting whether                     should be given.
                                                  need for beneficiary input. The                                                                                  Response: The public process and
                                                                                                          notice is required, we are removing the
                                                  commenters also recommended that                                                                              public notice requirements serve
                                                                                                          term ‘‘significant’’ in this final rule with
                                                  CMS adopt language for such a process                                                                         different purposes. The public notice
                                                                                                          comment period. Aside from the                        applies to any changes in state plan
                                                  similar to that contained in the
                                                                                                          specific exceptions described in the                  methods and standards, and is
                                                  proposed ‘‘Monitoring Access’’
                                                                                                          regulation, notice will be required for all           published 1 day prior to the effective
                                                  provisions whereby the state is able to
                                                                                                          changes in state plan methods and                     date of a Medicaid SPA. The public
                                                  define the procedures and process.
                                                     Response: The requirements in this                   standards with the effective date of this             notice informs the public of a proposed
                                                  final rule with comment period for                      final rule with comment period.                       change in Medicaid rate-setting or
                                                  public input allow states flexibility to                   Comment: A commenter suggested                     policy without necessarily considering
                                                  design public input mechanisms that                     that the public notice regulation                     public feedback as part of the
                                                  are appropriate for state-specific                      describe requirements specific to tribal              policymaking process. The public
                                                  circumstances. Considering that there is                consultation.                                         process requirement provides
                                                  so much variability in the Medicaid                        Response: While the May 6, 2011                    opportunity for the public to provide
                                                  program and the delivery of Medicaid                    proposed rule did not address tribal                  input into determining beneficiary
                                                  services, CMS is concerned that                         consultation, the CMS tribal                          access to care.
                                                  defining the significance of a rate                     consultation requirements were detailed                  Comment: A few commenters
                                                  reduction or payment restructuring                      in policy in the November 17, 2011                    objected to the use of web-based
                                                  before a state institutes a beneficiary                 document entitled ‘‘CMS Tribal                        publications as an option to issue public
                                                  feedback mechanism would undermine                      Consultation Policy.’’ The policy                     notice. One commenter cited a number
                                                  the inclusion of the process in this                    incorporates provision in the American                of reasons for the opposition, including:
                                                  regulation. Many states have indicated                  Recovery and Reinvestment Act of 2009                 The benefit of printed notice over
                                                  to CMS through other venues that the                    (Recovery Act) and the Children’s                     Internet notice; the fact that state Web
                                                  feedback mechanism is a primary                         Health Insurance Program                              sites do not have strong readership
                                                  indicator of access to care.                            Reauthorization Act of 2009 (CHIPRA).                 when compared to newspapers; limited
                                                                                                          Additional information regarding the                  access to the Internet in many poor and
                                                  D. Public Notice of Changes in                          CMS Tribal Consultation Policy is                     rural communities; potential problems
                                                  Statewide Methods and Standards for                     available at http://www.cms.gov/                      that individuals with disabilities or
                                                  Setting Payment Rates (§ 447.205)                       Outreach-and-Education/American-                      illness may have with using the
                                                    Comment: We received comments                         Indian-Alaska-Native/AIAN/                            Internet; lack of assurance that states
                                                  that suggested various thresholds for                   Consultation.html. CMS will continue                  will maintain Internet sites sufficiently;
                                                  significant changes and removal of the                  to consult with Tribal leaders on the                 and difficulty in archiving web-based
                                                  term significant from the public notice                 delivery of health care for American                  publications for courts, historians,
                                                  requirement. Some commenters                            Indians/Alaska Natives (AI/AN) served                 researchers and archivists. The
                                                  requested that states be allowed to                     by the Marketplace, Medicare,                         commenter stated that the proposal
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                                                  define the term ‘‘significant’’ in the                  Medicaid, Children’s Health Insurance                 would leave the public with large gaps
                                                  regulations, while others requested that                Program (CHIP), or any other health care              in public information.
                                                  CMS define both the terms ‘‘significant’’               program funded by CMS and make                           Response: We have addressed many
                                                  and ‘‘change’’ in the final rule. A                     updates to the policy as necessary.                   of the issues raised in the comment in
                                                  number of commenters suggested                             Comment: One commenter offered                     this final rule with comment period. For
                                                  thresholds for issuing public notice,                   that the public notice requirement                    instance, the rule provides that a state’s
                                                  including: any reduction in payment; a                  should be expanded so that a ‘‘change’’               electronic publication must be regular
                                                  reduction of 5 percent or more; a                       includes both a change in payment rates               and known. This offers significant


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                                                  67600            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  advantages over paper-based                             that the regulation is intended to                       • Section 447.203(b)(3) changes the
                                                  publications that may appear on any                     establish a process by which states                   analysis of payments to compare
                                                  day in the calendar year and should                     monitor and measure access, rather than               Medicaid payments as a percentage of
                                                  alleviate some concerns over access to                  just the requirement that data is due to              other public and private health payment
                                                  the state Web sites. We agree that these                CMS.                                                  rates within geographic areas of the
                                                  Web sites must meet national standard                      • Section 447.203(b) is revised to                 state. We proposed that states compare
                                                  to assure access to individuals with                    clarify that the states’ access monitoring            Medicaid rates to provider charges and
                                                  disabilities, and we are including this                 review plans must be developed in                     Medicare payments rates, the average
                                                  requirement in the final rule with                      consultation with the state’s medical                 commercial payment rates or the
                                                  comment period. Such standards are                      care advisory committee and submitted                 applicable allowable cost of Medicaid
                                                  issued by the Architectural and                         to CMS, and will be reviewed by CMS.                  services. We also proposed that states
                                                  Transportation Barriers Compliance                      This section has been revised to also                 stratify this information based on
                                                  Board, and are referred to as ‘‘section                 indicate that the plans must be made                  provider ownership status. The final
                                                  508’’ standards. Alternatively, the                     available for public review and                       rule with comment period modified the
                                                  World Wide Web Consortium’s Web                         comment for a period of no less than 30               requirement to streamline the
                                                  Content Accessibility Guidelines                        days prior to the finalization of the plan            information and allow states flexibility
                                                  (WCAG) 2.0 Level AA standards would                     and submission to CMS. This allows                    in demonstrating the comparative
                                                  also be considered as acceptable                        stakeholders time to comment on the                   analysis of the Medicaid payment rates
                                                  national standard for Web site                          appropriateness of the specific measures              as now defined in § 447.203(b)(1)(C).
                                                  accessibility. For more information, see                the state will use to determine that there            The analysis required in the final rule
                                                  the WCAG Web site at http://                            is adequate access to Medicaid services.              with comment reduces administrative
                                                  www.w3.org/TR/WCAG20/. We also                             • Section 447.203(b)(1) is revised to              burden associated with the proposed
                                                  note that states currently have the                     state that the access monitoring review               requirements while continuing to
                                                  option to publish notice in a state                     plan must include the items specified                 provide a basis to understand how
                                                  register that is similar to the Federal                 under the access review procedures, as                Medicaid service payments compared to
                                                  Register. Like the Federal Register,                    well as data sources, methodologies,                  other health payer payments. The
                                                  many state registers are web-based and                  assumptions, trends and factors, and                  statute discusses the sufficiency of rates
                                                  states already routinely use them to                    thresholds so that it is clear that                   in ensuring access to services; however,
                                                  publish notice as an alternative to                     measurable data and analysis are                      as we have stated, rates may not be the
                                                  paper-based publication. Therefore, we                  essential components of the access                    only or most important determinant of
                                                  do not view the proposed flexibility as                 monitoring review plans.                              access in the Medicaid program.
                                                  a significant departure from the current                   • Section 447.203(b)(1) is revised by                 • Section 447.203(b)(4) provides
                                                  available options. Furthermore, we                      replacing the term ‘‘access review’’ with             details on the review plan standards and
                                                  believe that web-based publication will                 ‘‘access monitoring review plan’’ for the             methodologies. To provide additional
                                                  be as accessible to poor and rural                      reasons described above. We made                      clarity on types of information that
                                                  communities as publication in a state                   clarifying changes to the monitoring                  states can use for these reviews, we have
                                                  register.                                               plan framework, specifying that reviews               described suggested data elements for
                                                     Comment: A commenter suggested                       must measure whether beneficiary                      state consideration including, but not
                                                  that CMS reconsider the statement in                    needs are fully met, that the providers               limited to: time and distance standards,
                                                  § 447.205(b) which allows states to                     analyzed as part of the review are                    providers participating in the Medicaid
                                                  change reimbursement as long as the                     enrolled in the program, and that the                 program, providers with open panels,
                                                  change is made to conform to Medicare                   access analysis must demonstrate access               providers accepting new Medicaid
                                                  without public notice. The commenter                    to care within state specified geographic             beneficiaries, service utilization
                                                  stated that Medicare serves a                           areas. This is consistent with the                    patterns, identified beneficiary needs,
                                                  significantly different population than                 statutory requirements. We also added a               logs of beneficiary and provider
                                                  Medicaid, has different conditions of                   requirement that the analysis describe                feedback and suggestions for
                                                  participation, and may be a relative low                the characteristics of the beneficiary                improvement, etc. While not
                                                  payer of professional services in some                  population (including considerations for              specifically required, these data
                                                  locations.                                              care, service, and payment variations for             elements may be used by states to
                                                     Response: The May 6, 2011 proposed                   pediatric and adult populations and for               address the framework described in the
                                                  rule did not contemplate modifying the                  individuals with disabilities). This is               final rule with comment and represents
                                                  exception to public notice in instances                 important to understand specific access               the scope of the analysis that states
                                                  where the change in Medicaid rates is                   needs within geographic areas.                        should conduct when reviewing access
                                                  consistent with Medicare. At this time                     • Section 447.203(b)(2) is revised to              to care. This responds to state and
                                                  we are not adopting the commenter’s                     specify that beneficiary and provider                 provider concerns that the data reviews
                                                  suggestion.                                             input must be considered within the                   in the May 6, 2011 proposed rule lacked
                                                                                                          access monitoring review plans. We                    clear direction and standards for how
                                                  IV. Provisions of the Final Regulations                 have also indicated potential sources of              CMS will evaluate the sufficiency of a
                                                    This final rule with comment period                   this information, such as the public rate-            state’s access analysis.
                                                  incorporates many of the provisions of                  setting process, medical care advisory                   • Section 447.203(b)(5) regarding the
                                                  the May 6, 2011 proposed rule but also                  committees, and letters to state and                  ‘‘Access Review Timeline’’ has been
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                                                  makes substantial modifications based                   federal officials. In addition to the data            modified to clarify that states will need
                                                  on responses to the public comments.                    the state will review, ongoing input                  to comply with the provision of this
                                                  Those provisions of this final rule with                from beneficiaries and providers will                 final rule with comment period. We
                                                  comment period that differ from the                     help states understand access issues                  received many comments on the timing
                                                  proposed rule are as follows:                           (and suggestions to improve access) on                associated with the access data reviews.
                                                    • The term ‘‘access review’’ is                       a real-time basis and potentially target              In the final rule with comment, states
                                                  replaced throughout by the term ‘‘access                access improvements and remediation                   will be required to conduct the first
                                                  monitoring review plan’’ to emphasize                   strategies.                                           review for the specified subset of


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67601

                                                  ongoing services by July 1 after the                    state submits a SPA to reduce payment                    • In § 447.204(a), the term
                                                  effective date of the final rule with                   or restructure payment in circumstances               ‘‘recipients’’ is changed to
                                                  comment period and update the                           when the changes could result in                      ‘‘beneficiaries.’’
                                                  analysis every 3 years by July 1 of each                diminished access for the service or                     • Section 447.204(a)(1) is revised to
                                                  review year. This corresponds with the                  services affected by the SPA. We have                 incorporate the baseline data review
                                                  start of the fiscal year for most states                further clarified in this paragraph that a            requirement and as part of the
                                                  and provides sufficient time to develop                 state must update the access monitoring               information that states consider prior to
                                                  the baseline monitoring plan.                           review plan within 12 months of the                   the submission of a SPA that proposes
                                                     • Section 447.203(b)(5)(ii) was                      effective date of the submitted SPA.                  to reduce or restructure Medicaid
                                                  revised to change the requirement that                     • Section 447.203(b)(6)(ii) which                  service payment rates. The results of the
                                                  states review all covered services within               describes monitoring procedures, has                  baseline data should inform states on
                                                  a 5-year period to require that states                  been retitled ‘‘Monitoring procedures.’’              compliance with section 1902(a)(30)(A)
                                                  review a subset of service categories at                The monitoring process has been                       of the Act and project the potential
                                                  least once every 3 years. Language has                  modified to require incorporation of                  impact of rate policies on access to care.
                                                  also been added to this section to clarify              access monitoring review plans and                       • Section 447.204(a)(2) is revised to
                                                  that the states are required to ‘‘complete              procedures, including period review                   indicate that prior to the submission of
                                                  a full review of the data collected                     protocols and clearly defined measures                a SPA that proposes to reduce or
                                                  through the monitoring plan                             and thresholds, into the Medicaid state               restructure Medicaid service payment
                                                  methodology.’’ Paragraphs (b)(5)(ii)A,                  plan reimbursement methodology and                    rates, states must consider input from
                                                  (ii)(B), (ii)(C), (ii)(D), and (ii)(E) were             to require the first monitoring review to             providers, as well as input from
                                                  added to define the specific categories                 occur within a year after the effective               beneficiaries and other affected
                                                  of services that must be included in the                date of a SPA rate change and continue                stakeholders. This change was added
                                                  access monitoring review plan.                          periodically for a period of at least 3               based on public comments that
                                                  Paragraph (b)(5)(ii)(A) adds primary care               years after the effective date of the SPA             requested that feedback from providers
                                                  services which includes physician,                                                                            be considered in addition to
                                                                                                          authorizing the payment reduction or
                                                  FQHC, clinic, dental care, etc. Paragraph                                                                     beneficiaries as part of the public
                                                                                                          restructuring.
                                                  (b)(5)(ii)(B) adds physician specialist                                                                       process.
                                                                                                             • Section 447.203(b)(7) describes that                • Section 447.204(b) is modified to
                                                  services which includes services which
                                                                                                          states must have mechanisms for                       more clearly state that with any
                                                  are provided via a referral from a
                                                                                                          ongoing beneficiary input on access to                proposed SPA affecting payment rates,
                                                  primary care provider, for example,
                                                                                                          care (through hotlines, surveys,                      states must provide the most recent
                                                  cardiology, urology and radiology.
                                                                                                          ombudsman, or another equivalent                      access monitoring review plan, if any,
                                                  Paragraph (b)(5)(ii)(C) adds behavioral
                                                                                                          mechanism). In response to concerns                   together with an analysis of the effect of
                                                  health services which includes mental
                                                                                                          over individual access issues, we                     the change in payment rates on access,
                                                  health, substance use disorder, etc.
                                                                                                          revised the provision to require states to            and a specific analysis of the
                                                  Paragraphs (b)(5)(ii)(D) adds pre- and
                                                  post-natal obstetric services including                 promptly respond to public input with                 information and concerns expressed in
                                                  labor and delivery. Paragraph                           an appropriate investigation, analysis,               input from affected stakeholders. With
                                                  (b)(5)(ii)(E) adds home health services.                and response. The state is also required              this change, is more clearly delineated
                                                  These categories were added because                     to maintain records of the input and the              that states must furnish the information
                                                  they are frequently used services in                    nature of the state’s responses. While                gathered under the procedures of the
                                                  Medicaid, and access to these services                  CMS recognizes that services provided                 final rule with comment to CMS as part
                                                  indicates that an individual has primary                through home and community-based                      of the SPA submission process. We will
                                                  sources of care, which may increase the                 waivers or 1115 demonstrations are not                use this information to inform our SPA
                                                  likelihood of having their care needs                   bound by the procedural requirements                  approval decisions.
                                                  met. Paragraph (b)(5)(ii)(F) has been                   of this rule, states may understand                      • Section 447.204(c) and (d) were
                                                  added clarify that additional services                  through these feedback mechanisms                     edited to more clearly describe CMS’s
                                                  are to be added to the access monitoring                access issues that may also arise for                 enforcement process if a state does not
                                                  review plan when states reduce or                       individuals receiving services through                submit the supporting documentation
                                                  restructure rates. Paragraph (b)(5)(ii)(G)              those delivery systems.                               described in the final rule with
                                                  was added to require states to review                      • Section 447.203(b)(8) is revised to              comment period along with SPAs. If a
                                                  access for additional services based on                 clarify that states have a number of                  state does not submit the supporting
                                                  a significantly higher than usual level of              options to address access to care issues              documentation, then the SPA would be
                                                  beneficiary, provider, or stakeholder                   that are identified through the access                disapproved. Likewise, if a state submits
                                                  access complaints. Paragraph                            monitoring review plans. These                        a SPA and the access analysis does not
                                                  (b)(5)(ii)(H) was added to allow                        remediation efforts can include but are               demonstrate adequate access, the SPA
                                                  additional types of services selected by                not limited to: modifying payment rates;              would be disapproved. To address
                                                  the state. These modifications remove                   improving outreach to providers;                      access deficiencies, CMS may also take
                                                  some burden from the states,                            reducing barriers to provider                         a compliance action using the
                                                  particularly those that have                            enrollment; providing additional                      procedures described at § 430.35 of this
                                                  continuously monitored Medicaid                         transportation to services; improving                 chapter which is specified at 447.204(d).
                                                  access to care and do not have                          care coordination; or changing provider               These edits were made for clarity and
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                                                  widespread access issues. We are                        licensing or scope of practice polices.               did not alter the agency’s proposed
                                                  requesting comment on the revisions to                  This is an acknowledgement that access                approach to enforcing the provisions of
                                                  paragraphs (b)(5)(ii)(A) through (ii)(E).               to care is not determined by payment                  the final rule with comment period.
                                                     • Section 447.203(b)(6)(i) was revised               rates alone but rather that when enough                  • Section 447.205(iv) was proposed to
                                                  to clarify that access monitoring review                providers are enlisted in the program                 allow states to issue public notice on
                                                  plans shall be updated to incorporate an                states may need to find ways to connect               Web sites maintained by the single state
                                                  access review as described under                        beneficiaries with the care and services              agency. We revised this section to
                                                  paragraph (b)(1) of this section when a                 that they need.                                       provide some additional parameters


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                                                  67602               Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  around notice publications, requiring                            day notice in the Federal Register and                    In the May 6, 2011, proposed rule (76
                                                  that publication Web site must be easily                         solicit public comment before a                         FR 26352–26359), we solicited public
                                                  reached from a hyperlink that provides                           collection of information requirement is                comments on each of the section
                                                  general information to beneficiaries and                         submitted to the Office of Management                   3506(c)(2)(A) required issues for the
                                                  providers and the state specific page on                         and Budget (OMB) for review and                         following information collection
                                                  the federal Medicaid Web site and that                           approval. To fairly evaluate whether an                 requirements (ICRs). PRA-related
                                                  the state ensures compliance with                                information collection should be                        comments were received as indicated
                                                  national standards to ensure access to                           approved by OMB, section 3506(c)(2)(A)                  below in section C under ‘‘Comments
                                                  individuals with disabilities (that is,                          of the Paperwork Reduction Act of 1995                  Associated with the Collection of
                                                  section 508 standards). Further, we                              requires that we solicit comment on the                 Information Requirements.’’
                                                  clarified that the notice must be issued                         following issues:
                                                  as part of regular and known provider                               • The need for the information                       A. Wages
                                                  bulletin updates and maintained on the                           collection and its usefulness in carrying
                                                  state’s Web site for no less than 3 years.                                                                                  To derive average costs, we used data
                                                                                                                   out the proper functions of our agency.                 from the U.S. Bureau of Labor Statistics’
                                                  These changes are necessary to ensure
                                                                                                                      • The accuracy of our estimate of the                May 2014 National Occupational
                                                  that notices are easily accessible to the
                                                                                                                   information collection burden.                          Employment and Wage Estimates for all
                                                  public (and CMS) and will remain
                                                  available for a sufficient period of time.                          • The quality, utility, and clarity of               salary estimates (www.bls.gov/oes/
                                                                                                                   the information to be collected.                        current/oes_nat.htm). In this regard, the
                                                  V. Collection of Information                                        • Recommendations to minimize the                    following table presents the mean
                                                  Requirements                                                     information collection burden on the                    hourly wage, the cost of fringe benefits
                                                    Under the Paperwork Reduction Act                              affected public, including automated                    (calculated at 100 percent of salary), and
                                                  of 1995, we are required to provide 60-                          collection techniques.                                  the adjusted hourly wage.

