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Medicaid Program; Reassignment of Medicaid Provider Claims rule (2022)
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The Medicaid Program; Reassignment of Medicaid Provider Claims rule is a significant rule issued by the Centers for Medicare and Medicaid Services (CMS) effective June 15, 2022, that reinterprets the scope of the general requirement that State payments for Medicaid services, pursuant to section 1902(a)(32) of the Social Security Act.[1]
Timeline
The following timeline details key rulemaking activity:
- June 12, 2022: Final rule took effect.[1]
- May 16, 2022: Final rule published.[1]
- September 28, 2021: Comment period closed.[1]
- August 3, 2021: Proposed rule issued.[1]
Background
Congress established Medicaid to provide healthcare services for low-income and disabled individuals. Section 1902(a)(32) of the Social Security Act outlines payment requirements for Medicaid services. Over time, there have been rule changes and interpretations regarding payment reassignment, with some states seeking exceptions to this policy. This rule would address these requests by reinterpreting the scope of general State payment requirements.
Summary of the rule
The following is a summary of the rule from the rule's entry in the Federal Register:
| “ | This final rule reinterprets the scope of the general requirement that State payments for Medicaid services under a State plan must generally be made directly to the individual practitioner or institution providing services or to the beneficiary, in the case of a class of practitioners for which the Medicaid program is the primary source of revenue. Specifically, this final rule explicitly authorizes States to make payments to third parties on behalf of individual practitioners, for individual practitioners' health insurance and welfare benefits, skills training, and other benefits customary for employees, if the individual practitioner consents to such payments on their behalf.[2] | ” |
Summary of provisions
The following is a summary of the provisions from the rule's entry in the Federal Register:[1]
| “ | A. Prohibition Against Reassignment of Provider Claims (§ 447.10)
Under title XIX of the Act, State Medicaid programs generally pay for Medicaid-covered practitioner services through direct payments to the treating practitioners. States may develop State plan payment rates that account for costs related to health and welfare benefits, training, and other benefits customary for employees. However, under our previous interpretation of the statutory provision at section 1902(a)(32) of the Act, as reflected in regulations at § 447.10 under the 2019 final rule, the entire rate was required to be paid to the individual practitioner who provided the service, unless certain exceptions applied. Under the 2019 final rule, none of the exceptions applied to payments for health and welfare benefits, training, and other benefits customary for employees when the practitioner is not in a direct employment or contractual relationship with a third party that submits claims on the practitioner's behalf. While the 2019 final rule did not directly prevent practitioners from purchasing health insurance, enrolling in trainings, or paying dues to a union or other association, it did create an unnecessary administrative burden on practitioners, and may have increased costs for those practitioners by eliminating access to lower group rates. Following the district court's decision and analysis in California v. Azar, we re-examined the statutory language and legislative history, and now conclude that the prohibition in section 1902(a)(32) of the Act is better read to be limited in its applicability to Medicaid payments to a third party under an assignment, power of attorney, or other similar arrangement. In other words, and consistent with the longstanding title of the provision at § 447.10 (“Prohibition against reassignment of provider claims”), a title which the regulation has consistently had since at least 1978, the statutory prohibition is better viewed as an anti-reassignment provision that only governs assignment-like payment arrangements. We do not believe this provision should be interpreted as a broad prohibition on any and all types of Medicaid payment arrangements beyond payments made directly to Medicaid beneficiaries and providers or enumerated in the statutory exceptions. As such, we proposed to amend § 447.10 to add a new paragraph (i), which would incorporate similar language from the previous paragraph (g)(4), as a new provision clarifying that certain types of third-party payments on behalf of a particular category of practitioners are outside the scope of the statutory provision in section 1902(a)(32) of the Act, rather than describing those payments as an exception to that prohibition. Specifically, § 447.10(i) as proposed specified that the payment prohibition in section 1902(a)(32) of the Act and § 447.10(d) would not apply to payments to a third party on behalf of, and with the consent of, an individual practitioner for benefits such as health insurance, skills training, and other benefits customary for employees, in the case of a class of practitioners for which the Medicaid program is the primary source of revenue. As discussed in the 2021 proposed rule, the text of the statute addresses only assignments and related payment arrangements wherein a provider's right to claim or receive full payment for services furnished to Medicaid beneficiaries is transferred to a third party. The statute includes examples of the types of payment arrangements intended to be prohibited, “under an assignment or power of attorney or otherwise.” The 2021 proposed rule included our reasoning that the language “or otherwise” is best read as referencing payments made under arrangements that are similar to an “assignment” and a “power of attorney” such that the reach of the prohibition under section 1902(a)(32) of the Act does not