Chris Traylor, as Executive Commissioner of the Texas Health and Human Services Commission And the Texas Health and Human Services Commission v. Diana D., as Next Friend of KD, a Child Karen G., as Next Friend of TG and ZM, Children Guadalupe P., as Next Friend of LP, a Child Sally L., as Next Friend of CH, a Child Dena D., as Next Friend of BD, a Child OCI Acquisition, LLC

Case Information

FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 11/12/2015 11:26:21 PM JEFFREY D. KYLE Clerk

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 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 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

General

Assistant Solicitor 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 I NDEX OF A UTHORITIES 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 T EX . C ONST . art. I, § 28 ........................................................................................ 33 T EX . C ONST . art. II, § 1 ......................................................................................... 33 T EX . C ONST . art. IV, § 10 ..................................................................................... 35

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

1 T EX . A DMIN . C ODE § 353.411(a)(5)............................................................... 13, 54 1 T EX . A DMIN . C ODE ch. 355 subch. B .................................................................... 6 1 T EX . A DMIN . C ODE § 355.201 ............................................................................... 5 1 T EX . A DMIN . C ODE § 355.201(c) ..................................................................... 8, 10 1 T EX . A DMIN . C ODE § 355.201(c)(4) ............................................................ 3, 8, 53 1 T EX . A DMIN . C ODE § 355.201(d) .............................................................. 9, 21, 22 1 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 355.201(e) ........................................................... 7, 9, 10, 13

xi

1 T EX . A DMIN . C ODE § 355.201(f) ................................................................ 7, 10, 13 1 T EX . A DMIN . C ODE § 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. A DMIN . C ODE 355.8021(B) ........................................................................ 49 1 T EX . A DMIN . C ODE § 355.8063(k)(1)(A) (2010), repealed by 35 T EX .

R EG . 6511, 6513 (2010) ............................................................................... 28

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

1 T EX . A DMIN . C ODE § 355.8085(g)(3) ................................................................... 8

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

1 T EX . A DMIN . C ODE § 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 T EX . C IV . P RAC . & R EM . C ODE § 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 T EX . G OV ’ T C ODE § 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 T EX . G OV ’ T C ODE § 311.016 ................................................................................ 24 T EX . G OV ’ T C ODE § 311.034 ................................................................................ 42 T EX . G OV ’ T C ODE ch. 531 ....................................................................................... 5 T EX . G OV ’ T C ODE ch. 531 subch. B ......................................................................... 5 T EX . G OV ’ T C ODE § 531.021(b-1)............................................................................ 5 T EX . G OV ’ T C ODE § 531.021(d) .......................................................................... 8, 9 TEX. GOV’T CODE § 531.021(e) ........................................................................ 9

xiii T EX . G OV ’ T C ODE § 531.02113 .......................................................................... 5, 13 T EX . G OV ’ T C ODE § 531.02113(1) ......................................................................... 53 T EX . G OV ’ T C ODE § 531.0212(b)(2) ...................................................................... 38 T EX . G OV ’ T C ODE § 533.005(a)(21) ...................................................................... 13 T EX . G OV ’ T C ODE § 533.005(a)(21)(c) ................................................................. 54 T EX . H UM . R ES . C ODE ch. 32 .................................................................................. 5 TEX. HUM. RES. CODE § 32.002 ........................................................................ 5 TEX. HUM. RES. CODE § 32.021 .................................................................. 5, 35 T EX . H UM . R ES . C ODE § 32.021(a) .......................................................................... 5 T EX . H UM . R ES . C ODE § 32.028 ................................................................... 3, 31, 53 T EX . H UM . R ES . C ODE § 32.028(a) ...................................................................... 5, 6 TEX. HUM. RES. CODE § 32.0281....................................................................... 5 TEX. HUM. RES. CODE § 32.0281(b)(1) ............................................................. 6 T EX . H UM . R ES . C ODE § 32.0281(d)....................................................................... 6

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

T EX . H UM . R ES . C ODE § 32.0282 ................................................................ 6, 10, 52 T EX . H UM . R ES . C ODE § 32.0282(a) ....................................................................... 7 T EX . R. C IV . P. 683 ................................................................................................ 56 Rule 24 ........................................................................................................... 22, 52

xiv Other Authorities 2016-17 Gen. Appropriations Act,

84th Leg., R.S., ch. 1281, art. II, 2015 T EX . S ESS . L AW S ERV . 4343,

4547 (Health & Human Servs. Comm’n), Rider 50 ..................................... 11

A D ICTIONARY OF M ODERN L EGAL U SAGE (2d ed. 1995) ................................ 24, 46 A MER . H ERITAGE D ICTIONARY 691 (4th ed. 1994) ................................................ 21 A MER . H ERITAGE D ICTIONARY 1612 (4th ed. 1994) ............................................. 24 B LACK ’ S L AW D ICTIONARY 1436 (9th ed. 2009) .................................................... 46

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

II, § 16, 2011 T EX . G EN . L AWS 4025, 4241 (Special Provisions Re: All Health & Human Servs. Agencies, Provider Rates) ............................... 10

xv S TATEMENT OF THE C ASE 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 I SSUES P RESENTED 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 C HRIS T RAYLOR , AS E XECUTIVE C OMMISSIONER OF THE T EXAS H EALTH AND H UMAN S ERVICES C OMMISSION , et al.

Appellants

,

v.

D IANA D., AS N EXT F RIEND OF KD, A C HILD , et al.

Appellees

. On Appeal from the

200th Judicial District Court of Travis County, Texas

A PPELLANTS ’ B RIEF T O THE H ONORABLE T HIRD C OURT OF A PPEALS : 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.

S TATEMENT OF F ACTS 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. , T EX . H UM . R ES . C ODE § 32.028, 1 T EX . A DMIN . C ODE § 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

T EX . H UM . R ES . C ODE ch. 32., T EX . G OV ’ T C ODE ch. 531 subch. B. The statutory provisions—unsurprisingly—mirror federal law. See T EX . H UM . R ES . C ODE § 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 T EX . G OV ’ T C ODE 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 T EX . H UM . R ES . C ODE § 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.” T EX . G OV ’ T C ODE § 531.02113.

Rulemaking:

Rates are adopted under a system set out by administrative rule. T EX . H UM .

R ES . C ODE § 32.028(a), § 32.0281; T EX . G OV ’ T C ODE § 531.021(b-1); see 1 T EX . A DMIN . C ODE § 355.201. These rules are promulgated under the formal rulemaking

5

requirements of the Administrative Procedure Act. T EX . H UM . R ES . C ODE § 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 T EX . H UM . R ES . C ODE § 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 T EX . A DMIN . C ODE ch. 355 subch. B. 2 Somewhat confusingly, § 32.0281 states that the adoption of rules is subject both to the APA’s rulemaking provisions, T EX . H UM . R ES . C ODE § 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.” T EX . H UM . R ES . C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . G OV ’ T C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE §§ 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, T EX . G OV ’ T C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . H UM . R ES . C ODE § 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 T EX . G EN . L AWS 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 T EX . A DMIN . C ODE §§ 355.201(d)(1)(A), (D); see T EX . G OV ’ T C ODE § 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 T EX . S ESS . L AW S ERV . 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 T EX . A DMIN . C ODE §§ 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 T EX .

12

A DMIN . C ODE §§ 355.8021, 355.8441, 355.8085); several provisions related to formal rulemaking (T EX . G OV ’ T C ODE §§ 2001.022(a), 2001.023(a), 2001.024, 2006.002); that there had been no published notice under the Medicaid Rate setting rule (1 T EX . A DMIN . C ODE § 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

T EX . G OV ’ T C ODE § 531.02113); and (2) ensure access to care for each beneficiary under the provisions governing MCO rates, CR.344 ¶ 27 (citing T EX . G OV ’ T C ODE § 533.005(a)(21) and 1 T EX . A DMIN . C ODE § 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. T EX . G OV ’ T C ODE § 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. T HE L IVE P ETITION D OES N OT A TTEMPT TO T IE THE C AUSES OF A CTION IT P LEADS TO THE R EMEDIES IT S EEKS . 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 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 T EX . A DMIN . C ODE § 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 A MER . H ERITAGE D ICTIONARY 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 T EX . A DMIN . C ODE §§ 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 T EX . A DMIN . C ODE § 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 T EX . G OV ’ T C ODE § 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.” A MER . H ERITAGE D ICTIONARY 1612 (4th ed. 1994). Thus, like “shall” and “may,” the word “should” can create a mandatory standard in some contexts. See A D ICTIONARY OF M ODERN L EGAL U SAGE (2d ed. 1995) (“Oddly, should , like may . . . is sometimes used to create 5 The 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 T EX . A DMIN . C ODE § 355.8063(k)(1)(A) (2010), repealed by 35 T EX . R EG . 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 8 Tellingly, 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, T EX . H UM . R ES . C ODE § 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; T EX . H UM . R ES . C ODE § 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. T EX . C ONST . 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, T EX . C ONST . 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.” T EX . C ONST . art. IV, § 10. The Legislature has designated the Commission as the Governor’s agent. T EX . H UM . R ES . C ODE § 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 T EX . G OV ’ T C ODE § 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, T EX . G OV ’ T C ODE §§ 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); T EX . G OV ’ T C ODE § 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. T EX . G OV ’ T C ODE § 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 T EX . G OV ’ T C ODE § 2001.038(a) (providing for declaratory, not injunctive relief) with T EX . C IV . P RAC . & R EM . C ODE § 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.

11 The 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 D ICTIONARY OF M ODERN L EGAL U SAGE 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 T EX . G OV ’ T C ODE § 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 B LACK ’ S L AW D ICTIONARY 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 T EX . A DMIN . C ODE §§ 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 T EX . A DMIN . C ODE § 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 13 Plaintiffs’ 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, T EX . H UM . R ES . C ODE § 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.” T EX . G OV ’ T C ODE § 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; T EX . H UM . R ES . C ODE § 32.028, 1 T EX . A DMIN . C ODE § 355.201(c)(4).

Plaintiffs cite several reporting requirements related to the formal rulemaking

process. CR.343 ¶ 25 (referring to T EX . G OV ’ T C ODE § 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 T EX . A DMIN . C ODE § 353.411(a)(5) (requiring MCOs to “ensure reasonable availability of specialists); T EX . G OV ’ T C ODE § 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. B ECAUSE THERE IS NO POTENTIAL FOR RECOVERY , THE C OURT S HOULD

VACATE THE T EMPORARY I NJUNCTION . 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

14 An 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.” T EX . R. C IV . 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 O FFICE OF THE A TTORNEY G ENERAL 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 C ERTIFICATE OF S ERVICE 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 C ERTIFICATE OF C OMPLIANCE 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 T ABLE OF C ONTENTS 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

IN THE DISTRICT COURT DIANA D., as next of friend of KD, a child, § 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 §

Filed in The Distiict Court CH, DENA D., as next friend of BD, a child, § of Travis County, Texas OCI ACQUISITION, LLC d/b/a § CARE OPTIONS FOR KIDS, §

SEP2~

CONNECTCARE SOLUTIONS, LLC § 'lfi!_f M. At d/b/a CONNECTCARE THERAPY FOR § 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.

SIGNED on this day ZS of September, 2015. °"..{- <-f-1.1 S-- r· M, .f~ Ill Page 597

B

DC BK15274 PG1653 Filed in The District Court of Travis County, Texas

SEP

2

5 2015 lf.7,!l;y M. CAUSE NO. D-1-GN-15-003263 At 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, § § 201st JUDICIAL DISTRICT OF v. § § § CHRIS TRAYLOR, as EXECUTIVE COMMISSIONER of TEXAS HEALTH § AND HUMAN SERVICES § COMMISSION, Et Al., § TRAVIS COUNTY, TEXAS

Defendants. §

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 • ""·

I llllll 111111111111111111111111111111111111111111111111 004237057

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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. Boulevard, Baltimore, MD 21244–1850. Provisions for Public Comment: We

[CMS–2328–FC] 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. G, Hubert H. Humphrey Building, 200 ACTION : Final rule with comment period. 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 review requirements may be warranted. comment period also recognizes filing by stamping in and retaining an Therefore, we are providing an electronic publication as an optional extra copy of the comments being filed.) opportunity for comment specifically on means of providing public notice of b. For delivery in Baltimore, MD— the access review requirements, proposed changes in rates or ratesetting Centers for Medicare & Medicaid including the service categories required methodologies that the state intends to Services, Department of Health and for ongoing review, elements of the include in a Medicaid state plan Human Services, 7500 Security review, and the timeframe for amendment (SPA). We are providing an Boulevard, Baltimore, MD 21244–1850. submission. CMS also requests opportunity for comment on whether If you intend to deliver your comment on whether we should allow future adjustments would be warranted comments to the Baltimore address, call exemptions based on state program to the provisions setting forth telephone number (410) 786–7195 in characteristics (for example, high requirements for ongoing state reviews 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 could be exempted based on these are effective on January 4, 2016. addresses indicated as appropriate for specific program characteristics, and Comment Date: To be assured of hand or courier delivery may be delayed alternatives to ensuring compliance consideration, comments on 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 for any exempted services in lieu of the of the addresses provided below, no comments, see the beginning of the procedures described in this final rule later than 5 p.m. on January 4, 2016. SUPPLEMENTARY INFORMATION section. with comment period. For example, the ADDRESSES : In commenting, please refer FOR FURTHER INFORMATION CONTACT : proposed rule included the requirement to file code CMS–2328–FC. Because of Jeremy Silanskis, (410) 786–1592. for states to conduct an access review staff and resource limitations, we cannot SUPPLEMENTARY INFORMATION : for all services every 5 years and this accept comments by facsimile (FAX) Inspection of Public Comments: All final rule with comment period will transmission. comments received before the close of require that states conduct an access You may submit comments in one of the comment period are available for review on five specific service four ways (please choose only one of the viewing by the public, including any categories (and other categories when ways listed): personally identifiable or confidential the state or CMS has received a 1. Electronically. You may submit business information that is included in significantly higher than usual volume electronic comments on this regulation a comment. We post all comments of beneficiary or provider access to http://www.regulations.gov. Follow received before the close of the complaints for a geographic area) every the ‘‘Submit a comment’’ instructions. comment period on the following Web 3 years. The changes in this final rule 2. By regular mail. You may mail site as soon as possible after they have with comment period resulted in large written comments to the following

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E been received: http://regulations.gov. part from our consideration of address ONLY: Centers for Medicare & L U R Follow the search instructions on that comments received from the public, Medicaid Services, Department of h t i w Web site to view public comments. including requests for additional clarity Health and Human Services, Attention: D O Comments received timely will be with respect to some of these matters. CMS–2328–FC, P.O. Box 8016, R

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^[1] also available for public inspection as While we believe these changes will Baltimore, MD 21244–8016. N

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T Please allow sufficient time for mailed they are received, generally beginning assist states in implementing the access P V ^[5] comments to be received before the approximately 3 weeks after publication review and monitoring requirements, K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 In this final rule with comment rulemaking would be warranted. In 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 beneficiary access to services. This final through federal regulation an approach which core access measures, thresholds, rule with comment period implements to guide states in meeting the statutory and appeals processes would provide methods for states to use in complying access requirement at section additional information or approaches with section 1902(a)(30)(A) of the Act 1902(a)(30)(A) of the Act. In the absence that would be useful to us and states in by requiring that states review data and of federal guidance and a clear process ensuring access to care for Medicaid trends to evaluate access to care for for monitoring and ensuring access, at beneficiaries. We are interested in covered services and conduct public times budget-driven payment changes in access measures that would apply processes to obtain public input on the state Medicaid programs led to regardless of the service delivery adequacy of access to covered services confusion and litigation for states and to approach adopted by the state, and in the Medicaid program. This possible access problems for would include access measures

information will be updated and beneficiaries. CMS’s review of state applicable for populations enrolled in monitored regularly. Should the data payment rate methodologies for managed care. Ultimately, our RFI- reveal short-comings in Medicaid compliance with this requirement was related goals are to better measure, beneficiaries’ access to care, states must on a case-by-case basis and was monitor, and ensure Medicaid access take corrective actions. The final rule hampered by the lack of consistent across state program and delivery with comment period also recognizes information related to beneficiary systems and understand the economic electronic publication as an optional access. We historically relied on state and policy factors that affect access to means of providing public notice of certifications and available supporting care. The RFI is published elsewhere in proposed changes in rates or ratesetting information to conclude that Medicaid this Federal Register along with methodologies that the state intends to payment rates met the statutory information on where respondents can include in a Medicaid state plan standards. send their responses. 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 to analyze access to care for Medicaid expectations of the May 6, 2011

A. General Information services through data and information proposed rule to establish a transparent In the May 6, 2011 Federal Register from beneficiaries and providers. The data-driven process that ensures that (76 FR 26342), we published the approach specifically focused on: (1) rates are consistent with section ‘‘Medicaid Program; Methods for The extent to which enrollee needs are 1902(a)(30)(A) of the Act. Assuring Access to Covered Medicaid met; (2) the availability of care and B. State Ratesetting and Access to Care Services’’ proposed rule (hereinafter 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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E prove difficult given current limitations Medicaid services, including but not are approved by us and go into effect. L U R on data, local variations in service limited to: The beneficiaries’ health care Earlier this year, the Supreme Court h t i w delivery, beneficiary needs, and needs and characteristics; state or local decided in Armstrong v. Exceptional D O

provider practice roles. For these service delivery models; procedures for Child Center, Inc., 135 S. Ct. 1378 (2015) R P ^[1] reasons, we proposed federal guidelines enrolling and reimbursing qualified that the Medicaid statute does not N V T to frame alternative approaches for providers; the availability of providers provide a private right of action to P V ^[5] states to demonstrate consistency with in the community; the capacity of providers to enforce state compliance K S D

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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 We have issued a series of State changes that may reduce beneficiaries’ with section 1902(a)(30)(A) of the Act. Medicaid Directors (SMD) letters to abilities to receive needed care. In The analysis and the follow-up promote and provide guidance on addition, because the proposed rule was monitoring data should clarify whether pathways to implementing integrated issued several years prior to the and how changes in care and payment care models which can provide higher Armstrong decision and therefore does data result from delivery and payment quality care at lower cost. We have also not address CMS’ or states’ role in light 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 Innovation Accelerator Program, the methodologies, as described above, is Request for Information to obtain public Medicaid Value-Based Learning consistent with the requirement in input into additional approaches to Collaborative series, group workshop section 1902(a)(30)(A) of the Act that Medicaid’s statutory access sessions, and one-to-one technical state Medicaid plans must provide: requirements for CMS to consider.

