The National Council has learned that the Department of Health and Human Services (HHS) has rescinded several harmful Medicaid regulations including: parts of targeted case management, outpatient hospital and clinic services upper payment limit, and school-based services.  The announcement was published in the Federal Register on Tuesday June 30, 2009. 

Rescinded Rules

Targeted Case Management (CMS 2237-F)
The Interim Final Rule (IFR) for case management and targeted case management was published on December 4, 2007.  The rule would have caused a disruption in the community mental health system and hurt Medicaid recipients.  The National Council is happy to report that the portions of the target case management IFR to be rescinded include all of the most harmful and restrictive aspects of the regulation, including:

• Reduction in the number of days case management services are reimbursable during the transition period out of institutional care to a community setting and only allowed payment if the transition was successful
• Case management services are to be furnished by only one case manager for each individual 
•  Required billing in 15-minute increments 
• Required providers to bill for services separately that are a part of a "package of services" 
• Denied reimbursement for case management activities that are an integral component of another covered Medicaid service 
• Denied reimbursement for case management activities that are integral to the administration of another non-medical program, such as guardianship, child welfare/child protective services, parole, probation or special education programs 
• Denied reimbursement for administrative activities 
• Denied reimbursement for case management activities that constitute the direct delivery of underlying medical, educational, social or other services under parole, probation, public guardianship, special education programs and child welfare/child protective services. Reimbursement will still be denied for these services provided in a foster care program.

Please note: The definition of case management and allowable case management activities are the same as they have been since 2001.  Case management includes only: assessment, development of a specific care plan, referral and related activities and monitoring and follow up activities.

Outpatient Hospital and Clinic Services Upper Payment Limit (CMS-2213-F2)
The IFR for outpatient hospital services was published on November 7, 2008.  The rule would have changed the definition of outpatient hospital and rural health clinic services and change the methods states must use to demonstrate compliance with the federal upper payment limit on outpatient hospital services provided in private outpatient facilities.  This regulation would have hurt community behavioral health centers ability to provide rehabilitative services and services helping individuals transition to the community. 

School-based Services (CMS-2287-F2)
The IFR for school-based services was issued on December 28, 2007.  Under the rule, federal Medicaid payments would no longer be available for administrative activities performed by school employees or contractors, or anyone under the control of a public or private educational institution. Transportation from home to school and back for school-aged children with an Individualized Education Program or an Individualized Services Plan established under the Individuals with Disabilities Education Act would not receive federal Medicaid payments. 
 
Provider Tax (CMS-2275-P2)
Under the provider tax regulations that were implemented in 1992, states can raise part of their Medicaid matching funds by using revenue from taxes on hospitals, nursing homes, managed care organizations and other healthcare providers.  The regulation stated that the funds raised could not exceed six percent of a health facility's gross revenue.  Provider taxes equal to between 3 percent and 6 percent of a facility's gross revenues would no longer count toward a states matching contribution, if the regulation were to be implemented.  States that now rely on revenue from provider taxes set at more than 3 percent of providers' gross revenues would have to find other sources of revenue to help fund their state share of Medicaid or cut back eligibility, covered benefits, or provider payment rates.  The provider tax rule has been delayed for one year until June 30, 2010.

Status of Other Medicaid Regulations

Rehabilitative Services Option [CMS 2261-P]
This proposed rule would have limited allowable rehabilitative services and thereby limited beneficiary access to important rehabilitative services.  The proposed rule narrowed the service definition and provided that Medicaid rehabilitative services must be coordinated with but do not include services furnished by other programs and available as part of other services or programs such as foster care, child welfare, education, child care, prevocational and vocational services, housing, parole and probation, juvenile justice, public guardianship, and any other non-Medicaid services from Federal, State, or local programs.

Medicaid Program Cost Limit for Providers Operated by Units of Government and Provisions to Ensure Integrity of the Federal-State Financial Partnership (CMS-2258-P)
This proposed rule would have clarified that entities involved in the financing of the non-Federal share of Medicaid payments must be a unit of government; clarified the documentation required to support a certified public expenditure; limited reimbursement for health care providers that are operated by units of government to an amount that does not exceed the provider's cost; required providers to receive and retain the full amount of total computable payments for services furnished under the approved State plan.

These two harmful Medicaid regulations were in the "proposed" rather than the "final" phase, and therefore CMS does not have to take any further action to prevent them from going into effect.  It is our understanding that these regulations will not be released in final form.

The National Council is grateful to all our members whose advocacy over the last three years has resulted in this significant victory.