extend to payment arrangements that are wholly distinct from such types of arrangements. Consistent with this interpretation, we also proposed to amend § 447.10(a) to include the phrase “under an assignment or power of attorney or a similar arrangement.” We stated that this change would align the regulation with the applicable statutory language and our reading of that language and would create a consistent framework for the proposed new paragraph (i). The introductory language in section 1902(a)(32) of the Act specifies that no payment under the plan for any care or service furnished to an individual shall be made to anyone other than such individual or the person or institution providing such care or service. This prohibition applies only to payments “for any care or service,” which we interpret to prohibit full diversion of the right to claim and receive such payments to third parties absent an exception, but not to apply to partial deductions from payments at the request or with the consent of the provider, to make payments to third parties on behalf of the provider. A re-examination of the statutory exceptions to the general prohibition also supports the conclusion that the prohibition under section 1902(a)(32) of the Act does not extend to payment arrangements that are outside the category of payments with assignments or assignment-like arrangements. The excepted arrangements or transactions are all similar to assignments in that they involve third parties submitting claims directly to the State Medicaid agency for payment or having the right to receive the full amount of all payments due to the provider for services furnished to Medicaid beneficiaries. More specifically, section 1902(a)(32) of the Act contains several enumerated exceptions to the general principle of direct payment to individual practitioners. As described in the proposed rule, these exceptions may appear to be largely unrelated; however, they all involve payment arrangements where third parties are submitting claims to the Medicaid agency or where the right to receive all of the payments due to a provider for services furnished to Medicaid beneficiaries is transferred to a third party. The fact that the only types of transactions that are explicitly excepted by the statute are assignment-like transactions that involve the transfer to a third party of either a provider's right to submit claims directly to the State or to receive all payments otherwise due a provider for services furnished supports our interpretation that the scope of the statutory prohibition extends only to payments to a third party that involve similar types of arrangements. By contrast, partial deductions from Medicaid payments requested by a provider to make separate payment to a third party on behalf of the provider for benefits customary for employees does not involve third parties receiving direct payment from the State for care or services provided to Medicaid beneficiaries. Nor does this arrangement allow such third parties to pursue independent claims against the State for Medicaid payment. The legislative history of section 1902(a)(32) of the Act also supports our conclusion that the statutory text is best read as an anti-assignment prohibition. When Congress adopted the original version of this statute in 1972, it was focused on the practice of factoring—a practice which often led to the submission of inflated or false claims, raising concerns that the factoring industry was a breeding ground for Medicaid fraud. When Congress amended this provision in 1977, it reiterated that it understood the provision simply as a response to and an attempt to prevent factoring. Indeed, in 1977, Congress amended the anti-reassignment provision to close what it perceived to be a loophole that factoring companies were exploiting. This legislative history supports our proposed interpretation of the statutory prohibition as extending only to assignments and assignment-like arrangements that involve a potential for the type of abuse that the statute was intended to prevent. For classes of practitioners for whom the State's Medicaid program is the only or primary payer, the ability of the State to ensure a stable and qualified workforce may be enhanced by the ability to deduct from Medicaid payments at the request or with the consent of a provider to make separate payment to a third party on behalf of the provider. Deductions for these purposes are an efficient and effective method for ensuring that the workforce has provisions for basic needs and is adequately trained for their functions as health care professionals, thus ensuring that beneficiaries have access to such practitioners and higher quality services. Requiring practitioner consent for such deductions ensures that Medicaid provider payments are treated appropriately, and in a manner consistent with the wishes of the practitioner, for purposes of receiving benefits such as health insurance, skills training, and other benefits customary for employees. Although we proposed that these deduction practices fall outside the scope of what the statute prohibits, we stated in the 2021 proposed rule that we consider it important to document the flexibility in regulation to ensure confidence in the provider community, particularly for front line workers during the Coronavirus Disease 2019 (COVID-19) pandemic. Within broad Federal Medicaid law and regulation, we have long sought to ensure maximum State flexibility to design State-specific payment methodologies that help ensure a strong, committed, and well-trained workforce. Currently, certain categories of Medicaid covered services, for which Medicaid is a primary payer, such as home and personal care services, suffer from especially high rates of turnover and low levels of participation in Medicaid which negatively impact access to and quality of providers available to Medicaid beneficiaries. These issues often result in higher rates of institutional stays for beneficiaries. We also noted that the proposed rule would support our previous efforts to strengthen the home care workforce by specifying what actions are permitted to help foster a stable and high-performing workforce.