                                                                                                NATIONAL OCCUPATIONAL EMPLOYMENT AND WAGE ESTIMATES
                                                                                                                                                                                                        Adjusted
                                                                                                                                                              Mean hourly wage       Fringe benefit
                                                                                Occupation title                                       Occupation code                                                 hourly wage
                                                                                                                                                                   ($/hr)                ($/hr)           ($/hr)

                                                  Business Operations Specialist ...............................................                  13–1000                 33.69                33.69            67.38
                                                  Computer and Information Analyst ..........................................                     15–1120                 42.25                42.25            84.50
                                                  General and Operations Manager ...........................................                      11–1021                 56.35                56.35           112.70
                                                  Management Analyst ...............................................................              13–1111                 43.68                43.68            87.36
                                                  Social Science Research Assistant .........................................                     19–4061                 20.71                20.71            41.42



                                                     As indicated, we are adjusting our                            determine appropriate data sources that                 provided to the general population
                                                  employee hourly wage estimates by a                              will be used to conduct the review. We                  within a geographic area. Based on
                                                  factor of 100 percent. This is necessarily                       believe most of the data that will be                   public comments received we are
                                                  a rough adjustment, both because fringe                          used to inform access is available to                   revising the requirements of
                                                  benefits and overhead costs vary                                 states and may already be collected by                  § 447.203(b) to limit the scope of
                                                  significantly from employer to                                   states as part of Medicaid program                      Medicaid services that states must
                                                  employer, and because methods of                                 reviews and payment rate-setting                        review on an ongoing basis. This final
                                                  estimating these costs vary widely from                          procedures. We also note that states                    rule with comment period stipulates
                                                  study to study. Nonetheless, there is no                         have flexibility to compare Medicaid                    that states must develop an access
                                                  practical alternative and we believe that                        rates to one or more of Medicare rates,                 monitoring review plan for the specified
                                                  doubling the hourly wage to estimate                             commercial rates, or Medicaid cost, as                  service categories and update the plan
                                                  total cost is a reasonably accurate                              may be appropriate to the service under                 every 3 years. States will also be
                                                  estimation method.                                               review. The burden associated with                      required to develop an access
                                                                                                                   these requirements is the time and effort               monitoring review plan when a state
                                                  B. ICRs Carried Over From the Proposed                           associated with analyzing this                          submits a SPA to reduce or restructure
                                                  Rule (May 6, 2011; 76 FR 26352–26359)                            information, making it available to the                 payment rates in circumstances where
                                                  1. ICRs Regarding Access Monitoring                              public, and periodically updating the                   the changes could result in access issues
                                                  Review Plans (§ 447.203(b))                                      information relative to activities states               for the service or services affected by the
                                                                                                                   are already undertaking. We have                        SPA. In this way, states would consider
                                                     Section 447.203(b) requires that states                       attempted to mitigate any new burden                    the impact that such proposals may
                                                  develop and make public an access                                by identifying data that states are likely              have on access to care and demonstrate
                                                  monitoring review plan that considers,                           to currently possess, identifying other                 compliance with section 1902(a)(30)(A)
                                                  at a minimum: Beneficiary needs, the                             data sources that might be informative                  of the Act. States may complete this
                                                  availability of care and providers,                              to state access reviews, and limiting the               review within the prior 12 months of
                                                  utilization of services, characteristics of                      categories of services states will be                   the SPA submission.
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                                                  the beneficiary population, and provider                         required to review.
                                                  payment rates. States are also required                                                                                  b. Access Monitoring Review Plan
                                                  under this provision to monitor data                             a. Access Monitoring Review Plan                        Framework
                                                  and beneficiary and provider input on                            Timeline                                                   The data analysis activities described
                                                  an ongoing basis and address known                                  Section 1902(a)(30)(A) of the Act                    in this final rule with comment period
                                                  access issues through corrective action.                         requires states to ensure that Medicaid                 are claimable as administrative claiming
                                                     This final rule with comment period                           beneficiaries have access to care and                   activities and are reimbursable at the
                                                  provides states with the discretion to                           services that is equivalent to care                     general 50 percent FFP rate for


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                                                                      Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                                                                67603

                                                  administrative expenditures, insofar as                            and a description of the specific                                          develop and make the access monitoring
                                                  they are necessary for the proper and                              measures the state will use to analyze                                     review plans publically available under
                                                  efficient administration of the Medicaid                           access to care. We recommend that                                          § 447.203(b)(1) through (4) will affect all
                                                  state plan as described at section                                 states use existing provider feedback                                      states. We have defined specific
                                                  1903(a)(7) of the Act. More specifically,                          mechanism such as medical care                                             categories of services that states must
                                                  utilization review is identified as an                             advisory committees described in                                           develop access monitoring review plans
                                                  allowable Medicaid administrative                                  § 431.12 to ease burden on states rather                                   for, while allowing states to include
                                                  activity in guidance that was issued in                            than create new requirements.                                              additional service categories as
                                                  the form of a SMD letter dated                                        Section 447.203(b)(3) requires that                                     necessary. We assume states will
                                                  December 20, 1994 (www.medicaid.gov/                               states include percentage comparisons                                      conduct reviews in the context of rate
                                                  Federal-Policy-Guidance/downloads/                                 of Medicaid payment rates to other                                         reductions or restructuring payment
                                                  SMD122094.pdf). We also believe that                               public (including, as practical, Medicaid                                  rates and we consider the burden
                                                  states may be collecting some of this                              managed care rates) or private health                                      associated with rate reduction or
                                                  information as part of current review                              coverage rates within geographic areas                                     restructuring reviews as part of the
                                                  efforts for various purposes, including                            of the state. This requirement was                                         ongoing estimated burden.
                                                  program administration and oversight,                              modified based on comments received                                          The one-time burden associated with
                                                  quality activities, integrity and payment,                         to allow states maximum flexibility in                                     the requirements under § 447.203(b)(1)
                                                  and as part of other performance                                   comparing Medicaid payment rates to                                        through (5) is the time and effort it
                                                  standards and measures required under                              the rates of other payers.                                                 would take, on average, each of the 50
                                                  the Affordable Care Act.                                              Section 447.203(b)(4) describes the                                     state Medicaid programs and the District
                                                     The provisions at § 447.203(b)(1)                               minimum content that must be in                                            of Columbia (51 total respondents) to
                                                  through (3) require that states develop                            included in the monitoring plan. States                                    develop and make publically available
                                                  and make publically available an access                            are required to describe: The measures                                     an access monitoring review plan for the
                                                  monitoring review plan using data                                  the state uses to analyze access to care                                   specific categories of Medicaid services.
                                                  trends and factors that considers:                                 issues, how the measures relate to the                                     The uniform nature of the initial menu
                                                  Beneficiary needs, availability of care                            overarching framework, access issues                                       of services required for the access
                                                  and providers, and changes in                                      that are discovered as a result of the                                     monitoring review plans are the reason
                                                  beneficiary utilization of covered                                 review, and the state Medicaid agency’s                                    we present average impacts.
                                                  services. Consistent with the statutory                            recommendations on the sufficiency of                                        We estimate that it will take 5,100 hr
                                                  requirement, we have clarified that                                access to care based on the review.                                        to develop the access monitoring review
                                                  states demonstrate access to care within                              Section 447.203(b)(5) describes the                                     plan, 8,160 hr to collect and analyze the
                                                  specific geographic regions. After                                 timeframe for states to develop and                                        data, and 2,040 to publish the plan and
                                                  careful consideration of the comments                              complete its access monitoring review                                      510 hr for a manager to review and
                                                  received, we are finalizing the review                             plan the data review and make the                                          approve the plan (15,810 total hours).
                                                  framework with some modifications in                               information available to the public                                        We also estimate a cost of $22,631,80
                                                  an effort to minimize the administrative                           through accessible public records or                                       per state and a total of $1,154,221.80.
                                                  burden associated with the requirement.                            Web sites on an on-going basis for the                                       In deriving these figures we used the
                                                  Though we recognize that no                                        following categories of services: Primary                                  following hourly labor rates and time to
                                                  methodology to gauge access to care is                             care, physician specialist services,                                       complete each task: 80 hr at $41.42/hr
                                                  flawless, we believe that the framework,                           behavioral health, pre- and post-natal                                     for a research assistant staff to gather
                                                  as supported by state data sources, is                             obstetric services including labor and                                     data, 80 hr at $84.50/hr for an
                                                  appropriate to inform whether the                                  delivery, home health services and                                         information analyst staff to analyze the
                                                  Medicaid access requirements are met.                              additional services as determined                                          data, 100 hr at $87.36/hr for
                                                     Section 447.203(b)(1) and (2)                                   necessary by the state or CMS. The                                         management analyst staff to develop the
                                                  describes the minimum factors that                                 initial access monitoring review plans                                     content of the access monitoring review
                                                  states must considered when developing                             are to be completed by July 1 after the                                    plan, 40 hr at $67.38/hr for business
                                                  an access monitoring review plan.                                  effective date of this final rule with                                     operations specialist staff to publish the
                                                  Specifically, we require the review to                             comment period. The plan must be                                           access monitoring review plan, and 10
                                                  include feedback from both Medicaid                                updated at least every 3 years, but no                                     hr at $112.70/hr for managerial staff to
                                                  beneficiaries and Medicaid providers,                              later than July 1 of the update year. We                                   review and approve the access
                                                  an analysis of Medicaid payment data,                              estimate that the requirements to                                          monitoring review plan.

                                                                                    TABLE 1—ACCESS MONITORING REVIEW PLAN—ONE-TIME BURDEN PER STATE
                                                                                                                                                                                                                                         Cost per
                                                                                                                                                                                                                 Adjusted               monitoring
                                                                        Requirement                                                       Occupation title                                    Burden hours      hourly wage                plan
                                                                                                                                                                                                                   ($/hr)                ($/State)

                                                  Gathering Data ...............................................   Social Science Research Assistant ..............                                     80                  41.42           3,313.60
                                                  Analyzing Data ...............................................   Computer and Information Analyst ...............                                     80                  84.50           6,760
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                                                  Developing Content of Access Monitoring                          Management Analyst ....................................                             100                  87.36           8,736
                                                    Review Plan.
                                                  Publishing Access Monitoring Review Plan ..                      Business Operations Specialist ....................                                  40                 67.38            2,695.20
                                                  Reviewing and Approving Access Monitoring                        General and Operations Manager ................                                      10                112.70            1,127.00
                                                    Review Plan.

                                                        Total Burden Per State ...........................         ........................................................................            310   ........................      22,631.80




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                                                  67604               Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                                                        TABLE 2—ACCESS MONITORING REVIEW PLAN—ONE-TIME TOTAL BURDEN
                                                          Anticipated number of                                                                                       Cost of review per state                         Total cost estimate
                                                                                                                    Total hours
                                                              state reviews                                                                                                      ($)                                           ($)

                                                                        51                                              15,810                                                   22,631.80                                  1,154,221.80



                                                    The ongoing burden associated with                               data, determine whether to add or drop                                     complete each task: 80 hr at $41.42/hr
                                                  the requirements under § 447.203(b)(1)                             measures, consider public feedback, and                                    for a research assistant staff to gather
                                                  through (5) is the time and effort it                              write-up new conclusions based on the                                      data, 80 hr at $84.50/hr for an
                                                  would take each of the 50 state                                    information they review. In this regard,                                   information analyst staff to analyze the
                                                  Medicaid programs and the District of                              we estimate it will take 5,100 hr to                                       data, 100 hr at $87.36/hr for
                                                  Columbia (51 total respondents) to                                 develop the access monitoring review                                       management analyst staff to update the
                                                  develop and make publically available                              plan, 8,160 hr to collect and analyze the                                  content of the access monitoring review
                                                  an access monitoring review plan for the                           data, and 2,040 to publish the plan, and                                   plan, 40 hr at $67.38/hr for business
                                                  specific categories of Medicaid services.                          510 hr for a manager to review and                                         operations specialist staff to publish the
                                                  The access monitoring review plans                                 approve the plan (15,810 total hours).
                                                                                                                                                                                                access monitoring review plan, and 10
                                                  must be updated at least every 3 years.                            We also estimate a cost of $22,631,80
                                                    We anticipate that the average initial                                                                                                      hr at $112.70/hr for managerial staff to
                                                                                                                     per state and a total of $1,154,221.80.
                                                  and ongoing burden is likely to be the                               In deriving these figures we used the                                    review and approve the access
                                                  same since states will need to re-run the                          following hourly labor rates and time to                                   monitoring review plan.

                                                                             TABLE 3—ACCESS MONITORING REVIEW PLAN–ONGOING BURDEN PER STATE (ANNUAL)
                                                                                                                                                                                                                                         Cost per
                                                                                                                                                                                                                 Adjusted               monitoring
                                                                        Requirement                                                       Occupation title                                    Burden hours      hourly wage                plan
                                                                                                                                                                                                                   ($/hr)                ($/State)

                                                  Gathering Data ...............................................   Social Science Research Assistant ..............                                     80                  41.42           3,313.60
                                                  Analyzing Data ...............................................   Computer and Information Analyst ...............                                     80                  84.50           6,760
                                                  Updating Content of Access Monitoring Re-                        Management Analyst ....................................                             100                  87.36           8,736
                                                    view Plan.
                                                  Publishing Access Monitoring Review Plan ..                      Business Operations Specialist ....................                                  40                 67.38            2,695.20
                                                  Reviewing and Approving Access Monitoring                        General and Operations Manager ................                                      10                112.70            1,127.00
                                                    Review Plan.

                                                        Total Burden Per State ...........................         ........................................................................            310   ........................      22,631.80


                                                                                TABLE 4—ACCESS MONITORING REVIEW PLAN—ONGOING TOTAL BURDEN (ANNUAL)
                                                          Anticipated number of                                                                                       Cost of review per state                         Total cost estimate
                                                                                                                    Total hours
                                                              state reviews                                                                                                      ($)                                           ($)

                                                                        51                                              15,810                                                   22,631.80                                  1,154,221.80



                                                    The requirements and burden will be                              § 447.203(b)(6)(ii) is the time and effort                                 associated with this final rule with
                                                  submitted to OMB under control                                     it would take each of the 50 state                                         comment period.
                                                  number 0938–1134 (CMS–10391).                                      Medicaid programs and the District of                                         We estimate that it will take, on
                                                  Annualized over the three-year                                     Columbia to monitor continued access                                       average, 880 hr to develop the
                                                  reporting period, we estimate 17                                   following the implementation of a SPA                                      monitoring procedures, 528 hr to
                                                  responses, 5,270 hr, $7,543.93 (per                                that reduces or restructures payment                                       periodically review the monitoring
                                                  state), and $384,740.60 (aggregate).                               rates. The requirements will affect all                                    results, and 66 hr for review and
                                                  2. ICRs Regarding Monitoring                                       states that implement a rate reduction or                                  approval of the monitoring procedures
                                                  Procedures (§ 447.203(b)(6)(ii))                                   restructure payment rates. We estimate                                     (1,474 total hours). We also estimate an
                                                     Section 447.203(b)(6)(ii) requires                              that in each SPA submission cycle, 22                                      average cost of $5,929.14 per state and
                                                  states to have procedures within the                               states will implement these rate changes                                   a total of $130,441.08.
                                                  access monitoring review plan to                                   based on the number of states that                                            In deriving these figures we used the
                                                  monitor continued access after                                     proposed such reductions in FY 2010.                                       following hourly labor rates and time to
                                                  implementation of a SPA that reduces or                            Please note that we are using FY 2010                                      complete each task: 40 hr at $87.36/hr
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                                                  restructures payment rates. The                                    as the basis for our estimate because of                                   for management analyst staff to develop
                                                  monitoring procedures must be in place                             the unusual high volume of rate                                            the monitoring procedures, 24 hr at
                                                  for at least 3 years following the                                 reduction SPAs that states submitted                                       $87.36/hr for management analyst staff
                                                  effective date of a SPA that reduces or                            during this period. By basing our                                          to periodically review the monitoring
                                                  restructures payment rates.                                        estimate on FY 2010 data, we anticipate                                    results, and 3 hr at $112.70/hr for
                                                     The ongoing burden associated with                              the highest potential for burden                                           management staff to review and approve
                                                  the requirements under                                                                                                                        the monitoring procedures.



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                                                                    Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                                                             67605

                                                      TABLE 5—ACCESS MONITORING PROCEDURES FOLLOWING RATE REDUCTION SPA—BURDEN PER STATE (ANNUAL)
                                                                                                                                                                                                          Adjusted               Cost per data
                                                                     Requirement                                                   Occupation title                                    Burden hours      hourly wage                review
                                                                                                                                                                                                            ($/hr)                 ($/State)

                                                  Develop Monitoring Procedures ....................        Management Analyst ....................................                              40                 87.36             3,494.40
                                                  Periodically Review Monitoring Results .........          Management Analyst ....................................                              24                 87.36             2,096.64
                                                  Approve Monitoring Procedures ....................        General and Operations Manager ................                                       3                112.70               338.10

                                                       Total Burden Per State ...........................   ........................................................................             67   ........................        5,929.14


                                                          TABLE 6—ACCESS MONITORING PROCEDURES FOLLOWING RATE REDUCTION SPA—TOTAL BURDEN (ANNUAL)
                                                         Anticipated number of                                                                                 Cost of review per state                         Total cost estimate
                                                                                                             Total hours
                                                             state reviews                                                                                                ($)                                           ($)

                                                                     22                                           1,474                                                    5,929.14                                    130,441.08



                                                    The requirements and burden will be                       records of the beneficiary input and the                                   develop and implement beneficiary
                                                  submitted to OMB under control                              nature of the state response.                                              feedback mechanisms.
                                                  number 0938–1134 (CMS–10391).                                  We estimate that the requirement will                                      We estimate that it will take an
                                                                                                              affect all states that do not currently                                    average 5,100 hr to develop the feedback
                                                  3. ICRs Regarding Ongoing Input
                                                                                                              have a means of beneficiary feedback.                                      effort and 255 hr to approve the
                                                  (§ 447.203(b)(7))
                                                                                                              Since we currently do not know which                                       feedback effort (5,355 total hours). We
                                                     Section 447.203(b)(7) requires that                      states have implemented these                                              also estimate an average cost of
                                                  states have a mechanism for obtaining                       mechanisms, we are assuming in our                                         $9,299.50 per state and a total of
                                                  ongoing beneficiary, provider and                           estimate that all states will need to                                      $474,274.50.
                                                  stakeholder input on access to care                         develop new mechanisms. The one-time                                          In deriving these figures we used the
                                                  issues, such as hotlines, surveys,                          burden associated with the                                                 following hourly labor rates and time to
                                                  ombudsman, or other equivalent                              requirements under § 447.203(b)(7) is                                      complete each task: 100 hr at $87.36/hr
                                                  mechanisms. States must promptly                            the time and effort it would take, on                                      for management analyst staff to develop
                                                  respond to public input with an                             average, for each of the 50 state                                          the feedback effort and 5 hr at $112.70/
                                                  appropriate investigation, analysis, and                    Medicaid programs and the District of                                      hr for managerial staff to review and
                                                  response. They must also maintain                           Columbia (51 total respondents) to                                         approve the feedback effort.

                                                                                TABLE 7—BENEFICIARY FEEDBACK MECHANISM—ONE-TIME BURDEN PER STATE
                                                                                                                                                                                                          Adjusted               Cost per data
                                                                     Requirement                                                   Occupation title                                    Burden hours      hourly wage                review
                                                                                                                                                                                                            ($/hr)                 ($/State)

                                                  Developing Feedback Effort ..........................     Management Analyst ....................................                             100                 87.36             8,736
                                                  Approve Feedback Effort ...............................   General and Operations Manager ................                                       5                112.70               563.50

                                                       Total Burden Per State ...........................   ........................................................................            105   ........................        9,299.50


                                                                                   TABLE 8—BENEFICIARY FEEDBACK MECHANISM—ONE-TIME TOTAL BURDEN
                                                         Anticipated number of                                                                                 Cost of review per state                         Total cost estimate
                                                                                                             Total hours
                                                             state reviews                                                                                                ($)                                           ($)

                                                                     51                                           5,355                                                    9,299.50                                    474,274.50



                                                     The ongoing burden associated with                       review and make recommendations for                                        estimate an average cost of $7,115.50
                                                  the requirements under § 447.203(b)(7)                      and conduct follow-up on the feedback.                                     per state and a total of $362,890.50.
                                                  is the time and effort it would take each                   We do not estimate that the approval of                                      In deriving these figures we used the
                                                  of the 50 state Medicaid programs and                       the recommendations will not require as                                    following hourly labor rates and time to
                                                  the District of Columbia (51 total                          significant effort from managers. We                                       complete each task: 75 hr at $87.36/hr
                                                  respondents) to monitor beneficiary                         estimate that it will take an average of                                   for management analyst staff to monitor
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                                                  feedback mechanisms.                                        3,825 hr to monitor the feedback results,
                                                     The overall effort associated with                                                                                                  feedback results and 5 hr at $112.70/hr
                                                                                                              and 255 hr to approve the feedback                                         for managerial staff to review and
                                                  monitoring the feedback will primarily
                                                                                                              effort (4,080 total hours). We also                                        approve the feedback effort.
                                                  be incurred by analysts who will gather,




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                                                  67606              Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                                           TABLE 9—BENEFICIARY FEEDBACK MECHANISM—ONGOING BURDEN PER STATE (ANNUAL)
                                                                                                                                                                                                               Adjusted                  Cost per data
                                                                      Requirement                                                     Occupation title                                      Burden hours      hourly wage                   review
                                                                                                                                                                                                                 ($/hr)                    ($/State)

                                                  Monitoring Feedback Results ........................         Management Analyst ....................................                                75                  87.36               6,552.00
                                                  Oversee Feedback Effort ...............................      General and Operations Manager ................                                         5                 112.70                 563.50

                                                       Total Burden Per State ...........................      ........................................................................               80    ........................          7,115.50


                                                                            TABLE 10—BENEFICIARY FEEDBACK MECHANISM—ONGOING TOTAL BURDEN (ANNUAL)
                                                         Anticipated number of                                                                                    Cost of review per state                            Total cost estimate
                                                                                                                Total hours
                                                             state reviews                                                                                                   ($)                                              ($)

                                                                      51                                             4,080                                                    7,115.50                                       362,890.50



                                                    The requirements and burden will be                          determine how many states will identify                                      requiring corrective action, 400 hr to
                                                  submitted to OMB under control                                 access issues as they conduct their data                                     develop the corrective action plans, and
                                                  number 0938–1134 (CMS–10391).                                  reviews and monitoring activities. We                                        30 hr to review and approve the
                                                                                                                 assume that many states currently have                                       corrective action plans (630 total hours).
                                                  4. ICRs Regarding Corrective Action
                                                                                                                 mechanisms in place to monitor access                                        We also estimate an average cost of
                                                  Plan (§ 447.203(b)(8))
                                                                                                                 to care and identify issues. While we are                                    $5,579.70 per state and a total of
                                                     Section 447.203(b)(8) institutes a                          careful not to under-estimate the burden                                     $55,797.00.
                                                  corrective action procedure that requires                      associated with this provision, we                                              In deriving these figures we used the
                                                  states to submit to CMS a corrective                           believe that a maximum of 10 states may                                      following hourly labor rates and time to
                                                  action plan should access issues be                            identify access issues per year. The on-                                     complete each task: 20 hr at $87.36/hr
                                                  discovered through the access                                  time burden associated with the                                              for management analyst staff to identify
                                                  monitoring processes. The requirement                          requirements under § 447.203(b)(7) is                                        issues requiring corrective action, 40 hr
                                                  is intended to ensure that states will                         the time and effort it would take 10 state                                   at $87.36/hr for management analyst
                                                  oversee and address any future access                          Medicaid programs to develop and                                             staff to develop the corrective action
                                                  concerns.                                                      implement corrective action plans.                                           plans, and 3 hr at $112.70/hr for
                                                     This is a new requirement and thus                            We estimate that it will take an                                           managerial staff to review and approve
                                                  we have no past data to use to                                 average of 200 hr to identify issues                                         the corrective action plans.