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 systems. For most services, states strategies work to improve care delivery enlist enough providers so that care and develop rates based on the costs of when there are deficiencies. We are also services are available under the plan at providing the service, a review of the developing internal standard operating least to the same extent that such care amount paid by commercial payers in procedures to bolster the administrative and services are available to the general the private market, or as a percentage of record that is used to document population in the geographic area. rates paid under the Medicare program Consistent with the requirement in compliance with the final rule for for equivalent services. Often, rates are section 1902(a)(30)(A) of the Act to individual SPAs and ensure that there is 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 period, we hope to clarify that, although payments based on achievement of

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E care arrangements, while others use FFS states must demonstrate that certain specified quality or health L U R payment arrangements (with or without beneficiaries have access to covered outcome measures. h t i w primary care case management). We have worked with states to design services at least comparable to others in D O

Increasingly, states are developing payment and service delivery systems to the geographic area, this access can be R P ^[1] service delivery models that emphasize ensure program savings are aligned with through service delivery networks, N V T medical homes, health homes, or better care quality and promote rather using payment methodologies different P V ^[5] broader integrated care models to than reduce access to services. Although from other individuals in the geographic K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. This final rule with comment period

approaches to compliance. These D. Modifications to State Payment Rates recognizes the importance of stronger decisions have at times left states, Payment rates should be neither too processes and data to ensure access to providers, and beneficiaries without low nor too high to ensure access to care care while supporting state flexibility to clear and consistent guidelines and for Medicaid beneficiaries and to ensure design the appropriate measures to resulted in uncertainty in moving the economy and efficiency of Medicaid demonstrate and monitor access to care, forward in designing service delivery services and spending. Setting total which reflect the unique and evolving systems and payment methodologies. payments too high does not necessarily state service delivery models and For instance, several federal Courts of improve beneficiary access. This is service rate structures. A uniform Appeals have addressed access and particularly true when higher payments approach to meeting the statutory payment issues, but there has been no are targeted to select providers and do requirement under section consensus concerning the data or not necessarily translate into improved 1902(a)(30)(A) of the Act could prove standards that would be relevant in access to services. Payment reductions challenging at this time, given local determining compliance with the or other adjustments to payment rates variations in service delivery, Medicaid statute. More recently, in can help to manage Medicaid program beneficiary needs, provider practice March 2015, the Supreme Court ruled in costs and ensure efficiency of service roles, and limitations on data. At this Armstrong v. Exceptional Child Center, provision, without necessarily violating time, we are issuing this final rule with Inc., 135 S. Ct. 1378 (2015) that the requirements to ensure access to care. comment period to establish approaches Medicaid statute does not provide a For example, a state may amend its for states to demonstrate consistency private right of action for providers and program to use a selective contract to with the access requirement using a beneficiaries to challenge payment rates provide incontinence supplies which consistent, transparent process, rather in federal court. The lack of a private results in lower payment rates for those than setting nationwide standards. right of action underscores the need for supplies while maintaining statewide These approaches will also strengthen stronger non-judicial processes to access to those supplies. Or a state may our ability to make sound and data- ensure access, including stronger reduce payments for hospital driven decisions about the adequacy of processes at both the state and federal 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 following the Armstrong decision. However, payment reductions or through means other than increasing In the May 6, 2011 proposed rule, we other adjustments can, in some payment rates. This rule requires that intended to establish consistent circumstances, compromise beneficiary beneficiary access must be considered procedures that all states would follow access to services. Consequently, we in setting and adjusting payment in reviewing and understanding affirm in this final rule with comment methodologies for Medicaid services. If Medicaid access to care on an ongoing period that such payment rate changes a problem is identified, any number of basis and monitoring access after be made only with consideration of the steps, including payment increases, reducing or restructuring rates. potential impact on access to care for might be appropriate to address the Specifically, we proposed that states Medicaid beneficiaries and with problem, such as: Redesigning service conduct ongoing access reviews for all effective processes for assuring access. delivery strategies or improving Medicaid services over 5-year periods Payment rate changes do not comply provider enrollment and retention that evaluate: The extent to which with the Medicaid access requirements efforts. This final rule with comment enrollee needs are met; the availability if they result in a denial of sufficient period provides that we will review of care and providers; and changes in access to covered care and services. these access issues in making SPA beneficiary utilization of covered Non-compliant changes could adversely approval decisions, and describes a services. We proposed that within the affect beneficiaries’ abilities to obtain more consistent and transparent way for reviews, states would need to include needed, cost-effective preventive care, states to collect and analyze the information about access gathered create stress on safety-net providers, and necessary information to support such through ongoing beneficiary feedback counteract state delivery reform efforts reviews. mechanisms and comparisons of We consider the requirements of this that seek to reduce cost and increase Medicaid payments to Medicare, final rule with comment period as a quality.

At times, budget-driven payment commercials rates, or Medicaid service component of a broader strategy to

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E changes have led to confusion among costs. We proposed that when states ensure access in the Medicaid program. L U R states and providers about the analysis reduce or restructure rates in ways that However, the 2011 proposed rule did h t i w required to demonstrate compliance could harm access to care, they consider not anticipate the Supreme Court D O

with Medicaid access requirements at concerns raised by beneficiaries and decision: Armstrong v. Exceptional R P ^[1] section 1902(a)(30)(A) of the Act. States stakeholders and develop and monitor Child Center, Inc., 135 S. Ct. 1378 N V T attempting to reduce Medicaid costs indices to ensure sustained access after (2015), which underscored the primacy P V ^[5] through payment rate changes have implementing the rate changes. States of CMS’s role in ensuring access. For K S D

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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. Proposed § 447.203(b)(2) described information. Additionally, we will determinant of whether access is the timeframe for states to conduct the assess the feasibility of processes that sufficient. We solicited comments that data review and make the information target and resolve access to care issues would serve to help states narrow the available to the public through at an individual level, such as robust focus of the data review to core accessible public records or Web sites complaint resolution or formal hearings elements that would demonstrate on an on-going basis for all covered processes. sufficient access to care. We received,

Specifically, as we issue this final rule services. We proposed that the annual through public comments, many 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 covered Medicaid service, as long as the commenters as to measures that could which core access measures, thresholds, state reviewed a subset of services each be universally applied across all and appeals processes would provide year and each covered service is services. We will continue to study additional information or approaches reviewed at least once every 5 years. We whether a core set of measures and that would be useful to us and states in provided states this 5-year cycle to thresholds should be applied to ensuring access to care for Medicaid reduce the burden while Medicaid access to care and are beneficiaries. We are interested in accommodating the need for review to soliciting more information from 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. Because of the need to demonstrate approach adopted by the state, and Proposed § 447.203(b)(1)(i) through (iii) would have required states to service access in the context of a would include access measures review and make publically available payment rate reduction, we proposed in applicable for populations enrolled in data trends and factors that measure: § 447.203(b)(3)(i) that states would need managed care. Ultimately, our RFI- to conduct the review relevant to the Enrollee needs; availability of care and related goals are to better measure, affected service prior to submission of a providers; and utilization of services. monitor, and ensure Medicaid access SPA implementing a reduction. If the Consistent with the statutory across state program and delivery state had already reviewed access requirement, we proposed that states systems and understand the economic relating to the types of services that are review this data by state designated and policy factors that affect access to subject to the rate reduction within 12 geographic location. care. The RFI is published elsewhere in

We proposed revisions to months prior to the proposed rate this Federal Register along with § 447.203(b)(1)(iii)(B) to require that the reduction, and maintained an ongoing information on where respondents can review must include: (1) An estimate of monitoring mechanism for beneficiary send their responses. the percentile which Medicaid payment complaints, its review relative to the In addition to issuing this final rule represents of the estimated average rate reduction could be referenced in with comment period and the RFI, we customary provider charges; (2) an the previous review. To ensure also will improve our administrative estimate of the percentile which sustained access to care, we included processes associated with documenting Medicaid payment represents of one, or provisions at § 447.203(b)(3)(ii) that the basis for approval and disapprovals more, of the following: Medicare would require states to develop ongoing when states propose SPAs that reduce payment rates, the average commercial monitoring procedures through which rates or restructure payments in ways payment rates, or the applicable they periodically review indices to that may affect access to care. The Medicaid allowable cost of the services; measure sustained access to care. We information that is gathered by states and (3) an estimate of the composite also proposed at § 447.203(b)(4) to through the processes described in this average percentage increase or decrease require states to have a mechanism for final rule with comment, as well as resulting from any proposed revision in beneficiary input on access to care, such through additional state and CMS payment rates. as hotlines, surveys, ombudsman or processes for ensuring Medicaid access We proposed in other equivalent mechanisms. to care, will be the basis for our § 447.203(b)(1)(iii)(B)(3) that the Additionally, we proposed at approval decisions and we will build Medicaid payment rates must include § 447.203(b)(5) a corrective action our administrative SPA records with both base and supplemental payments procedure requiring states to submit a this information. 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 to different payment schedules based on We proposed to address state or monitoring processes. These governmental status, we proposed at processes for setting payment rates by requirements were proposed to ensure § 447.203(b)(1)(iii)(C) that states stratify amending existing regulations at that states would oversee and address

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E the access review data by state § 447.203, § 447.204, and § 447.205. The future access concerns. L U R government owned or operated, non-

following is a summary of our h t B. Medicaid Provider Participation and i w state government owned or operated proposals.

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Public Process To Inform Access to Care O and private providers. R P A. Documentation of Access to Care and ^[1] In § 447.203(b)(1)(iii)(D), we proposed In § 447.204, we proposed to N V

Service Payment Rates T to describe the minimum content that implement the statutory requirement P V ^[5] We proposed to revise § 447.203(b) to must be in included in the rate review. that Medicaid payment rates must be K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 regulatory framework also seeks to available to the general population. We We received many comments that ensure that states will have the proposed to revise § 447.204(a)(1) were general in nature and were not information necessary to consider and through (a)(2) to require that states

specific to any of the provisions of the evaluate access issues. We will continue consider, when proposing to reduce or May 6, 2011 proposed rule. We have to work closely with states and other restructure Medicaid payment rates, the summarized and responded to those partners to appropriately review access data collected through the proposed comments below. to care and address access issues, while requirement at § 447.203 and undertake 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 thresholds and appeals processes would that we may disapprove a proposed rate state Medicaid agencies to develop provide additional information or reduction or restructuring SPA that does access thresholds. One commenter approaches that would be useful to us not include or consider the data review 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 Medicaid beneficiaries. SPA means that a state would not have 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 states and federal partners to identify administrative matching rate be made C. Public Notice of Changes in appropriate access measures and a available for costs associated with the Statewide Methods and Standards for manageable process for state Medicaid final rule. Setting Payment Rates agencies to meet the statutory Response: To receive federal financial requirements of section 1902(a)(30)(A) participation (FFP) for Medicaid We proposed to clarify and modernize of the Act. This included listening services, states must comply with the changes to the public notice sessions with the National Association applicable statutory and regulatory requirement at § 447.205. We also of Medicaid Directors to hear state requirements. To the extent that state solicited comments on whether it is concerns regarding Medicaid access to activities described in this final rule advisable to delete the term care and how states were working to with comment period are for the proper ‘‘significant’’ from § 447.205(a) and address access issues. We worked with and efficient administration of the explicitly state that notice is required many states and providers individually Medicaid state plan, the administrative for any change in rates. Alternatively, to understand state-specific access match rate is available to states. We do we solicited comments on whether to issues and the types of information that not have the statutory authority to adopt a threshold for significance and states and providers rely upon to provide an enhanced administrative what that threshold might be. 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 extensive consultation, 4 years after we only Medicaid FFS rates. The

III. Analysis of and Responses to Public issued the proposed rule. Further commenter stated that if the final rule Comments 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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E comments ranged from support for the Armstrong v. Exceptional Child Center, suggested that the final rule clarify that L U R proposal to specific questions or Inc., 135 S. Ct. 1378 (2015), which the statute refers to specific service rates h t i w comments regarding the proposed specifically stated that providers do not under the Medicaid state plan or waiver D O changes. We received some comments have a private right of action to enforce rather than all Medicaid provider R

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^[1] that were outside of the scope of the section 1902(a)(30)(A) of the Act and payments. N

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T proposed rule, and therefore, not that CMS is ultimately responsible for Response: The statute requires that P V ^[5] addressed in this final rule with enforcing the statutory requirements. states have methods and procedures K S D

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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 Response: We agree with the services, which may not include all Medicaid managed care organizations commenters that it is important for Medicaid revenues received by a and rates paid under Medicaid waiver states to evaluate access any time the provider, the rule does contemplate programs. Many commenters were state proposes a change to its Medicaid broader payment changes that may concerned that a proposal to address reimbursement methodologies that will affect access, such as reductions to access issues under managed care result in a reduction or restructuring of supplemental provider payments. In delivery systems is needed. Some provider rates. This final rule with addition, reviewing additional data will 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 requirement. But nothing in this rule not updated for many years, and if CMS should incorporate into the changes the longstanding policies that necessary to address them through actuarial soundness review, standards permit a state to submit a SPA with an compliance action. At this time, we for transparency in rate setting for effective date as early as the first day of generally do not review individual managed care organizations and require the quarter in which a plan is submitted Medicaid payment rates as part of the states to evaluate the impact of managed (but only after public notice of the new SPA process, but we review the care rate cuts on access. Another rates have been issued). This policy methodologies that states apply to set 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 1902(a)(30)(A) of the Act specifically physician, federally qualified health of the quarter in which an approvable applies to payment for care and services centers (FQHC), clinic, dental care, etc.; SPA is submitted to CMS. available under the state plan, which we Comment: Several commenters physician specialist services (for interpret to refer to payments to requested that we make the following example, cardiology, urology, providers and not to capitated payments data public for all providers, radiology); behavioral health services, to managed care entities. While beneficiaries, and stakeholders to including mental health and substance Medicaid access to services under review and comment upon: (1) Data abuse disorder treatment; pre- and post- managed care arrangements is an analysis and any supporting natal obstetric services including labor important issue, that issue is addressed and delivery; and home health services documentation; (2) SPA submissions through reviews of network sufficiency (as defined in § 440.70), whether or not and supporting documentation; and (3) and managed care quality review the payment methodologies change. all communication between CMS and processes. As a result, we are not states pertaining to data analysis and States may also choose to select addressing access to care under SPAs. additional services to review through managed care arrangements in this Response: In this rule, we require the access monitoring review plan. In rulemaking effort. Similarly, methods to states to make the data analysis and addition, when changes to payment assure access to care, including payment supporting documentation available methodologies are made through the methodologies, are reviewed in the both to the public and to CMS. While SPA process, the state must be able to approval process for Medicaid waiver publication of specific information support that change with and demonstration programs (and, when related to SPA submissions and documentation that access to care will appropriate, may be monitored in the disposition is not required under this not be adversely affected, and must evaluation of a demonstration program). final rule with comment period, these monitor access after the change is made. As a result, we did not specifically materials may be available through If, for example, a state removes an address those programs within the Freedom of Information Act (FOIA) annual inflation adjustment and context of this rulemaking process. requests. We recommend that states therefore freezes rates from 1 year to the

publish the access monitoring review Separate recent CMS initiatives have next when an increase in inflation was plans and subsequent data collected addressed the framework for Medicaid anticipated, a current access review will through those plans on their Web sites managed care and home and community be required to support approval of a for full transparency. Furthermore, we based service programs, including SPA, and the state will also need to continue to post approved SPAs on the access and quality review methods. In continue to monitor access. In addition, www.Medicaid.gov Web site and will January 16, 2014, we issued the ‘‘Home whether or not the state changes post state access review plans so that and Community-Based State Plan payment methodologies (including for they are publicly available. Issuing all of Services Program, Waivers, and services outside of the ongoing

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E the communications and documentation Provider Payment Reassignments’’ final monitoring and review requirements), L U R associated with the SPA review process rule (79 FR 2947–3039), and on June 1, required ongoing mechanisms to receive h t i w as it is ongoing would add burden 2015, we published the ‘‘Medicaid beneficiary and provider feedback D O without adding significant relevant Managed Care, CHIP Delivered in would indicate to states and CMS access R

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^[1] information, and would significantly Managed Care, Medicaid and CHIP issues that arise for any Medicaid N

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T slow the process for CMS to review and Comprehensive Quality Strategies, and service. P

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^[5] Comment: Several commenters approve state submissions, many of Revisions related to Third Party K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 coordination initiatives from access discusses requirements for network rates and continue to pay for those documentation requirements. Other adequacy. 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 Comment: Commenters requested services to add to this list. In addition, infringe on states’ abilities to make specific exceptions to the procedures access studies and continued budget decisions. Some commenters described in the final rule based on state monitoring will be required for covered raised concerns that the timing of a state Medicaid program features. As services when payment rates have been legislative session makes it difficult for examples, commenters requested reduced or restructured, or when the states to comply with the due dates of exceptions for states with a majority of state receives a significant volume of the access monitoring review plans. individuals enrolled in managed public input raising access to care 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 Medicare rates, and for services where analysis. Additional services will need beneficiaries will maintain sufficient Medicaid is the only or primary payer to be reviewed as reductions to payment access to care. In the May 6, 2011 of care. The commenters stated that rates or as access issues become proposed rule, we acknowledged the requiring states with these program apparent. These additional services reality that state budgets often play a features to follow the procedures must be monitored periodically for a role in Medicaid rate-setting. This final described in the rule would be minimum of 3 years following the initial rule with comment period requires that inefficient. rate reduction. states have a process in place to review Response: This final rule with

Comment: One commenter stated that and monitor access to care to determine comment period applies to all covered providers can practice cost-shifting by the impact various program changes services under the state plan for which overcharging some patients to make up have on beneficiary access. The rule payment is made on a FFS basis. for low Medicaid rates. The commenter does not prescribe specific state actions However we are soliciting comments noted that cost-shifting permits equal to address access to care issues. The rule through the final rule with comment access even if Medicaid rates are not instead requires procedures that will period on whether we should consider consistent with economy and efficiency. 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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E agree with the commenter that the § 447.203(b)(5), including whether to intended to hamper the legislative L U R adequacy of payment rates in meeting permit streamlined approaches to process. h t i w provider costs are not necessarily the measuring access to care based on Comment: A commenter requested D O

only or the decisive factor in ensuring specific circumstances within states. For that we clarify how CMS would handle R P ^[1] access to care, in this final rule with instance, we are particularly interested access issues that arise due to events N V T comment period, we do not require that in whether states with higher that are not within the state’s control, P V ^[5] states establish access by reviewing the percentages of beneficiaries enrolled such as through competitive bidding K S D

