Notice of Hearing: Reconsideration of Disapproval of Vermont State Plan Amendment (SPA) 03-015a

AGENCY:

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

ACTION:

Notice of hearing.

SUMMARY:

This notice announces an administrative hearing to be held on August 25, 2004, at 10 a.m., JFK Federal Building, Room 2325, Boston, Massachusetts 02203-0003, to reconsider our decision to disapprove Vermont State Plan Amendment (SPA) 03-015a.

DATES:

Requests to participate in the hearing as a party must be received by the presiding officer by August 18, 2004.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes, Presiding Officer, CMS, Lord Baltimore Drive, Mail Stop LB-23-20, Baltimore, Maryland 21244. Telephone: (410) 786-2055.

SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider our decision to disapprove Vermont State Plan Amendment (SPA) 03-015a, which Vermont submitted to the Centers for Medicare & Medicaid Services (CMS) on September 30, 2003. In SPA 03-15a, Vermont proposes to establish State-only Medicaid supplemental rebate agreements under which pharmaceutical manufacturers would pay supplemental rebates to the State based on Medicaid utilization in the State, for the period from October 1, 2002, through June 30, 2003. The level of the supplemental rebates would also be based on a “multi-state pooling” arrangement to take into account aggregate utilization levels among several participating states. The Centers for Medicare & Medicaid Services (CMS) reviewed this proposal and determined it was unable to approve SPA 03-015a for the reasons set forth below.

At issue is whether the requested effective date of October 1, 2002, is consistent with statutory and regulatory requirements. States receiving Federal Medicaid funding must have approved state plans that describe the nature and scope of the state Medicaid program and must fulfill the requirements for approval set forth in section 1902(a) of the Social Security Act (the Act) and pertinent regulations as set forth in 42 CFR 430.15(a). Federal regulations at 42 CFR 430.20(b) provide that the rules of 42 CFR 447.256 apply with respect to the effective date of a plan amendment that changes the state's payment methods and standards. Federal regulations at 42 CFR 447.256 provide that the effective date of such amendments may not be earlier than the first day of the calendar quarter in which an approvable plan is submitted.

CMS concluded that the change proposed by Vermont amounted to a change in the State's payment methods and standards, and that the earliest approvable effective date would be the first day of the calendar quarter in which the SPA was submitted, or July 1, 2003. In a separate action, CMS approved SPA 03-15b, which authorized State-only Medicaid supplemental rebate agreements and participation in a multi-state pooling arrangement effective July 1, 2003.

In addition, section 1902(a)(19) of the Act requires that care and services under the plan be provided in a manner consistent with simplicity of administration and the best interests of recipients. CMS was concerned that approval of a retroactive effective date could, in some circumstances, adversely impact beneficiary access and would be inconsistent with these provisions.

Based on the above, and after consultation with the Secretary of the Department of Health and Human Services as required under Federal regulations at 42 CFR 430.15(c)(2), CMS disapproved Vermont SPA 03-015a.

Section 1116 of the Act and 42 CFR part 430 establish Departmental procedures that provide an administrative hearing for reconsideration of a disapproval of a state plan or plan amendment. CMS is required to publish a copy of the notice to a state Medicaid agency that informs the agency of the time and place of the hearing and the issues to be considered. If we subsequently notify the agency of additional issues that will be considered at the hearing, we will also publish that notice.

Any individual or group that wants to participate in the hearing as a party must petition the presiding officer within 15 days after publication of this notice, in accordance with the requirements contained at 42 CFR 430.76(b)(2). Any interested person or organization that wants to participate as amicus curiae must petition the presiding officer before the hearing begins in accordance with the requirements contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the presiding officer will notify all participants.

The notice to Vermont announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:

Mr. Charles P. Smith, Secretary, Vermont Agency of Human Services 103 South Main Street, Waterbury, VT 05671-0204.

Dear Mr. Smith: I am responding to your request for reconsideration of the decision to disapprove Vermont State Plan Amendment (SPA) 03-015a, which Vermont submitted on September 30, 2003. In SPA 03-15a, Vermont proposes to establish State-only Medicaid supplemental rebate agreements under which pharmaceutical manufacturers would pay supplemental rebates to the State based on Medicaid utilization in the State, for the period from October 1, 2002, through June 30, 2003. The level of the supplemental rebates would also be based on a “multi-state pooling” arrangement to take into account aggregate utilization levels among several participating states. The Centers for Medicare & Medicaid Services (CMS) reviewed this proposal and was unable to approve SPA 03-015a for the reasons set forth below.

At issue is whether the requested effective date of October 1, 2002, is consistent with statutory and regulatory requirements. States receiving Federal Medicaid funding must have approved state plans that describe the nature and scope of the state Medicaid program and must fulfill the requirements for approval as set forth in section 1902(a) of the Social Security Act (the Act) and pertinent regulations as set forth in 42 CFR 430.15(a). Federal regulations at 42 CFR 430.20(b) provide that the rules of 42 CFR 447.256 apply with respect to the effective date of a plan amendment that changes the state's payment methods and standards. Federal regulations at 42 CFR 447.256 provide that the effective date of such amendments may not be earlier than the first day of the calendar quarter in which an approvable plan is submitted.

CMS concluded that the change proposed by Vermont amounted to a change in the State's payment methods and standards, and that the earliest approvable effective date would be the first day of the calendar quarter in which the SPA was submitted, or July 1, 2003. In a separate action, CMS approved SPA 03-15b, which authorized State-only Medicaid supplemental rebate agreements and participation in a multi-state pooling arrangement effective July 1, 2003.

In addition, section 1902(a)(19) of the Act requires that care and services under the plan be provided in a manner consistent with simplicity of administration and the best interests of recipients. CMS was concerned that approval of a retroactive effective date could, in some circumstances, adversely impact beneficiary access and would be inconsistent with these provisions.

Based on the above, and after consultation with the Secretary of the Department of Health and Human Services as required under Federal regulations at 42 CFR 430.15(c)(2), CMS disapproved Vermont SPA 03-015a.

I am scheduling a hearing to be held on August 25, 2004, at 10:00 a.m., JFK Federal Building, Room 2325, Boston, Massachusetts 02203-0003, to reconsider our decision to disapprove Vermont SPA 03-015a.

If this date is not acceptable, we would be glad to set another date that is mutually agreeable to the parties. The hearing will be governed by the procedures prescribed at 42 CFR Part 430.

I am designating Ms. Kathleen Scully-Hayes as the presiding officer. If these arrangements present any problems, please contact the presiding officer. In order to facilitate any communication that may be necessary between the parties to the hearing, please notify the presiding officer to indicate acceptability of the hearing date that has been scheduled and provide names of the individuals who will represent the State at the hearing. The presiding officer may be reached at (410) 786-2055.

Sincerely,

Mark B. McClellan, M.D., Ph.D.

Section 1116 of the Social Security Act (42 U.S.C. section 1316); 42 CFR Section 430.18.

(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid Assistance Program.)