                                                                                               TABLE 11—CORRECTIVE ACTION PLAN—BURDEN PER STATE
                                                                                                                                                                                                                 Adjusted                Cost per data
                                                                      Requirement                                                      Occupation title                                      Burden hours       hourly wage                 review
                                                                                                                                                                                                                   ($/hr)                  ($/State)

                                                  Identifying Issues for Action ............................   Management Analyst .....................................                                20                   87.36             1,747.20
                                                  Developing the Corrective Plan ......................        Management Analyst .....................................                                40                   87.36             3,494.40
                                                  Approve Corrective Plan .................................    General and Operations Manager .................                                         3                  112.70               338.10

                                                       Total Burden Per State ............................      .........................................................................              63     ........................        5,579.70


                                                                                                   TABLE 12—CORRECTIVE ACTION PLAN—TOTAL BURDEN
                                                         Anticipated number of                                                                                    Cost of review per state                            Total cost estimate
                                                                                                                Total hours
                                                             state reviews                                                                                                   ($)                                              ($)

                                                                      10                                              630                                                     5,579.70                                        55,797.00



                                                    The requirements and burden will be                          proposed reduction or restructuring of                                       states will develop and implement these
                                                  submitted to OMB under control                                 Medicaid service payment rates on                                            rate changes that would require a public
                                                  number 0938–1134 (CMS–10391).                                  beneficiary access to care. In                                               process based on the number of states
                                                                                                                 § 447.204(b), we have also clarified that                                    that proposed such reductions in FY
                                                  5. ICRs Regarding Public Process to
                                                                                                                 we may disapprove a proposed rate                                            2010. Again, we are using FY 2010 as
                                                  Engage Stakeholders (§ 447.204)
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                                                                                                                 reduction or restructuring if the SPA                                        the estimate due to the high number of
                                                    Sections 447.204(a)(1) and (a)(2)                            does not include or consider the data                                        rate reduction proposals submitted by
                                                  require that states consider (when                             review and a public process. As an                                           states in that year.
                                                  proposing to reduce or restructure                             alternative, or additionally, we may take                                      We estimate that it will take an
                                                  Medicaid payment rates) the data                               a compliance action in accordance with                                       average of 440 hr to develop the public
                                                  collected through § 447.203 and                                § 430.35.                                                                    process and 66 hr for review and
                                                  undertake a public process that solicits                          We are estimating, annually, that for                                     approval of the public process (506 total
                                                  input on the potential impact of the                           each SPA revision approximately 22                                           hours). We also estimate an average cost


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                                                                    Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                                                                 67607

                                                  of $2,085.30 per state and a total of                        complete each task: 20 hr at $87.36/hr                                      hr for managerial staff to review and
                                                  $45,876.60.                                                  for management analyst staff to develop                                     approve the public process.
                                                    In deriving these figures we used the                      the public process and 3 hr at $112.70/
                                                  following hourly labor rates and time to
                                                                                      TABLE 13—PUBLIC PROCESS—ONE-TIME BURDEN PER STATE PER SPA
                                                                                                                                                                                                              Adjusted                Cost per SPA
                                                                      Requirement                                                    Occupation title                                     Burden hours       hourly wage                   ($)
                                                                                                                                                                                                                ($/hr)

                                                  Develop the Public Process ............................     Management Analyst .....................................                              20                  87.36             1,747.20
                                                  Approve Public Process ..................................   General and Operations Manager .................                                       3                 112.70               338.10

                                                       Total Burden Per State ............................    .........................................................................             23     ........................       2,085.30


                                                                                                 TABLE 14—PUBLIC PROCESS—ONE-TIME TOTAL BURDEN
                                                         Anticipated number of                                                                                  Cost of review per state                           Total cost estimate
                                                                                                              Total hours
                                                             state reviews                                                                                                 ($)                                             ($)

                                                                     22                                             506                                                     2,085.30                                       45,876.60



                                                    The ongoing burden associated with                         activities. We do not estimate that                                         cost of $3,832.50 per state and a total of
                                                  the requirements under § 447.204 is the                      efforts associated with review and                                          $84,315.00
                                                  time and effort it would take 22 state                       approval of the activities will increase                                      In deriving these figures we used the
                                                  Medicaid programs to oversee a public                        for overseeing managers. We estimate it                                     following hourly labor rates and time to
                                                  process.                                                     will take an average of 880 hr to oversee                                   complete each task: 40 hr at $87.36/hr
                                                    The overall effort associated with                         the public process and 66 hr for review                                     for management analyst staff to oversee
                                                  developing the public process will                           and approval of the public process (946                                     the public process and 3 hr at $112.70/
                                                  primarily be incurred by analysts who                        total hours). We also estimate an average                                   hr for managerial staff to review and
                                                  develop and initiate public process                                                                                                      approve the public process.
                                                                                              TABLE 15—PUBLIC PROCESS—ONGOING BURDEN PER STATE
                                                                                                                                                                                                              Adjusted                Cost per SPA
                                                                      Requirement                                                    Occupation title                                     Burden hours       hourly wage                   ($)
                                                                                                                                                                                                                ($/hr)

                                                  Oversee the Public Process ...........................      Management Analyst .....................................                              40                  87.36             3,494.40
                                                  Approve Public Process ..................................   General and Operations Manager .................                                       3                 112.70               338.10

                                                       Total Burden Per State ............................    .........................................................................             43     ........................       3,832.50


                                                                                          TABLE 16—PUBLIC PROCESS—ONGOING TOTAL BURDEN (ANNUAL)
                                                         Anticipated number of                                                                                  Cost of review per state                           Total cost estimate
                                                                                                              Total hours
                                                             state reviews                                                                                                 ($)                                             ($)

                                                                     22                                             946                                                     3,832.50                                       84,315.00



                                                    The requirements and burden will be                        public via the Internet. The burden                                         documentation, including rate reduction
                                                  submitted to OMB under control                               associated with developing and issuing                                      SPA documents ready to submit to
                                                  number 0938–1134 (CMS–10391).                                public notice at § 447.205 is not affected                                  CMS. These commenters were
                                                                                                               by this requirement since the revision                                      concerned that the efforts would create
                                                  6. ICRs Regarding Public Notice of                           would simply address an additional (in                                      a significant backlog of SPAs.
                                                  Changes in Statewide Methods and                             this case, electronic) means of
                                                  Standards for Setting Payment Rates                                                                                                         Response: As previously discussed,
                                                                                                               notification. Consequently, we do not                                       we have considered concerns related to
                                                  (§ 447.205)                                                  include the electronic notice activity in                                   the proposed burden and have modified
                                                     The provisions at § 447.205 clarify                       our burden analysis.                                                        the ongoing regulatory requirements to
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                                                  when states must issue public notice to                      C. Comments Associated With the                                             reduce the burden. We also note that the
                                                  providers and allow for the electronic                       Collection of Information Requirements                                      challenges presented by initial access
                                                  publication of those notices. Section                                                                                                    reviews, including time constraints,
                                                  447.205(d)(2)(iv)(A) through (D) allow                         Comment: Several commenters noted                                         were considered in the finalizing this
                                                  those notices to be published on the                         that it could take a state up to 6 months                                   rule. Though initial access reviews,
                                                  single state Medicaid agency or other                        and consume many resources to                                               either triggered by the routine, rotating
                                                  state-developed and maintained Web                           conduct ongoing access reviews (in                                          review process, or by submission of a
                                                  site that is accessible to the general                       conjunction with a SPA) and have the                                        SPA, will require a significant time


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                                                  67608                  Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  investment, subsequent reviews are                                              regulatory impact analysis as part of this                      this regulation to surpass the threshold
                                                  expected to be more manageable, due to                                          final rule with comment period. We do                           for economic significance.
                                                  pre-established metrics and review                                              not believe that there is potential for                         D. Summary of Annual Burden
                                                  mechanisms. We have conducted a                                                                                                                 Estimates
                                                                                                 TABLE 17—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
                                                                                                                                                                                                                              Total
                                                                                                                                                                                     Hourly labor           Total labor
                                                                                               OMB                                                   Burden per      Total annual                                            capital/
                                                                                                                 Number of             Number of                                       cost of                cost of                             Total cost
                                                      Regulation section(s)                   Control                                                 response         burden                                                mainte-
                                                                                                                respondents            responses                                      reporting              reporting                               ($)
                                                                                               No.                                                     (hours)         (hours)                                             nance costs
                                                                                                                                                                                        ($/hr)                  ($)            ($)

                                                  447.203(b)(1)–(4) (one-time
                                                    requirement) ....................      0938–1134                           51             17                80           1,360             41.42          56,331.20                     0       56,331.20
                                                                                                                                                                80           1,360             84.50         114,920.00                     0      114,920.00
                                                                                                                                                               100           1,700             87.36         148,512.00                     0      148,512.00
                                                                                                                                                                40             680             67.38          45,818.40                     0       45,818.40
                                                                                                                                                                10             170            112.70          19,159.00                     0       19,159.00

                                                      Subtotal ........................    ..................                   51            17               310           5,270   ....................    384,740.60                     0      384,740.60
                                                  447.203(b)(1)–(4) (on-going
                                                    requirement) ....................      0938–1134                            51            51                80           4,080             41.42         168,993.60                     0      168,993.60
                                                                                                                                                                80           4,080             84.50         344,760.00                     0      344,760.00
                                                                                                                                                               100           5,100             87.36         445,536.00                     0      445,536.00
                                                                                                                                                                40           2,040             67.38         137,455.20                     0      137,455.20
                                                                                                                                                                10             510            112.70          54,477.00                     0       54,477.00

                                                      Subtotal ........................    ..................                  51             51               310          15,810   ....................   1,154,221.80                    0     1,154,221.80
                                                  447.203(b)(6)(ii) ...................    0938–1134                           22             22                64           1,408              87.36         123,002.88                    0       123,002.88
                                                                                                                                                                 3              66            112.70            7,438.20                    0         7,438.20

                                                      Subtotal ........................    ..................                   22            22                67           1,474   ....................    130,441.08                     0      130,441.08
                                                  447.203(b)(7) (one-time re-
                                                    quirement) ........................    0938–1134                           51             17               100           1,700            87.36          148,512.00                      0
                                                                                                                                                                 5              85           112.70            9,579.50                      0

                                                      Subtotal ........................    ..................                   51            17               105           1,785   ....................    158,091.50                     0      158,091.50
                                                  447.203(b)(7) (on-going re-
                                                    quirement) ........................    0938–1134                            51            51               75            3,825             87.36         334,152.00                     0      334,152.00
                                                                                                                                                                5              255            112.70          28,738.50                     0       28,738.50

                                                      Subtotal ........................    ..................                   51            51                80           4,080   ....................    362,890.50                     0      362,890.50
                                                  447.203(b)(8) (one-time re-
                                                    quirement) ........................    0938–1134                            10            3.3              60             198              87.36           17,297.28                    0       17,297.28
                                                                                                                                                                3             9.9             112.70            1,115.73                    0        1,115.73

                                                       Subtotal ........................   ..................                   10            3.3              63            207.9   ....................      18,413.01                    0       18,413.01
                                                  447.204(a)(1) and (2) (one-
                                                    time requirement) ............         0938–1134                            22            7.3              20              146              87.36          12,754.56                     0      12,754.56
                                                                                                                                                                3             21.9            112.70            2,468.13                     0       2,468.13
                                                      Subtotal ........................    ..................                   22            7.3              23            167.9   ....................      15,222.69   ....................     15,222.69
                                                  447.204(a)(1) and (2) (on-
                                                    going requirement) ..........          0938–1134                            22            22                40            880             87.36            76,876.80                    0       76,876.80
                                                                                                                                                                 3             66            112.70             7,438.20                    0        7,438.20

                                                       Subtotal ........................   ..................                   22            22                43            946    ....................      84,315.00                     0      84,315.00

                                                  SUB-TOTAL (One Time Re-
                                                   quirements) ......................      ..................   ....................         44.6              568           8,905   ....................    706,908.88                     0      706,908.88

                                                       SUB-TOTAL (On-Going
                                                        Requirements) ..........           ..................   ....................         146               433          20,836   ....................   1,601,427.30                    0     1,601,427.30

                                                             TOTAL ..................      ..................   ....................        381.2              896          27,956   ....................   2,150,244.68                    0     2,150,244.68



                                                  E. Submission of PRA-Related                                                    cms.hhs.gov, or call the Reports                                  Email: OIRA_submission@
                                                  Comments                                                                        Clearance Office at 410–786–1326.                               omb.eop.gov.
                                                    We submitted a copy of this final rule                                           We invite public comments on these                             ICR-related comments are due
                                                  to OMB for its review of the rule’s                                             potential information collection                                December 2, 2015.
                                                  information collection and                                                      requirements. If you wish to comment,
                                                                                                                                                                                                  VI. Response to Comments
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                                                  recordkeeping requirements. The                                                 please identify the rule (CMS–2328–FC)
                                                  requirements are not effective until they                                       and submit your comments to the OMB                               Because of the large number of public
                                                  have been approved by the OMB.                                                  desk officer via one of the following                           comments we normally receive on
                                                    To obtain copies of the supporting                                            transmissions:                                                  Federal Register documents, we are not
                                                  statement and any related forms for the                                            Mail: OMB, Office of Information and                         able to acknowledge or respond to them
                                                  proposed collections discussed above,                                           Regulatory Affairs, Attention: CMS Desk                         individually. We will consider all
                                                  please visit CMS’ Web site at                                                   Officer.                                                        comments we receive by the date and
                                                  www.cms.hhs.gov/Paperwork@                                                         Fax Number: 202–395–5806, OR                                 time specified in the DATES section of


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67609

                                                  this preamble, and, when we proceed                        In fact, the guidance provided under               for the RFA because we and the
                                                  with a subsequent document, we will                     this rule intends to focus disparate state            Secretary have determined that this
                                                  respond to the comments in the                          efforts in monitoring and overseeing                  final rule with comment period will not
                                                  preamble to that document.                              data and beneficiary concerns, which                  have a significant economic impact on
                                                                                                          offers a clear framework to comply with               a substantial number of small entities.
                                                  VII. Regulatory Impact Statement                        section 1902(a)(30)(A) of the Act. In the                In addition, section 1102(b) of the Act
                                                  A. Statement of Need                                    absence of federal guidance, states have              requires us to prepare a regulatory
                                                     This final rule with comment period                  likely misspent resources in efforts to               impact analysis if a rule may have a
                                                  revises regulatory provisions in                        interpret and comply with section                     significant impact on the operations of
                                                                                                          1902(a)(30)(A) of the Act. We will also               a substantial number of small rural
                                                  § 447.203 and § 447.204 to create a
                                                                                                          make every effort, in collaboration with              hospitals. This analysis must conform to
                                                  standardized, transparent process for
                                                                                                          state and federal partners, to identify               the provisions of section 604 of the
                                                  states to follow as part of their broader
                                                                                                          resources and tools that states may use               RFA. For purposes of section 1102(b) of
                                                  efforts to assure that payments are
                                                                                                          to review and monitor access to care                  the Act, we define a small rural hospital
                                                  consistent with efficiency, economy,
                                                                                                          within their state Medicaid programs. In              as a hospital that is located outside of
                                                  and quality of care and are sufficient to
                                                                                                          this final rule with comment period, we               a Metropolitan Statistical Area for
                                                  enlist enough providers so that care and
                                                                                                          are soliciting public comments to begin               Medicare payment regulations and has
                                                  services are available to the general
                                                                                                          identifying data sources and will                     fewer than 100 beds. We are not
                                                  population in the geographic area, as
                                                                                                          continue to provide assistance as states              preparing an analysis for section 1102(b)
                                                  required by section 1902(a)(30)(A) of the               develop their reviews and monitoring
                                                  Act. This rule also clarifies and amends                                                                      of the Act because we and the Secretary
                                                                                                          procedures.                                           have determined that this final rule with
                                                  § 447.205, which require states to issue                   Based on our analysis above, we
                                                  public notice to their providers when                                                                         comment period will not have a
                                                                                                          estimate that even if these data                      significant impact on the operations of
                                                  changing Medicaid payment methods                       collection efforts were totally new to a
                                                  and standards. The changes to the                                                                             a substantial number of small rural
                                                                                                          state and each state were to either bid               hospitals.
                                                  public notice requirement will alleviate                a contract to gather and publish the data
                                                  confusion on when states must issue                                                                              Section 202 of the Unfunded
                                                                                                          collection effort and public process                  Mandates Reform Act of 1995 (UMRA)
                                                  notice to providers and recognize                       required under this rule or conduct the
                                                  electronic media as a means to issue the                                                                      also requires that agencies assess
                                                                                                          collection and public process with state              anticipated costs and benefits before
                                                  notices.                                                agency resources, the economic effects
                                                                                                                                                                issuing any rule whose mandates
                                                  B. Overall Impact                                       would not surpass $100 million or more
                                                                                                                                                                require spending in any 1 year of $100
                                                                                                          in any 1 year.
                                                     We have examined the impacts of this                    Further, we are not requiring states to            million in 1995 dollars, updated
                                                  rule as required by Executive Order                     directly adjust payment rates as a result             annually for inflation. In 2015, that
                                                  12866 on Regulatory Planning and                        of the provisions of this final rule with             threshold is approximately $144
                                                  Review (September 30, 1993), Executive                  comment period, nor to take any steps                 million. This final rule with comment
                                                  Order 13563 on Improving Regulation                     that would not be consistent with                     period will not impose a mandate that
                                                  and Regulatory Review (January 18,                      efficiency, economy, and quality of care.             will result in the expenditure by state,
                                                  2011), the Regulatory Flexibility Act                   Rather, these rules propose to clarify                local, and tribal governments, in the
                                                  (RFA)) (September 19, 1980, Pub. L. 96–                 that beneficiary access must be                       aggregate, or by the private sector, of
                                                  354), section 1102(b) of the Social                     considered in setting and adjusting                   more than $144 million in any one year.
                                                  Security Act, section 202 of the                        payment methodology for Medicaid                         Executive Order 13132 establishes
                                                  Unfunded Mandates Reform Act of 1995                    services. If a problem is identified, any             certain requirements that an agency
                                                  (March 22, 1995; Pub. L. 104–4),                        number of steps might be appropriate,                 must meet when it promulgates a
                                                  Executive Order 13132 on Federalism                     such as redesigning service delivery                  proposed rule (and subsequent final
                                                  (August 4, 1999), and the Congressional                 strategies, or improving provider                     rule) that imposes substantial direct
                                                  Review Act (5 U.S.C. 804(2)).                           enrollment and retention efforts. It has              requirement costs on state and local
                                                     Executive Order 12866 and 13563                      historically been within our regulatory               governments, preempts state law, or
                                                  direct agencies to assess all costs and                 authority to make SPA approval                        otherwise has federalism implications.
                                                  benefits of available regulatory                        decisions based on sufficiency of                     Since the estimated total cost associated
                                                  alternatives and, if regulation is                      beneficiary service access and this rule              with the provisions in this final rule
                                                  necessary, to select regulatory                         merely provides a more consistent and                 with comment period is around $2.3
                                                  approaches that maximize net benefits                   transparent way to gather and analyze                 million annually, it will not impose
                                                  (including potential economic,                          the necessary information to support                  significant costs on state or local
                                                  environmental, public health and safety                 such reviews.                                         governments, the requirements of E.O.
                                                  effects, distributive impacts, and                         The RFA requires agencies to analyze               13132 are not applicable. We also note
                                                  equity). A regulatory impact analysis                   options for regulatory relief for small               that the costs associated with this final
                                                  (RIA) must be prepared for major rules                  entities, if a rule has a significant impact          rule with comment are allocated across
                                                  with economically significant effects                   on a substantial number of small                      51 state governments. To the extent that
                                                  ($100 million or more in any 1 year). We                entities. For purposes of the RFA, small              costs are for the proper and efficient
                                                  do not believe that there is potential for              entities include small businesses,                    administration of the Medicaid state
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                                                  this provision to surpass the threshold                 nonprofit organizations, and small                    plan, many of the activities required
                                                  for economic significance because the                   government jurisdictions. For details,                under this final rule are likely available
                                                  proposed data analysis effort is                        see the Small Business Administration’s               at the Medicaid matching rate for
                                                  generally consistent with current state                 Web site at https://www.sba.gov/sites/                administrative expenditures.
                                                  oversight and review activities and                     default/files/files/Size_Standards_                      In accordance with the provisions of
                                                  states have flexibility within the reviews              Table.pdf. Individuals and states are not             Executive Order 12866, this regulation
                                                  to use their existing data or build upon                included in the definition of a small                 was reviewed by the Office of
                                                  that data when reviewing access to care.                entity. We are not preparing an analysis              Management and Budget.