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67584 Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. Response : We appreciate that some number of approaches to assuring better services; maternity services; long term states or geographic areas within states access to Medicaid state plan services. care and supports; family planning and are in HPSAs or MUAs, which present To competitively bid for medical contraception; pharmacy; specialty care; challenges in improving access to care. devices and supplies, states are dental care; hospital services; End Stage 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 improvement in access to care when and federal regulation at 42 CFR care. Similarly, commenters wrote that Medicaid access is consistent with the 431.54(d). Section 1915(a)(1)(B)(i) and state access reviews should be statute and the availability of care for the regulation at § 431.54(d) expressly segmented to identify the needs of the general population in a geographic require that adequate services or devices children and individuals with particular area. We recognize that some areas must be available to recipients under a health care needs that may go unmet. Response : We agree that there are within states may face particular competitive bidding program. States unique qualities in service categories, challenges in meeting the health needs should consider this requirement in 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 to be more prone to access to care issues and discuss how they affect the does not meet this standard, than it is in the Medicaid program. This is one of Medicaid program in particular. not in compliance with § 431.54(d) and the challenges that CMS and states face Comment : Some commenters stated section 1915(a)(1)(B) of the Act. that the proposed rule did not provide

Comment : One commenter requested in selecting access data and measures an appropriate balance between that CMS clarify whether states would that are appropriate and also addressing economy and efficiency and access by need to have CMS approval for a change concerns on the part of states regarding allowing states to invoke cost as a to payment rates or methodologies prior administrative burden. Based on the constraint only when they can address to implementing a change. The public comments we received, the final access issues in some way other than an commenter noted that a SPA should be rule with comment period requires that increase in payment rates. Other necessary any time a state proposes to ongoing access reviews focus on the 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 innovation strategies that aim to lower requires modification of existing plan urology, radiology); behavioral health cost and improve care. language. Similarly, commenters urged services, including mental health and Response : The rule does not limit a that state Medicaid programs cannot substance abuse disorder treatment; pre-

state’s ability to reduce or restructure implement provider payment reductions and post-natal obstetric services rates based on information that the rates until they have complied with the including labor and delivery; and home are not economic and efficient; rather, it proposed regulatory process for assuring health services. We believe these ensures that states take appropriate access to care and CMS has approved services are both in high demand and measures to document access to care the state’s SPA to reduce provider commonly utilized by Medicaid consistent with section 1902(a)(30)(A) of payments. beneficiaries (see: The Kaiser the Act. Under the Act, rates are neither

Response : Without exception, our Commission on Medicaid and the policy, as set forth in § 447.201(b), is economic nor efficient if they do not Uninsured. Medicaid Moving Forward. that states must receive approval also ensure that individuals have Julia Paradise. March 2015). States may through the SPA process to modify appropriate access to covered services. also select additional services to add to Medicaid payment methodologies. CMS We interpret section 1902(a)(30)(A) of this list. This final rule with comment approval ensures that the changes in the Act as a balanced approach to period also requires that all services that service payment methodologies comply Medicaid rate-setting and we encourage are subject to reduced rates or with all applicable regulatory and states to utilize appropriate information restructured rates and that could impact statutory requirements and are eligible and program experience to develop rates access will also need to be reviewed and

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E for FFP. SPAs may be effective no to meet all of its requirements. Further, monitored as part of a state’s access L U R earlier than the first day of the quarter we expect states to document that monitoring review plan. h t i w in which a state submits an amendment. We will work with states to identify, Medicaid rates are economic and D O

While there is no specific regulatory or based on feedback from beneficiaries efficient when the state submits changes R P ^[1] statutory requirement that a state wait and providers and other available to payment methodologies through a N V T until SPA approval to implement a information and data, additional SPA. We will continue to document as P V ^[5] reduction in payment rates, the state services that may require more regular part of our SPA review process why the K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. Response: We agree that state will consider issuing policy guidance on to ensure access to care and services for oversight efforts and rate setting policies standards for economy and efficiency beneficiaries, and this final rule with through future rulemaking efforts. We should discourage over-utilization. We comment provides considerable are actively working with states toward support state efforts to identify flexibility to consider relevant factors innovative delivery system designs that utilization associated with including market rates. The requirement inappropriate care through processes promote economy and efficiency to assure access to services is not that can include prior authorization, through person centered coordinated limited in scope to when a state is claims review, and care management care and value-based purchasing. We do proposing a change to its payment rate initiatives. Regulations at 42 CFR part not view the requirements described in methodology, but rather, applies to 456 specifically discuss the this final rule with comment period or current rates as well. If a state has not requirements concerning control of the the access provisions under section changed its Medicaid payment utilization of Medicaid services in 1902(a)(30)(A) of the Act in conflict methodology for many years, we believe with these efforts. certain settings, or for certain services.

it is just as important to assess those Comment: A commenter noted that by The regulatory framework presented in rates to determine if the rates are still using only access metrics, it would be this final rule with comment period sufficient to ensure access as it is to very unlikely that state access reviews describes several data points that may evaluate the effect of proposed changes would ever show that emergency room be indicators of access within a given to rate methodologies. The provisions of rates violate the statute because state; however, we recognize that no one the final rule with comment period hospitals, in practice, usually do not opt measure offers a precise indication of allow for state flexibility to take into out of serving Medicaid patients. The sufficient or insufficient access to care. account market conditions in carrying commenter further stated that rates to If a state experiences a severe decline in out their access monitoring review Medicaid hospitals could sustain equal service utilization without a plausible plans. We have considered state access to emergency room services, but explanation, there may be an access concerns with the burden associated could simultaneously be entirely concern worthy of investigation. The with the rule and have focused the inconsistent with efficiency, economy, same is true of beneficiary needs. If a ongoing access reviews on: primary care and quality of care. state experiences a spike in beneficiaries services; physician specialist services Response: This final rule with who experience difficulty receiving a (for example, cardiology, urology, comment period focuses specifically on particular service in a geographic radiology); behavioral health services, documenting compliance with the region, this could indicate access issues including mental health and substance access to care requirements of section and should be investigated. Because the abuse disorder treatment; pre- and post- 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 processes also required under this final Medicaid payment that falls short of form. The final rule with comment rule with comment period. We note that their full cost of providing the care period allows states broad flexibility to the final rule with comment period does furnished. This is an issue that is consider the impact of new types of not require a payment floor for any relevant to the state’s rate-setting payments and care delivery in the Medicaid service. process, but not necessarily an access access monitoring review plans. Comment: One commenter issue. These issues could be raised by Comment: One commenter requested recommended that CMS clearly explain hospitals in the rate-setting procedures that CMS specifically examine out-of- in the rule that the statute includes required under section 1902(a)(13)(A) of state Medicaid payments, particularly in strong policy against over-utilization of the Act, but we agree that there could states with historically high-volume, medical services, and it is both be additional opportunities for public out-of-state use of services. appropriate and desirable that states input. We are including in the final rule Response: We have not set out adopt rate policies that will discourage with comment period, requirements that specific requirements for out-of-state unnecessary utilization of services and states develop mechanisms for ongoing providers in this final rule with embody incentives for more efficient provider feedback, which should allow comment period. To the extent that use of health care resources. hospitals and other providers who seek individuals in the state obtain access to Commenters wrote that measuring higher rates to raise concerns to states. 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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E considerations and expressed concern efforts to ensure appropriate utilization. area generally obtain services through L U R that the proposed rule should require To remedy this conflict, commenters out-of-state providers, the state will h t i w states to implement a process to suggested that CMS clarify the law need to consider such providers in D O evaluate access regardless of whether a requires states to enroll enough reviewing access to care. R

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^[1] state is seeking changes to rates. providers to ensure access rather than Comment: One commenter stated that N V T Further, the commenter expressed ensure that people are actively seeking the regulatory effort should be expanded P V ^[5] concern regarding the establishment of treatment. These commenters also to address section 1902(a)(30)(A) of the K S D

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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 Response: The public comment systems and strengthen quality 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. the development of final regulations. example the Child and Adult Core While the suspension of a rate reduction Input from beneficiaries and their Health Care Quality Measurement Sets may be an appropriate corrective action, advocates is essential because that input developed in conjunction with the we are not requiring a specific approach most directly reflects the success or National Quality Forum. While the to addressing access issues within the failure to obtain beneficiary access to focus of this final regulation is limited final rule with comment period and we care. And the importance of that input in scope to access to care, we will will work with states on appropriate is not limited to the rulemaking process. continue our work to promote quality 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 analyze beneficiary comments and 5-year access review cycles described in guidance on quality standards. We also complaints concerning access to care. the May 6, 2011 proposed rule to ensure recognize that access and quality can be The importance of beneficiary needs that all services are included. related and beneficiaries may provide Response: We proposed that states and ongoing feedback are highlighted in beneficial input to states on this review all services covered in the the framework described in the relationship through the processes states Medicaid state plan over 5-year cycles. proposed and final rules. develop in accordance with this rule. Medicaid allows states the option to

Comment: Several commenters stated 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 Comment: Many commenters agreed have been required to review would standard than what is required under that it is important for states to conduct the statute. Some commenters offered vary. The scope of services proposed for access reviews to examine access and that the requirement will be difficult to review are described in regulation at 42 related data in different geographic meet and would effectively preclude a CFR part 440. Based on public regions throughout the state. comments, we have revised the access state from making program changes. Response: We appreciate support for

Response: Prior to the issuance of this review requirements in this final rule the proposed data analysis final rule with comment period, several with comment period to be more requirements. We have adopted without states implemented a number of the targeted so as to only require change many of the proposed regulatory provisions we proposed in measurement of a discrete set of requirements in this final rule with the May 6, 2011 proposed rule. These services, which provides additional data comment period. states recognized the need to review and on access while reducing administrative Comment: Many commenters monitor data and to work with burden on states. States must conduct suggested that we modify the access stakeholders to address potential access access monitoring reviews every 3 years review procedures to require baseline issues in light of cuts to Medicaid for the following categories of service: access analysis prior to taking action to payment rates. Based on the work of Primary care services; physician approve provider rate reductions, these states, we consider the specialist services (for example, ongoing monitoring to detect problems, requirements of the final rule with cardiology, urology, radiology); and corrective action when problems comment period to be reasonable and behavioral health services, including are detected. Some commenters offered achievable. As discussed in the May 6, mental health and substance abuse that CMS should suspend the rate 2011 proposed rule and in this final rule disorder treatment; pre- and post-natal reduction until corrective measures are with comment period, the requirements obstetric services including labor and taken. of the rule do not limit state flexibility delivery; and home health services.

Response: Consistent with the in program operation. Nor do the States may also need to add additional commenters’ suggestion, this final rule regulatory requirements go beyond the services to the access monitoring review with comment period requires that scope of what is necessary to reasonably plan based on access to care concerns states conduct baseline reviews of the document beneficiary access to care. that arise out of the information core services defined in this regulation Instead, the rule provides states with received by states through the public and monitor access data to ensure procedures to document compliance input processes described in this final compliance with section 1902(a)(30)(A) with the statutory requirement to ensure rule with comment period. We note that of the Act. States are also required to access to care. These procedures permit states may have additional alternative review and submit access data when states considerable flexibility in the processes to identify access to care states submit rate proposals that may analysis of data reflecting access, and in issues for services in addition to those have a negative impact on access to care the measures that a state must take to required under the final rule. This rule and continue monitoring for 3 years respond to access concerns. 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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E Medicare and Social Security have not in the access monitoring review plan. In does not intend to limit additional state L U R experienced the same challenges facing addition, we have revised the ongoing access to care review activities for h t i w Medicaid, likely because their access monitoring review plan activities Medicaid services that are already D O beneficiaries have considerable political to require a review of primary care effective. R

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^[1] clout. The commenter stated that services; physician specialist services; Comment: We received several N V T policymakers must factor in this reality behavioral health services, including comments that requested additional P V ^[5] when reviewing the proposed rule mental health and substance abuse guidance on how states should review K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. Comment: Commenters requested that by state geography and to emphasize the the final rule with comment period does we clarify scenarios when restructuring importance of geographic variation not specify how states should make rate methodologies would result in through specific changes to the such comparisons to the general access issues and trigger the regulatory text. population, we note that a state’s

Response: To clarify, states must analysis should be robust and consider requirements of this rule. Response: There may be any number assure that access is available to both demands for care and whether of payment methodology changes that Medicaid beneficiaries to the extent that individuals have an ability to pay for care is available to the general could harm access to care and we such care if individuals without population in a geographic area. The cannot set forth an exhaustive list. One coverage are included in the analysis. actual definition of geographic area may Comment: Several commenters noted common type of restructuring is a change in the targeting of supplemental vary by state and the extent and need to that courts have determined that the payments. States may alter payments in which states review and monitor access term ‘‘general population’’ only means ways that are budget neutral as a whole based on geographic area may depend people who have private insurance and for the amendment action, but would on the data and other information that not the uninsured and requiring reduce payments for some providers. states are required to review as part of Medicaid to compare its coverage to For instance, some states make up for the framework of this final rule with private plans without accounting for the low base payment rates through lump comment period. For instance, states access of the uninsured is an artificial 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 services available to the general dependent upon the availability of local and remediation strategies on that population in a geographic area. States governments to fund the nonfederal region. Other states may have more are instead allowed to analyze access share of payments. A change in statewide access concerns that require a issues within broad parameters in a supplemental payments that reduces the county-by-county analysis and strategy manner that appropriately reflects the total amounts that providers receive or to address access on a statewide basis. local health care delivery system of each shifts funds from one provider to At this time, we are not defining state state, as outlined in this final rule with another could result in access to care geographic areas or the specific geographic considerations that states comment period. issues and is one example of a potential Comment: Several commenters must include in access reviews. CMS payment restructuring that could requested clarification as to how the will rely on states and the processes negatively impact access to care. Where agency will evaluate the data from there is uncertainty, we will work with described in this final rule with access reviews. The commenters also states to help identify other situations comment period, including the public sought clarification as to how CMS where the processes described in this processes that allow stakeholders to would apply or evaluate the data when final rule with comment period should comment on the access monitoring deciding to approve or disapprove a apply. review plans, to determine appropriate

SPA. Comment: Several commenters geographic considerations. Response: Under this final rule with requested that CMS mandate that states Comment: Commenters requested that comment period, states will follow make the annual data reviews publically we clarify the difference between a specific procedures to review and available. Commenters further requested ‘‘comparable population’’ to Medicaid monitor access to care and to solicit that CMS require states to disclose the and statutory designation of ‘‘the feedback from stakeholders through general population in a geographic reports with a sufficient amount of time ongoing public processes. We also area.’’ A few commenters wrote that the to review the data and provide require a public review timeframe for regulations need to acknowledge that comments prior to the state’s the access monitoring review plan the law requires Medicaid to be submission of a SPA. which will allow interested parties to Response: We are finalizing the compared to the general population. review and comment on states’ access provision to require that states make Some commenters stated that the monitoring review plans for a period no access data reviews available to the appropriate comparison is between less than 30 days before the monitoring public and to CMS for review. In Medicaid and those in the general plan is finalized and submitted to CMS. addition, prior to submitting a SPA that population regardless of insurance We will review this information in total reduces or restructures Medicaid status, while others stated that the when reviewing SPAs but have not, at payment rates or otherwise have a comparison to the general population is

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E this time, required any specific negative impact on access to care, states unrealistic and should be removed from L U R thresholds that would determine an are required to conduct a public process consideration. h t i w Response: The regulation adopts the amendment to be approved or that solicits feedback from stakeholders D O

statutory standard of ‘‘the general disapproved. We will document as part in consideration of the access reviews R P ^[1] population’’ and we have applied this in of our SPA review process that states are conducted by the states. Access N V T this final rule with comment period. following the process described in this monitoring review plans will be P V ^[5] States are allowed to analyze access final rule with comment period, that published and made available to the K S D

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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 Response: We agree that feedback determine the elements most of all the comments received, we are from beneficiaries and providers on appropriate for review of access to care revising this final rule with comment access to care is important and should that are meaningful for their specific 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 States are expected to solicit feedback applied across all states without to care issues for services in addition to during the development of the access additional consideration or compelling those required under the final rule. This monitoring review plan and corrective evidence that the standards offered in rule is not intended to preclude states action plans and could also use the comments would necessarily ensure from continuing to use those processes existing Medical Care Advisory consistency with section 1902(a)(30)(A) 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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E reviewing access to care that includes implement access measures specific to states to identify payment rate L U R data analysis and feedback from the characteristics of their state. At this comparisons for service by provide type h t i w beneficiaries, providers and time, we are not issuing a template or and site of service. This should address D O

stakeholders rather than national specific format for states to conduct the commenters concerns. We recognize R P ^[1] thresholds. The analysis of this their access monitoring review plans. the important role FQHCs play in N V T information must also weigh relevant However, CMS will identify model delivering health care services to P V ^[5] state-specific circumstances. As a result, plans for states to consider as they Medicaid beneficiaries. We expect that K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 or benefit. requirements and quality and safety prospective payment system (PPS) rate Response: This final rule with standards. Other commenters to FQHC providers or an alternative comment period clarifies that states recommended that the numbers of payment methodology that results in must conduct a baseline access review providers willing to care for Medicaid payment at least at the PPS rate. The for new services within 3 years of the patients be compared to some measure PPS rate recognizes costs associated effective date of the SPAs that of patient need to provide an indication with all of the Medicaid services that authorizes the service for FFP if the of whether access is adequate. FQHCs provide and is not specific to service falls under a certain subset of Commenters lamented that the rule did particular service. So, while services service categories defined in this not specifically address circumstances furnished by FQHCs may increase regulation. All other new services will related to care in hospitals, family beneficiary access to certain categories

fall under the rate reduction or payment planning centers, long term services and of care, payments made to FQHCs are restructuring protocol outlined in this supports and many additional benefit not going to be relevant to the payments final rule with comment period whereby categories. made to other types of providers. SPAs reducing or restructuring payment Response: While we are not adopting Comment: Several commenters rates for the services are submitted with any specific metrics at this time, we are suggested that state-level reviews of an analysis of access to care and are continuing to evaluate the feasibility of beneficiary access to specialty monitored periodically for a minimum establishing a set of core metrics and pharmacies are critically important for period of 3 years. thresholds and are soliciting input from assisting states in determining whether Comment: Some commenters stakeholders on these approaches Medicaid beneficiaries’ access to suggested that CMS allow independent through the RFI. We considered these specialty pharmacy services under the third parties to conduct the access comments in developing this final rule state plan is at least equivalent to that reviews, stating that access reviews with comment period, and hope that the available to the general population is should be objective and conducted by information provided through the the geographic area. Commenters also an organization/academic institution public comment process informs state noted that access issues may already that is impartial. access monitoring review plans. We exist in most states due to the 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 party to conduct access reviews, the robust and are carefully designed to mental health and substance abuse option is certainly available to states. indicate access to care issues as they disorder treatment; pre- and post-natal Additionally, we will consider develop. We also anticipate that obstetric services including labor and alternative approaches to addressing stakeholders will provide feedback on delivery; and home health services. Medicaid access issues that state access monitoring review plans, While we have not included specialty beneficiaries face through a hearing or including on proposed, baselines, pharmacies, we have included the complaint driven process. We intend to metrics and thresholds, and that states requirement for states to review access solicit feedback on the feasibility and will review the feedback and make for additional services based on a implementation options for such an appropriate changes to their monitoring significantly higher than usual level of plans. approach through an RFI process. beneficiary or provider access Comment: Some commenters 1. Access Review Data Requirements complaints. States may also select 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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E types if the Medicaid population cannot utilization of services, and service program, the commenter offered that L U R obtain needed services from those payment information. These publically would reasonably mean access is h t i w provider types. To the extent that mail available measures will support the SPA available. D O order pharmacies are not adequate or Response: As we discussed in the submission. R

