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March 2012 St@teside

CMS Publishes Final Rule on Procedures for Processing Medicaid Demonstration Applications

On February 22, 2012, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that seeks to promote more public input and transparency in the Medicaid and Children’s Health Insurance Program (CHIP) demonstration application process.  The rule is supported by the Affordable Care Act and becomes effective April 27, 2012.

Section 1115 demonstration projects allow states to expand coverage to new groups of people, modify the delivery system, or change the benefit package design. Under the Medicaid statute, they are approved initially for a period of five years and extended for a period of up to three years.  The final rule affects both applications for new demonstration projects and extensions of existing projects.

The rule outlines new requirements for both states and CMS that would promote transparency and increase public input at both the state and federal level.

State Requirements

To promote public input at the state level, states will have to provide a 30-day public notice and comment period prior to the state submitting its application to CMS. The notice must be published on the state’s Medicaid agency’s website as well as in newspapers with the widest circulation or the state’s administrative record.

The notice should include:

  • A comprehensive description of the demonstration application or extension;
  • The program goals and objectives and a description of individuals who will be impacted;
  • The proposed health care delivery system and eligibility requirements, benefit coverage, and cost sharing for people enrolled in the demonstration program; and
  • An estimate of the expected increase or decrease in annual enrollment, and in annual aggregate expenditures.

States must also:

  • Conduct at least two public hearings that would occur at least 20 days before the state submits the demonstration application;
  • Provide teleconferencing or Web-conferencing capability for at least one of the public hearings; and
  • Maintain an email list or a similar mechanism for the purpose of notifying stakeholders about the demonstration application.

There will also be new reporting requirements for states that receive approval of their applications. States will have to report a number of items on an annual basis including:

  • Any policy or administrative difficulties in the operation of the demonstration;
  • The impact of the demonstration on beneficiaries’ access to coverage, quality of care, and level of satisfaction;
  • The impact on the cost of care;
  • Any information resulting from audits, investigations, or lawsuits that impact the demonstration; and
  • The financial performance of the demonstration. 

CMS Requirements

To promote public input at the federal level, CMS will have to take the following steps:

  • Begin a 30-day federal public notice and comment period after the agency deems the state’s application complete.
  • Make a decision on the application 45 days after the application is complete to give the agency time to consider public comments submitted during the 30-day comment period.
  • Use to receive public comments; and publish an administrative record that includes the state’s application and associated documents, public comments, and if the application is approved, the state’s acceptance letter and final special terms and conditions.
  • Maintain an email list to notifying stakeholders that a state’s demonstration application is available on the website.

A fact sheet is available on the CMS website.