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                                                  67610            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  C. Regulatory Alternatives Considered                   period, there are no standardized,                    services and requires additional review
                                                     This section provides an overview of                 transparent methodologies for                         and monitoring over three years for
                                                  regulatory alternatives that CMS                        demonstrating access to care that would               services subject to rate reductions or
                                                  considered for this final rule with                     be appropriate to adopt at this time.                 restructuring of payments or when the
                                                                                                             Rather than prescribe data measures                Medicaid agency receives a significantly
                                                  comment period. In determining the
                                                                                                          that may not align with all services or               higher than usual level of complaints
                                                  appropriate approach to guide states in
                                                                                                          set threshold standards, we have                      about access to care from beneficiaries,
                                                  their efforts to meet the requirements of
                                                                                                          adopted a general framework, which                    providers, or other stakeholders. In this
                                                  section 1902(a)(30)(A) of the Act and
                                                                                                          sets forth a three-part review that                   way, the final rule with comment period
                                                  demonstrate sufficient access to
                                                                                                          applies across services and delivery                  ensures that access to care reviews for
                                                  Medicaid services, we consulted with
                                                                                                          systems and will allow states the                     most services will be conducted as
                                                  SMDs, federal agency policy officials
                                                                                                          flexibility to determine, through current             potential issues arise or circumstances
                                                  and the MACPAC. Based, in part, on                      or new data sources, appropriate                      change. We believe that, absent rate
                                                  these discussions we arrived at the                     measures of access to care. As states                 reductions or restructuring of payments,
                                                  provisions discussed in this rule, which                analyze their existing data sources and               the 3-year review and monitoring
                                                  seek to balance state obligations to meet               those that we identify through work                   periods combined with ongoing
                                                  the statutory requirement of section                    with MACPAC and our federal partners,                 solicitation of information about access
                                                  1902(a)(30)(A) of the Act and potential                 we believe that states may arrive at best             from beneficiaries are sufficient to
                                                  new burden associated with the                          practices for determining sufficient                  identify access issues that may occur
                                                  proposal. To achieve this balance, we                   Medicaid access to care which could be                over time.
                                                  have set forth a process that provides a                replicated across state delivery systems                 This final rule with comment period
                                                  framework for states to demonstrate                     and will evolve with new approaches to                will require states to develop
                                                  access to Medicaid services using                       delivering health care to Medicaid                    monitoring procedures after
                                                  available data resources and in                         beneficiaries. In addition, we are issuing            implementing provider rate reductions
                                                  consideration of unique and evolving                    an RFI to solicit feedback from                       or restructuring rates in ways that may
                                                  health care delivery systems. We have                   stakeholders on whether data exists to                negatively impact access to care. We
                                                  also emphasized the importance of                       develop core access measures and                      require these monitoring procedures
                                                  considering beneficiary input in                        thresholds would provide additional                   because the impact of rate changes on
                                                  determining and monitoring access to                    information or approaches that would                  access to care may not be apparent at
                                                  Medicaid services throughout the                        be useful to us and states in ensuring                the time the changes are adopted. We
                                                  process as discussed in this final rule                 access to care to Medicaid beneficiaries.             considered not requiring states to
                                                  with comment period.                                                                                          monitor access after implementing the
                                                                                                          2. Access Review Timeframe and
                                                  1. Access Monitoring Review Plan                                                                              changes and to continue to rely on the
                                                                                                          Monitoring Procedures
                                                                                                                                                                5-year reviews to ensure that access is
                                                     The process for documenting access                      States will be required to develop                 maintained. However, we believe that it
                                                  to care and service payment rates                       access monitoring review plans for the                is important for states to identify and
                                                  described at § 447.203 will require states              following service categories: Primary                 address access issues that arise from
                                                  to develop and make publically                          care; physician specialist services;                  specific SPA actions, such as
                                                  available access monitoring review                      behavioral health; pre- and post-natal                reimbursement rate reductions or
                                                  plans that address the extent to which                  obstetric services, including labor and               restructuring.
                                                  beneficiary needs are met, the                          delivery; home health services and other
                                                  availability of care and providers, and                 service categories as determined                      3. Beneficiary Input on Access to Care
                                                  changes in beneficiary utilization of                   necessary based on beneficiary, provider                 The requirements of § 447.203 and
                                                  covered services and other factors. The                 or stakeholder complaints; the access                 § 447.204 emphasize the importance of
                                                  access monitoring review plan would                     monitoring review plans must be                       involving beneficiaries in determining
                                                  also include percentage comparisons of                  reviewed and updated at least every 3                 access issues and the impact that state
                                                  Medicaid payment rates to other public                  years. States must also submit an access              rate changes will have on access to care.
                                                  or private health coverage rates within                 review, completed within the 12 months                Specifically, we require that states
                                                  geographic areas of the state. The access               prior, with any SPA that proposes to                  implement an ongoing mechanism for
                                                  monitoring review plans are to be                       reduce or restructure provider payments               beneficiary input on access to care
                                                  developed for a subset of Medicaid                      for each of the impacted services. We                 (through hotlines, surveys, ombudsman,
                                                  service categories and updated at least                 have arrived at this subset of service                or another equivalent mechanism) and
                                                  every 3 years or, in the context of a SPA               categories because they are frequently                receive input from beneficiaries (and
                                                  proposal to reduce provider rates or                    used services in Medicaid and they are                affected stakeholders) on the impact that
                                                  restructure provider rates in                           considered gateway services, meaning if               proposed rates changes will have
                                                  circumstance that may negatively                        a beneficiary has access to these                     through a public process. We believe
                                                  impact access to care, within 12 months                 services, it is likely that the majority of           that beneficiaries’ experiences in
                                                  of implementing the SPA.                                the beneficiary’s needs are being met.                accessing Medicaid services is the most
                                                     As an alternative to the proposed                       We considered requiring the review                 important indicator of whether access is
                                                  framework for reviewing access to care,                 for all services on an annual basis or a              sufficient and beneficiary input will be
                                                  we considered requiring states to report                review period that is more frequent than              particularly informative in identifying
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                                                  standard data measures to demonstrate                   5 years. After careful consideration of               access issues.
                                                  sufficient access to care and section                   the burden associated with annual                        We also considered a requirement that
                                                  1902(a)(30)(A) of the Act. We also                      reviews, which were a foremost concern                states consult with beneficiaries when
                                                  considered setting national access                      for some commenters, we determined 3                  developing their corrective action plans
                                                  thresholds or requiring states to                       year ongoing reviews as an appropriate                in instances when the access data
                                                  establish and demonstrate access                        frequency period. The final rule with                 reviews or monitoring procedures
                                                  thresholds. As we have highlighted                      comment period provides for more                      identify access issues. While we
                                                  throughout this final rule with comment                 frequent reviews for fewer high demand                encourage states to solicit beneficiary


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                                                                   Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations                                         67611

                                                  input on corrective action plans, we did                   (ii) The availability of care through              this section, baseline and updated data
                                                  not make this a specific regulatory                     enrolled providers to beneficiaries in                associated with the measures, any issues
                                                  requirement and we leave it to the                      each geographic area, by provider type                with access that are discovered as a
                                                  states’ discretion to develop the                       and site of service;                                  result of the review, and the state
                                                  corrective action plans as part of their                   (iii) Changes in beneficiary utilization           agency’s recommendations on the
                                                  current policy development methods.                     of covered services in each geographic                sufficiency of access to care based on
                                                                                                          area.                                                 the review. In addition, the access
                                                  List of Subjects in 42 CFR Part 447                        (iv) The characteristics of the                    monitoring review plan must include
                                                    Accounting, Administrative practice                   beneficiary population (including                     procedures to periodically monitor
                                                  and procedure, Drugs, Grant programs-                   considerations for care, service and                  access for at least 3 years after the
                                                  health, Health facilities, Health                       payment variations for pediatric and                  implementation of a provider rate
                                                  professions, Medicaid, Reporting and                    adult populations and for individuals                 reduction or restructuring, as discussed
                                                  recordkeeping requirements, and Rural                   with disabilities); and                               in paragraph (b)(6)(ii) of this section.
                                                  areas.                                                     (v) Actual or estimated levels of                     (5) Access monitoring review plan
                                                    For the reasons set forth in the                      provider payment available from other                 timeframe. Beginning July 1, 2016 the
                                                  preamble, the Centers for Medicare &                    payers, including other public and                    State agency must:
                                                  Medicaid Services amends 42 CFR                         private payers, by provider type and site                (i) Develop its access monitoring
                                                  chapter IV as set forth below:                          of service.                                           review plan by July 1 of the first review
                                                                                                             (2) Access monitoring review plan                  year, and update this plan by July 1 of
                                                  PART 447—PAYMENTS FOR                                   beneficiary and provider input. The                   each subsequent review period;
                                                  SERVICES                                                access monitoring review plan must                       (ii) For all of the following, complete
                                                                                                          include an analysis of data and the                   an analysis of the data collected using
                                                  ■ 1. The authority citation for part 447                state’s conclusion of the sufficiency of              the methodology specified in the access
                                                  continues to read as follows:                           access to care that will consider relevant            monitoring review plan in paragraphs
                                                                                                          provider and beneficiary information,                 (b)(1) through (4) of this section, with a
                                                   Authority: Sec. 1102 of the Social Security            including information obtained through                separate analysis for each provider type
                                                  Act (42 U.S.C. 1302).                                   public rate-setting processes, the                    and site of service furnishing the type of
                                                  ■ 2. Section 447.203 is amended by                      medical care advisory committees                      service at least once every 3 years:
                                                  revising the section heading and                        established under § 431.12 of this                       (A) Primary care services (including
                                                  paragraph (b) to read as follows:                       chapter, the processes described in                   those provided by a physician, FQHC,
                                                                                                          paragraph (b)(7) of this section, and                 clinic, or dental care).
                                                  § 447.203 Documentation of access to care               other mechanisms (such as letters from                   (B) Physician specialist services (for
                                                  and service payment rates.                              providers and beneficiaries to State or               example, cardiology, urology,
                                                  *      *    *      *    *                               Federal officials), which describe access             radiology).
                                                     (b) In consultation with the medical                 to care concerns or suggestions for                      (C) Behavioral health services
                                                  care advisory committee under § 431.12                  improvement in access to care.                        (including mental health and substance
                                                  of this chapter, the agency must develop                   (3) Access monitoring review plan                  use disorder).
                                                  a medical assistance access monitoring                  comparative payment rate review. For                     (D) Pre- and post-natal obstetric
                                                  review plan and update it, in                           each of the services reviewed, by the                 services including labor and delivery.
                                                  accordance with the timeline                            provider types and sites of service (e.g.                (E) Home health services.
                                                  established in paragraph (b)(5) of this                 primary care physicians in office                        (F) Any additional types of services
                                                  section. The plan must be published                     settings) described within the access                 for which a review is required under
                                                  and made available to the public for                    monitoring analysis, the access                       paragraph (b)(6) of this section;
                                                  review and comment for a period of no                   monitoring review plan must include an                   (G) Additional types of services for
                                                  less than 30 days, prior to being                       analysis of the percentage comparison of              which the state or CMS has received a
                                                  finalized and submitted to CMS for                      Medicaid payment rates to other public                significantly higher than usual volume
                                                  review.                                                 (including, as practical, Medicaid                    of beneficiary, provider or other
                                                     (1) Access monitoring review plan                    managed care rates) and private health                stakeholder access complaints for a
                                                  data requirements. The access                           insurer payment rates within geographic               geographic area, including complaints
                                                  monitoring review plan must include an                  areas of the state.                                   received through the mechanisms for
                                                  access monitoring analysis that                            (4) Access monitoring review plan                  beneficiary input consistent with
                                                  includes: Data sources, methodologies,                  standards and methodologies. The                      paragraph (b)(7) of this section; and
                                                  baselines, assumptions, trends and                      access monitoring review plan and                        (H) Additional types of services
                                                  factors, and thresholds that analyze and                analysis must, at a minimum, include:                 selected by the state.
                                                  inform determinations of the sufficiency                The specific measures that the state uses                (6) Special provisions for proposed
                                                  of access to care which may vary by                     to analyze access to care (such as, but               provider rate reductions or
                                                  geographic location within the state and                not limited to: Time and distance                     restructuring—(i) Compliance with
                                                  will be used to inform state policies                   standards, providers participating in the             access requirements. The State shall
                                                  affecting access to Medicaid services                   Medicaid program, providers with open                 submit with any State plan amendment
                                                  such as provider payment rates, as well                 panels, providers accepting new                       that proposes to reduce provider
                                                  as the items specified in this section.                 Medicaid beneficiaries, service                       payment rates or restructure provider
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                                                  The access monitoring review plan must                  utilization patterns, identified                      payments in circumstances when the
                                                  specify data elements that will support                 beneficiary needs, data on beneficiary                changes could result in diminished
                                                  the state’s analysis of whether                         and provider feedback and suggestions                 access, an access review, in accordance
                                                  beneficiaries have sufficient access to                 for improvement, the availability of                  with the access monitoring review plan,
                                                  care. The plan and monitoring analysis                  telemedicine and telehealth, and other                for each service affected by the State
                                                  will consider:                                          similar measures), how the measures                   plan amendments as described under
                                                     (i) The extent to which beneficiary                  relate to the access monitoring review                paragraph (b)(1) of this section
                                                  needs are fully met;                                    plan described in paragraph (b)(1) of                 completed within the prior 12 months.


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                                                  67612            Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations

                                                  That access review must demonstrate                     timelines to address those issues. While              submission the supporting
                                                  sufficient access for any service for                   the corrective action plan may include                documentation described in paragraph
                                                  which the state agency proposes to                      longer-term objectives, remediation of                (b) of this section, for failure to
                                                  reduce payment rates or restructure                     the access deficiency should take place               document compliance with statutory
                                                  provider payments to demonstrate                        within 12 months.                                     access requirements. Any such
                                                  compliance with the access                                 (i) The state’s corrective actions may             disapproval would follow the
                                                  requirements at section 1902(a)(30)(A)                  address the access deficiencies through               procedures described at part 430
                                                  of the Act.                                             a variety of approaches, including, but               Subpart B of this title.
                                                     (ii) Monitoring procedures. In                       not limited to: Increasing payment rates,               (d) To remedy an access deficiency,
                                                  addition to the analysis conducted                      improving outreach to providers,                      CMS may take a compliance action
                                                  through paragraphs (b)(1) through (4) of                reducing barriers to provider                         using the procedures described at
                                                  this section that demonstrates access to                enrollment, proving additional                        § 430.35 of this chapter.
                                                  care is sufficient as of the effective date             transportation to services, providing for             ■ 4. Section 447.205 is amended by
                                                  of the State plan amendment, a state                    telemedicine delivery and telehealth, or              adding paragraph (d)(2)(iv) to read as
                                                  must establish procedures in its access                 improving care coordination.                          follows:
                                                  monitoring review plan to monitor                          (ii) The resulting improvements in
                                                  continued access to care after                          access must be measured and                           § 447.205 Public notice of changes in
                                                  implementation of state plan service                    sustainable.                                          Statewide methods and standards for
                                                  rate reduction or payment restructuring.                ■ 3. Section 447.204 is revised to read               setting payment rates.
                                                  The frequency of monitoring should be                   as follows:                                           *      *     *     *      *
                                                  informed by the public review described                                                                          (d) * * *
                                                  in paragraph (b) of this section and                    § 447.204 Medicaid provider participation
                                                                                                                                                                   (2) * * *
                                                  should be conducted no less frequently                  and public process to inform access to
                                                                                                          care.                                                    (iv) A Web site developed and
                                                  than annually.                                                                                                maintained by the single State agency or
                                                     (A) The procedures must provide for                    (a) The agency’s payments must be
                                                                                                          consistent with efficiency, economy,                  other responsible State agency that is
                                                  a periodic review of state determined                                                                         accessible to the general public,
                                                  and clearly defined measures, baseline                  and quality of care and sufficient to
                                                                                                          enlist enough providers so that services              provided that the Web site:
                                                  data, and thresholds that will serve to
                                                                                                          under the plan are available to                          (A) Is clearly titled and can be easily
                                                  demonstrate continued sustained
                                                                                                          beneficiaries at least to the extent that             reached from a hyperlink included on
                                                  service access, consistent with
                                                                                                          those services are available to the                   Web sites that provide general
                                                  efficiency, economy, and quality of care.
                                                     (B) The monitoring procedures must                   general population. In reviewing                      information to beneficiaries and
                                                  be in place for a period of at least 3                  payment sufficiency, states are required              providers, and included on the State-
                                                  years after the effective date of the state             to consider, prior to the submission of               specific page on the Federal Medicaid
                                                  plan amendment that authorizes the                      any state plan amendment that proposes                Web site.
                                                  payment reductions or restructuring.                    to reduce or restructure Medicaid                        (B) Is updated for bulletins on a
                                                     (7) Mechanisms for ongoing                           service payment rates:                                regular and known basis (for example,
                                                  beneficiary and provider input. (i) States                (1) The data collected, and the                     the first day of each month), and the
                                                  must have ongoing mechanisms for                        analysis performed, under § 447.203.                  public notice is issued as part of the
                                                  beneficiary and provider input on                         (2) Input from beneficiaries, providers             regular update;
                                                  access to care (through hotlines,                       and other affected stakeholders on                       (C) Includes the actual date it was
                                                  surveys, ombudsman, review of                           beneficiary access to the affected                    released to the public on the Web site;
                                                  grievance and appeals data, or another                  services and the impact that the                      or
                                                  equivalent mechanisms), consistent                      proposed rate change will have, if any,                  (D) Complies with national standards
                                                  with the access requirements and public                 on continued service access. The state                to ensure access to individuals with
                                                  process described in § 447.204.                         should maintain a record of the public                disabilities; and
                                                     (ii) States should promptly respond to               input and how it responded to such                       (E) Includes protections to ensure that
                                                  public input through these mechanisms                   input.                                                the content of the issued notice is not
                                                  citing specific access problems, with an                  (b) The state must submit to CMS                    modified after the initial publication
                                                  appropriate investigation, analysis, and                with any such proposed state plan                     and is maintained on the Web site for
                                                  response.                                               amendment affecting payment rates:                    no less than a 3-year period.
                                                     (iii) States must maintain a record of                 (1) Its most recent access monitoring                 Dated: September 17, 2015.
                                                  data on public input and how the state                  review plan performed under
                                                                                                                                                                Andrew M. Slavitt,
                                                  responded to this input. This record                    § 447.203(b)(6) for the services at issue;
                                                  will be made available to CMS upon                        (2) An analysis of the effect of the                Acting Administrator, Centers for Medicare
                                                                                                                                                                & Medicaid Services.
                                                  request.                                                change in payment rates on access; and
                                                     (8) Addressing access questions and                    (3) A specific analysis of the                        Dated: October 22. 2015.
                                                  remediation of inadequate access to                     information and concerns expressed in                 Sylvia M. Burwell,
                                                  care. When access deficiencies are                      input from affected stakeholders.                     Secretary, Department of Health and Human
                                                  identified, the state must, within 90                     (c) CMS may disapprove a proposed                   Services.
                                                  days after discovery, submit a corrective               state plan amendment affecting payment                [FR Doc. 2015–27697 Filed 10–29–15; 11:15 am]
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                                                  action plan with specific steps and                     rates if the state does not include in its            BILLING CODE 4120–01–P




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D
    CONFERENCE
  COMMITTEE REPORT
        3RD Printing




       H.B. NO. 1
GENERAL APPROPRIATIONS
         BILL
                     HEALTH AND HUMAN SERVICES COMMISSION
                                              (Continued)


     (HHSC) in Goal B, Medicaid, and Goal C, Children's Health Insurance Program, HHSC may
     implement the following quality-based reforms in the Medicaid and CHIP programs:

     a.    develop quality-based outcome and process measures that promote the provision of efficient,
           quality health care and that can be used to implement quality-based payments for acute and
           long-term care services across delivery models and payment systems;

     b.    implement quality-based payment systems for compensating a health care provider or facility
           participating in the Medicaid and CHIP programs;

     c.    implement quality-based payment initiatives to reduce potentially preventable readmissions
           and potentially preventable complications; and

     d.    implement a bundled payment initiative in the Medicaid program, including a shared savings
           component for providers that meet quality-based outcomes. The executive commissioner
           may select high-cost and/or high-volume services to bundle and may consider the
           experiences of other payers and other state of Texas programs that purchase healthcare
           services in making the selection.

     e.    Under the Health and Human Services Commission's authority in 1 T.A.C. Sec. 355.307(c),
           the commission may implement a Special Reimbursement Class for long term care
           commonly referred to as "small house facilities." Such a class may include a rate
           reimbursement model that is cost neutral and that adequately addresses the cost differences
           that exist in a nursing facility constructed and operated as a small house facility, as well as
           the potential for off-setting cost savings through decreased utilization of higher cost
           institutional and ancillary services. The payment increment may be based upon a provider
           incentive payment rate.

     Required Reporting: The commission shall provide annual reports to the Governor's Office of
     Budget, Planning, and Policy and Legislative Budget Board on December 1, 2015 and December
     1, 2016 that include (1) the quality-based outcome and process measures developed; (2) the
     progress of the implementation of quality-based payment systems and other related initiatives; (3)
     outcome and process measures by health service region; and (4) cost-effectiveness of quality-
     based payment systems and other related initiatives.

47. Texas Office for the Prevention of Developmental Disabilities. Out of General Revenue Funds
    appropriated above in Strategy A.1.1, Enterprise Oversight and Policy, the Health and Human
    Services Commission shall expend an amount not to exceed $200,000 each fiscal year for salaries,
    travel expenses, and other costs in order to support the Office for Prevention of Developmental
    Disabilities. Grants and donations for the Texas Office for Prevention of Developmental
    Disabilities received through the authority provided by Article IX, Sec. 8.01, Acceptance of Gifts
    of Money, are not subject to this limit and shall be expended as they are received as a first source,
    and General Revenue shall be used as a second source to support the office.

48. Supplemental Payments. It is the intent of the Legislature that when the Health and Human
    Services Commission calculates supplemental payments, data be collected to provide transparency
    regarding claims associated with the supplemental payment program. An independent audit of the
    program, including a review of regional affiliations, uncompensated care claims for both
    uninsured and insured individuals, and contractual agreements, and a report with findings should
    be completed and distributed annually on March 1 to the Governor, the Lieutenant Governor, the
    Speaker of the House of Representatives, the Senate Finance Committee members, the House
    Appropriations Committee members, and the Legislative Budget Board.