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^[1] appropriate for some Medicaid Comment: Comments suggested preamble of the May 6, 2011 proposed N V T beneficiaries, availability of mail order provider and service specific metrics, rule, CMS is not currently proposing P V ^[5] pharmacies would not constitute access threshold, and considerations should be national standards to be applied across K S D

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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 Comment: Several commenters final rule with comment period. 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 Response: This final rule with mental health services are a high 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 enrollee needs, and service utilization. professionals. 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 Comment: We received many those populations. States will be 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 care and providers, enrollee needs and services, including mental health and service categories, we are not at this service utilization. One commenter substance abuse disorder treatment; pre- time requiring specific access measures suggested that CMS should incorporate and post-natal obstetric services in the final rule with comment period. measures through future rulemaking including labor and delivery, home As discussed, we will continue to study and guidance, but only after Medicaid health services, and other service and solicit feedback on standard data and CHIP Payment and Access categories when the state or CMS has sets through a RFI process. Commission (MACPAC) completes its received a significantly higher than 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. Response: While we appreciate the to which Medicaid payments are States have the option to add the above comment and intend to continue to sufficient by, at a minimum, following elements to their access monitoring

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R access measures, the components of the undertakes when assessing the monitoring review plans become more h t i w broad framework that are described in adequacy of Medicare Payments. sophisticated over time. D O

Response: States have significant this final rule with comment period are

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P 2. Beneficiary Information ^[1] discretion in establishing payment viewed by industry experts as good N V T methods across services, providers, and indicators of access to health care Comment: Most commenters P V ^[5] states, whereas Medicare uses national services. We are considering providing expressed support for the provisions K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 Medicaid agencies to collect Consumer feedback on specific issues (for providers. Some commenters even Assessment of Healthcare Providers and example, mental health, and women’s suggested a separate payment rate Systems (CAHPS) data for FFS health) and mandate types of feedback metric to reflect public hospitals and beneficiaries in a similar manner to mechanisms, while other commenters providers that pay the non-federal share what is collected for Medicare FFS urged CMS to allow states flexibility to of the Medicaid payments. beneficiaries. Response: Section 1902(a)(30)(A) of determine the best tools to obtain Response: We are currently working the Act describes payment rates for feedback. Commenters also requested with state Medicaid agencies to collect clarification regarding the types of Medicaid care and services. Our and use the CAHPS survey data for feedback mechanisms CMS would regulatory purview is to review all state institutional and primary care settings consider acceptable and the standards payment rate methodologies through the and we will continue to assist states in SPA process to ensure the payment rates that CMS would use when reviewing collecting this or similar data in the are economic, efficient, and sufficient to beneficiary input.

Response: We appreciate the future. To the extent possible, we will assure access. The requirements work with states to use the CAHPS commenters’ support for this provision contained in this final rule with survey data to support the analysis and and we are finalizing § 447.203(b)(4) comment period set forth a framework oversight procedures described in this that requires states to have mechanisms for states to use to demonstrate their final rule with comment period. for obtaining ongoing beneficiary payment rate methodologies are

Comment: Commenters suggested that feedback through hotlines, surveys, sufficient to ensure access. To the extent states should also obtain provider and ombudsman, or other equivalent that payments are made to providers beneficiary feedback during the mechanisms. We continue to offer states outside of a state plan rate methodology development of corrective action plans the ability to implement feedback (for example, uncompensated care pool so that beneficiary and provider mechanisms tailored to their program payments, Medicaid DSH, or HIT experience may better inform the state’s characteristics and to use feedback payments), such payments would not be actions. mechanisms that are already in place directly included in the state’s rate

Response: We are finalizing and working to meet the objectives of analysis. But rate analysis is only one § 447.203(b)(4), which requires states to this final rule with comment period. In part of an overall access analysis, and have a mechanism for obtaining ongoing consideration of comments from these other payments may affect beneficiary feedback through hotlines, providers and provider groups, we are provider’s participation rates in surveys, ombudsman, or other adding a requirement within the final Medicaid by providing additional equivalent mechanisms. We are also rule with comment period that states incentive to serve Medicaid patients. adding a provision that requires states to have a mechanism for ongoing provider Comment: We received a significant have similar mechanisms in place for feedback. While CMS will not formally number of comments regarding the provider feedback. One mechanism that approve state feedback mechanisms, proposed requirement to compare states could use is the Medical Care Medicaid rates to the rates of other states are required in this final rule with Advisory Committees that are already payers; some commenters supported the comment period to maintain a record of required in federal regulations. We proposed requirement while other the volume and nature of responses to believe that states should solicit commenters opposed it. One commenter beneficiary feedback.

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

3. Access Review Medicaid Payment Response: Because each state designs contended that it is difficult to Data and administers its own Medicaid determine actual commercial rates Comment: We received numerous program within the federal framework, because often this information is comments regarding which factors we believe it is most appropriate for 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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E federal level. As part of the final rule payments, Health Information commenters cautioned against using L U R with comment period, states will be Technology (HIT) payments and other Medicare rates as a comparison, citing h t i w required to promptly respond to specific types of supplemental payments be that Medicare does not offer the same D O

access problems, with an appropriate excluded from the rate analysis. One benefits as Medicaid (for example, R P ^[1] investigation, analysis, and response. In commenter suggested that states should comprehensive dental and pediatric) N V T addition, we are exploring the feasibility separately show percentiles with and and that the Medicare payment rates do P V ^[5] of requiring a state level formal hearings without supplemental payments. not reflect the costs incurred by the K S D

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67592 Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. Response: This final rule with service, we would expect the state to Comment: A commenter noted an comment period does not require a state explain this as part of its analysis and error in the proposed regulatory text. to publish the rates used by other conduct other appropriate reviews of Specifically, the May 6, 2011 proposed payers. Although we are finalizing the Medicaid rates. 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 Response: We approve states’ rate issue and 5 years is an eternity in the health coverage rates within geographic methodologies for compliance with lifetime of a child. 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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E review of primary care services; fee schedule, as the output of a rate provider’s actual cost as part of the L U R physician specialist services; behavioral methodology. This final rule with access review. Some commenters stated h t i w health services, including mental health comment period does not change that CMS should specifically clarify that D O

and substance abuse disorder treatment; policy or imply that CMS will review provider rates need not be tied to, or R P ^[1] pre- and post-natal obstetric services individual rates for sufficiency. based on provider costs, while others N V T including labor and delivery, home Reviewing individual rates within a fee suggested CMS should mandate that P V ^[5] health services, and for services where schedule would not necessarily provide rates meet a certain percentage of K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 associated geographic areas. We required by section 1902(a)(30)(A) of the technology is introduced into the understand that payments do vary based Act. Neither provider cost nor charges is medical community to determine on provider ownership status and we a required review element in meeting whether access to the new technology is intend to review those differences the requirements of the final rule with limited. Commenters also suggested that outside of the scope of this final rule comment period. We acknowledge and medical conditions affecting Medicaid with comment period. support states’ efforts in working toward populations may develop that 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 rule. One commenter suggested access to care should be considered as rates to ensure continued access to requiring that each state complete a full part of a reform model. necessary items and services; this is not program access review by the end of the Comment: Commenters suggested that reflected in the proposed 5-year review second full calendar year following the the regulations be revised to address structure. effective date of the regulations, request ‘‘payment’’ as referring to both Response: Our intent is to define a that all services be reviewed every 3 individual health care service rates, as process by which states can effectively years, and that one-third of all services well as payments for care and services and consistently measure beneficiary be reviewed each year. Other on an aggregate basis such as total access to medical services in the commenters suggested that rates be payments for all care and services or Medicaid program. To the extent that reviewed more frequently than every 5 total payments for all acute hospital care advances in technology and/or years and suggested various alternative and services. unforeseen challenges arise that have an for more frequent review. While other Response: This rule only addresses impact on the delivery of care in the commenters suggested that yearly how states can demonstrate and monitor Medicaid program, we expect these reviews are excessive without a change sufficient access to care as required by types of changes to be considered when in payments and that it is more section 1902(a)(30)(A) of the Act, which reviewing access to care but only to the appropriate to monitor access after describes payment rates for Medicaid extent that it increases or decreases implementation of rate changes to care and services. The requirements access to services as established in determine the impact of the change. contained in this final rule with section 1902(a)(30)(A) of the Act. As Response: The timeframe outlined in comment period set forth a framework such, this final rule with comment the May 6, 2011 proposed rule was for states to use to demonstrate their period offers flexibility to states to designed to ensure a timely review of payment rate methodologies are demonstrate access within the context access, while accommodating the time, sufficient to ensure access. We of each state’s local health care delivery manpower, and data constraints of state appreciate the comment but, as system. Medicaid agencies. After considering previously discussed, we are not Comment: We received some the public comments, we have requiring states to review access for comments indicating that establishing a determined that a full program review each individual item, service, or standard equivalent to commercial over 5 years is too burdensome. procedure payment rate. insurance would need to be established Therefore, we have revised this

Comment: One commenter expressed by the Congress and doing so through requirement to include a review of: concern that the proposed requirement the proposed rule is an administrative Primary care services; physician in § 447.203(b)(3) is unreasonable and expansion of the Medicaid entitlement, specialist services; behavioral health impedes the efficient operation of the one that may or may not be achievable services (including mental health and Medicaid program because all changes even if substantial increases in state and substance abuse disorder treatment); in payment policy can be considered federal program funding were possible. Response: We did not propose to pre- and post-natal obstetric services ‘‘significant’’.

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E Response: Reviews of access to care establish a standard equivalent to including labor and delivery; and home L U R are necessary to ensure the state commercial insurance. Rather, this rule health services; services where either h t i w Medicaid program is providing will require states to make comparisons payment rates have been reduced or D O

sufficient services to its beneficiaries. of Medicaid service rates to private or restructured; and services for which a R P ^[1] We discussed the reasons for issuing public health payer rates. We are aware higher than usual volume of N V T this regulation at length in the May 6, that a number of states already perform beneficiaries, providers, or stakeholders P V ^[5] 2011 proposed rule. Although there is these types of calculations for varying have raised access to care issues. The K S D

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67594 Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 state effort similar to what we proposed. Comment: Some commenters indicating that the 5 year proposed For the reasons discussed in more detail suggested as an alternative to the review periods were too infrequent to above, we will require that the access proposed timeline, that states should be adequately capture changes in access to monitoring review plan include a required to conduct a comprehensive care. In addition, SPAs reducing review of primary care services; and public access review within 180 payment rates for the services other than physician specialist services; behavioral days prior to submission of the those mentioned above must be health services, including mental health proposed payment rate change. submitted with an analysis of access to and substance abuse disorder treatment;

Response: We believe that the changes care and then reviewed for a minimum pre- and post-natal obstetric services in access to care that occur within 180 period of 3 years. States may also select including labor and delivery; home days between a review and SPA additional services to review at their health services, and for services where submission and a year between review discretion. either payment rates have been reduced and submission would be negligible. Comment: Some commenters or restructured or where a significantly Furthermore, states are required to requested that CMS require states to higher than usual level of beneficiary, monitor access ongoing for 3 years once post their access review online by provider or stakeholder access a rate reduction goes into effect so any January 15th each year since access complaints have been received. States access to care issues that arise between reviews are to be completed by January may also select additional services to the initial review and SPA submission 1st. review at their discretion. will be detected through state Response: We consider the monitoring procedures. 6. Special Provisions for Proposed completion date to be synonymous with 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 made available upon request. We have comments on the requirement that 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 every 5 years thereafter. Other of each review year. This coincides with that we modify the access review commenters stated that CMS should the beginning of most state fiscal years procedures to require baseline access require states to begin the access and allows states sufficient time after analysis prior to taking action to reduce reviews as soon as possible. Some the issuance of this final rule with provider rates, ongoing monitoring commenters stated that CMS could comment period to conduct the first processes to detect problems, and require states to begin reviews on the review for service categories subject to corrective action when problems are sooner of the first day of the state fiscal ongoing review. detected. Some of the commenters year or the first day of the calendar year Comment: Many commenters stated that CMS should suspend the rate after the final rule with comment period suggested revisions to the timeline for reduction until corrective measures are becomes effective. review that would require states to taken. Other commenters requested that Response: We had proposed that conduct access studies and monitor CMS eliminate the requirement that states make available the first access program changes on an annual basis. proposed rate changes be accompanied data reviews beginning January 1 of the For example, commenters suggested by an analysis of access or face year beginning no sooner than 12 CMS require states to conduct annual disapproval. months after the effective date of the reviews and compare information from Response: In the May 6, 2011 final rule with comment period. Based year-to-year and analyze trends, proposed rule, we discussed the basis on comments regarding the delay in averages, and notations of changes in and reasoning behind requiring access access review information, we are access to care over time. information in making SPA decisions. revising the proposed timeframe and Response: We agree that This final rule with comment period will require states to publish the access comprehensive studies of access are requires that states conduct baseline monitoring review plans by July 1 after important. However, we have also reviews and monitoring procedures the effective date of this final rule with considered concerns from states over when implementing rate reductions or comment period. The access monitoring the burden associated with the data restructuring rates in ways that may review plans must be updated by July requirements discussed in the May 6, negatively affect access to care. 1st every 3 years thereafter. As 2011 proposed rule and the resources Consistent with commenters’ discussed, this timeframe corresponds that states estimate would be required to suggestions, this rule requires that states with the start of state fiscal years for the collect and analyze access information conduct baseline reviews and ongoing majority of states and provides states for all covered Medicaid services. monitoring of access data to ensure with time to gather the necessary data Therefore, to comply with section compliance with section 1902(a)(30)(A) and resources to perform accurate and 1902(a)(30)(A) of the Act, we focus of the Act. detailed access reviews. access review requirements on ongoing Based on feedback from states that

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E reviews of primary care services, Comment: Several commenters ongoing 5-year access reviews for all L U R physician specialist services, mental suggested that priority be given to services would overly burden state h t i w health services, pre- and post-natal certain services for which access agencies, we determined a process D O

obstetric services including labor and problems have been documented. The similar to the commenters’ to be the R P ^[1] delivery, and home health services and list of services included physician appropriate regulatory framework. Such N V T to focus state efforts on review and services, dental services, mental health a process will include a review of P V ^[5] monitoring access to care for all other services, and many specialty care primary care services, physician K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. Response: A state must develop including labor and delivery, home Response: Section 1902(a)(30)(A) of procedures to monitor continued access health services and for services where the Act requires that payments be either payment rates have been reduced to care after implementation of state sufficient to enlist enough providers so or restructured or for which a plan service rate reduction or payment that care and services are available significantly higher than usual level of restructuring that may reduce access to under the plan at least to the extent that care. The procedures must define a beneficiary, provider or stakeholder such care and services are available to periodic review of state determined complaints have been received. While the general population in the geographic indices that will serve to demonstrate the suspension of a rate reduction may area. We expect states to address access sustained service access, consistent with be an appropriate corrective action, we issues, whether through a formal efficiency, economy, and quality of care. will not require a specific approach to corrective action plan, or if more

Comment: One commenter requested addressing access issues within this appropriate, on a case by case basis. that CMS clarify how a state would rule, and we will work with states on Comment: Some commentators demonstrate sustained access after appropriate remedies given the facts and

requested more specific requirements implementation of a SPA that reduces or nuances of particular situations. We for monitoring access after a rate restructures rates. intend to work with states to monitor reduction is implemented, including the Response: The monitoring procedures access data and determine an request that CMS set specific timeframes required in § 447.203(b)(6)(ii) require appropriate course of action should for the required monitoring procedures. that a state develop procedures to access issues arise. Response: Section 447.203(b)(6)(ii) monitor access after implementation of allows the state flexibility to develop 7. Compliance With Access a SPA that results in rate reduction or access monitoring strategies. While Requirements payment restructuring. Such monitoring monitoring procedures are required of should include enrollee needs, Comment: Some commenters states, each state may develop the availability of care and providers, suggested that CMS approve an access 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 payment information. States must the review is deemed unacceptable, that adequately monitoring access to conduct reviews periodically over a CMS disapprove a SPA submittal or take services. This final rule with comment minimum 3-year period following corrective action to address inadequate 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 Comment: Some commenters proposed rule. Some commenters review the plans using this standard. suggested that we provide clear and requested that CMS provide additional We will not approve SPAs that are broad discretion to states in managing flexibility to states in establishing unsupported by data and the processes rates, and a clear path toward expedient appropriate methods for measuring and described in this final rule with approval of a rate reduction, provided monitoring beneficiary access to comment period, and will pursue that the states have mechanisms in services. Other commenters suggested compliance action should a state fail to place to monitor and correct adverse that states should periodically review conduct the baseline access data impacts to access. and monitor access and states determine reviews. Response: This final rule with the measures of access and beneficiary 8. Monitoring Procedures comment period continues to offer information included in such reviews states broad discretion to manage rates Comment: Some commenters allowing states to take a more balanced and includes procedures to ensure that suggested that we revise the access approach to evaluating access. proposed changes in the program do not Response: This final rule with demonstration to state that states must violate section 1902(a)(30)(A) of the Act. comment period offers states significant ‘‘consider’’ the access impact and Comment: Some commenters flexibility in determining the measures commit to ongoing monitoring when suggested that CMS should define in the of access and beneficiary information appropriate. regulation its role in post- included in the review as the

