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May 2009

CMS Moves to Rescind Three Medicaid Regulations

Citing potential detrimental affects on states and beneficiaries, the Centers for Medicare and Medicaid Services (CMS) proposed a rule rescinding three Medicaid regulations in the May 6 Federal Register.   The regulations in question involve reimbursement for school based administrative and transportation services, Medicaid’s definition of outpatient care, and funding for targeted case management. The first two regulations have not yet come into affect though certain provisions of the case management regulation have been implemented. The regulations, had they been let stand, would have had the following effects:

  • Reimbursement for School Based Health Services: This regulation would have eliminated federal Medicaid matching funds for expenditures related to transportation between home and school for children who receive Medicaid services at school. Specifically, the regulation would have cut off federal matching funds for administrative activities performed by school employees or contractors and would have stopped federal funding of transportation services between home and school for Medicaid eligible children in an Individualized Education Program (IEP) or an Individualized Family Services Plan (IFSP) under the Individuals with Disabilities Act (IDEA).
  • Definition of Outpatient Services:  This regulation would have restricted what Medicaid can reimburse under the outpatient hospital benefit to include only those services reimbursable by Medicare.  This would have stopped reimbursement to hospitals for a number of services including vaccinations, school-based services, and rehabilitation services. According to the National Association of State Medicaid Directors (NASMD), this rule would place constraints on states ability to move services from costly inpatient settings to more outpatient settings.[1]
  • Targeted Case Management: This regulation would have narrowed the definition of individuals who are eligible for Medicaid case management services and would have affected the ability of some beneficiaries to access these services along with other medical, social, and educational services.  It would also have eliminated federal funding for some services, placed limits on others, and required states to change their billing and reimbursement services, thus limiting states ability to provide effective delivery of these vital services.

CMS has stated it will seek to rescind the first two regulations in full, while rescinding certain provisions of the case management regulation that affect beneficiary access to needed case management services The other provisions of the regulation could still be implemented in the future. However, under the American Recovery and Reinvestment Act, all three regulations are subject to Congressional moratoria until June 30, 2009.

CMS is requesting comments on the proposed rule which are due by June 1st.

To read the full text of the proposed rule, click here.