49. Prevent Eligibility Determination Fraud. It is the intent of the Legislature that to prevent fraud
    and to maximize efficiencies, the Health and Human Services Commission shall use technology to
    identify the risk for fraud associated with applications for benefits. Within the parameters of state
    and federal law, the commission shall set appropriate verification and documentation requirements
    based on the application's risk to ensure agency resources are targeted to maximize fraud reduction
    and case accuracy.

50. Medicaid Funding Reduction and Cost Containment.

     a.    Included in appropriations above in Goal B, Medicaid, is a reduction of $186,500,000 in
           General Revenue Funds and $249,349,498 in Federal Funds in fiscal year 2016 and
           $186,500,000 in General Revenue Funds and $247,220,930 in Federal Funds in fiscal year

A529-Conf-2-B                                  II-96                                         May 25, 2015
                   HEALTH AND HUMAN SERVICES COMMISSION
                                            (Continued)


         2017, a biennial total of $373,000,000 in General Revenue Funds and $496,570,428 in
         Federal Funds. The Health and Human Services Commission (HHSC) is authorized to
         transfer these reductions between fiscal years and to allocate these reductions among health
         and human services agencies as listed in Article II of this Act, pursuant to the requirement to
         submit a plan included in Subsection (d) of this rider.

    b.   This reduction shall be achieved through the implementation of the plan described under
         subsection (d) which may include any or all of the following initiatives:

          (1)   Continue strengthening and expanding prior authorization and utilization reviews,

          (2)   Incentivize appropriate neonatal intensive care unit utilization and coding,

          (3)   Fully implement dually eligible Medicare/Medicaid integrated care model and long-
                term services and supports quality payment initiative,

          (4)   Maximize co-payments in Medicaid programs,

          (5)   Increase fraud, waste, and abuse prevention and detection,

          (6)   Explore changes to premium structure for managed care organizations and contracting
                tools to reduce costs and increase efficiency,

          (7)   Renegotiate more efficient contracts, including reducing the administrative contract
                profit margin and establish rebate provisions where possible,

          (8)   Develop a dynamic premium development process for managed care organizations that
                has an ongoing methodology for reducing inappropriate utilization, improving
                outcomes, reducing unnecessary spending, and increasing efficiency,

          (9)   Implement fee-for-service payment changes and managed care premium adjustments
                that incentivize the most appropriate and effective use of services,

          (10) Improve birth outcomes, including improving access to information and payment
               reform,

          (11) Increase efficiencies in the vendor drug program,

          (12) Increase third party recoupments,

          (13) Create a pilot program on motor vehicle subrogation,

          (14) Assess options to reduce costs for retroactive Medicaid claims,

          (15) Review the cost effectiveness of including children with disabilities in dental managed
               care,

          (16) Review and determine the benefits of providing the managed care-organizations with
               the ability to create a pharmacy lock-in program, and

          (17) Implement additional initiatives identified by HHSC.

    c.   HHSC shall reform reimbursement methodology to be in line with industry standards,
         policies, and utilization for acute care therapy services (including physical, occupational, and
         speech therapies) while considering stakeholder input and access to care. Out of the amount
         in subsection (a), in each fiscal year at least $50,000,000 in General Revenue Funds savings
         should be achieved through rate reductions and $25,000,000 in General Revenue Funds
         savings may be achieved through various medical policy initiatives listed in items (1)-(10),
         below. If $25,000,000 in savings is not achieved through various medical policy initiatives in
         fiscal year 2016, the amount of unrealized savings (the difference between $25,000,000 in
         General Revenue Funds and savings actually achieved in fiscal year 2016) should be
         achieved through additional rate reductions in fiscal year 2017 while continuing any




A529-Conf-2-B                                II-97                                         May 25, 2015
                    HEALTH AND HUMAN SERVICES COMMISSION
                                             (Continued)


           initiatives implemented in fiscal year 2016 that have been found to produce savings. HHSC
           may achieve savings through various medical policy initiatives, taking into consideration the
           following:

           (1)   Clarifying policy language regarding co-therapy definition, documentation, and billing
                 requirements,

           (2)   Clarifying who can participate in therapy sessions in policy that interns, aides,
                 students, orderlies and technicians can participate in therapy sessions when they are
                 directly and appropriately supervised according to provider licensure requirements,
                 but they are not eligible to enroll as providers and bill Texas Medicaid for services,

           (3)   Consolidate Traditional, Comprehensive Care Program and Home Health Agency
                 therapy policies into one policy,

           (4)   Require a primary care or treating physician to initiate a signed order or referral prior
                 to an initial therapy evaluation. The initial evaluation may require prior authorization
                 and the signed order or referral must be dated prior to the evaluation,

           (5)   Require a primary care or treating physician to order the therapy services based on the
                 outcomes of the evaluation,

           (6)   Clarify medical necessity for therapy services to ensure prior authorization staff who
                 are reviewing requests are using guidelines based on the nationally recognized
                 standards of care,

           (7)   Require licensed Medicaid enrolled therapists to document and support decisions for
                 continued therapy based on professional assessment of a client's progress relative to
                 their individual treatment plan and in concert with the client's primary care physician
                 and the individual and/or family,

           (8)   Ensure appropriate duration of services by aligning authorization periods with national
                 standards,

           (9)   Streamline prior authorization processes, and

           (10) Implement policies that ensure services are provided in the most cost-efficient and
                medically appropriate setting, and implementation of other medical or billing policy
                changes.

      d.   HHSC shall develop a plan to allocate the reductions required by Subsection (a) of this rider
           by taking actions such as those suggested under Subsection (b) and (c) of this rider to the
           budgets of the health and human services agencies as listed in Chapter 531, Government
           Code. The plan shall include reduction amounts by strategy and fiscal year and shall be
           submitted in writing before December 1, 2015 to the Legislative Budget Board, the
           Governor, and the Comptroller of Public Accounts.

51. Improve Efficiencies in Benefit Applications. Out of funds appropriated above, in order to
    improve efficiencies, the Health and Human Services Commission shall promote online
    submissions of applications for benefits administered by the agency. HHSC shall develop
    standards and technical requirements to allow organizations to electronically submit applications.
    It is the intent of the Legislature that HHSC only expend funds or utilize agency resources to
    partner with entities whose role in submitting benefit applications has been statutorily established,
    or with entities that provide in-person assistance using the agency's website for clients.

52. Dental and Orthodontia Providers in the Texas Medicaid Program. It is the intent of the
    Legislature that the Health and Human Services Commission (HHSC) use funds appropriated
    above in Strategy G.1.1, Office of Inspector General, to strengthen the capacity of the HHSC
    Inspector General to detect, investigate, and prosecute abuse by dentists and orthodontists who
    participate in the Texas Medicaid program. Further, it is the intent of the Legislature that HHSC
    conduct more extensive reviews of medical necessity for orthodontia services in the Medicaid
    program.




A529-Conf-2-B                                  II-98                                         May 25, 2015
E
                                     Exhibit A
 to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief




  TEXAS HEALTH AND HUMAN SERVICES COMMISSION
           RATE ANALYSIS DEPARTMENT


 Notice of Proposed Adjustments to Fees, Rates or Charges
for Physical, Occupational, and Speech Therapy provided by
           Comprehensive Outpatient Rehabilitation
  Facilities/Outpatient Rehabilitation Facilities {CORF/ORF),
 Home Health Agencies {HHA), and Independent Therapists




            Adjustments are proposed to be effective
                       October 1, 2015




                                                       Public Rate Hearing September 18, 2015 Page 1



                                                                                                       351
                                      Exhibit A
  to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief



                     SUMMARY OF PROPOSED ADJUSTMENTS

                            To Be Effective October 1, 2015


Included in this document is information relating to the proposed adjustments to
Medicaid payment rates for Physical, Occupational, and Speech Therapy provided by
Comprehensive Outpatient Rehabilitation Facilities/Outpatient Rehabilitation Facilities
(CORF/ORF), Home Health Agencies (HHA), and Independent Therapists. The rates
are proposed to be effective October 1, 2015.

Hearing

The Health and Human Services Commission (HHSC) will conduct a public hearing to
receive comments regarding the proposed adjustments to Medicaid rates detailed in this
document on September 18, 2015, at 9:00 a.m. in the Public Hearing Room of the John
H. Winters Building at 701 West 51 st Street, Austin, Texas. Entry is through security at
the main entrance of the building facing West 51 st Street. HHSC will consider concerns
expressed at the hearing prior to final rate approval. This public hearing is held in
compliance with the provisions of Human Resources Code §32.0282 and the Texas
Administrative Code, Title 1 (1 TAC), §355.201, which require a public hearing on
proposed payment rate adjustments. Should you have any questions regarding the
information in this document, please contact:

                  Megan Wolfe, Rate Analysis for Acute Care Services
                   Texas Health and Human Services Commission
                        (512) 730-7456; FAX: (512) 730-7475
                       E-mail: megan .wolfe@hhsc.state.tx.us


Background

HHSC is responsible for the reimbursement determination functions for the Texas
Medicaid Program. The proposed rate adjustments presented in this document are
based on direction provided by the 2016-2017 General Appropriations Act, 34th
Legislature, Regular Session, Article II, Rider 50, at pages 11-96 through 11-98 (Health
and Human Services Section, Health and Human Services Commission).

Methodology

The specific administrative rules that govern the establishment of the fees in this
proposal include these rules in 1 TAC:

   •   §355.201 (d)(1 )(A) and (D), which authorize HHSC to adjust rates for medical
       assistance if state law is enacted requiring a rate reduction or restricting the
       availability of appropriated funds.

                                                         Public Rate Hearing September 18, 2015 Page 2



                                                                                                         352
                                      Exhibit A
  to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief




   •   §355.8021, which addresses the reimbursement methodology for home health
       services and durable medical equipment, prosthetics, orthotics, and supplies;

   •   §355.8085, which addresses the reimbursement methodology for physicians and
       other practitioners;

   •   §355.8441, which addresses the reimbursement methodology for Early and
       Periodic Screening, Diagnosis, and Treatment (EPSDT) services (known in
       Texas as Texas Health Steps).

Proposed Rate Adjustments

As indicated above, the proposed rate adjustments are based on direction provided by
the 2016-2017 General Appropriations Act, 84th Legislature, Regular Session, Article II,
Rider 50, at pages 11-96 through 11-98.

Proposed rate adjustments were calculated based on an analysis of Medicaid fees paid
by other states and previous Texas Medicaid payments for Medicaid-reimbursable
therapy services. Where current Texas Medicaid rates exceed 150 percent of the
median of other states' rates for the same service, a percentage reduction is applied.
An alternative percentage reduction is applied to Texas Medicaid rates that do not
exceed 150 percent of the median of other states' rates for the same service and in
cases where information on other states' rates is not available.

Specific proposed payment rate adjustments are listed in the attachments outlined
below:

Att 1 - CORFORF Therapies
Att 2 - HHA Therapies
Att 3 - Independent Therapists

Written Comments

Written comments regarding the proposed payment rate adjustments may be submitted
in lieu of, or in addition to, oral testimony until 5 p.m. the day of the hearing. Written
comments may be sent by U.S. mail to the Texas Health and Human Services
Commission, Attention: Rate Analysis, Mail Code H-400, P.O. Box 149030, Austin,
Texas 78714-9030; by fax to Rate Analysis at (512) 730-7475; or by e-mail to
RADAcuteCare@hhsc.state.tx.us. In addition, written comments may be sent by
overnight mail or hand delivered to Texas Health and Human Services Commission,
Attention: Rate Analysis, Mail Code H-400, Brown-Heatly Building, 4900 North Lamar,
Austin, Texas 78751.

Persons with disabilities who wish to attend the hearing and require auxiliary aids or
services should contact Rate Analysis at (512) 730-7401 at least 72 hours in advance,
                                                         Public Rate Hearing September 18, 2015 Page 3




                                                                                                         353
                                      Exhibit A
  to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief




so appropriate arrangements can be made.




                                                        Public Rate Hearing September 18, 2015 Page 4




                                                                                                        354
                                                Exhibit A
            to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief


ATTACHMENT 1- COMPREHENSIVE OUTPATIENT REHABILITATION FACILITY/OUTPATIENT REHABILITATION
FACILITY (CORF/ORF) (proposed to be effective October 1, 2015)

                                                                 CURRENT                    PROPOSED
                                                                        current                    l'roposea
                                                 Age      Current      Adjusted       Proposed     Adjusted
TOS* Procedure Code     Long Description   **   Range    Medicaid Fee Medicaid Fee   Medicaid Fee Medicaid Fee
 1        92507                 **                0-20      $39.78       $39.78         $28.67       $28.67
 1        92507                 **              21-999      $39.78       $39.78         $28.67       $28.67
 1        92508                 **                0-20      $19.90       $19.90         $14.93       $14.93
 1        92508                 **              21-999      $19.90       $19.90         $14.93       $14.93
 1        92521                 **                0-20     $140.62       $140.62       $105.47       $105.47
 1        92521                 **              21-999     $140.62       $140.62       $105.47       $105.47
 1        92522                 **                0-20     $175.77       $175.77       $131.83       $131.83
 1        92522                 **              21-999     $175.77       $175.77       $131.83       $131.83
 1        92523                 **                0-20     $234.36       $234.36       $175.77       $175.77
 1        92523                 **              21-999     $234.36       $234.36       $175.77       $175.77
 1        92524                 **                0-20     $117.18       $117.18        $87.89       $87.89
 1        92524                 **              21-999     $117.18       $117.18        $87.89       $87.89
 1        92526                 **               0-999      $39.78       $39.78         $38.41       $38.41
 1        92610                 **               0-999     $234.36       $234.36       $226.27       $226.27
 1        97001                 **                0-20     $167.40       $167.40       $125.55       $125.55
 1        97001                 **              21-999     $167.40       $167.40       $125.55       $125.55
 1        97002                 **                0-20     $150.66       $150.66       $113.00       $113.00
 1        97002                 **              21-999     $150.66       $150.66       $113.00       $113.00
 1        97003                 **                0-20     $167.40       $167.40       $125.55       $125.55
 1        97003                 **              21-999     $167.40       $167.40       $125.55       $125.55
 1        97004                 **                0-20     $150.66       $150.66       $113.00       $113.00
 1        97004                 **              21-999     $150.66       $150.66       $113.00       $113.00
 1        97012                 **                0-20      $39.78       $39.78         $38.41       $38.41
 1        97012                 **              21-999      $39.78       $39.78         $38.41       $38.41
 1        97014                 **                0-20      $39.78       $39.78         $29.84       $29.84
 1        97014                 **              21-999      $39.78       $39.78         $29.84       $29.84
 1        97016                 **                0-20      $39.78       $39.78         $29.84       $29.84
 1        97016                 **              21-999      $39.78       $39.78         $29.84       $29.84
 1        97018                 **                0-20      $39.78       $39.78         $29.84       $29.84
 1        97018                 **              21-999      $39.78       $39.78         $29.84       $29.84
 1        97022                 **                0-20      $39.78       $39.78         $38.41       $38.41
 1        97022                 **              21-999      $39.78       $39.78         $38.41       $38.41
 1        97024                 **                0-20      $39.78       $39.78         $29.84       $29.84
 1        97024                 **              21-999      $39.78       $39.78         $29.84       $29.84
 1        97026                 **                0-20      $39.78       $39.78         $29.84       $29.84
 1        97026                 **              21-999      $39.78       $39.78         $29.84       $29.84
 1        97028                 **                0-20      $39.78       $39.78         $38.41       $38.41
 1        97028                 **              21-999      $39.78       $39.78         $38.41       $38.41
 1        97032                 **                0-20      $39.78       $39.78         $38.41       $38.41
 1        97032                 **              21-999      $39.78       $39.78         $38.41       $38.41
 1        97033                 **                0-20      $39.78       $39.78         $38.41       $38.41
 1        97033                 **              21-999      $39.78       $39.78         $38.41       $38.41
 1        97034                 **                0-20      $39.78       $39.78         $38.41       $38.41
 1        97034                 **              21-999      $39.78       $39.78         $38.41       $38.41
 1        97035                 **                0-20      $39.78       $39.78         $38.41       $38.41



                                                                                                          355
                                                    Exhibit A
                to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief


ATTACHMENT 1- COMPREHENSIVE OUTPATIENT REHABILITATION FACILITY/OUTPATIENT REHABILITATION
FACILITY (CORF/ORF) (proposed to be effective October 1, 2015)

                                                                             CURRENT                          PROPOSED
                                                                                    current                          l'roposea
                                                             Age      Current      Adjusted             Proposed     Adjusted
TOS* Procedure Code             Long Description   **       Range    Medicaid Fee Medicaid Fee         Medicaid Fee Medicaid Fee
  1          97035                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97036                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97036                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97039                        **                 0-20        $39.78           $39.78           $29.84           $29.84
  1          97039                        **                21-999       $39.78           $39.78           $29.84           $29.84
  1          97110                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97110                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97112                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97112                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97113                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97113                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97116                        **                 0-20        $39.78           $39.78           $30.08           $30.08
  1          97116                        **                21-999       $39.78           $39.78           $30.08           $30.08
  1          97124                        **                 0-20        $39.78           $39.78           $29.84           $29.84
  1          97124                        **                21-999       $39.78           $39.78           $29.84           $29.84
  1          97139                        **                 0-20        $39.78           $39.78           $39.00           $39.00
  1          97139                        **                21-999       $39.78           $39.78           $39.00           $39.00
  1          97140                        **                 0-20        $39.78           $39.78           $30.84           $30.84
  1          97140                        **                21-999       $39.78           $39.78           $30.84           $30.84
  1          97150                        **                 0-20        $19.90           $19.90           $19.21           $19.21
  1          97150                        **                21-999       $19.90           $19.90           $19.21           $19.21
  1          97530                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97530                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97535                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97537                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97542                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97750                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97750                        **                21-999       $39.78           $39.78           $38.41           $38.41
  1          97760                        **                 0-20        $39.78           $39.78           $38.87           $38.87
  1          97761                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97762                        **                 0-20        $40.36           $40.36           $35.09           $35.09
  1          97799                        **                 0-20        $39.78           $39.78           $38.41           $38.41
  1          97799                        **                21-999       $39.78           $39.78           $38.41           $38.41
                              Physical or manipulative
                               therapy performed for
                              maintenance rather than
  1          S8990                   restoration            0-999        $52.33          $52.33            $39.00          $39.00
  1          S9152          Speech therapy, re-evaluation   0-999       $210.92          $210.92          $203.64          $203.64


*Type of Service (TOS)
  1 Medical Services



**Required Notice: The five-character code included in this notice is obtained from the Current Procedural Terminology (CPT®),


                                                                                                                                 356
                                                    Exhibit A
                to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief


ATTACHMENT 1- COMPREHENSIVE OUTPATIENT REHABILITATION FACILITY/OUTPATIENT REHABILITATION
FACILITY (CORF/ORF) (proposed to be effective October 1, 2015)

                                                                                 CURRENT                           PROPOSED
                                                                                        current                           l'roposea
                                                                Age        Current     Adjusted              Proposed     Adjusted
TOS* Procedure Code              Long Description **           Range     Medicaid Fee Medicaid Fee          Medicaid Fee Medicaid Fee
copyright 2015 by the American Medical Association (AMA). CPT is developed by the AMA as a listing of descriptive terms and five
character identifying codes and modifiers for reporting medical services and procedures performed by physicians. The responsibility for
the content of this notice is with HHSC and no endorsement by the AMA is intended or should be implied. The AMA disclaims
responsibility for any consequences or liability attributable or related to any use, nonuse or interpretation of information contained in this
notice. Fee schedules, relative value units, conversion factors and/or related components are not assigned by the AMA, are not part ofCPT,
and the AMA is not recommending their use. The AMA does not directly or indirectly practice medicine or dispense medical services. The
AMA assumes no liability for data contained or not contained.