Response: We agree that states should implementation monitoring. commenter suggests. However, we conduct ongoing monitoring efforts on Response: We will review access to believe that a defined time period for access to care and included oversight care data each time a state submits a rate completion of the access to care reviews and monitoring procedures within this reduction or restructuring of payment allows the collected data to serve as an final rule with comment period. To the SPA or any time the agency is made acceptable comparative analytical tool extent that states find access to care aware of access to care issues. The over a number of years whenever states issues as part of the access monitoring monitoring procedures in the regulation proposes to restructure or reduce rates review plan processes that are ongoing are intended to be used to inform the or when beneficiaries alert the agency to or associated with specific rate actions, state and federal government of the access to care issues. Timely reviews we expect the state to take actions to overall status of access to care in their also allow states to demonstrate ongoing remediate those issues. If a state does

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E program. In addition, CMS may use the compliance with the section not take remediation actions, the state L U R access to care data to monitor the 1902(a)(30)(A) of the Act. Section would not be in compliance with the h t i w adequacy of rates over time, and may 447.203(b)(6)(ii) will require states to statute and would be at risk of losing D O use it to address areas in which access develop ongoing monitoring procedures FFP. R

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^[1] Comment: Commenters requested that is insufficient. through which they periodically review N V T CMS define access issues and action Comment: One commenter requested indices to measure sustained access to P V ^[5] plans as system-wide rather than case- that CMS clarify if the monitoring care. Our goal is to provide a consistent K S D

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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 mechanism provided for public input. Order 13175, HHS Policy, and the CMS same methodology to measure access Response: We understand that Tribal Consultation Policy, states are once a rate reduction is put into place advocate groups currently have many required to consult with tribes to receive so that a fair comparison of the impact opportunities to provide feedback to

their input. We also encourage states to of the rate reduction may be made. states on Medicaid issues and offer develop specialized mechanisms that Response: We generally agree that important insights for state would be responsive to input from consistency in a state’s methodology consideration. This final rule with beneficiaries from other populations may allow for better comparisons of comment period offers advocates and that have particular access concerns. access over a period of time; however, other stakeholders an opportunity to Comment: Several commenters states may need to make adjustments provide feedback on specific state rate requested that states or CMS establish and changes to the analysis based on actions through the public process advisory groups to help determine modifications of service delivery procedures. In addition, we would whether state payment rates sufficiently systems, payment rates or other program expect that individuals advocating on provide for access to care. Commenters changes that may affect access to care. behalf of a Medicaid beneficiary would suggested that the groups be comprised States and CMS may also determine that have access to the mechanism for of a variety of stakeholders, such as an analysis is not feasible to conduct or ongoing beneficiary feedback described beneficiaries, beneficiary advocacy does not accurately demonstrate access in this rule. groups, clinicians, and provider trade after conducting a review For these organizations. 10. Addressing Access Questions and reasons, we are not restricting states 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 Comment: Some commenters the requirement for states to submit a mechanism for ongoing provider suggested, as part of monitoring corrective action plan, while many 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. committee required at § 431.12. the lack of ‘‘threshold’’ for the scope or Response: We considered requiring Comment: Commenters requested that severity of an access issue that would that states conduct a public process for we clarify the decision to require require the submission of a corrective monitoring activities similar to that ongoing beneficiary feedback when action plan. While some commenters which is described for the submission of other requirements of the proposed rule, sought clarification from CMS, others SPA that reduce rate or restructure such as the public process, involve implied that the state should be able to payment in circumstances when the providers and other stakeholders. In define such threshold, especially in changes could result in access issues. addition, commenters requested that instances that are clearly compliant This final rule with comment period CMS clarify the standard against which with the statutory standard. Some requires states to have mechanisms for we would require states to consider commenters suggested that CMS should ongoing beneficiary, provider, and other input from beneficiaries and other not approve a SPA or permit a payment stakeholder feedback and those stakeholders. A commenter noted that reduction to be imposed until corrective mechanisms should ensure that state the level of input and magnitude of action measures are taken. Other monitoring activities are effective and proposed SPA changes are not always commenters suggested that CMS should were properly developed. correlated. affirmatively require states to suspend 9. Mechanisms for Ongoing Input Response: After considering the or reverse a payment reduction if an comments received, we are including in Comment: Many commenters access issue is identified. A few this final rule with comment period the supported the requirement that states commenters urged CMS to impose requirement that states consider have ongoing mechanisms (hotlines, sanctions on states that fail to remedy provider feedback similar to the surveys, ombudsman, etc.) for access issues timely. Still other requirement for ongoing beneficiary beneficiary input on access to care. commenters requested that CMS remove feedback. This could be accomplished Some of the commenters suggested that any references to remedies for access through state Medical care advisory we add a specific mechanism for issues that do not involve increasing committees, logging of issues raised by feedback from tribes, tribal payment rates. Commenters also providers, or other means. States must organizations, and Indian Health discussed the 90-day timeframe to incorporate feedback from beneficiaries Providers. 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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E ongoing mechanism for beneficiary There is no threshold or standard that hasty, while others thought it L U R feedback. We have also considered we will apply to stakeholder feedback; appropriate. h t i w comments from providers and provider rather, the requirements will assure that Response: After careful consideration D O

organizations and will require that states understand access to care of all of the comments received, we are R P ^[1] states have a similar mechanism for concerns from the community as they finalizing § 447.203(b)(8) requiring a N V T provider feedback. Tribes and Indian arise and consider that information as state to develop and submit a corrective P V ^[5] Health providers are an important part they make changes to their Medicaid action plan to CMS within 90 days of K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 of time beneficiaries may experience

Comment: Some commenters stated issues that are found as a result of the decreased access while realistically that states need more than 12 months to access review and monitoring efforts. accommodating a state’s resources, implement corrective action when The rule also requires an ongoing allowing sufficient time to address the access issues are discovered, whereas mechanism for beneficiaries, providers, underlying causes of identified access other commenters believed that and other stakeholders to raise concerns issues. allowing states 12 months to resolve the 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

C. Medicaid Provider Participation and recognize the potential need for state comply with statutory and regulatory Public Process To Inform Access to Care legislative action to address identified requirements. To the extent a state (§ 447.204) access issues and the 12-month 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 E Data gathering is essential to these stakeholders raise concerns that L U R plan aim to resolve the access issue activities and, as previously discussed, proposed rate changes will have a h t i within 12 months, in the interest of w we are focusing the data review efforts meaningful effect on beneficiary needs

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O preserving adequate beneficiary access. in consideration of state burden. and the availability of care and R P ^[1] Comment: Commenters suggested that Comment: A commenter noted that providers. We maintain that such N V T we require states to publicly report and the May 6, 2011 proposed rule states information is necessary to understand P V ^[5] address any decline in access to services that CMS may disapprove a SPA if a rate state rate proposals and inform CMS K S D

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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. Response: This final rule with requirement increases the time it takes posted on state Web sites or the CMS comment period does not require a to submit a SPA by at least 30 days. As Web site. Response: This final rule with particular mechanism for states to an alternative, some commenters comment period does not address the receive feedback from beneficiaries and suggested that the public process occur public process under section other stakeholders that are affected by prior to the effective date of the SPA 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 Comment: Commenters suggested that effective dates. States may make SPAs needs and address access concerns CMS be more prescriptive in how states effective as early as the first day within within each state. The public process should conduct the public process the quarter in which the SPA is requirements for institutional rates and based upon a proven methodology. One submitted so even a 30-day delay the ongoing public input mechanisms commenter suggested a formal should rarely change the proposed serve different purposes. The ongoing ‘‘Listserv’’ for comments similar to the effective date of a state’s SPA action. public input mechanisms apply to all federal proposed rule listserv for public Furthermore, we also note that states are 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 concerns to the Medicaid agencies and Notification processes established under beneficiary feedback mechanism allows have processes in place that allow them section 1916 of the Act. 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 Response: While we continue to allow prescriptive and that CMS should allow are duplicative. for states to determine exact procedures individual states to determine how to Comment: Several commenters for soliciting input from beneficiaries interact with stakeholders on changes to recommended that CMS strengthen the and stakeholders, we appreciate the Medicaid payment methodologies. 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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E Comment: Some commenters offered will both inform CMS’s approval actions access issues. We retain the authority to L U R concerns that the specific requirements and serve as the state’s public record for consider the circumstances of and h t i w of public input is an unclear process compliance with section 1902(a)(30)(A) content of a SPA submittal to determine D O and that it is difficult for states to obtain of the Act. its compliance with statutory and R

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations ‘‘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. Response: We did not propose an take a compliance action’’ could enjoin or alteration in reimbursement methods. expansion of the public notice a rate alteration or reduction based Many commenters also suggested that solely on the fact that the SPA is not yet requirement to include changes in CMS should delete the term CMS-approved. coverage policy and the public notice ‘‘significant’’ altogether.

Response: As we indicated above, we regulation discusses notice of changes Response: The public notice do not intend in this rulemaking to in statewide methods and standards for requirement informs providers of change the requirements relating to the setting payment rates. Since this rule changes in state plan methods and effective date of approvable SPAs. How addresses policies related to section standards that have either a positive or these requirements are applied and 1902(a)(30)(A) of the Act, which is negative impact on rate-setting. As interpreted in judicial review in the specific to state plan service rates and discussed in the May 6, 2011 proposed federal courts is an issue that is beyond access to care, we are not addressing rule, it is difficult to determine a the scope of this rulemaking. changes to coverage policies at this threshold of a significant change in Comment: Several commenters time. payment methods and standards since suggested requiring states to implement Comment: One commenter offered the determination to participate or an ongoing input process for every that the public notice requirement continue to participate in Medicaid is change, regardless of the scope. Other should be amended to tie in with the provider specific. This final rule with commenters noted the rule creates a public process requirement described in comment period should reduce the significant administrative burden for the May 6, 2011 proposed rule. The administrative and financial burden of states and stated it would be an commenter offered that since the new issuing notice by allowing states to inefficient use of limited resources in public process is required prior to a publish on state agency Web site. In situations where states are making state submitting a SPA, the process consideration of this and comments minor changes. The commenters should tie in with the requirements set from providers requesting the removal requested that CMS work with states to forth in § 447.205 as to how notice of the term ‘‘significant’’ and the past define a threshold that would trigger the should be given. ambiguity in interpreting whether Response: The public process and need for beneficiary input. The notice is required, we are removing the public notice requirements serve commenters also recommended that term ‘‘significant’’ in this final rule with different purposes. The public notice CMS adopt language for such a process comment period. Aside from the applies to any changes in state plan similar to that contained in the specific exceptions described in the proposed ‘‘Monitoring Access’’ methods and standards, and is regulation, notice will be required for all provisions whereby the state is able to published 1 day prior to the effective changes in state plan methods and define the procedures and process. date of a Medicaid SPA. The public standards with the effective date of this Response: The requirements in this notice informs the public of a proposed final rule with comment period. final rule with comment period for change in Medicaid rate-setting or Comment: A commenter suggested public input allow states flexibility to policy without necessarily considering that the public notice regulation design public input mechanisms that public feedback as part of the describe requirements specific to tribal are appropriate for state-specific policymaking process. The public consultation. circumstances. Considering that there is process requirement provides Response: While the May 6, 2011 so much variability in the Medicaid opportunity for the public to provide proposed rule did not address tribal program and the delivery of Medicaid input into determining beneficiary consultation, the CMS tribal services, CMS is concerned that access to care. consultation requirements were detailed Comment: A few commenters defining the significance of a rate in policy in the November 17, 2011 objected to the use of web-based reduction or payment restructuring document entitled ‘‘CMS Tribal publications as an option to issue public before a state institutes a beneficiary Consultation Policy.’’ The policy notice. One commenter cited a number feedback mechanism would undermine incorporates provision in the American of reasons for the opposition, including: the inclusion of the process in this Recovery and Reinvestment Act of 2009 The benefit of printed notice over regulation. Many states have indicated (Recovery Act) and the Children’s Internet notice; the fact that state Web to CMS through other venues that the Health Insurance Program sites do not have strong readership feedback mechanism is a primary Reauthorization Act of 2009 (CHIPRA). when compared to newspapers; limited indicator of access to care. 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 Indian-Alaska-Native/AIAN/ Comment: We received comments Internet; lack of assurance that states Consultation.html. CMS will continue that suggested various thresholds for will maintain Internet sites sufficiently; to consult with Tribal leaders on the significant changes and removal of the and difficulty in archiving web-based delivery of health care for American term significant from the public notice publications for courts, historians, Indians/Alaska Natives (AI/AN) served requirement. Some commenters researchers and archivists. The by the Marketplace, Medicare, requested that states be allowed to commenter stated that the proposal

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Medicaid, Children’s Health Insurance E define the term ‘‘significant’’ in the would leave the public with large gaps L U R Program (CHIP), or any other health care regulations, while others requested that in public information. h t i program funded by CMS and make w CMS define both the terms ‘‘significant’’ Response: We have addressed many

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O updates to the policy as necessary. and ‘‘change’’ in the final rule. A of the issues raised in the comment in R P ^[1] number of commenters suggested Comment: One commenter offered this final rule with comment period. For N V T thresholds for issuing public notice, that the public notice requirement instance, the rule provides that a state’s P V ^[5] including: any reduction in payment; a should be expanded so that a ‘‘change’’ electronic publication must be regular K S D

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67600 Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations • Section 447.203(b)(3) changes the advantages over paper-based that the regulation is intended to 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

• Section 447.203(b) is revised to Web sites must meet national standard state. We proposed that states compare to assure access to individuals with clarify that the states’ access monitoring Medicaid rates to provider charges and review plans must be developed in disabilities, and we are including this Medicare payments rates, the average consultation with the state’s medical requirement in the final rule with commercial payment rates or the care advisory committee and submitted comment period. Such standards are applicable allowable cost of Medicaid to CMS, and will be reviewed by CMS. issued by the Architectural and services. We also proposed that states This section has been revised to also Transportation Barriers Compliance stratify this information based on indicate that the plans must be made Board, and are referred to as ‘‘section provider ownership status. The final available for public review and 508’’ standards. Alternatively, the 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 stakeholders time to comment on the also be considered as acceptable analysis of the Medicaid payment rates appropriateness of the specific measures national standard for Web site as now defined in § 447.203(b)(1)(C). the state will use to determine that there accessibility. For more information, see The analysis required in the final rule is adequate access to Medicaid services. the WCAG Web site at http:// with comment reduces administrative

• Section 447.203(b)(1) is revised to www.w3.org/TR/WCAG20/. We also burden associated with the proposed state that the access monitoring review note that states currently have the requirements while continuing to plan must include the items specified option to publish notice in a state provide a basis to understand how under the access review procedures, as register that is similar to the Federal Medicaid service payments compared to well as data sources, methodologies, Register . Like the Federal Register , other health payer payments. The assumptions, trends and factors, and many state registers are web-based and statute discusses the sufficiency of rates thresholds so that it is clear that states already routinely use them to in ensuring access to services; however, measurable data and analysis are publish notice as an alternative to as we have stated, rates may not be the essential components of the access paper-based publication. Therefore, we only or most important determinant of

monitoring review plans. do not view the proposed flexibility as access in the Medicaid program. • Section 447.203(b)(1) is revised by • Section 447.203(b)(4) provides a significant departure from the current replacing the term ‘‘access review’’ with details on the review plan standards and available options. Furthermore, we

‘‘access monitoring review plan’’ for the methodologies. To provide additional believe that web-based publication will reasons described above. We made be as accessible to poor and rural clarity on types of information that clarifying changes to the monitoring communities as publication in a state states can use for these reviews, we have plan framework, specifying that reviews register. described suggested data elements for must measure whether beneficiary Comment: A commenter suggested state consideration including, but not needs are fully met, that the providers that CMS reconsider the statement in limited to: time and distance standards, analyzed as part of the review are § 447.205(b) which allows states to providers participating in the Medicaid enrolled in the program, and that the change reimbursement as long as the program, providers with open panels, access analysis must demonstrate access change is made to conform to Medicare providers accepting new Medicaid to care within state specified geographic without public notice. The commenter beneficiaries, service utilization

areas. This is consistent with the stated that Medicare serves a patterns, identified beneficiary needs, statutory requirements. We also added a significantly different population than logs of beneficiary and provider requirement that the analysis describe Medicaid, has different conditions of feedback and suggestions for the characteristics of the beneficiary participation, and may be a relative low improvement, etc. While not population (including considerations for specifically required, these data payer of professional services in some care, service, and payment variations for elements may be used by states to locations. pediatric and adult populations and for address the framework described in the

Response: The May 6, 2011 proposed individuals with disabilities). This is final rule with comment and represents rule did not contemplate modifying the important to understand specific access the scope of the analysis that states exception to public notice in instances needs within geographic areas. should conduct when reviewing access where the change in Medicaid rates is

• Section 447.203(b)(2) is revised to to care. This responds to state and consistent with Medicare. At this time specify that beneficiary and provider provider concerns that the data reviews we are not adopting the commenter’s input must be considered within the in the May 6, 2011 proposed rule lacked suggestion. 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 information, such as the public rate- This final rule with comment period state’s access analysis. • Section 447.203(b)(5) regarding the setting process, medical care advisory incorporates many of the provisions of committees, and letters to state and ‘‘Access Review Timeline’’ has been the May 6, 2011 proposed rule but also

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E federal officials. In addition to the data modified to clarify that states will need makes substantial modifications based L U R the state will review, ongoing input to comply with the provision of this on responses to the public comments. h t i w from beneficiaries and providers will final rule with comment period. We Those provisions of this final rule with D O help states understand access issues received many comments on the timing comment period that differ from the R

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^[1] (and suggestions to improve access) on associated with the access data reviews. proposed rule are as follows: N

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• The term ‘‘access review’’ is T a real-time basis and potentially target In the final rule with comment, states P V ^[5] replaced throughout by the term ‘‘access access improvements and remediation will be required to conduct the first K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations • In § 447.204(a), the term ongoing services by July 1 after the state submits a SPA to reduce payment 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.’’

