CMS published the “State Flexibility for Medicaid Benefit Packages” Final Rule (73 FR 73694 – 73727) implementing a provision of the Deficit Reduction Act of 2005 (“DRA”).  A copy is attached with relevant portions bookmarked and highlighted.  While many of our comments to the Proposed Rule received honorable mention, CMS decided to implement the Proposed Rule without modification, effective February 2, 2009. 

            The Final Rule implements a new regulation at 42 CFR §440.390, “Assurance of Transportation” that allows states, at their option, to amend their state plans to provide benchmark or benchmark-equivalent coverage to recipients without regard to assurance of transportation to medically necessary services, i.e., state benchmark plans may now opt out of the requirement found at 42 CFR §431.53 to “assure transportation to and from providers.”  This could affect a narrow segment of the population served by ambulance providers who provide non-emergency transportation to individuals who participate in benchmark or benchmark-equivalent State Medicaid plans if their State does decide to adopt such a program without assurance of transportation to and from providers. Fortunately, the impact on ambulance providers is mitigated by the fact that there are there are many exceptions as to who States can require participating in benchmark plans.  Many individuals who most commonly require Non-Emergency Medical Transportation (“NEMT”) are exempt from being required to participate in benchmark programs and thus will still receive NEMT under a traditional Medicaid plan. However, it is another blow to many providers who already operate at minimal profit margins. 

Background

            Before the DRA, States were required to offer a minimum standard benefit package to eligible Medicaid populations and the package had to include specific benefits identified in the definition of “medical assistance” at section 1905(a) of the Social Security Act.  Section 6044 of the DRA (which this Final Rule implements) allows states to amend their Medicaid State plans to provide for the use of benefit packages other than the standard benefit package, i.e., benchmark benefit packages or benchmark equivalent packages for certain populations.  Specifically, section 6044 added section 1937 to the Social Security Act stating that “notwithstanding any other provision,” States have the ability to amend their State plans to provide packages other than the standard benefit package.  CMS interprets this provision to relieve States of the responsibility to “assure transportation to and from providers” (which is the regulatory requirement at 42 CFR §431.53).

            States may require that individuals who are “full benefit eligibles” to obtain benefits by enrolling in benchmark or benchmark-equivalent coverage.  A full benefit eligible is an individual who would otherwise be eligible to receive the standard full Medicaid benefit package under the approved Medicaid State Plan.  Benchmark coverage is basically health benefits coverage that is equal to the coverage that Federal Employees or State Employees receive, or that is equal to the coverage offered by the largest HMO plan in the State.  Benchmark-equivalent health benefits coverage is health benefits coverage that has an “aggregate actuarial value that is at least actuarially equivalent to the coverage under one of the benchmark benefits packages.”  However, there are certain exempt populations that may not be included or mandated in the benchmark or benchmark-equivalent coverages, i.e., they are entitled to all benefits provided in standard full Medicaid plans.  

            The statute specifies certain individuals who are exempt from being required to enroll in benchmark or benchmark-equivalent benefit coverage.  Some of these individuals include Medicaid recipients who are:

·         pregnant

·         blind

·         dual eligible

·         terminally ill receiving hospice care

·         an inpatient in a hospital, nursing facility, intermediate care facility for the mentally retarded, or other medical institution

·         medically frail

·         receiving long-term care services

·         children in foster care

            States can not require that exempt individuals enroll in benchmark or benchmark-equivalent plans.  However, States may offer exempt individuals the option to enroll into a benchmark or benchmark-equivalent plan.  The State must inform the individual that the enrollment is voluntary and that the individual may opt out of the coverage at any time and regain immediate access to standard full Medicaid coverage under the state plan.  The State must also inform the individual how the benchmark or benchmark-equivalent plan differs from the benefits offered under the standard full Medicaid program. 

The Final Rule and its Effect on Ambulance Provider/Suppliers

            This Final Rule affects Medicaid recipients who are required by their State to participate in benchmark and benchmark-equivalent Medicaid plan and individuals who are exempt from being required to participate in benchmark or benchmark-equivalent plans if they choose to participate in a benchmark or benchmark-equivalent plan (because States may still offer the plans to individuals who are exempt, they just prohibited from requiring them to participate in the plan). 

            Part of the “increased flexibility” that CMS refers to in this Final Rule includes relieving States from the obligation to provide “Assurance of Transportation,” i.e., non-emergency medical transportation for Medicaid recipients to and from providers. Specifically, the new provision which affects the ambulance service industry states: 

42 CFR § 440.390 Assurance of Transportation.

 A State may at its option amend its State plan to provide benchmark or benchmark-equivalent coverage to recipients without regard to the assurance of transportation to medically necessary services requirement specified in § 431.53 of this chapter.

Under 42 CFR §431.53 a State plan must “(1) Specify that the Medicaid agency will ensure necessary transportation for recipients to and from providers; and

(2) Describe the methods that the agency will use to meet this requirement.”  CMS states that section 1937 of the Social Security Act (implemented through the DRA) provides States the right to provide benchmark and benchmark equivalent plans without regard to the regulatory requirement at 42 CFR §431.53.       

           In the Proposed Rule, CMS claimed it was allowing States to create more mainstream healthcare packages that are similar to those in the private insurance market by implementing health benefit packages mirroring employer sponsored group health plans since “[g]enerally, private health insurance plans do not offer non-emergency medical transportation as a benefit to enrollees.”  CMS reiterated this comment in the Final rule at 73 FR 73715 and further maintained this rationale by stating that other “State employee coverage and coverage offered by an HMO in the State with the largest insured commercial non-Medicaid populations . . . generally do not pay for NEMT to and from medical providers in all instances.”  CMS points out that States may choose to provide NEMT as a service to the benchmark plan and that “of the nine States that have approved benchmark plans, only three do not provide NEMT services to beneficiaries enrolled in the benchmark programs.”  The main theme of CMS’s comments is that this regulation affects only a limited number of beneficiaries.  CMS states that since States have the option to decide whether to provide reimbursement for NEMT, many States will likely decide to do so.  CMS also maintains that since that the most vulnerable individuals are statutorily exempt from benchmark plans, those who rely the most upon NEMT will still receive it though standard Medicaid plans.   

            Unfortunately, CMS ignores that fact that States are still permitted to offer benchmark plans to exempt individuals and many individuals may choose these plans, unaware of the fact that the benchmark plan may not cover the full panoply of services covered in the standard full Medicaid package.  The good new is that it does not appear that this rule will have a big impact given the fact that many States who have implemented benchmark programs have decided to include a NEMT benefit.  Hopefully, exempt individuals will not choose to go into these plans.