                                                                                                                                        357
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    92507                               **             0-20      $135.14      $135.14      $100.34       $100.34
 1    92507                               **            21-999     $115.46      $115.46      $100.34       $100.34
 1    92508                               **             0-20      $67.57        $67.57       $50.68       $50.68
 1    92508                               **            21-999     $67.57        $67.57       $50.68       $50.68
 1    92521                               **             0-20      $120.00      $120.00       $90.00       $90.00
 1    92521                               **            21-999     $70.33        $70.33       $67.90       $67.90
 1    92522                               **             0-20      $150.00      $150.00      $112.50       $112.50
 1    92522                               **            21-999     $87.92        $87.92       $84.89       $84.89
 1    92523                               **             0-20      $200.00      $200.00      $150.00       $150.00
 1    92523                               **            21-999     $117.22      $117.22      $113.18       $113.18
 1    92524                               **             0-20      $100.00      $100.00       $75.00       $75.00
 1    92524                               **            21-999     $58.61        $58.61       $56.59       $56.59
 1    92526                               **             0-20      $135.14      $135.14      $130.48       $130.48
 1    92526                               **            21-999     $115.46      $115.46      $111.48       $111.48
 1    92610                               **             0-20      $200.00      $200.00      $193.10       $193.10
 1    92610                               **            21-999     $117.22      $117.22      $113.18       $113.18
 1    97001                               **             0-20      $137.20      $137.20      $102.90       $102.90
 1    97001                               **            21-999     $114.03      $114.03       $85.52       $85.52
 1    97001      AT                       **             0-20      $114.03      $114.03       $85.52       $85.52
 1    97001      AT                       **            21-999     $114.03      $114.03       $85.52       $85.52
 c    97001                               **             0-20      $114.03      $114.03       $85.52       $85.52
 c    97001                               **            21-999     $114.03      $114.03       $85.52       $85.52
 1    97002                               **             0-20      $123.48      $123.48       $92.61       $92.61
 1    97002                               **            21-999     $102.63      $102.63       $76.97       $76.97
 1    97002      AT                       **             0-20      $102.63      $102.63       $76.97       $76.97
 1    97002      AT                       **            21-999     $102.63      $102.63       $76.97       $76.97
 c    97002                               **             0-20      $102.63      $102.63       $76.97       $76.97
 c    97002                               **            21-999     $102.63      $102.63       $76.97       $76.97
 1    97003                               **             0-20      $137.20      $137.20      $102.90       $102.90
 1    97003                               **            21-999     $116.25      $116.25       $89.21       $89.21
 1    97003      AT                       **             0-20      $116.25      $116.25       $89.21       $89.21
 1    97003      AT                       **            21-999     $116.25      $116.25       $89.21       $89.21
 c    97003                               **             0-20      $116.25      $116.25       $89.21       $89.21
 c    97003                               **            21-999     $116.25      $116.25       $89.21       $89.21
 1    97004                               **             0-20      $123.48      $123.48       $92.61       $92.61
 1    97004                               **            21-999     $104.63      $104.63       $78.47       $78.47
 1    97004      AT                       **             0-20      $104.63      $104.63       $78.47       $78.47
 1    97004      AT                       **            21-999     $104.63      $104.63       $78.47       $78.47
 c    97004                               **             0-20      $104.63      $104.63       $78.47       $78.47
 c    97004                               **            21-999     $104.63      $104.63       $78.47       $78.47
 1    97012                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97012      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97012      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97012      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97012      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97012      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44



                                                                                                              358
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97012      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97012      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97012      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97012      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97012      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97012                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97012                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97012      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97012      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97012      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97012      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97014                               **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97014      AT                       **             0-20      $113.05      $113.05       $84.79       $84.79
 1    97014      AT                       **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97014      AT       GO              **             0-20      $114.51      $114.51       $85.88       $85.88
 1    97014      AT       GO              **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97014      AT       GP              **             0-20      $112.32      $112.32       $84.24       $84.24
 1    97014      AT       GP              **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97014      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97014      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97014      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97014      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 c    97014                               **             0-20      $113.05      $113.05       $84.79       $84.79
 c    97014                               **            21-999     $113.05      $113.05       $84.79       $84.79
 c    97014      GO                       **             0-20      $114.51      $114.51       $85.88       $85.88
 c    97014      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 c    97014      GP                       **             0-20      $112.32      $112.32       $84.24       $84.24
 c    97014      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97016                               **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97016      AT                       **             0-20      $113.05      $113.05       $84.79       $84.79
 1    97016      AT                       **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97016      AT       GO              **             0-20      $114.51      $114.51       $85.88       $85.88
 1    97016      AT       GO              **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97016      AT       GP              **             0-20      $112.32      $112.32       $84.24       $84.24
 1    97016      AT       GP              **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97016      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97016      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97016      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97016      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 c    97016                               **             0-20      $113.05      $113.05       $84.79       $84.79
 c    97016                               **            21-999     $113.05      $113.05       $84.79       $84.79
 c    97016      GO                       **             0-20      $114.51      $114.51       $85.88       $85.88
 c    97016      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 c    97016      GP                       **             0-20      $112.32      $112.32       $84.24       $84.24
 c    97016      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97018                               **            21-999     $113.05      $113.05       $91.08       $91.08



                                                                                                              359
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97018      AT                       **             0-20      $113.05      $113.05       $91.08       $91.08
 1    97018      AT                       **            21-999     $113.05      $113.05       $91.08       $91.08
 1    97018      AT       GO              **             0-20      $114.51      $114.51       $91.08       $91.08
 1    97018      AT       GO              **            21-999     $114.51      $114.51       $91.08       $91.08
 1    97018      AT       GP              **             0-20      $112.32      $112.32       $91.08       $91.08
 1    97018      AT       GP              **            21-999     $112.32      $112.32       $91.08       $91.08
 1    97018      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97018      GO                       **            21-999     $114.51      $114.51       $91.08       $91.08
 1    97018      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97018      GP                       **            21-999     $112.32      $112.32       $91.08       $91.08
 c    97018                               **             0-20      $113.05      $113.05       $91.08       $91.08
 c    97018                               **            21-999     $113.05      $113.05       $91.08       $91.08
 c    97018      GO                       **             0-20      $114.51      $114.51       $91.08       $91.08
 c    97018      GO                       **            21-999     $114.51      $114.51       $91.08       $91.08
 c    97018      GP                       **             0-20      $112.32      $112.32       $91.08       $91.08
 c    97018      GP                       **            21-999     $112.32      $112.32       $91.08       $91.08
 1    97022                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97022      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97022      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97022      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97022      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97022      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97022      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97022      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97022      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97022      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97022      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97022                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97022                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97022      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97022      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97022      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97022      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97024                               **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97024      AT                       **             0-20      $113.05      $113.05       $84.79       $84.79
 1    97024      AT                       **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97024      AT       GO              **             0-20      $114.51      $114.51       $85.88       $85.88
 1    97024      AT       GO              **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97024      AT       GP              **             0-20      $112.32      $112.32       $84.24       $84.24
 1    97024      AT       GP              **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97024      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97024      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97024      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97024      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 c    97024                               **             0-20      $113.05      $113.05       $84.79       $84.79
 c    97024                               **            21-999     $113.05      $113.05       $84.79       $84.79



                                                                                                              360
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 c    97024      GO                       **             0-20      $114.51      $114.51       $85.88       $85.88
 c    97024      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 c    97024      GP                       **             0-20      $112.32      $112.32       $84.24       $84.24
 c    97024      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97026                               **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97026      AT                       **             0-20      $113.05      $113.05       $84.79       $84.79
 1    97026      AT                       **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97026      AT       GO              **             0-20      $114.51      $114.51       $85.88       $85.88
 1    97026      AT       GO              **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97026      AT       GP              **             0-20      $112.32      $112.32       $84.24       $84.24
 1    97026      AT       GP              **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97026      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97026      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97026      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97026      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 c    97026                               **             0-20      $113.05      $113.05       $84.79       $84.79
 c    97026                               **            21-999     $113.05      $113.05       $84.79       $84.79
 c    97026      GO                       **             0-20      $114.51      $114.51       $85.88       $85.88
 c    97026      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 c    97026      GP                       **             0-20      $112.32      $112.32       $84.24       $84.24
 c    97026      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97028                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97028      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97028      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97028      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97028      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97028      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97028      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97028      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97028      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97028      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97028      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97028                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97028                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97028      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97028      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97028      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97028      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97032                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97032      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97032      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97032      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97032      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97032      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97032      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97032      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48



                                                                                                              361
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97032      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97032      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97032      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97032                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97032                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97032      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97032      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97032      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97032      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97033                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97033      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97033      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97033      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97033      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97033      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97033      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97033      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97033      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97033      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97033      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97033                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97033                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97033      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97033      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97033      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97033      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97034      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97034      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97034      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97034      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97035                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97035      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97035      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97035      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97035      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97035      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97035      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97035      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97035      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97035      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97035      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97035                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97035                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97035      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97035      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97035      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44



                                                                                                              362
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 c    97035      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97036      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97036      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97036      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97036      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97039                               **            21-999     $112.32      $112.32       $90.00       $90.00
 1    97039      AT                       **             0-20      $112.32      $112.32       $90.00       $90.00
 1    97039      AT                       **            21-999     $112.32      $112.32       $90.00       $90.00
 1    97039      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97039      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 c    97039                               **             0-20      $112.32      $112.32       $90.00       $90.00
 c    97039                               **            21-999     $112.32      $112.32       $90.00       $90.00
 1    97110                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97110      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97110      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97110      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97110      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97110      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97110      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97110      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97110      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97110      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97110      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97110                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97110                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97110      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97110      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97110      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97110      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97112                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97112      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97112      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97112      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97112      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97112      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97112      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97112      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97112      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97112      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97112      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97112                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97112                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97112      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97112      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97112      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97112      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44



                                                                                                              363
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97116                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97116      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97116      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97116      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97116      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97116      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97116      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97116      GO                       **             0-20      $135.14      $135.14      $120.30       $120.30
 1    97116      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97116      GP                       **             0-20      $135.14      $135.14      $120.30       $120.30
 1    97116      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97116                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97116                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97116      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97116      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97116      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97116      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97124                               **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97124      AT                       **             0-20      $113.05      $113.05       $84.79       $84.79
 1    97124      AT                       **            21-999     $113.05      $113.05       $84.79       $84.79
 1    97124      AT       GO              **             0-20      $114.51      $114.51       $85.88       $85.88
 1    97124      AT       GO              **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97124      AT       GP              **             0-20      $112.32      $112.32       $84.24       $84.24
 1    97124      AT       GP              **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97124      GO                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97124      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 1    97124      GP                       **             0-20      $135.14      $135.14      $101.36       $101.36
 1    97124      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 c    97124                               **             0-20      $113.05      $113.05       $84.79       $84.79
 c    97124                               **            21-999     $113.05      $113.05       $84.79       $84.79
 c    97124      GO                       **             0-20      $114.51      $114.51       $85.88       $85.88
 c    97124      GO                       **            21-999     $114.51      $114.51       $85.88       $85.88
 c    97124      GP                       **             0-20      $112.32      $112.32       $84.24       $84.24
 c    97124      GP                       **            21-999     $112.32      $112.32       $84.24       $84.24
 1    97139                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97139      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97139      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97139      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97139      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97139      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97139      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97139      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97139      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97139      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97139      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97139                               **             0-20      $113.05      $113.05      $109.15       $109.15



                                                                                                              364
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 c    97139                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97139      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97139      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97139      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97139      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97140                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97140      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97140      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97140      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97140      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97140      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97140      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97140      GO                       **             0-20      $135.14      $135.14      $123.36       $123.36
 1    97140      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97140      GP                       **             0-20      $135.14      $135.14      $123.36       $123.36
 1    97140      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97140                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97140                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97140      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97140      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97140      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97140      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97150                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97150      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97150      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97150      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97150      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97150      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97150      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97150      GO                       **             0-20      $67.57        $67.57       $65.24       $65.24
 1    97150      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97150      GP                       **             0-20      $67.57        $67.57       $65.24       $65.24
 1    97150      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97150                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97150                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97150      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97150      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97150      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97150      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97530                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97530      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97530      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97530      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97530      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97530      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97530      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44



                                                                                                              365
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97530      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97530      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97530      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97530      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97530                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97530                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97530      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97530      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97530      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97530      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97535                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97535      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97535      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97535      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97535      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97535      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97535      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97535      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97535      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97535      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97535      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97535                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97535                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97535      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97535      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97535      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97535      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97537                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97537      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97537      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97537      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97537      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97537      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97537      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97537      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97537      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97537      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97537      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97537                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97537                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97537      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97537      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97537      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97537      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97542                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97542      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15



                                                                                                              366
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                        CURRENT                   PROPOSED

                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                          Age       Current     Adjusted     Proposed     Adjusted
 *    Code      1        2        Long Description **   Range    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97542      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97542      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97542      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97542      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97542      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97542      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97542      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97542      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97542      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97542      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97542                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97542                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97542      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97542      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97542      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97542      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97750      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97750      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97750      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97750      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97760      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97760      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97761      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97761      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97762      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97762      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97799                               **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97799      AT                       **             0-20      $113.05      $113.05      $109.15       $109.15
 1    97799      AT                       **            21-999     $113.05      $113.05      $109.15       $109.15
 1    97799      AT       GO              **             0-20      $114.51      $114.51      $110.56       $110.56
 1    97799      AT       GO              **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97799      AT       GP              **             0-20      $112.32      $112.32      $108.44       $108.44
 1    97799      AT       GP              **            21-999     $112.32      $112.32      $108.44       $108.44
 1    97799      GO                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97799      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 1    97799      GP                       **             0-20      $135.14      $135.14      $130.48       $130.48
 1    97799      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44
 c    97799                               **             0-20      $113.05      $113.05      $109.15       $109.15
 c    97799                               **            21-999     $113.05      $113.05      $109.15       $109.15
 c    97799      GO                       **             0-20      $114.51      $114.51      $110.56       $110.56
 c    97799      GO                       **            21-999     $114.51      $114.51      $110.56       $110.56
 c    97799      GP                       **             0-20      $112.32      $112.32      $108.44       $108.44
 c    97799      GP                       **            21-999     $112.32      $112.32      $108.44       $108.44




                                                                                                              367
                                                      Exhibit A
                  to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief

ATTACHMENT 2 - HOME HEALTH AGENCY (HHA) (proposed to be effective October 1, 2015)

                                                                                          CURRENT                         PROPOSED

                                                                                                Current                  Proposed
TOS Procedure Modifier Modifier                                        Age         Current     Adjusted     Proposed     Adjusted
 *    Code      1        2                 Long Description **        Range      Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee

                                          Physical or manipulative
                                          therapy performed for
                                          maintenance rather than
  1     S8990                             restoration                  0-999        $57.14           $57.14          $55.17           $55.17
                                          Speech therapy, re-
  1     S9152                             evaluation                   0-20         $180.00         $180.00          $173.79         $173.79
                                          Speech therapy, re-
  1     S9152                             evaluation                  21-999        $105.50         $105.50          $101.86         $101.86

*Type of Service (TOS)
  1 Medical Services
  c Home Health Agency
Modifiers
 AT Acute Treatment
 GO Occupational Therapy
 GP Physical Therapy

**Required Notice: The five-character code included in this notice is obtained from the Current Procedural Terminology (CPT®), copyright
2015 by the American Medical Association (AMA). CPT is developed by the AMA as a listing of descriptive terms and five character
identitying codes and modifiers for reporting medical services and procedures performed by physicians. The responsibility for the content of
this notice is with HHSC and no endorsement by the AMA is intended or should be implied. The AMA disclaims responsibility for any
consequences or liability attributable or related to any use, nonuse or interpretation of information contained in this notice. Fee schedules,
relative value units, conversion factors and/or related components are not assigned by the AMA, are not part of CPT, and the AMA is not
recommending their use. The AMA does not directly or indirectly practice medicine or dispense medical services. The AMA assumes no
liability for data contained or not contained.




                                                                                                                                          368
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief



ATTACHMENT 3 - INDEPENDENT THERAPIST (proposed to be effective October 1, 2015)

                                                                     CURRENT                   PROPOSED

                                                                            Current                   Proposed
TOS Procedure                              Age     Place of    Current      Adjusted     Proposed     Adjusted
 *    Code         Long Description **    Range    Service    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    92507                **              0-20                 $31.25       $31.25       $28.67       $28.67
 1    92507                **              0-20      P2         $33.79       $33.79       $28.67       $28.67
 1    92507                **             21-999                $31.25       $31.25       $28.67       $28.67
 1    92507                **             21-999     P2         $33.79       $33.79       $28.67       $28.67
 1    92508                **              0-20                 $15.63       $15.63       $11.72       $11.72
 1    92508                **              0-20      P2         $15.63       $15.63       $11.72       $11.72
 1    92508                **             21-999                $15.63       $15.63       $11.72       $11.72
 1    92508                **             21-999     P2         $15.63       $15.63       $11.72       $11.72
 1    92521                **              0-20                 $117.18      $117.18      $87.89       $87.89
 1    92521                **              0-20      P2         $120.00      $120.00      $90.00       $90.00
 1    92521                **             21-999                $117.18      $117.18      $87.89       $87.89
 1    92521                **             21-999     P2         $120.00      $120.00      $90.00       $90.00
 1    92522                **              0-20                 $146.48      $146.48      $109.86      $109.86
 1    92522                **              0-20      P2         $150.00      $150.00      $112.50      $112.50
 1    92522                **             21-999                $146.48      $146.48      $109.86      $109.86
 1    92522                **             21-999     P2         $150.00      $150.00      $112.50      $112.50
 1    92523                **              0-20                 $195.30      $195.30      $146.48      $146.48
 1    92523                **              0-20      P2         $200.00      $200.00      $150.00      $150.00
 1    92523                **             21-999                $195.30      $195.30      $146.48      $146.48
 1    92523                **             21-999     P2         $200.00      $200.00      $150.00      $150.00
 1    92524                **              0-20                 $97.65       $97.65       $73.24       $73.24
 1    92524                **              0-20      P2         $100.00      $100.00      $75.00       $75.00
 1    92524                **             21-999                $97.65       $97.65       $73.24       $73.24
 1    92524                **             21-999     P2         $100.00      $100.00      $75.00       $75.00
 1    92526                **              0-20                 $31.25       $31.25       $30.17       $30.17
 1    92526                **              0-20      P2         $33.79       $33.79       $32.62       $32.62
 1    92526                **             21-999                $31.25       $31.25       $30.17       $30.17
 1    92526                **             21-999     P2         $33.79       $33.79       $32.62       $32.62
 1    92610                **              0-999                $195.30      $195.30      $188.56      $188.56
 1    92610                **              0-999     P2         $200.00      $200.00      $193.10      $193.10
 1    97001                **              0-20                 $130.20      $130.20      $97.65       $97.65
 1    97001                **              0-20      P2         $137.20      $137.20      $102.90      $102.90
 1    97001                **             21-999                $130.20      $130.20      $97.65       $97.65
 1    97001                **             21-999     P2         $137.20      $137.20      $102.90      $102.90
 1    97002                **              0-20                 $117.18      $117.18      $87.89       $87.89
 1    97002                **              0-20      P2         $123.48      $123.48      $92.61       $92.61
 1    97002                **             21-999                $117.18      $117.18      $87.89       $87.89
 1    97002                **             21-999     P2         $123.48      $123.48      $92.61       $92.61
 1    97003                **              0-20                 $130.20      $130.20      $97.65       $97.65
 1    97003                **              0-20      P2         $137.20      $137.20      $102.90      $102.90
 1    97003                **             21-999                $130.20      $130.20      $97.65       $97.65
 1    97003                **             21-999     P2         $137.20      $137.20      $102.90      $102.90
 1    97004                **              0-20                 $117.18      $117.18      $87.89       $87.89
 1    97004                **              0-20      P2         $123.48      $123.48      $92.61       $92.61




                                                                                                             369
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief



ATTACHMENT 3 - INDEPENDENT THERAPIST (proposed to be effective October 1, 2015)

                                                                     CURRENT                   PROPOSED

                                                                            Current                   Proposed
TOS Procedure                              Age     Place of    Current      Adjusted     Proposed     Adjusted
 *    Code         Long Description **    Range    Service    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97004                **             21-999                $117.18      $117.18       $87.89       $87.89
 1    97004                **             21-999     P2         $123.48      $123.48       $92.61       $92.61
 1    97012                **              0-20                 $31.25       $31.25        $30.17       $30.17
 1    97012                **              0-20      P2         $33.79       $33.79        $32.62       $32.62
 1    97012                **             21-999                $31.25       $31.25        $30.17       $30.17
 1    97012                **             21-999     P2         $33.79       $33.79        $32.62       $32.62
 1    97014                **              0-20                 $31.25       $31.25        $23.44       $23.44
 1    97014                **              0-20      P2         $33.79       $33.79        $25.34       $25.34
 1    97014                **             21-999                $31.25       $31.25        $23.44       $23.44
 1    97014                **             21-999     P2         $33.79       $33.79        $25.34       $25.34
 1    97016                **              0-20                 $31.25       $31.25        $23.44       $23.44
 1    97016                **              0-20      P2         $33.79       $33.79        $25.34       $25.34
 1    97016                **             21-999                $31.25       $31.25        $23.44       $23.44
 1    97016                **             21-999     P2         $33.79       $33.79        $25.34       $25.34
 1    97018                **              0-20                 $31.25       $31.25        $23.44       $23.44
 1    97018                **              0-20      P2         $33.79       $33.79        $25.34       $25.34
 1    97018                **             21-999                $31.25       $31.25        $23.44       $23.44
 1    97018                **             21-999     P2         $33.79       $33.79        $25.34       $25.34
 1    97022                **              0-20                 $31.25       $31.25        $30.17       $30.17
 1    97022                **              0-20      P2         $33.79       $33.79        $32.62       $32.62
 1    97022                **             21-999                $31.25       $31.25        $30.17       $30.17
 1    97022                **             21-999     P2         $33.79       $33.79        $32.62       $32.62
 1    97024                **              0-20                 $31.25       $31.25        $23.44       $23.44
 1    97024                **              0-20      P2         $33.79       $33.79        $25.34       $25.34
 1    97024                **             21-999                $31.25       $31.25        $23.44       $23.44
 1    97024                **             21-999     P2         $33.79       $33.79        $25.34       $25.34
 1    97026                **              0-20                 $31.25       $31.25        $23.44       $23.44
 1    97026                **              0-20      P2         $33.79       $33.79        $25.34       $25.34
 1    97026                **             21-999                $31.25       $31.25        $23.44       $23.44
 1    97026                **             21-999     P2         $33.79       $33.79        $25.34       $25.34
 1    97028                **              0-20                 $31.25       $31.25        $30.17       $30.17
 1    97028                **              0-20      P2         $33.79       $33.79        $32.62       $32.62
 1    97028                **             21-999                $31.25       $31.25        $30.17       $30.17
 1    97028                **             21-999     P2         $33.79       $33.79        $32.62       $32.62
 1    97032                **              0-20                 $31.25       $31.25        $30.17       $30.17
 1    97032                **              0-20      P2         $33.79       $33.79        $32.62       $32.62
 1    97032                **             21-999                $31.25       $31.25        $30.17       $30.17
 1    97032                **             21-999     P2         $33.79       $33.79        $32.62       $32.62
 1    97033                **              0-20                 $31.25       $31.25        $30.17       $30.17
 1    97033                **              0-20      P2         $33.79       $33.79        $32.62       $32.62
 1    97033                **             21-999                $31.25       $31.25        $30.17       $30.17
 1    97033                **             21-999     P2         $33.79       $33.79        $32.62       $32.62
 1    97034                **              0-20                 $31.25       $31.25        $30.17       $30.17
 1    97034                **              0-20      P2         $33.79       $33.79        $32.62       $32.62



                                                                                                             370
                                                  Exhibit A
              to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief



ATTACHMENT 3 - INDEPENDENT THERAPIST (proposed to be effective October 1, 2015)