• Section 447.204(a)(1) is revised to analysis every 3 years by July 1 of each diminished access for the service or review year. This corresponds with the incorporate the baseline data review services affected by the SPA. We have start of the fiscal year for most states requirement and as part of the further clarified in this paragraph that a and provides sufficient time to develop information that states consider prior to state must update the access monitoring the submission of a SPA that proposes the baseline monitoring plan. review plan within 12 months of the

• Section 447.203(b)(5)(ii) was to reduce or restructure Medicaid effective date of the submitted SPA. 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 baseline data should inform states on

describes monitoring procedures, has a 5-year period to require that states compliance with section 1902(a)(30)(A) been retitled ‘‘Monitoring procedures.’’ review a subset of service categories at of the Act and project the potential The monitoring process has been least once every 3 years. Language has impact of rate policies on access to care. modified to require incorporation of • Section 447.204(a)(2) is revised to also been added to this section to clarify access monitoring review plans and indicate that prior to the submission of that the states are required to ‘‘complete procedures, including period review a SPA that proposes to reduce or a full review of the data collected protocols and clearly defined measures through the monitoring plan restructure Medicaid service payment and thresholds, into the Medicaid state methodology.’’ Paragraphs (b)(5)(ii)A, rates, states must consider input from plan reimbursement methodology and (ii)(B), (ii)(C), (ii)(D), and (ii)(E) were providers, as well as input from to require the first monitoring review to beneficiaries and other affected added to define the specific categories occur within a year after the effective stakeholders. This change was added of services that must be included in the date of a SPA rate change and continue based on public comments that access monitoring review plan. periodically for a period of at least 3 requested that feedback from providers Paragraph (b)(5)(ii)(A) adds primary care years after the effective date of the SPA be considered in addition to services which includes physician, authorizing the payment reduction or beneficiaries as part of the public FQHC, clinic, dental care, etc. Paragraph restructuring. process. (b)(5)(ii)(B) adds physician specialist • 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 promptly respond to public input with information and concerns expressed in post-natal obstetric services including an appropriate investigation, analysis, input from affected stakeholders. With labor and delivery. Paragraph and response. The state is also required this change, is more clearly delineated (b)(5)(ii)(E) adds home health services. to maintain records of the input and the that states must furnish the information These categories were added because nature of the state’s responses. While gathered under the procedures of the they are frequently used services in CMS recognizes that services provided final rule with comment to CMS as part Medicaid, and access to these services through home and community-based of the SPA submission process. We will indicates that an individual has primary waivers or 1115 demonstrations are not use this information to inform our SPA sources of care, which may increase the bound by the procedural requirements approval decisions. likelihood of having their care needs • Section 447.204(c) and (d) were of this rule, states may understand met. Paragraph (b)(5)(ii)(F) has been through these feedback mechanisms edited to more clearly describe CMS’s added clarify that additional services access issues that may also arise for enforcement process if a state does not are to be added to the access monitoring individuals receiving services through submit the supporting documentation review plan when states reduce or those delivery systems. described in the final rule with restructure rates. Paragraph (b)(5)(ii)(G) • Section 447.203(b)(8) is revised to comment period along with SPAs. If a was added to require states to review clarify that states have a number of state does not submit the supporting access for additional services based on options to address access to care issues documentation, then the SPA would be a significantly higher than usual level of that are identified through the access disapproved. Likewise, if a state submits beneficiary, provider, or stakeholder monitoring review plans. These a SPA and the access analysis does not access complaints. Paragraph remediation efforts can include but are demonstrate adequate access, the SPA (b)(5)(ii)(H) was added to allow not limited to: modifying payment rates; would be disapproved. To address additional types of services selected by improving outreach to providers; access deficiencies, CMS may also take the state. These modifications remove reducing barriers to provider some burden from the states, a compliance action using the enrollment; providing additional particularly those that have procedures described at § 430.35 of this transportation to services; improving continuously monitored Medicaid chapter which is specified at 447.204(d). care coordination; or changing provider access to care and do not have These edits were made for clarity and

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E licensing or scope of practice polices. widespread access issues. We are did not alter the agency’s proposed L U R This is an acknowledgement that access requesting comment on the revisions to approach to enforcing the provisions of h t i w to care is not determined by payment paragraphs (b)(5)(ii)(A) through (ii)(E). the final rule with comment period.

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O • Section 447.203(b)(6)(i) was revised • Section 447.205(iv) was proposed to

rates alone but rather that when enough R P ^[1] to clarify that access monitoring review providers are enlisted in the program allow states to issue public notice on N V T plans shall be updated to incorporate an states may need to find ways to connect Web sites maintained by the single state P V ^[5] access review as described under beneficiaries with the care and services agency. We revised this section to K S D

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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: A. Wages as part of regular and known provider • The need for the information bulletin updates and maintained on the

collection and its usefulness in carrying To derive average costs, we used data state’s Web site for no less than 3 years. 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 • The quality, utility, and clarity of salary estimates ( www.bls.gov/oes/ available for a sufficient period of time. current/oes _ nat.htm ). In this regard, the the information to be collected. 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. N ATIONAL O CCUPATIONAL E MPLOYMENT AND W AGE E STIMATES 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 rates to one or more of Medicare rates, monitoring review plan for the specified practical alternative and we believe that commercial rates, or Medicaid cost, as service categories and update the plan doubling the hourly wage to estimate may be appropriate to the service under every 3 years. States will also be total cost is a reasonably accurate review. The burden associated with required to develop an access estimation method.

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 public, and periodically updating the the changes could result in access issues 1. ICRs Regarding Access Monitoring information relative to activities states for the service or services affected by the Review Plans (§ 447.203(b))

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 E required to review. L U b. Access Monitoring Review Plan R payment rates. States are also required h t a. Access Monitoring Review Plan Framework i under this provision to monitor data w

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Timeline O and beneficiary and provider input on The data analysis activities described R P ^[1] an ongoing basis and address known Section 1902(a)(30)(A) of the Act in this final rule with comment period N V T access issues through corrective action. requires states to ensure that Medicaid are claimable as administrative claiming P V ^[5] This final rule with comment period beneficiaries have access to care and activities and are reimbursable at the K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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.

T ABLE 1—A CCESS M ONITORING R EVIEW P LAN —O NE -T IME B URDEN P ER S TATE 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 E L U Review Plan.

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h Publishing Access Monitoring Review Plan .. Business Operations Specialist .................... 40 67.38 2,695 .20 t i w D Reviewing and Approving Access Monitoring General and Operations Manager ................ 10 112.70 1,127 .00 O R Review Plan. P ^[1] N V

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P 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 T ABLE 2—A CCESS M ONITORING R EVIEW P LAN —O NE -T IME T OTAL B URDEN 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 hr at $112.70/hr for managerial staff to We anticipate that the average initial per state and a total of $1,154,221.80. review and approve the access and ongoing burden is likely to be the In deriving these figures we used the monitoring review plan. same since states will need to re-run the following hourly labor rates and time to T ABLE 3—A CCESS M ONITORING R EVIEW P LAN –O NGOING B URDEN P ER S TATE (A NNUAL ) Cost per Adjusted monitoring Requirement Occupation title Burden hours hourly wage plan ($/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 T ABLE 4—A CCESS M ONITORING R EVIEW P LAN —O NGOING T OTAL B URDEN (A NNUAL ) 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 comment period. it would take each of the 50 state 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 states that implement a rate reduction or approval of the monitoring procedures 2. ICRs Regarding Monitoring restructure payment rates. We estimate (1,474 total hours). We also estimate an Procedures (§ 447.203(b)(6)(ii)) average cost of $5,929.14 per state and

that in each SPA submission cycle, 22 Section 447.203(b)(6)(ii) requires a total of $130,441.08. states will implement these rate changes states to have procedures within the based on the number of states that In deriving these figures we used the access monitoring review plan to proposed such reductions in FY 2010. following hourly labor rates and time to monitor continued access after Please note that we are using FY 2010 complete each task: 40 hr at $87.36/hr implementation of a SPA that reduces or

S E L as the basis for our estimate because of for management analyst staff to develop restructures payment rates. The U R the unusual high volume of rate the monitoring procedures, 24 hr at h monitoring procedures must be in place t i w $87.36/hr for management analyst staff for at least 3 years following the reduction SPAs that states submitted D

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R to periodically review the monitoring effective date of a SPA that reduces or during this period. By basing our

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^[1] N results, and 3 hr at $112.70/hr for restructures payment rates. estimate on FY 2010 data, we anticipate V

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P The ongoing burden associated with management staff to review and approve V the highest potential for burden ^[5]

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations T ABLE 5—A CCESS M ONITORING P ROCEDURES F OLLOWING R ATE R EDUCTION SPA—B URDEN P ER S TATE (A NNUAL ) 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 T ABLE 6—A CCESS M ONITORING P ROCEDURES F OLLOWING R ATE R EDUCTION SPA—T OTAL B URDEN (A NNUAL ) 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.

T ABLE 7—B ENEFICIARY F EEDBACK M ECHANISM —O NE -T IME B URDEN P ER S TATE 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 T ABLE 8—B ENEFICIARY F EEDBACK M ECHANISM —O NE -T IME T OTAL B URDEN 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. E 3,825 hr to monitor the feedback results, L feedback results and 5 hr at $112.70/hr U The overall effort associated with R

and 255 hr to approve the feedback h for managerial staff to review and t monitoring the feedback will primarily i w

effort (4,080 total hours). We also D approve the feedback effort. O be incurred by analysts who will gather, R P ^[1] N V T P V ^[5] K S D n o s a k s u a i l a b a VerDate Sep<11>2014 19:43 Oct 30, 2015 Jkt 238001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\02NOR3.SGM 02NOR3 s a

67606 Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations T ABLE 9—B ENEFICIARY F EEDBACK M ECHANISM —O NGOING B URDEN P ER S TATE (A NNUAL ) 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 T ABLE 10—B ENEFICIARY F EEDBACK M ECHANISM —O NGOING T OTAL B URDEN (A NNUAL ) 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. T ABLE 11—C ORRECTIVE A CTION P LAN —B URDEN P ER S TATE 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 T ABLE 12—C ORRECTIVE A CTION P LAN —T OTAL B URDEN 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 E L U R does not include or consider the data rate reduction proposals submitted by Sections 447.204(a)(1) and (a)(2) h t i review and a public process. As an states in that year. w require that states consider (when

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O alternative, or additionally, we may take proposing to reduce or restructure We estimate that it will take an R P ^[1] a compliance action in accordance with Medicaid payment rates) the data average of 440 hr to develop the public N V T § 430.35. collected through § 447.203 and process and 66 hr for review and P V ^[5] undertake a public process that solicits We are estimating, annually, that for approval of the public process (506 total K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 $112.70/ following hourly labor rates and time to T ABLE 13—P UBLIC P ROCESS —O NE -T IME B URDEN P ER S TATE P ER SPA Adjusted Cost per SPA Requirement Occupation title Burden hours hourly wage ($) ($/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 T ABLE 14—P UBLIC P ROCESS —O NE -T IME T OTAL B URDEN 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 $84,315.00 efforts associated with review and time and effort it would take 22 state In deriving these figures we used the approval of the activities will increase Medicaid programs to oversee a public following hourly labor rates and time to for overseeing managers. We estimate it process. complete each task: 40 hr at $87.36/hr

will take an average of 880 hr to oversee The overall effort associated with for management analyst staff to oversee the public process and 66 hr for review developing the public process will the public process and 3 hr at $112.70/ and approval of the public process (946 primarily be incurred by analysts who hr for managerial staff to review and total hours). We also estimate an average develop and initiate public process approve the public process. T ABLE 15—P UBLIC P ROCESS —O NGOING B URDEN P ER S TATE Adjusted Cost per SPA Requirement Occupation title Burden hours hourly wage ($) ($/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 T ABLE 16—P UBLIC P ROCESS —O NGOING T OTAL B URDEN (A NNUAL ) 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 Response: As previously discussed, Standards for Setting Payment Rates 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 our burden analysis. The provisions at § 447.205 clarify the ongoing regulatory requirements to

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447.205(d)(2)(iv)(A) through (D) allow Comment: Several commenters noted were considered in the finalizing this R P ^[1] those notices to be published on the that it could take a state up to 6 months rule. Though initial access reviews, N V T single state Medicaid agency or other and consume many resources to either triggered by the routine, rotating P V ^[5] state-developed and maintained Web conduct ongoing access reviews (in review process, or by submission of a K S D

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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 T ABLE 17—A NNUAL R ECORDKEEPING AND R EPORTING R EQUIREMENTS 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 Email: OIRA _ submission@ E. Submission of PRA-Related cms.hhs.gov, or call the Reports Comments Clearance Office at 410–786–1326. omb.eop.gov .

We invite public comments on these ICR-related comments are due We submitted a copy of this final rule potential information collection December 2, 2015. to OMB for its review of the rule’s requirements. If you wish to comment, information collection and VI. Response to Comments S please identify the rule (CMS–2328–FC) E recordkeeping requirements. The

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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 absence of federal guidance, states have A. Statement of Need requires us to prepare a regulatory likely misspent resources in efforts to impact analysis if a rule may have a This final rule with comment period interpret and comply with section significant impact on the operations of revises regulatory provisions in 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 of the Act because we and the Secretary Act. This rule also clarifies and amends procedures. have determined that this final rule with § 447.205, which require states to issue Based on our analysis above, we comment period will not have a public notice to their providers when estimate that even if these data significant impact on the operations of changing Medicaid payment methods collection efforts were totally new to a a substantial number of small rural and standards. The changes to the state and each state were to either bid hospitals. public notice requirement will alleviate a contract to gather and publish the data Section 202 of the Unfunded confusion on when states must issue collection effort and public process Mandates Reform Act of 1995 (UMRA) notice to providers and recognize required under this rule or conduct the also requires that agencies assess electronic media as a means to issue the collection and public process with state anticipated costs and benefits before notices. agency resources, the economic effects issuing any rule whose mandates would not surpass $100 million or more B. Overall Impact require spending in any 1 year of $100 in any 1 year. million in 1995 dollars, updated We have examined the impacts of this Further, we are not requiring states to annually for inflation. In 2015, that rule as required by Executive Order directly adjust payment rates as a result threshold is approximately $144 12866 on Regulatory Planning and of the provisions of this final rule with million. This final rule with comment Review (September 30, 1993), Executive comment period, nor to take any steps period will not impose a mandate that Order 13563 on Improving Regulation that would not be consistent with will result in the expenditure by state, and Regulatory Review (January 18, efficiency, economy, and quality of care. local, and tribal governments, in the 2011), the Regulatory Flexibility Act Rather, these rules propose to clarify aggregate, or by the private sector, of (RFA)) (September 19, 1980, Pub. L. 96– that beneficiary access must be more than $144 million in any one year. 354), section 1102(b) of the Social considered in setting and adjusting Executive Order 13132 establishes Security Act, section 202 of the payment methodology for Medicaid certain requirements that an agency Unfunded Mandates Reform Act of 1995 services. If a problem is identified, any must meet when it promulgates a (March 22, 1995; Pub. L. 104–4), number of steps might be appropriate, proposed rule (and subsequent final Executive Order 13132 on Federalism such as redesigning service delivery rule) that imposes substantial direct (August 4, 1999), and the Congressional strategies, or improving provider requirement costs on state and local Review Act (5 U.S.C. 804(2)). enrollment and retention efforts. It has governments, preempts state law, or Executive Order 12866 and 13563 historically been within our regulatory otherwise has federalism implications. direct agencies to assess all costs and authority to make SPA approval Since the estimated total cost associated benefits of available regulatory decisions based on sufficiency of with the provisions in this final rule alternatives and, if regulation is beneficiary service access and this rule with comment period is around $2.3 necessary, to select regulatory merely provides a more consistent and million annually, it will not impose approaches that maximize net benefits transparent way to gather and analyze significant costs on state or local (including potential economic, the necessary information to support governments, the requirements of E.O. environmental, public health and safety such reviews. 13132 are not applicable. We also note effects, distributive impacts, and The RFA requires agencies to analyze that the costs associated with this final equity). A regulatory impact analysis options for regulatory relief for small rule with comment are allocated across (RIA) must be prepared for major rules entities, if a rule has a significant impact 51 state governments. To the extent that with economically significant effects on a substantial number of small costs are for the proper and efficient ($100 million or more in any 1 year). We entities. For purposes of the RFA, small administration of the Medicaid state do not believe that there is potential for entities include small businesses,

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plan, many of the activities required E this provision to surpass the threshold nonprofit organizations, and small L U R under this final rule are likely available for economic significance because the government jurisdictions. For details, h t i at the Medicaid matching rate for w proposed data analysis effort is see the Small Business Administration’s

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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

transparent methodologies for and monitoring over three years for This section provides an overview of demonstrating access to care that would services subject to rate reductions or regulatory alternatives that CMS be appropriate to adopt at this time. restructuring of payments or when the considered for this final rule with 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 changes and to continue to rely on the 1. Access Monitoring Review Plan 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 3. Beneficiary Input on Access to Care availability of care and providers, and service categories as determined 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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considered setting national access for some commenters, we determined 3 developing their corrective action plans R P ^[1] thresholds or requiring states to year ongoing reviews as an appropriate in instances when the access data N V T establish and demonstrate access frequency period. The final rule with reviews or monitoring procedures P V ^[5] thresholds. As we have highlighted comment period provides for more identify access issues. While we K S D

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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 / Rules and Regulations 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. (v) Actual or estimated levels of areas. (5) Access monitoring review plan provider payment available from other For the reasons set forth in the timeframe. Beginning July 1, 2016 the payers, including other public and preamble, the Centers for Medicare & State agency must: private payers, by provider type and site (i) Develop its access monitoring Medicaid Services amends 42 CFR of service. review plan by July 1 of the first review chapter IV as set forth below: (2) Access monitoring review plan year, and update this plan by July 1 of beneficiary and provider input. The PART 447—PAYMENTS FOR each subsequent review period; access monitoring review plan must SERVICES (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 including information obtained through Authority: Sec. 1102 of the Social Security separate analysis for each provider type public rate-setting processes, the Act (42 U.S.C. 1302). and site of service furnishing the type of medical care advisory committees ■ 2. Section 447.203 is amended by service at least once every 3 years: established under § 431.12 of this (A) Primary care services (including revising the section heading and chapter, the processes described in those provided by a physician, FQHC, paragraph (b) to read as follows: 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 (4) Access monitoring review plan access monitoring analysis that beneficiary input consistent with standards and methodologies. The includes: Data sources, methodologies, paragraph (b)(7) of this section; and access monitoring review plan and (H) Additional types of services baselines, assumptions, trends and analysis must, at a minimum, include: selected by the state. factors, and thresholds that analyze and The specific measures that the state uses (6) Special provisions for proposed inform determinations of the sufficiency to analyze access to care (such as, but provider rate reductions or of access to care which may vary by not limited to: Time and distance restructuring— (i) Compliance with geographic location within the state and standards, providers participating in the access requirements. The State shall will be used to inform state policies Medicaid program, providers with open submit with any State plan amendment affecting access to Medicaid services panels, providers accepting new that proposes to reduce provider such as provider payment rates, as well Medicaid beneficiaries, service payment rates or restructure provider as the items specified in this section.