                                                                     CURRENT                   PROPOSED

                                                                            Current                   Proposed
TOS Procedure                              Age     Place of    Current      Adjusted     Proposed     Adjusted
 *    Code         Long Description **    Range    Service    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
 1    97034                **             21-999                 $31.25       $31.25       $30.17       $30.17
 1    97034                **             21-999     P2          $33.79       $33.79       $32.62       $32.62
 1    97035                **              0-20                  $31.25       $31.25       $30.17       $30.17
 1    97035                **              0-20      P2          $33.79       $33.79       $32.62       $32.62
 1    97035                **             21-999                 $31.25       $31.25       $30.17       $30.17
 1    97035                **             21-999     P2          $33.79       $33.79       $32.62       $32.62
 1    97036                **              0-20                  $31.25       $31.25       $30.17       $30.17
 1    97036                **              0-20      P2          $33.79       $33.79       $32.62       $32.62
 1    97036                **             21-999                 $31.25       $31.25       $30.17       $30.17
 1    97036                **             21-999     P2          $33.79       $33.79       $32.62       $32.62
 1    97039                **              0-20                  $31.25       $31.25       $23.44       $23.44
 1    97039                **              0-20      P2          $33.79       $33.79       $25.34       $25.34
 1    97039                **             21-999                 $31.25       $31.25       $23.44       $23.44
 1    97039                **             21-999     P2          $33.79       $33.79       $25.34       $25.34
 1    97110                **              0-20                  $31.25       $31.25       $30.17       $30.17
 1    97110                **              0-20      P2          $33.79       $33.79       $32.62       $32.62
 1    97110                **             21-999                 $31.25       $31.25       $30.17       $30.17
 1    97110                **             21-999     P2          $33.79       $33.79       $32.62       $32.62
 1    97112                **              0-20                  $31.25       $31.25       $30.17       $30.17
 1    97112                **              0-20      P2          $33.79       $33.79       $32.62       $32.62
 1    97112                **             21-999                 $31.25       $31.25       $30.17       $30.17
 1    97112                **             21-999     P2          $33.79       $33.79       $32.62       $32.62
 1    97113                **              0-20                  $36.70       $36.70       $35.43       $35.43
 1    97113                **              0-20      P2          $39.69       $39.69       $38.32       $38.32
 1    97113                **             21-999                 $36.70       $36.70       $35.43       $35.43
 1    97113                **             21-999     P2          $39.69       $39.69       $38.32       $38.32
 1    97116                **              0-20                  $31.25       $31.25       $30.08       $30.08
 1    97116                **              0-20      P2          $33.79       $33.79       $30.08       $30.08
 1    97116                **             21-999                 $31.25       $31.25       $30.08       $30.08
 1    97116                **             21-999     P2          $33.79       $33.79       $30.08       $30.08
 1    97124                **              0-20                  $31.25       $31.25       $23.44       $23.44
 1    97124                **              0-20      P2          $33.79       $33.79       $25.34       $25.34
 1    97124                **             21-999                 $31.25       $31.25       $23.44       $23.44
 1    97124                **             21-999     P2          $33.79       $33.79       $25.34       $25.34
 1    97139                **              0-20                  $31.25       $31.25       $30.17       $30.17
 1    97139                **              0-20      P2          $33.79       $33.79       $32.62       $32.62
 1    97139                **             21-999                 $31.25       $31.25       $30.17       $30.17
 1    97139                **             21-999     P2          $33.79       $33.79       $32.62       $32.62
 1    97140                **              0-20                  $31.25       $31.25       $30.84       $30.84
 1    97140                **              0-20      P2          $33.79       $33.79       $30.84       $30.84
 1    97140                **             21-999                 $31.25       $31.25       $30.84       $30.84
 1    97140                **             21-999     P2          $33.79       $33.79       $30.84       $30.84
 1    97150                **              0-20                  $31.25       $31.25       $30.17       $30.17
 1    97150                **              0-20      P2          $33.79       $33.79       $32.62       $32.62



                                                                                                             371
                                                   Exhibit A
               to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief



ATTACHMENT 3 - INDEPENDENT THERAPIST (proposed to be effective October 1, 2015)

                                                                              CURRENT                   PROPOSED

                                                                                     Current                   Proposed
TOS Procedure                                       Age     Place of    Current      Adjusted     Proposed     Adjusted
 *    Code           Long Description **           Range    Service    Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee
  1    97150                  **                   21-999                 $31.25       $31.25       $30.17       $30.17
  1    97150                  **                   21-999     P2          $33.79       $33.79       $32.62       $32.62
  1    97530                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97530                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97530                  **                   21-999                 $31.25       $31.25       $30.17       $30.17
  1    97530                  **                   21-999     P2          $33.79       $33.79       $32.62       $32.62
  1    97535                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97535                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97537                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97537                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97542                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97542                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97750                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97750                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97750                  **                   21-999                 $31.25       $31.25       $30.17       $30.17
  1    97750                  **                   21-999     P2          $33.79       $33.79       $32.62       $32.62
  1    97760                  **                    0-20                  $32.76       $32.76       $31.63       $31.63
  1    97760                  **                    0-20      P2          $35.42       $35.42       $34.20       $34.20
  1    97761                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97761                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97762                  **                    0-20                  $39.73       $39.73       $35.09       $35.09
  1    97762                  **                    0-20      P2          $42.97       $42.97       $35.09       $35.09
  1    97799                  **                    0-20                  $31.25       $31.25       $30.17       $30.17
  1    97799                  **                    0-20      P2          $33.79       $33.79       $32.62       $32.62
  1    97799                  **                   21-999                 $31.25       $31.25       $30.17       $30.17
  1    97799                  **                   21-999     P2          $33.79       $33.79       $32.62       $32.62

                Physical or manipulative therapy
                  performed for maintenance
  1    S8990         rather than restoration       0-999                  $31.25       $31.25       $30.17       $30.17

                Physical or manipulative therapy
                  performed for maintenance
  1    S8990         rather than restoration     0-999        P2         $33.79       $33.79       $32.62       $32.62
  1    S9152     Speech therapy, re-evaluation   0-20                    $180.00      $180.00      $173.79      $173.79
  1    S9152     Speech therapy, re-evaluation    0-20        P2         $180.00      $180.00      $173.79      $173.79
  1    S9152     Speech therapy, re-evaluation 21-999                    $175.77      $175.77      $169.71      $169.71

*Type of Service (TOS)
  1 !Medical Services
Place of Service
 P2 !Home




                                                                                                                      372
                                                     Exhibit A
                 to Plaintiffs' Second Amended Original Petition and Application for Injunctive Relief



ATTACHMENT 3 - INDEPENDENT THERAPIST (proposed to be effective October 1, 2015)

                                                                                         CURRENT                         PROPOSED

                                                                                               Current                  Proposed
TOS Procedure                                           Age        Place of       Current     Adjusted     Proposed     Adjusted
 *    Code               Long Description **           Range       Service      Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee

**Required Notice: The five-character code included in this notice is obtained from the Current Procedural Terminology (CPT®),
copyright 2015 by the American Medical Association (AMA). CPT is developed by the AMA as a listing of descriptive terms and five
character identifying codes and modifiers for reporting medical services and procedures performed by physicians. The responsibility for
the content of this notice is with HHSC and no endorsement by the AMA is intended or should be implied. The AMA disclaims
responsibility for any consequences or liability attributable or related to any use, nonuse or interpretation of information contained in this
notice. Fee schedules, relative value units, conversion factors and/or related components are not assigned by the AMA, are not part of
CPT, and the AMA is not recommending their use. The AMA does not directly or indirectly practice medicine or dispense medical
services. The AMA assumes no liability for data contained or not contained.




                                                                                                                                           373
F
                                                                        9/8/2015 2:49:47 PM
                                                                                           Velva L. Price
                                                                                          District Clerk
                                                                                          Travis County
                              CAUSE NO. D-1-GN-15-003263                               D-1-GN-15-003263
                                                                                          Shaun Glasson

DIANA D., as next of friend of KD, a child,      §           IN THE DISTRICT COURT
KAREN G., as next friend of TG and ZM,           §
children, GUADALUPE P., as next of friend        §
of LP, a child, SALLY L., as next of friend of   §
CH, DENA D., as next friend of BD, a child,      §
OCI ACQUISITION, LLC d/b/a                       §
CARE OPTIONS FOR KIDS,                           §
CONNECTCARE SOLUTIONS, LLC                       §
d/b/a CONNECTCARE THERAPY FOR                    §
KIDS, ATLAS PEDIATRIC THERAPY                    §
CONSULTANTS LLC, and PATHFINDER                  §
PEDIATRIC HOME CARE, INC.,                       §
                                                 §      200TH JUDICIAL DISTRICT OF
           Plaintiffs,                           §
                                                 §
v.                                               §
                                                 §
CHRIS TRAYLOR, as EXECUTIVE                      §
COMMISSIONER of TEXAS                            §
HEALTH AND HUMAN SERVICES                        §
COMMISSION, and TEXAS                            §
HEALTH AND HUMAN SERVICES                        §
COMMISSION,                                      §
                                                 §
           Defendants.                           §            TRAVIS COUNTY, TEXAS


               PLAINTIFFS' SECOND AMENDED ORIGINAL PETITION AND
                       APPLICATION FOR INJUNCTIVE RELIEF


TO THE HONORABLE JUDGE OF SAID COURT:

       Although entrusted with the responsibility of operating the Texas Medicaid system in

accordance with applicable Texas and federal law, Defendants Chris Traylor, as Executive

Commissioner of the Texas Health and Human Services Commission, and the Texas Health and

Human Services Commission promulgated and then abruptly withdrew, in the face of a

temporary injunction hearing requested by Plaintiffs, two illegal sets of cuts to the

reimbursement rates for providers of physical, occupational, and speech therapy services to


1826.002
435836                                                                                " g ('   11
                                                                                                    336
Texas Medicaid beneficiaries. Nine days after withdrawing the first two sets of illegal rate cuts,

Defendants continued their inexplicable rush to implement destructive cuts to critical Medicaid

rates by publishing a third set of illegal cuts, to be effective October 1, 2015. As with the first

two sets of rates proposed by Defendants, this newest set of rates violates Article I, § 19 of the

Texas Constitution and numerous Texas statutes and regulations. If implemented, the newest cuts

will force Texas Medicaid providers to cease providing services critical to the health and

development of Texas' most vulnerable residents, its children. Plaintiffs Diana D., Karen G.,

Guadalupe P., Sally L., and Dena D. are the mothers and next friends of children receiving

speech, occupational, and therapy services from home health agencies under the Texas Medicaid

program. Plaintiffs OCI Acquisition, LLC d/b/a Care Options for Kids, ConnectCare Solutions,

LLC d/b/a ConnectCare Therapy for Kids, Atlas Pediatric Therapy Consultants LLC, and

Pathfinder Pediatric Home Care, Inc. are duly licensed home health agencies providing pediatric

speech, occupational, and physical therapy services under the Texas Medicaid program. Because

Defendants' actions are unlawful and will cause immediate and irreparable injury to the children

whose mothers are bringing this suit, to thousands of other Texas children receiving services

under the Texas Medicaid program, and to Texas Medicaid providers, Plaintiffs are requesting

that the Court grant a declaratory judgment that the proposed rates are void and injunctive relief

preventing the implementation of those rates.

                              I. DISCOVERY CONTROL PLAN

       1.      Plaintiffs intend to conduct discovery under Level 3 of Texas Rule of Civil

Procedure 190 .4 and will seek a Court Order in accordance with the requirements of such Rule.




                                                2
                                                                                                      337
                                         II. PARTIES

       2.      Plaintiff Diana D. is the mother and next friend of KD, who is nine years old.

Both are residents of Travis County, Texas.

       3.      Plaintiff Karen G. is the mother and next friend of TG, who is fifteen years old,

and ZM, who is thirteen years old. All are residents of Williamson County, Texas.

       4.      Plaintiff Guadalupe P. is the mother and next friend of LP, who is two years old.

Both are residents of Travis County, Texas.

       5.      Plaintiff Sally L. is the mother and next friend of CH, who is four years old. Both

are residents of Travis County, Texas.

       6.      Plaintiff Dena D. is the mother and next friend of BD, who is eight years old.

Both are residents of Hays County, Texas.

       7.      Plaintiffs OCI Acquisition, LLC d/b/a Care Options for Kids and ConnectCare

Solutions LLC d/b/a ConnectCare Therapy for Kids (collectively "Care Options for Kids" or

"COFK"), are affiliated entities and duly licensed Texas pediatric home health agencies that

provide speech, occupational, and physical therapy services to children across the State of Texas,

including in Travis County, Texas. COFK's headquarters and principal place of business is in

Dallas, Dallas County, Texas.

       8.      Plaintiff Atlas Pediatric Therapy Consultants LLC ("Atlas") is a duly licensed

Texas pediatric home health agency that provides speech, occupational, and physical therapy

services to children in North Texas. Its headquarters and principal place of business is in

Arlington, Tarrant County, Texas.

       9.      Plaintiff Pathfinder Pediatric Home Care, Inc. ("Pathfinder") is a duly licensed,

family-owned Texas pediatric home health agency that provides speech, occupational, and




                                                3
                                                                                                     338
physical therapy services to children in 115 Texas counties, primarily in East Texas. Pathfinder's

headquarters and principal place of business in The Woodlands, Montgomery County, Texas.

       10.     Care Options for Kids, Atlas, and Pathfinder are referred to collectively as

"Provider Plaintiffs".

       11.     Defendant Chris Traylor, as Executive Commissioner of the Texas Health and

Human Services Commission ("Commissioner Traylor") has appeared and answered.

       12.     Defendant Texas Health and Human Services Commission ("HHSC") 1s an

agency of the State of Texas, and has appeared and answered.

                             III. JURISDICTION AND VENUE

       13.     Jurisdiction and venue are appropriate in this Court under TEX. Crv. PRAC. &

REM. CODE §37.002(b) and TEX. Gov'T CODE §2001.038(b).

                               IV. FACTUALBACKGROUND

       14.     Medicaid is a health insurance program, jointly operated and funded by the

federal and state governments, for the medical care of low-income and other eligible persons.

While federal law establishes Medicaid's basic parameters, each state, including Texas, decides

the types and ranges of services, payment levels for services, and administrative services it will

provide. Specifically, each state, including Texas, prepares a written plan ("State Plan")

describing the nature and scope of its Medicaid program. Once the State Plan is approved by the

U.S. Secretary of Health and Human Services, the state is responsible for operating the program

to conform to that plan.

        15.    Although recently described by the governor of Texas as "riddled with

operational, managerial, structural and procedural problems," HHSC is the agency responsible

for the Texas Medicaid program. HHSC arranges for the delivery of most Medicaid services




                                                4
                                                                                                     339
through contracts with managed care organizations ("MCOs") licensed by the Texas Department

of Insurance. MCOs contract directly with doctors and other health care providers to create

provider networks for Medicaid beneficiaries. HHSC pays each MCO a monthly amount to

coordinate and deliver health services for the Medicaid members enrolled in the MCO's health

plan. The MCOs are required to provide to their members all medically necessary services

mandated by the Texas State Plan, including pediatric occupational, speech, and physical therapy

services ("Pediatric Services").

       16.     Diana D. is the mother and next friend of a child currently receiving Pediatric

Services from Care Options for Kids. KD, her nine year old daughter, suffers from Rett

syndrome, delayed development, and a seizure disorder. KD is nonverbal, non-ambulatory,

suffers from swallowing seizures, and has difficulty using her hands and feet. Due to her

condition, KD is unable to receive therapy outside her home. Because Diana D. is unable to

afford the rates of a commercial provider, the Texas Medicaid program is the only source of the

Pediatric Services her daughter requires.

       17.     Karen G. is the mother and next friend of two children currently rece1vmg

Pediatric Services from Care Options for Kids. TG, her fifteen year old son, was born with a

brain injury and suffers from autism and speech developmental delay. ZM, her thirteen year old

son, suffers from multiple issues, including seizure disorder, mesial temporal sclerosis disorder,

and autism. Due to their conditions, TG and ZM are unable to receive therapy outside their

home. Because Karen G. is unable to afford the rates of a commercial provider, the Texas

Medicaid program is the only source of the Pediatric Services her sons require.

       18.     Guadalupe P. is the mother and next friend of a child currently receiving Pediatric

Services from Care Options for Kids. LP, her two year old daughter, is diagnosed with Williams




                                                5
                                                                                                     340
syndrome and subglottic stenosis, and as a result, has developmental delays, aortic stenosis, and

a heart murmur. Due to these conditions, LP is unable to receive therapy outside her home.

Because Guadalupe P. is unable to afford the rates of a commercial provider, the Texas Medicaid

program is the only source of the Pediatric Services her daughter requires.

       19.     Sally L. is the mother and next friend of a child currently receiving Pediatric

Services from Care Options for Kids. CH, her four year old son, is diagnosed with moderate

autism and, as a result, has challenges with speech, applied behavior, outbursts, transitions, and

following directions. Due to these conditions, CH is unable to receive therapy outside his home.

Because Sally L. is unable to afford the rates of a commercial provider, the Texas Medicaid

program is the only source of the Pediatric Services her son requires.

       20.     Dena D. is the mother and next friend of a child currently receiving Pediatric

Services. BD, her eight year old daughter, is diagnosed with Cerebral Palsy and post-traumatic

epilepsy. Due to these conditions, BD is unable to receive therapy outside her home. Because

Dena D. is unable to afford the rates of a commercial provider, the Texas Medicaid program is

the only source of the Pediatric Services her daughter requires.

       21.     Care Options for Kids is a duly-licensed Texas pediatric home health agency that

provides Pediatric Services to Texas children from birth through twenty-one years of age in the

children's homes. It is the largest pediatric home health organization in the state of Texas; of all

children who receive therapy services in a home environment, approximately nine percent of

them receive their services from Care Options for Kids. COFK has over 400 employees, and all

of its revenues are generated from services provided to children under the Medicaid program.




                                                 6
                                                                                                       341
       22.     Atlas and Pathfinder are also duly-licensed Texas pediatric home health agencies

providing Pediatric Services to Texas children. Pathfinder is a family-owned business. Atlas is a

small business under the definition in Tex. Govt. Code 2006.001.

       23.     Provider Plaintiffs deliver a wide range of critical services to the children served

by the Texas Medicaid program, including required Pediatric Services. The Provider Plaintiffs'

pediatric physical therapists assist children with mild to severe defects in gross motor skills,

specializing in the treatment and management of a variety of congenital, developmental,

neuromuscular, skeletal, and acquired disorders and diseases. The therapists' goals are to

promote overall wellness and independence for the children and their families. The Provider

Plaintiffs' speech language pathologists focus on helping their patients with language

development, articulation skills, and oral/motor feeding challenges, working to remediate

communication disorders that interfere with or impede the child's effective communication. The

goals of those professionals are to increase the child's communication skills to an age-

appropriate or functional ability level. The Provider Plaintiffs' pediatric occupational therapists

are trained to assist children with their individual physical and development issues, and work

with the children to teach them how to perform daily activities, interact socially, and become

functional and independent adults.

       24.     Defendants have promulgated new proposed reimbursement rates to be

implemented October 1, 2015 for physical, occupational, and speech therapy services, including

Pediatric Services, under the Texas Medicaid program ("the Rates"). A copy of the Rates is

attached as Exhibit A. The Rates, which are the third set of rates that Defendants have

promulgated in less than sixty days, will impose severe cuts to the current Medicaid

reimbursement rates for speech, occupational, and physical therapy services. If the Rates are




                                                7
                                                                                                      342
allowed to take effect, numerous Medicaid providers, including the Provider Plaintiffs, will be

unable to continue providing Medicaid services. Many providers will be forced to cease

operations entirely. The forced closure of multiple Medicaid providers, particularly those

providing services to children, will make it impossible for Texas to comply with state-mandated

access standards. Such closures will deny needed services to children, including KD, TG, ZM,

LP, CH, and BD, who are now served by the Texas Medicaid program. Accordingly, the Rates, if

implemented, will cause imminent and irreparable harm to the children of Texas, the most

vulnerable of Medicaid beneficiaries.

       25.     Defendants have promulgated the Rates without complying with, and in direct

violation of, multiple Texas statutes and regulations. First, Defendants have promulgated the

Rates in violation of 1 TAC §§355.8021, 355.8441, and 355.8085. Second, Defendants have

promulgated the Rates without conducting the economic impact analysis or regulatory flexibility

analysis required by TEX. Gov'T CODE §2006.002. Third, Defendants have not prepared the local

employment impact statement required by TEX. Gov'T CODE §2001.022(a). Fourth, Defendants

have not published the notice required by 1 TAC §355.201(e) and (f). In addition, Defendants

have not complied with TEX. Gov'T CODE §2001.023(a), which requires that a state agency

promulgating a new rule must provide information about the costs and benefits of the new rule,

as well as all other statements required by law.

       26.     Defendants' actions also violate their statutory duty to maximize the Medicaid

finance system. TEX. Gov'T CODE §531.02113 requires Defendants to maximize the Medicaid

finance system by, among other things: a) creating incentives for providers to use preventive

care; b) increasing and retaining providers to maintain an adequate provider network; c)

encouraging the improvement of the quality of care; and d) insuring that the system accurately




                                                   8
                                                                                                  343
reflects the costs borne by the providers. If implemented, the Rates will have exactly the opposite

impact on the Texas Medicaid system because they will create disincentives for preventive care,

dramatically decrease the number of providers, impair the quality of care, and fail to accurately

reflect the costs borne by the providers. If allowed to go into effect, the promulgated Rates, or

other Pediatric Services rates implemented in violation of applicable law, will cause immediate

and irreparable damage to each of the Plaintiffs, other children receiving Pediatric Services under

the Texas Medicaid program, and other Texas Medicaid providers.