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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 setting payment rates. rate reduction or payment restructuring. ■ 3. Section 447.204 is revised to read The frequency of monitoring should be * * * * *

as follows: informed by the public review described (d) * * * § 447.204 Medicaid provider participation in paragraph (b) of this section and (2) * * * and public process to inform access to should be conducted no less frequently (iv) A Web site developed and care. than annually. maintained by the single State agency or (a) The agency’s payments must be (A) The procedures must provide for other responsible State agency that is consistent with efficiency, economy, a periodic review of state determined accessible to the general public, and quality of care and sufficient to and clearly defined measures, baseline provided that the Web site: enlist enough providers so that services data, and thresholds that will serve to (A) Is clearly titled and can be easily under the plan are available to demonstrate continued sustained reached from a hyperlink included on beneficiaries at least to the extent that service access, consistent with Web sites that provide general those services are available to the efficiency, economy, and quality of care. information to beneficiaries and general population. In reviewing (B) The monitoring procedures must providers, and included on the State- payment sufficiency, states are required be in place for a period of at least 3 specific page on the Federal Medicaid to consider, prior to the submission of years after the effective date of the state Web site. any state plan amendment that proposes plan amendment that authorizes the (B) Is updated for bulletins on a to reduce or restructure Medicaid payment reductions or restructuring. regular and known basis (for example, (7) Mechanisms for ongoing service payment rates: the first day of each month), and the beneficiary and provider input. (i) States (1) The data collected, and the public notice is issued as part of the must have ongoing mechanisms for analysis performed, under § 447.203. regular update; (2) Input from beneficiaries, providers beneficiary and provider input on (C) Includes the actual date it was and other affected stakeholders on access to care (through hotlines, released to the public on the Web site; beneficiary access to the affected surveys, ombudsman, review of or services and the impact that the grievance and appeals data, or another proposed rate change will have, if any, (D) Complies with national standards equivalent mechanisms), consistent on continued service access. The state to ensure access to individuals with with the access requirements and public should maintain a record of the public disabilities; and process described in § 447.204.

(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; Acting Administrator, Centers for Medicare (2) An analysis of the effect of the will be made available to CMS upon & Medicaid Services. change in payment rates on access; and request. Dated: October 22. 2015. (8) Addressing access questions and (3) A specific analysis of the Sylvia M. Burwell, remediation of inadequate access to information and concerns expressed in care. When access deficiencies are input from affected stakeholders. Secretary, Department of Health and Human Services. identified, the state must, within 90 (c) CMS may disapprove a proposed days after discovery, submit a corrective state plan amendment affecting payment [FR Doc. 2015–27697 Filed 10–29–15; 11:15 am]

S E action plan with specific steps and rates if the state does not include in its L BILLING CODE 4120–01–P U R h t i w D O R P ^[1] N V T P V ^[5] K S D n o s a k s u a i l a b a VerDate Sep<11>2014 19:43 Oct 30, 2015 Jkt 238001 PO 00000 Frm 00038 Fmt 4701 Sfmt 9990 E:\FR\FM\02NOR3.SGM 02NOR3 s a

D CONFERENCE COMMITTEE REPORT 3 RD 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 HEAL TH 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 Long Description ** TOS* Procedure Code 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 ** 0-20 1 92521 $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 ** 0-20 1 92524 $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 ** 0-20 1 97002 $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 ** 0-20 1 97012 $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 ** 0-20 1 97018 $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 ** 0-20 1 97026 $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 Long Description ** TOS* Procedure Code 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 0-20 1 97039 ** $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 0-20 1 97113 ** $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 0-20 1 97760 ** $39.78 $39.78 $38.87 $38.87 0-20 1 97761 ** $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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 ** 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 ** 21-999 $117.22 $117.22 $113.18 $113.18 1 92523 ** 1 92524 0-20 $100.00 $100.00 $75.00 $75.00 ** 1 92524 21-999 $58.61 $58.61 $56.59 $56.59 ** 0-20 1 92526 $135.14 $135.14 $130.48 $130.48 ** 21-999 $115.46 $115.46 $111.48 $111.48 1 92526 ** 1 92610 0-20 $200.00 $200.00 $193.10 $193.10 ** 1 92610 21-999 $117.22 $117.22 $113.18 $113.18 ** 0-20 1 97001 $137.20 $137.20 $102.90 $102.90 ** 1 97001 21-999 $114.03 $114.03 $85.52 $85.52 AT ** 1 97001 0-20 $114.03 $114.03 $85.52 $85.52 AT ** 1 97001 21-999 $114.03 $114.03 $85.52 $85.52 c c **

97001 0-20 $114.03 $114.03 $85.52 $85.52 ** 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 AT ** 1 97002 0-20 $102.63 $102.63 $76.97 $76.97 AT ** 1 97002 21-999 $102.63 $102.63 $76.97 $76.97 c c ** 0-20 97002 $102.63 $102.63 $76.97 $76.97 ** 21-999 $102.63 $102.63 $76.97 $76.97

97002 ** 1 97003 0-20 $137.20 $137.20 $102.90 $102.90 ** 1 97003 21-999 $116.25 $116.25 $89.21 $89.21 ** AT 0-20 1 97003 $116.25 $116.25 $89.21 $89.21 AT ** 1 97003 21-999 $116.25 $116.25 $89.21 $89.21 c c **

97003 0-20 $116.25 $116.25 $89.21 $89.21 ** 97003 21-999 $116.25 $116.25 $89.21 $89.21 ** 0-20

1 97004 $123.48 $123.48 $92.61 $92.61 ** 1 97004 21-999 $104.63 $104.63 $78.47 $78.47 AT ** 1 97004 0-20 $104.63 $104.63 $78.47 $78.47 AT ** 1 97004 21-999 $104.63 $104.63 $78.47 $78.47 c c ** 0-20 $104.63 $104.63 $78.47 $78.47

97004 ** 97004 21-999 $104.63 $104.63 $78.47 $78.47 **

1 97012 21-999 $113.05 $113.05 $109.15 $109.15 ** AT 0-20 $113.05 $113.05 $109.15 $109.15 1 97012 AT ** 1 97012 21-999 $113.05 $113.05 $109.15 $109.15 AT GO ** 1 97012 0-20 $114.51 $114.51 $110.56 $110.56 ** AT GO 1 97012 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97012 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 AT GP ** 1 97012 21-999 $112.32 $112.32 $108.44 $108.44 ** 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 ** 1 97012 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97012 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c **

97012 0-20 $113.05 $113.05 $109.15 $109.15 ** 97012 21-999 $113.05 $113.05 $109.15 $109.15 GO ** 97012 0-20 $114.51 $114.51 $110.56 $110.56 ** GO 97012 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 0-20 $112.32 $112.32 $108.44 $108.44 97012

c GP ** 97012 21-999 $112.32 $112.32 $108.44 $108.44 ** 1 97014 21-999 $113.05 $113.05 $84.79 $84.79 ** AT 0-20 1 97014 $113.05 $113.05 $84.79 $84.79 ** AT 21-999 $113.05 $113.05 $84.79 $84.79 1 97014 AT GO ** 1 97014 0-20 $114.51 $114.51 $85.88 $85.88 ** AT GO 1 97014 21-999 $114.51 $114.51 $85.88 $85.88 ** AT GP 0-20 1 97014 $112.32 $112.32 $84.24 $84.24 AT GP ** 1 97014 21-999 $112.32 $112.32 $84.24 $84.24 GO ** 1 97014 0-20 $135.14 $135.14 $101.36 $101.36 ** GO 1 97014 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 1 97014 0-20 $135.14 $135.14 $101.36 $101.36 GP ** 1 97014 21-999 $112.32 $112.32 $84.24 $84.24 c c c c c c ** 0-20 97014 $113.05 $113.05 $84.79 $84.79

** 97014 21-999 $113.05 $113.05 $84.79 $84.79 GO ** 97014 0-20 $114.51 $114.51 $85.88 $85.88 GO ** 97014 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 97014 0-20 $112.32 $112.32 $84.24 $84.24 GP ** 21-999 $112.32 $112.32 $84.24 $84.24 97014 **

1 97016 21-999 $113.05 $113.05 $84.79 $84.79 ** AT 0-20 1 97016 $113.05 $113.05 $84.79 $84.79 ** AT 1 97016 21-999 $113.05 $113.05 $84.79 $84.79 AT GO ** 1 97016 0-20 $114.51 $114.51 $85.88 $85.88 AT GO ** 1 97016 21-999 $114.51 $114.51 $85.88 $85.88 AT GP ** 1 97016 0-20 $112.32 $112.32 $84.24 $84.24 GP ** AT 1 97016 21-999 $112.32 $112.32 $84.24 $84.24 GO ** 1 97016 0-20 $135.14 $135.14 $101.36 $101.36 GO ** 1 97016 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 1 97016 0-20 $135.14 $135.14 $101.36 $101.36 GP ** 21-999 $112.32 $112.32 $84.24 $84.24 1 97016 c **

97016 0-20 $113.05 $113.05 $84.79 $84.79 c c ** 97016 21-999 $113.05 $113.05 $84.79 $84.79 ** GO 0-20 $114.51 $114.51 $85.88 $85.88 97016

c c c GO ** 97016 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 97016 0-20 $112.32 $112.32 $84.24 $84.24 ** GP 97016 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 AT ** 1 97018 0-20 $113.05 $113.05 $91.08 $91.08 ** 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 ** 1 97018 21-999 $114.51 $114.51 $91.08 $91.08 ** AT GP 0-20 1 97018 $112.32 $112.32 $91.08 $91.08 AT GP ** 1 97018 21-999 $112.32 $112.32 $91.08 $91.08 GO ** 1 97018 0-20 $135.14 $135.14 $101.36 $101.36 GO ** 1 97018 21-999 $114.51 $114.51 $91.08 $91.08 ** GP 0-20 1 97018 $135.14 $135.14 $101.36 $101.36 GP ** 21-999 $112.32 $112.32 $91.08 $91.08 1 97018 c c c c c c **

97018 0-20 $113.05 $113.05 $91.08 $91.08 ** 97018 21-999 $113.05 $113.05 $91.08 $91.08 ** GO 0-20 97018 $114.51 $114.51 $91.08 $91.08 ** GO 21-999 $114.51 $114.51 $91.08 $91.08 97018 GP ** 97018 0-20 $112.32 $112.32 $91.08 $91.08 ** GP 97018 21-999 $112.32 $112.32 $91.08 $91.08

** 1 97022 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97022 0-20 $113.05 $113.05 $109.15 $109.15 AT ** 1 97022 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 1 97022 0-20 $114.51 $114.51 $110.56 $110.56 AT GO ** 1 97022 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97022 0-20 $112.32 $112.32 $108.44 $108.44 ** AT GP 1 97022 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20 1 97022 $135.14 $135.14 $130.48 $130.48 GO ** 1 97022 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97022 0-20 $135.14 $135.14 $130.48 $130.48 GP ** 1 97022 21-999 $112.32 $112.32 $108.44 $108.44 c c c c ** 0-20 $113.05 $113.05 $109.15 $109.15

97022 ** 97022 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 97022 $114.51 $114.51 $110.56 $110.56 ** GO 97022 21-999 $114.51 $114.51 $110.56 $110.56

c c GP ** 97022 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 97022 21-999 $112.32 $112.32 $108.44 $108.44 **

1 97024 21-999 $113.05 $113.05 $84.79 $84.79 ** AT 0-20 1 97024 $113.05 $113.05 $84.79 $84.79 AT ** 1 97024 21-999 $113.05 $113.05 $84.79 $84.79 AT GO ** 1 97024 0-20 $114.51 $114.51 $85.88 $85.88 AT GO ** 1 97024 21-999 $114.51 $114.51 $85.88 $85.88 GP ** AT 0-20 $112.32 $112.32 $84.24 $84.24 1 97024 AT GP ** 1 97024 21-999 $112.32 $112.32 $84.24 $84.24 GO ** 1 97024 0-20 $135.14 $135.14 $101.36 $101.36 ** GO 21-999 $114.51 $114.51 $85.88 $85.88 1 97024 GP ** 1 97024 0-20 $135.14 $135.14 $101.36 $101.36 GP ** 1 97024 21-999 $112.32 $112.32 $84.24 $84.24 c ** 0-20 97024 $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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 c c c c GO **

97024 0-20 $114.51 $114.51 $85.88 $85.88 ** GO 21-999 $114.51 $114.51 $85.88 $85.88 97024 GP ** 0-20 $112.32 $112.32 $84.24 $84.24 97024 GP ** 97024 21-999 $112.32 $112.32 $84.24 $84.24

** 1 97026 21-999 $113.05 $113.05 $84.79 $84.79 AT ** 1 97026 0-20 $113.05 $113.05 $84.79 $84.79 AT ** 1 97026 21-999 $113.05 $113.05 $84.79 $84.79 AT GO ** 1 97026 0-20 $114.51 $114.51 $85.88 $85.88 ** AT GO 1 97026 21-999 $114.51 $114.51 $85.88 $85.88 GP ** AT 0-20 $112.32 $112.32 $84.24 $84.24 1 97026 AT GP ** 1 97026 21-999 $112.32 $112.32 $84.24 $84.24 GO ** 1 97026 0-20 $135.14 $135.14 $101.36 $101.36 ** GO 1 97026 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 0-20 $135.14 $135.14 $101.36 $101.36 1 97026 GP ** 1 97026 21-999 $112.32 $112.32 $84.24 $84.24 c c c c c c ** 0-20 97026 $113.05 $113.05 $84.79 $84.79

** 97026 21-999 $113.05 $113.05 $84.79 $84.79 GO ** 97026 0-20 $114.51 $114.51 $85.88 $85.88 GO ** 97026 21-999 $114.51 $114.51 $85.88 $85.88 ** GP 97026 0-20 $112.32 $112.32 $84.24 $84.24 GP ** 97026 21-999 $112.32 $112.32 $84.24 $84.24 **

1 97028 21-999 $113.05 $113.05 $109.15 $109.15 ** AT 0-20 1 97028 $113.05 $113.05 $109.15 $109.15 ** AT 1 97028 21-999 $113.05 $113.05 $109.15 $109.15 AT GO ** 1 97028 0-20 $114.51 $114.51 $110.56 $110.56 AT GO ** 1 97028 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97028 0-20 $112.32 $112.32 $108.44 $108.44 GP ** AT 21-999 $112.32 $112.32 $108.44 $108.44 1 97028 GO ** 1 97028 0-20 $135.14 $135.14 $130.48 $130.48 ** GO 1 97028 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 0-20 1 97028 $135.14 $135.14 $130.48 $130.48 GP ** 1 97028 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c **

97028 0-20 $113.05 $113.05 $109.15 $109.15 ** 97028 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 97028 $114.51 $114.51 $110.56 $110.56 GO ** 97028 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 97028 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 97028 21-999 $112.32 $112.32 $108.44 $108.44 ** 21-999 $113.05 $113.05 $109.15 $109.15

1 97032 AT ** 1 97032 0-20 $113.05 $113.05 $109.15 $109.15 AT ** 1 97032 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 $114.51 $114.51 $110.56 $110.56 1 97032 AT GO ** 1 97032 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97032 0-20 $112.32 $112.32 $108.44 $108.44 ** AT GP 1 97032 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97032 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 GO ** 1 97032 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 0-20 $135.14 $135.14 $130.48 $130.48 1 97032 GP ** 21-999 $112.32 $112.32 $108.44 $108.44 1 97032 c c c c c c **

97032 0-20 $113.05 $113.05 $109.15 $109.15 ** 97032 21-999 $113.05 $113.05 $109.15 $109.15 ** 97032 GO 0-20 $114.51 $114.51 $110.56 $110.56 GO ** 97032 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 97032 0-20 $112.32 $112.32 $108.44 $108.44 ** GP 97032 21-999 $112.32 $112.32 $108.44 $108.44 ** 21-999 $113.05 $113.05 $109.15 $109.15

1 97033 AT ** 1 97033 0-20 $113.05 $113.05 $109.15 $109.15 AT ** 1 97033 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 1 97033 $114.51 $114.51 $110.56 $110.56 ** AT GO 21-999 $114.51 $114.51 $110.56 $110.56 1 97033 AT GP ** 1 97033 0-20 $112.32 $112.32 $108.44 $108.44 ** AT GP 1 97033 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20 1 97033 $135.14 $135.14 $130.48 $130.48 GO ** 1 97033 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97033 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97033 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c **

97033 0-20 $113.05 $113.05 $109.15 $109.15 ** 97033 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 97033 $114.51 $114.51 $110.56 $110.56 ** GO 97033 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 97033 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 97033 21-999 $112.32 $112.32 $108.44 $108.44 GO **

1 97034 0-20 $135.14 $135.14 $130.48 $130.48 ** GO 21-999 $114.51 $114.51 $110.56 $110.56 1 97034 GP ** 1 97034 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97034 21-999 $112.32 $112.32 $108.44 $108.44

** 1 97035 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97035 0-20 $113.05 $113.05 $109.15 $109.15 AT ** 1 97035 21-999 $113.05 $113.05 $109.15 $109.15 AT GO ** 1 97035 0-20 $114.51 $114.51 $110.56 $110.56 ** AT GO 1 97035 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97035 0-20 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97035 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97035 0-20 $135.14 $135.14 $130.48 $130.48 ** GO 21-999 $114.51 $114.51 $110.56 $110.56 1 97035 GP ** 1 97035 0-20 $135.14 $135.14 $130.48 $130.48 GP ** 1 97035 21-999 $112.32 $112.32 $108.44 $108.44 c ** 0-20 $113.05 $113.05 $109.15 $109.15

97035 c c c ** 97035 21-999 $113.05 $113.05 $109.15 $109.15 GO ** 97035 0-20 $114.51 $114.51 $110.56 $110.56 ** GO 97035 21-999 $114.51 $114.51 $110.56 $110.56

c GP ** 97035 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 c GP **

97035 21-999 $112.32 $112.32 $108.44 $108.44 ** 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 ** 1 97036 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97036 21-999 $112.32 $112.32 $108.44 $108.44 ** 1 97039 21-999 $112.32 $112.32 $90.00 $90.00 AT ** 1 97039 0-20 $112.32 $112.32 $90.00 $90.00 AT ** 1 97039 21-999 $112.32 $112.32 $90.00 $90.00 ** GO 0-20 1 97039 $135.14 $135.14 $101.36 $101.36 GP ** 0-20 $135.14 $135.14 $101.36 $101.36 1 97039 c c **

97039 0-20 $112.32 $112.32 $90.00 $90.00 ** 97039 21-999 $112.32 $112.32 $90.00 $90.00

** 1 97110 21-999 $113.05 $113.05 $109.15 $109.15 ** AT 0-20 $113.05 $113.05 $109.15 $109.15 1 97110 AT ** 1 97110 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 1 97110 $114.51 $114.51 $110.56 $110.56 ** AT GO 1 97110 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97110 0-20 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97110 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 1 97110 0-20 $135.14 $135.14 $130.48 $130.48 GO ** 1 97110 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97110 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97110 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c ** 0-20

97110 $113.05 $113.05 $109.15 $109.15 ** 97110 21-999 $113.05 $113.05 $109.15 $109.15 GO ** 97110 0-20 $114.51 $114.51 $110.56 $110.56 GO ** 97110 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 0-20 $112.32 $112.32 $108.44 $108.44 97110 GP ** 97110 21-999 $112.32 $112.32 $108.44 $108.44

** 1 97112 21-999 $113.05 $113.05 $109.15 $109.15 ** AT 0-20 1 97112 $113.05 $113.05 $109.15 $109.15 AT ** 1 97112 21-999 $113.05 $113.05 $109.15 $109.15 AT GO ** 1 97112 0-20 $114.51 $114.51 $110.56 $110.56 AT GO ** 1 97112 21-999 $114.51 $114.51 $110.56 $110.56 GP ** AT 0-20 1 97112 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97112 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97112 0-20 $135.14 $135.14 $130.48 $130.48 GO ** 1 97112 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 0-20 $135.14 $135.14 $130.48 $130.48 1 97112 GP ** 1 97112 21-999 $112.32 $112.32 $108.44 $108.44 c c **

97112 0-20 $113.05 $113.05 $109.15 $109.15 ** 21-999 $113.05 $113.05 $109.15 $109.15 97112

c c c GO ** 97112 0-20 $114.51 $114.51 $110.56 $110.56 GO ** 97112 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 0-20 97112 $112.32 $112.32 $108.44 $108.44

c GP ** 97112 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 ** 1 97116 21-999 $113.05 $113.05 $109.15 $109.15 ** 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 ** 1 97116 0-20 $114.51 $114.51 $110.56 $110.56 ** AT GO 1 97116 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97116 0-20 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97116 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97116 0-20 $135.14 $135.14 $120.30 $120.30 ** GO 1 97116 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 0-20 $135.14 $135.14 $120.30 $120.30 1 97116 GP ** 1 97116 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c **

97116 0-20 $113.05 $113.05 $109.15 $109.15 ** 97116 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 $114.51 $114.51 $110.56 $110.56 97116 GO ** 97116 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 0-20 97116 $112.32 $112.32 $108.44 $108.44 ** GP 97116 21-999 $112.32 $112.32 $108.44 $108.44 **

1 97124 21-999 $113.05 $113.05 $84.79 $84.79 AT ** 1 97124 0-20 $113.05 $113.05 $84.79 $84.79 ** AT 1 97124 21-999 $113.05 $113.05 $84.79 $84.79 AT GO ** 1 97124 0-20 $114.51 $114.51 $85.88 $85.88 AT GO ** 1 97124 21-999 $114.51 $114.51 $85.88 $85.88 ** AT GP 0-20 1 97124 $112.32 $112.32 $84.24 $84.24 GP ** AT 1 97124 21-999 $112.32 $112.32 $84.24 $84.24 GO ** 1 97124 0-20 $135.14 $135.14 $101.36 $101.36 GO ** 1 97124 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 1 97124 0-20 $135.14 $135.14 $101.36 $101.36 GP ** 21-999 $112.32 $112.32 $84.24 $84.24 1 97124 c c c **

97124 0-20 $113.05 $113.05 $84.79 $84.79 ** 97124 21-999 $113.05 $113.05 $84.79 $84.79 ** GO 0-20 97124 $114.51 $114.51 $85.88 $85.88

c c c GO ** 97124 21-999 $114.51 $114.51 $85.88 $85.88 GP ** 97124 0-20 $112.32 $112.32 $84.24 $84.24 GP ** 97124 21-999 $112.32 $112.32 $84.24 $84.24

** 1 97139 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97139 0-20 $113.05 $113.05 $109.15 $109.15 AT ** 1 97139 21-999 $113.05 $113.05 $109.15 $109.15 AT GO ** 1 97139 0-20 $114.51 $114.51 $110.56 $110.56 ** AT GO 21-999 $114.51 $114.51 $110.56 $110.56 1 97139 AT GP ** 1 97139 0-20 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97139 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20 $135.14 $135.14 $130.48 $130.48 1 97139 GO ** 1 97139 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97139 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97139 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 c c c c c **

97139 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 $114.51 $114.51 $110.56 $110.56 97139 ** GO 21-999 $114.51 $114.51 $110.56 $110.56 97139 GP ** 97139 0-20 $112.32 $112.32 $108.44 $108.44 ** GP 97139 21-999 $112.32 $112.32 $108.44 $108.44 **

1 97140 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97140 0-20 $113.05 $113.05 $109.15 $109.15 AT ** 1 97140 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 1 97140 $114.51 $114.51 $110.56 $110.56 ** AT GO 21-999 $114.51 $114.51 $110.56 $110.56 1 97140 AT GP ** 1 97140 0-20 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97140 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20 1 97140 $135.14 $135.14 $123.36 $123.36 ** GO 21-999 $114.51 $114.51 $110.56 $110.56 1 97140 GP ** 1 97140 0-20 $135.14 $135.14 $123.36 $123.36 ** GP 1 97140 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c ** 0-20 97140 $113.05 $113.05 $109.15 $109.15 **

97140 21-999 $113.05 $113.05 $109.15 $109.15 GO ** 97140 0-20 $114.51 $114.51 $110.56 $110.56 ** GO 97140 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 97140 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 97140 21-999 $112.32 $112.32 $108.44 $108.44

** 1 97150 21-999 $113.05 $113.05 $109.15 $109.15 ** AT 0-20 1 97150 $113.05 $113.05 $109.15 $109.15 AT ** 1 97150 21-999 $113.05 $113.05 $109.15 $109.15 AT GO ** 1 97150 0-20 $114.51 $114.51 $110.56 $110.56 AT GO ** 1 97150 21-999 $114.51 $114.51 $110.56 $110.56 GP ** AT 0-20 $112.32 $112.32 $108.44 $108.44 1 97150 AT GP ** 1 97150 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20 1 97150 $67.57 $67.57 $65.24 $65.24 ** GO 1 97150 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97150 0-20 $67.57 $67.57 $65.24 $65.24 GP ** 1 97150 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c **

97150 0-20 $113.05 $113.05 $109.15 $109.15 ** 97150 21-999 $113.05 $113.05 $109.15 $109.15 GO ** 97150 0-20 $114.51 $114.51 $110.56 $110.56 GO ** 97150 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 97150 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 21-999 $112.32 $112.32 $108.44 $108.44 97150 **

1 97530 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97530 0-20 $113.05 $113.05 $109.15 $109.15 ** AT 21-999 $113.05 $113.05 $109.15 $109.15 1 97530 AT GO ** 1 97530 0-20 $114.51 $114.51 $110.56 $110.56 AT GO ** 1 97530 21-999 $114.51 $114.51 $110.56 $110.56 ** AT GP 0-20 1 97530 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97530 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 GO ** 1 97530 0-20 $135.14 $135.14 $130.48 $130.48 ** 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 ** 1 97530 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c ** 0-20 97530 $113.05 $113.05 $109.15 $109.15 **

97530 21-999 $113.05 $113.05 $109.15 $109.15 GO ** 97530 0-20 $114.51 $114.51 $110.56 $110.56 GO ** 97530 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 0-20 97530 $112.32 $112.32 $108.44 $108.44 GP ** 21-999 $112.32 $112.32 $108.44 $108.44 97530 **

1 97535 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97535 0-20 $113.05 $113.05 $109.15 $109.15 ** AT 1 97535 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 $114.51 $114.51 $110.56 $110.56 1 97535 AT GO ** 1 97535 21-999 $114.51 $114.51 $110.56 $110.56 ** AT GP 0-20 1 97535 $112.32 $112.32 $108.44 $108.44 ** AT GP 1 97535 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97535 0-20 $135.14 $135.14 $130.48 $130.48 GO ** 1 97535 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 1 97535 0-20 $135.14 $135.14 $130.48 $130.48 GP ** 1 97535 21-999 $112.32 $112.32 $108.44 $108.44 c c c c c c **

97535 0-20 $113.05 $113.05 $109.15 $109.15 ** 97535 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 97535 $114.51 $114.51 $110.56 $110.56 GO ** 97535 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 97535 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 97535 21-999 $112.32 $112.32 $108.44 $108.44 ** 21-999 $113.05 $113.05 $109.15 $109.15

1 97537 AT ** 1 97537 0-20 $113.05 $113.05 $109.15 $109.15 ** AT 1 97537 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 1 97537 $114.51 $114.51 $110.56 $110.56 AT GO ** 1 97537 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 97537 0-20 $112.32 $112.32 $108.44 $108.44 AT GP ** 1 97537 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20 1 97537 $135.14 $135.14 $130.48 $130.48 GO ** 1 97537 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97537 0-20 $135.14 $135.14 $130.48 $130.48 GP ** 1 97537 21-999 $112.32 $112.32 $108.44 $108.44 c c ** 0-20 $113.05 $113.05 $109.15 $109.15

97537 ** 97537 21-999 $113.05 $113.05 $109.15 $109.15

c c GO ** 97537 0-20 $114.51 $114.51 $110.56 $110.56 ** GO 21-999 $114.51 $114.51 $110.56 $110.56 97537

c c GP ** 97537 0-20 $112.32 $112.32 $108.44 $108.44 GP ** 97537 21-999 $112.32 $112.32 $108.44 $108.44

** 1 97542 21-999 $113.05 $113.05 $109.15 $109.15 AT ** 1 97542 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee Code * 1 2 AT ** 1 97542 21-999 $113.05 $113.05 $109.15 $109.15 ** 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 ** 1 97542 0-20 $112.32 $112.32 $108.44 $108.44 ** AT GP 1 97542 21-999 $112.32 $112.32 $108.44 $108.44 ** 1 97542 GO 0-20 $135.14 $135.14 $130.48 $130.48 GO ** 1 97542 21-999 $114.51 $114.51 $110.56 $110.56 GO ** 1 97542 21-999 $114.51 $114.51 $110.56 $110.56 ** GP 0-20 1 97542 $135.14 $135.14 $130.48 $130.48 GP ** 21-999 $112.32 $112.32 $108.44 $108.44 1 97542 c c c c c c **

97542 0-20 $113.05 $113.05 $109.15 $109.15 ** 97542 21-999 $113.05 $113.05 $109.15 $109.15 ** GO 0-20 97542 $114.51 $114.51 $110.56 $110.56 ** GO 21-999 $114.51 $114.51 $110.56 $110.56 97542 GP ** 97542 0-20 $112.32 $112.32 $108.44 $108.44 ** GP 97542 21-999 $112.32 $112.32 $108.44 $108.44 ** GO 0-20

1 97750 $135.14 $135.14 $130.48 $130.48 GO ** 1 97750 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 97750 0-20 $135.14 $135.14 $130.48 $130.48 ** GP 1 97750 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97760 0-20 $135.14 $135.14 $130.48 $130.48 GP ** 1 97760 0-20 $135.14 $135.14 $130.48 $130.48 ** GO 0-20 1 97761 $135.14 $135.14 $130.48 $130.48 GP ** 0-20 1 97761 $135.14 $135.14 $130.48 $130.48 GO ** 1 97762 0-20 $135.14 $135.14 $130.48 $130.48 GP ** 1 97762 0-20 $135.14 $135.14 $130.48 $130.48 ** 1 97799 21-999 $113.05 $113.05 $109.15 $109.15 ** AT 0-20 $113.05 $113.05 $109.15 $109.15 1 97799 AT ** 1 97799 21-999 $113.05 $113.05 $109.15 $109.15 ** AT GO 0-20 1 97799 $114.51 $114.51 $110.56 $110.56 ** AT GO 1 97799 21-999 $114.51 $114.51 $110.56 $110.56 AT GP ** 1 0-20 $112.32 $112.32 $108.44 $108.44 97799 AT GP ** 1 97799 21-999 $112.32 $112.32 $108.44 $108.44 GO ** 1 97799 0-20 $135.14 $135.14 $130.48 $130.48 ** GO 1 97799 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 1 0-20 $135.14 $135.14 $130.48 $130.48 97799 GP ** 1 97799 21-999 $112.32 $112.32 $108.44 $108.44 c c c **

97799 0-20 $113.05 $113.05 $109.15 $109.15 ** 21-999 $113.05 $113.05 $109.15 $109.15 97799 GO ** 97799 0-20 $114.51 $114.51 $110.56 $110.56

c c GO ** 97799 21-999 $114.51 $114.51 $110.56 $110.56 GP ** 0-20 $112.32 $112.32 $108.44 $108.44 97799

c GP ** 97799 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 Long Description ** Range Medicaid Fee Medicaid Fee Medicaid Fee Medicaid Fee 1 2 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- evaluation 21-999 $105.50 $105.50 $101.86 $101.86 1 S9152 *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 Long Description ** * Code 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 ** 21-999 P2 $33.79 $33.79 $28.67 $28.67 1 92507 ** 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 ** 0-20 P2 $120.00 $120.00 $90.00 $90.00 1 92521 ** 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 ** 21-999 P2 $150.00 $150.00 $112.50 $112.50 1 92522 ** 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 ** 0-20 1 92524 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 ** 0-20 1 97002 $117.18 $117.18 $87.89 $87.89 ** 0-20 P2 $123.48 $123.48 $92.61 $92.61 1 97002 ** 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 ** 0-20 1 97003 P2 $137.20 $137.20 $102.90 $102.90

** 1 97003 21-999 $130.20 $130.20 $97.65 $97.65 ** 21-999 P2 $137.20 $137.20 $102.90 $102.90 1 97003 ** 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 Long Description ** * Code 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 ** 0-20 1 97012 $31.25 $31.25 $30.17 $30.17 ** 0-20 P2 $33.79 $33.79 $32.62 $32.62 1 97012 ** 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 ** 21-999 P2 $33.79 $33.79 $25.34 $25.34 1 97014 ** 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 ** 0-20 1 97018 $31.25 $31.25 $23.44 $23.44 ** 0-20 P2 $33.79 $33.79 $25.34 $25.34 1 97018 ** 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 ** 21-999 P2 $33.79 $33.79 $32.62 $32.62 1 97022 ** 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 ** 0-20 1 97026 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 ** 0-20 1 97032 $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 ** 0-20 1 97033 P2 $33.79 $33.79 $32.62 $32.62

** 1 97033 21-999 $31.25 $31.25 $30.17 $30.17 ** 21-999 P2 $33.79 $33.79 $32.62 $32.62 1 97033 ** 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 Long Description ** * Code 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 ** 0-20 1 97035 $31.25 $31.25 $30.17 $30.17 ** 0-20 P2 $33.79 $33.79 $32.62 $32.62 1 97035 ** 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 ** 21-999 P2 $33.79 $33.79 $32.62 $32.62 1 97036 ** 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 ** 0-20 1 97110 $31.25 $31.25 $30.17 $30.17 ** 0-20 P2 $33.79 $33.79 $32.62 $32.62 1 97110 ** 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 ** 21-999 P2 $33.79 $33.79 $32.62 $32.62 1 97112 ** 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 ** 0-20 1 97116 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 ** 0-20 1 97139 $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 ** 0-20 1 97140 P2 $33.79 $33.79 $30.84 $30.84

** 1 97140 21-999 $31.25 $31.25 $30.84 $30.84 ** 21-999 P2 $33.79 $33.79 $30.84 $30.84 1 97140 ** 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 Long Description ** * Code 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 ** 0-20 1 97530 $31.25 $31.25 $30.17 $30.17 ** 0-20 P2 $33.79 $33.79 $32.62 $32.62 1 97530 ** 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 ** 0-20 1 97537 $31.25 $31.25 $30.17 $30.17 ** 0-20 P2 $33.79 $33.79 $32.62 $32.62 1 97537 ** 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 ** 21-999 P2 $33.79 $33.79 $32.62 $32.62 1 97750 ** 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 ** 0-20 P2 $42.97 $42.97 $35.09 $35.09 1 97762 ** 1 0-20 $31.25 $31.25 $30.17 $30.17 97799 ** 1 0-20 P2 $33.79 $33.79 $32.62 $32.62 97799 ** 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 rather than restoration 0-999 $31.25 $31.25 $30.17 $30.17 1 S8990 Physical or manipulative therapy performed for maintenance 1 S8990 rather than restoration 0-999 P2 $33.79 $33.79 $32.62 $32.62 0-20 1 S9152 Speech therapy, re-evaluation $180.00 $180.00 $173.79 $173.79 Speech therapy, re-evaluation 0-20 P2 $180.00 $180.00 $173.79 $173.79 1 S9152 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 Long Description ** * Code 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

D-1-GN-15-003263 CAUSE NO. 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, 9 344 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

10 345 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. Request for Temporary and Permanent Injunctive Relief B.

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.

3 7. 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

14 349

CERTIFICATE OF SERVICE

I hereby certify that the foregoing document has been delivered to the following counsel ofrecords on this, the 8 ^[1] h 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 T EXAS A DMINISTRATIVE C ODE § 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).

Case Details

Case Name: Chris Traylor, as Executive Commissioner of the Texas Health and Human Services Commission And the Texas Health and Human Services Commission v. Diana D., as Next Friend of KD, a Child Karen G., as Next Friend of TG and ZM, Children Guadalupe P., as Next Friend of LP, a Child Sally L., as Next Friend of CH, a Child Dena D., as Next Friend of BD, a Child OCI Acquisition, LLC

Court Name: Court of Appeals of Texas

Date Published: Nov 12, 2015

Docket Number: 03-15-00657-CV

Court Abbreviation: Tex. App.