       27.     Defendants' actions additionally deny KD, TG, ZM, LP, CH, BD, and other

Texas Medicaid beneficiaries the access to providers and services required by applicable Texas

statutes and regulations.    HHSC's regulations require that each MCO must "ensure the

reasonable availability of specialists for all covered services requiring specialty care." 1 TAC

§353.411(a)(5). Furthermore, each contract between an MCO and the state must provide for a

"sufficient number of. .. specialty pediatric providers of home and community-based services"

and provide that "health care services will be accessible to recipients through the [MCO's]

provider network to a comparable extent that health care services would be available to

recipients under a fee-for-service or primary care case management model of Medicaid managed

care." TEX. Gov'T CODE §533.005(a)(21). The Rates will eliminate the sole provider of

Medicaid Pediatric Services available to KD, TG, ZM, LP, CH, and BD, as well as numerous

other Medicaid providers, thus denying those children and thousands of other children access to

critical Medicaid services mandated by state law. Accordingly, the proposed Rates will prevent

the access to services and providers required by Texas law.

       28.     Finally, Defendants' efforts to implement the Rates violate the due course of law

provision of the Texas Constitution Art. I, §19. If implemented, the Rates will deprive KD, TG,




                                                9
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ZM, LP, CH, and BD of mandated and necessary services and destroy the economic viability of

the Provider Plaintiffs. The Rates are arbitrary, capricious, and not based on fact. The Rates

cannot arguably be rationally related to a legitimate governmental interest. When considered as a

whole, the actual, real-world effect of the Rates as applied to Plaintiffs cannot arguably be

rationally related to a government interest. Finally, the Rates are so burdensome as to be

oppressive in light of any governmental interest. The Rates therefore deny Plaintiffs, citizens of

Texas, the right not to be deprived "of life, liberty, property, privileges or immunities ... except by

the due course of the law of the land." Tex. Const. art. I, § 19.

                            V. CLAIMS AGAINST DEFENDANTS

A.     Declaratory Relief

       29.     Plaintiffs reallege and incorporate herein by reference paragraphs 1-28 above.

       30.     Plaintiffs' legal rights, status, and legal relations are affected by the Rates and

Defendants' actions in promulgating the Rates. Pursuant to Chapter 37 of the Texas Civil

Practice & Remedies Code, Plaintiffs seek a judgment declaring that the Rates are invalid, void,

and of no force or effect because (1) Defendants have promulgated the Rates in violation of

applicable Texas law, (2) Commissioner Traylor's actions in promulgating the rates are ultra

vires, and (3) the Rates violate the due course oflaw provision of the Texas Constitution.

       31.     In addition, the Rates and their threatened application interfere with or impair, or

threaten to interfere with or impair, Plaintiffs' legal rights or privileges. Plaintiffs therefore seek

a declaratory judgment pursuant to TEX. Gov'T CODE §2001.038 declaring that the Rates are

invalid, void, and of no force or effect because (1) Defendants have promulgated the Rates in

violation of applicable Texas law, (2) Commissioner Traylor's actions in promulgating the Rates




                                                  10
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are ultra vires, and (3) the Rates violate the due course of law prov1s10n of the Texas

Constitution.

       32.      Plaintiffs request that the Court award them their reasonable and necessary

attorneys' fees and costs incurred herein as allowed by TEX. Crv. PRAC. & REM. CODE §37.009

and other applicable law.

B.     Request for Temporary and Permanent Injunctive Relief

       33.      Plaintiffs reallege and incorporate herein by reference paragraphs 1-32 above.

       34.      As set forth above, the actions of Commissioner Traylor are ultra vires in that his

actions taken in promulgating the Rates are outside his statutory and legal authority, and HHSC's

actions are in violation of applicable Texas law. Because Defendants have acted and are acting

without legal authority, this Court can and must enjoin Commissioner Traylor and HHSC from

taking any further actions to implement the Rates. Plaintiffs believe, moreover, that Defendants,

if they are prevented from implementing the Rates, intend to implement new reimbursement

rates for Pediatric Services and other physical, occupational, and speech therapy services under

the Texas Medicaid program without complying with the requirements of applicable statutes and

regulations, including without limitation, TEX. Gov'T CODE §§ 531.02113, 533.005(a)(21),

2001.022(a), 2001.023(a), and 2006.002, and 1 TAC§§ 353.41 l(a)(5), 355.201(e), (f), 355.8021,

355.8085, and 355.8441.

       35.      Plaintiffs will suffer imminent, irreparable harm without court intervention and

have no adequate remedy at law if Defendants are not immediately enjoined from (1) taking any

action to implement the Rates and (2) taking any action to implement any other new

reimbursement rates for physical, occupational, or speech therapy services under the Texas

Medicaid program without complying with the requirements of applicable Texas statutes and




                                                 11
                                                                                                      346
regulations, including without limitation TEX. Gov'T CODE §§ 531.02113, 533.005(a)(21),

2001.022(a), 2001.023(a), and 2006.002, and 1 TAC§§ 353.411(a)(5), 355.201(e), (f), 355.8021,

355.8085, and 355.8441.

       36.     If not so enjoined, Commissioner Traylor will continue to take actions outside his

legal authority, and HHSC will continue to take actions in violation of applicable Texas law. If

Defendants are not enjoined as requested, KD, TG, ZM, LP, CH, BD, and thousands of other

Texas children receiving Pediatric Services under the Texas Medicaid program will be deprived

of those critical services. Defendants' actions will cause multiple Texas Medicaid providers to

go out of business and/or stop providing Medicaid services. Those actions will, in addition,

create disincentives for Medicaid providers to use preventive care, decrease the quality of care

provided to Medicaid recipients in Texas, and prevent Texas Medicaid beneficiaries from

receiving critical services. If allowed to go into effect, the Rates, or other reimbursement rates

for physical, occupational, or speech therapy services under the Texas Medicaid program

implemented without complying with Texas law, will cause immediate and irreparable damage

to each of the Plaintiffs, other children receiving Pediatric Services under the Texas Medicaid

program, and other Texas Medicaid providers.

       37.     Plaintiffs are willing to post the necessary reasonable bond to facilitate the

injunctive relief requested. Plaintiffs believe that a bond in a nominal amount would be

appropriate.

       38.     The only adequate, effective and complete relief for Plaintiffs is for the Court to

grant injunctive relief immediately restraining and prohibiting Commissioner Traylor and HHSC

and their agents, servants, employees, independent contractors, attorneys, representatives, and

those persons or entities in active concert or participation with them from (1) taking any action to




                                                 12
                                                                                                       347
implement the Rates and (2) taking any action to implement any other reimbursement rates for

physical, occupational, and speech therapy services under the Texas Medicaid program without

complying with the requirements of applicable statutes and regulations, including without

limitation TEX. Gov'T CODE §§ 531.02113, 533.005(a)(21), 2001.022(a), 2001.023(a), and

2006.002, and 1 TAC §§ 353.411(a)(5), 355.201(e), (f), 355.8021, 355.8085, and 355.8441 (the

"Injunctive Relief).

         39.      Pursuant to Texas Rules of Civil Procedure 680 et. seq., and Texas Civil Practice

and Remedies Code §65.001 et. seq., and in order to preserve the status quo during the pendency

of this action, Plaintiffs request (1) a temporary restraining order granting the requested

Injunctive Relief, (2) alternatively, a temporary injunction hearing and an order requiring

Defendants to appear at such hearing and show cause why a temporary injunction should not be

issued, (3) upon hearing, a temporary injunction granting the requested Injunctive Relief, and (4)

upon final hearing, a permanent injunction granting the requested Injunctive Relief.

         40.      Plaintiffs are willing to post the necessary reasonable bond to facilitate the

injunctive relief requested. Plaintiffs believe that a bond in a nominal amount would be

appropriate.

         41.      Plaintiffs incorporate herein by reference the affidavits of Diana D., Karen G.,

Guadalupe P., and Sally L. attached as Exhibits B through E, respectively to Plaintiffs' Original

Petition and Application for Injunctive Relief previously filed herein, 1 and the affidavits of

Michael Reiswig on behalf of Care Options for Kids, Joshua Adams on behalf of Atlas, and J.




1
  To protect the privacy of the children named as Plaintiffs, the original affidavits of their next friends attached to
such petition and filed in the records of the Court were redacted to eliminate identifying information, such as the
next friends' last names and addresses. Non-redacted copies of such affidavits are available and will be provided to
the Court and Defendants if deemed appropriate by the Court.


                                                          13
                                                                                                                          348
Adam Wilcox on behalf of Pathfinder, attached as Exhibits A-1 through A-3, respectively, to this

Petition.

                               VI. CONCLUSION & PRAYER

        WHEREFORE, PREMISES CONSIDERED, Plaintiffs respectfully request that they be

granted:

        (a)   the declaratory relief as set forth above;

        (b)   the injunctive relief as set forth above;

        (c)   their reasonable and necessary attorneys' fees and expenses; and

        (d)   all other relief to which they may be justly entitled.

                                                      Respectfully submitted,




                                               By:




                                                      ATTORNEYS FOR PLAINTIFFS




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                                                                                                   349
                               CERTIFICATE OF SERVICE

       I hereby certify that the foregoing document has been delivered to the following counsel
ofrecords on this, the 81h day of September 2015 by fax and e-mail:

Eugene A. Clayborn
Andrew Lutostanski
Assistant Attorney General
Office of the Attorney General of Texas
P.O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Facsimile: (512) 457-4614




                                              15
                                                                                                  350
G
Texas Government Code


§ 531.021. Administration of Medicaid
(a)   The commission is the state agency designated to administer federal
      Medicaid funds.
(b)   The commission shall:
      (1)   plan and direct Medicaid in each agency that operates a portion of
            Medicaid , including the management of the Medicaid managed care
            system and the development, procurement, management, and
            monitoring of contracts necessary to implement the Medicaid
            managed care system; and
      (2)    establish requirements for and define the scope of the ongoing
            evaluation of the Medicaid managed care system conducted in
            conjunction with the Department of State Health Services under
            Section 108.0065, Health and Safety Code.
(b-1) The executive commissioner shall adopt reasonable rules and standards
      governing the determination of fees, charges, and rates for Medicaid
      payments.
(c)   The executive commissioner in the adoption of reasonable rules and
      standards under Subsection (b-1) shall include financial performance
      standards that, in the event of a proposed rate reduction, provide private
      ICF-IID facilities and home and community-based services providers with
      flexibility in determining how to use Medicaid payments to provide services
      in the most cost-effective manner while continuing to meet the state and
      federal requirements of Medicaid.
(d) In adopting rules and standards required by Subsection (b-1), the executive
commissioner may provide for payment of fees, charges, and rates in accordance
with:
      (1) formulas, procedures,       or   methodologies    prescribed   by   the
      commission's rules;
      (2) applicable state or federal law, policies, rules, regulations, or
      guidelines;
      (3) economic conditions that substantially and materially affect provider
      participation in Medicaid , as determined by the executive
      commissioner; or
      (4)   available levels of appropriated state and federal funds.
(e)   Notwithstanding any other provision of Chapter 32, Human Resources Code,
      Chapter 533, or this chapter, the commission may adjust the fees, charges, and
      rates paid to Medicaid providers as necessary to achieve the objectives of
      Medicaid in a manner consistent with the considerations described by
      Subsection (d).
(f)   In adopting rates for Medicaid payments under Subsection (b-1), the executive
      commissioner may adopt reimbursement rates for appropriate nursing
      services provided to recipients with certain health conditions if those services
      are determined to provide a cost-effective alternative to hospitalization. A
      physician must certify that the nursing services are medically appropriate for
      the recipient for those services to qualify for reimbursement under this
      subsection.
(g)   In adopting rates for Medicaid payments under Subsection (b-1), the executive
      commissioner may adopt cost-effective reimbursement rates for group
      appointments with Medicaid providers for certain diseases and medical
      conditions specified by rules of the executive commissioner.
§ 531.02113. Optimization of Medicaid Funding
The commission shall ensure that the Medicaid finance system is optimized to:
      (1) maximize the state's receipt of federal funds;
      (2) create incentives for providers to use preventive care;
      (3) increase and retain providers in the system to maintain an adequate
      provider network;
      (4) more accurately reflect the costs borne by providers; and
      (5) encourage the improvement of the quality of care.


§ 2001.038. Declaratory Judgment
(a) The validity or applicability of a rule, including an emergency rule adopted under
Section 2001.034, may be determined in an action for declaratory judgment if it is
alleged that the rule or its threatened application interferes with or impairs, or
threatens to interfere with or impair, a legal right or privilege of the plaintiff.
                                       * * *


Texas Human Resources Code
§ 32.021. Administration of the Program
(a) The commission is the single state agency designated to administer the
medical assistance program provided in this chapter in accordance with 42 U.S.C.
Section 1396a(a)(5). Subject to applicable federal law, the commission may delegate
the operation of a part of the medical assistance program to another state agency.
Notwithstanding any delegation, the commission retains ultimate authority over the
medical assistance program.
(a-1) To the extent the commission delegates the operation of a part of the medical
assistance program to another state agency, or to the extent that state law assigns a
function of the medical assistance program to another health and human services
agency operating under the commission’s oversight, a reference in this chapter to
the commission with respect to that part of the medical assistance program means
the state agency to which the operation of that part is delegated or assigned.
(b) The commission shall enter into agreements with any federal agency
designated by federal law to administer medical assistance when the commission
determines the agreements to be compatible with the state's participation in the
medical assistance program and within the limits of appropriated funds. The
commission shall cooperate with federal agencies designated by federal law to
administer medical assistance in any reasonable manner necessary to qualify for
federal funds.
(c) The executive commissioner shall establish methods of administration and
adopt necessary rules for the proper and efficient operation of the medical assistance
program.
                                       * * *
§ 32.028. Fees, Charges, and Rates
(a) The executive commissioner shall adopt reasonable rules and standards
governing the determination of fees, charges, and rates for medical assistance
payments.
(b) The fee, charge, or rate for a professional service is the usual and customary
fee, charge, or rate that prevails in the community.
(c) The fee, charge, or rate for other medical assistance is the usual and customary
fee, charge, or rate that prevails in the community unless the payment is limited by
state or federal law.
                                          * * *
§ 32.0281. Rules and Notice Relating to Payment Rates
(a) The executive commissioner shall by rule describe the process used to
determine payment rates for medical assistance and shall notify providers,
consumers, the Legislative Budget Board, and the Governor's Office of Budget,
Planning, and Policy of that process.
(b) The executive commissioner shall adopt rules relating to payment rates that
include:
      (1) a description of the process used to determine payment rates;
      (2) a description of each cost of living index used in calculating inflation rates
      and the procedure for determining the level of inflation used in the executive
      commissioner's calculations;
      (3) the criteria for desk audits;
      (4) the procedure for notifying providers of exclusions and adjustments to
      reported expenses, if notification is requested; and
      (5) a method of adjusting rates if new legislation, regulations, or economic
      factors affect costs.
(c) The commission shall include in the Title XIX State Medicaid Plan submitted
to the federal government for approval the procedures for making available to the
public the data and methodology used in establishing payment rates.
(d) The procedures for adopting rules under this section shall be governed by
Chapter 2001, Government Code.
(e) An interested party may appeal an action taken by the commission under this
section, and an appeal of such action shall be governed by the procedures for a
contested case hearing under Chapter 2001, Government Code. The filing of an
appeal under this section shall not stay the implementation of payment rates adopted
by the executive commissioner in accordance with commission rules.
§ 32.0282. Public Hearing on Rates
(a) The commission shall hold a public hearing to allow interested persons to
present comments relating to proposed payment rates for medical assistance.
(b)   The commission shall provide notice of each hearing to the public.


1 TEXAS ADMINISTRATIVE CODE
§ 355.201    Establishment and Adjustment of Reimbursement Rates by the
             Health and Human Services Commission
                                       * * *
(b) Purpose. This section implements the provisions of §531.021(d) and (e),
Government Code and applies to all programs that provide medical assistance and
to all reimbursement methodologies prescribed under this chapter.
(c) Establishment of fees, rates, and charges. The Commission establishes fees, rates,
and charges to be paid for medical assistance in accordance with:
 (1) the formulas, procedures, or methodologies prescribed in this chapter;
 (2) the requirements of applicable state and federal law, policies, rules,
     regulations, or guidelines, including:


      (A)    legislative or Congressional enactments that change state or federal
             laws in a manner that affects such fees, rates, and charges;
      (B)    changes in federal regulations, and policies that affect such fees, rates,
                  and charges; and
      (C)    judicial orders, opinions, or interpretations regarding state or federal
             law that affect such fees, rates, and charges;
 (3) the consideration of economic factors that, in the Commission's
     determination:
        (A)   have or may have a significant and measurable effect on provider
              participation; or
        (B)   have or may have a significant and measurable effect on providers'
              ability to deliver services in accordance with state and federal law; and
 (4) levels of appropriated state and federal funds or state or federal laws or
     enactments that limit, restrict, or condition the availability of appropriated
     funds for medical assistance.
(d) Adjustment of fees, rates, and charges. Notwithstanding any other provision of
this chapter, the Commission may adjust fees, rates, and charges paid for medical
assistance if:
 (1) state or federal law is enacted, amended, judicially interpreted, or
     implemented to:
        (A)   require the Commission to increase or reduce a fee, rate, or charge
              paid to a provider for medical assistance;
        (B)   change the amount, scope, or type of allowable or unallowable costs
              for providers of medical assistance that are required to report costs to
              the Commission or a health and human services agency for purposes
              of establishing a reimbursement rate for medical assistance;
        (C)   require all providers within a program or category of providers to
incur         additional costs to provide medical assistance, other than unallowable
              costs, that are not currently recognized in the reimbursement
              methodology established by the Commission for the program; or
        (D)   restrict, limit, or condition the availability of appropriated funds to the
              Commission for payment or reimbursement of medical assistance;
 (2) economic conditions that prevail among all providers within a specific
     program or category of providers and:
        (A)   result in a demonstrable increase in the cost of providing services
              beyond amounts recognized in the Commission's established
              reimbursement methodology; or
      (B)    require providers within a program or category of providers to incur
             costs, other than unallowable costs, that are not currently recognized
             in the reimbursement methodology established by the Commission for
             the program.
(e) Notice of adjustment of fees, rates, and charges. If the Commission adjusts fees,
rates, or charges under this section, the Commission or its designee will publish
notice of the proposed adjustment at the earliest feasible date but not later than 10
state working days before the effective date of the adjustment. If the adjustment is
required by the enactment or amendment of state or federal law, such notice may
be published before the effective date of such enactment or amendment, but the
adjustment to fees, rates, or charges will not take effect before the effective date of
the enactment or amendment. The notice must be published either by publication
on the Commission's Internet web site or in the Texas Register. In addition, the
Commission may issue written or electronic communication to providers, if
economically feasible.


(f) Contents of notice. The notice required under subsection (e) of this section will
include the following:
 (1) a description of the specific increase or reduction of fees, rates, and charges;
 (2) the date on which such adjustment will take effect;
 (3) a description of the legal and factual bases for the adjustment;
 (4) a description of the specific requirements of the rate setting methodology
     established under this chapter that cannot effectively be implemented as a
     result of the adjustment;
 (5) instructions for interested parties to submit written comments to the
     Commission regarding the proposed adjustment; and
 (6) the date, time, and location of a public hearing in accordance with §32.0282,
     Human Resources Code.
§ 355.8021 Reimbursement Methodology for Home Health Services and
           Durable Medical Equipment, Prosthetics, Orthotics and Supplies
(a) Reimbursement methodology for services provided by a home health agency.
 (1) Except for durable medical equipment, prosthetics, orthotics and supplies
     (DMEPOS), authorized home health services provided for eligible Medicaid
     recipients are reimbursed the lesser of:

      (A)   the amount billed to Medicaid by the agency; or

      (B)   the fee established for the specific authorized home health service and
                   published in the Medicaid fee schedules.

 (2) HHSC will update the fee schedules for Medicaid-reimbursable therapy,
     nursing, and aide services provided by a home health agency as needed.

      (A)    HHSC bases the fee schedules on: an analysis of the Centers for
             Medicare and Medicaid Services fees for similar services; Medicaid
             fees paid by other states; a survey of costs reported by Medicaid home
                   health agencies; the Medicare Low Utilization Payment
Adjustment                 (LUPA) fees; previous Medicaid payments for Medicaid-
reimbursable               therapy, nursing, and aide services; or some combination
thereof.                   Reimbursement information for therapy, nursing and aide
services                   provided through the Early and Periodic Screening,
Diagnosis and                    Treatment (EPSDT) program, known in Texas as
Texas Health                     Steps, is defined in §355.8441 of this subchapter
(relating to                     Reimbursement Methodologies for Early and
Periodic Screening,                     Diagnosis and Treatment (EPSDT)
Services).
       (B) HHSC may conduct periodic rate reviews that will include, but not be
             limited to, payments for as well as the costs associated with providing
             these Medicaid-reimbursable therapy, nursing, and aide services.
             HHSC may seek input from contracted home health services
             providers and other interested parties in performing this review.

                                      * * *
H
42 U.S.C. § 1396a

(30)(A) provide such methods and procedures relating to the utilization of, and the
payment for, care and services available under the plan (including but not limited to
utilization review plans as provided for in section 1396b(i)(4) of this title) as may be
necessary to safeguard against unnecessary utilization of such care and services and to
assure that payments are consistent with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and services are available under the plan
at least to the extent that such care and services are available to the general population in
the geographic area;


42 U.S.C. § 1396c

If the Secretary, after reasonable notice and opportunity for hearing to the State agency
administering or supervising the administration of the State plan approved under this
subchapter, finds--
(1) that the plan has been so changed that it no longer complies with the provisions of
section 1396a of this title; or
(2) that in the administration of the plan there is a failure to comply substantially with any
such provision;

the Secretary shall notify such State agency that further payments will not be made to the
State (or, in his discretion, that payments will be limited to categories under or parts of the
State plan not affected by such failure), until the Secretary is satisfied that there will no
longer be any such failure to comply. Until he is so satisfied he shall make no further
payments to such State (or shall limit payments to categories under or parts of the State
plan not affected by such failure).