[8] As proposed, under the amendment to § 447.10, State Medicaid programs would be permitted, as authorized under State law and with the consent of the individual practitioner, to deduct from the practitioner's payment to pay third parties for health and welfare benefit contributions, training costs, and other benefits customary for employees. For States, the third-party payment arrangements authorized by the provisions in the proposed rule would be optional; States that choose to implement them can use existing administrative processes to make deductions for certain benefits on behalf of the individual practitioner and with consent of the practitioner, from a practitioner's Medicaid payment. For practitioners, we stated that the proposed rule would enhance the ability of the practitioners, regardless of their employment arrangement, to perform their functions as health care professionals, and thus support beneficiary access to quality home care. The Medicaid program, at both the State and Federal levels, has a strong interest in ensuring the development and maintenance of a committed, well-trained workforce. With the majority of LTSS expenditures spent on HCBS, rather than institutional services, the importance of a strong home care workforce in Medicaid cannot be understated. HCBS provides critical services to millions of individuals across the county, including people with disabilities and older Americans. As the COVID-19 pandemic continues to impact health care in the United States, it is crucial that Medicaid beneficiaries are able to receive the home-based care they need in their homes and communities. Section 9817 of the American Rescue Plan Act of 2021 (Pub. L. 117-2) reinforces the importance of HCBS in Medicaid and during the COVID-19 pandemic by providing a temporary 10 percentage point increase to the Federal medical assistance percentage for certain HCBS, including those delivered by home care providers. As we explained in the proposed rule, the flexibility permitted under the rule would help protect the economic security for home care providers as well as protect and strengthen the HCBS workforce and accelerate LTSS reform and innovation. Facilitating access to benefits customary for employees for home care providers is critically important to improve workforce standards. Moreover, because the majority of home care workers are women and people of color, permitting this type of payment arrangement will directly benefit those populations and address inequities. Further, as discussed in the proposed rule, the increasing shortage of home care providers due to high turnover, low participation in Medicaid, low wages, and lack of benefits and training has significantly reduced access to home care services for older adults and people with disabilities. State Medicaid agencies can play a key role in increasing such access by improving workforce stability of these practitioners by addressing training, wages and benefits, and provider payment. Under the rule as proposed, State Medicaid agencies would be authorized to make deductions from a practitioner's Medicaid payment, with the consent of the individual practitioner, to pay a third party on behalf of the individual practitioner for benefits that provide the workforce with freedom to advocate for higher wages and career advancement, access to health insurance and necessary trainings, and other customary employee benefits. States typically have an established administrative process for their own employees' deductions for benefits that can also be applied to classes of practitioners for whom Medicaid is the only or primary payer. Additionally, State Medicaid agencies often perform employer-like responsibilities without a formal relationship to a certain class of practitioners for whom Medicaid is the only or primary payer, such as home care providers or personal care assistants. Using the State's established administrative processes to deduct funds to pay third parties on behalf of the practitioner, with the consent of the individual practitioner, may simplify administrative functions and program operations for the State and provide advantages to practitioners. For example, a practitioner could receive continuous health care coverage because the State automatically deducts funds for health insurance premiums on behalf of the practitioner. Providing State Medicaid agencies with the authority to make deductions from Medicaid payments, with the consent of the individual practitioner, to make payments to a third party on behalf of the individual practitioner for benefits such as health insurance, skills training, and other benefits customary for employees will ensure many of the country's most vulnerable workers, who care for the country's most vulnerable individuals, gain or retain benefits which help them support themselves and their families, and subsequently benefit those individuals they care for. We noted in the 2021 proposed rule that these provisions would not authorize a State to claim, as a separate expenditure under its approved Medicaid State plan, amounts that are deducted from payments to individual practitioners (that is, health and welfare benefit contributions, training, and similar benefits customary for employees). As explained in the proposed rule, should a State wish to recognize such costs, they would need to be included as part of the rate paid for the service to be eligible for Federal financial participation. No Federal financial participation would be available for such amounts apart from the Federal match available for a rate paid by the State for the medical assistance service. These costs also could not be claimed by the Medicaid agency separately as an administrative expense. As a result, we noted that the rule would have little to no impact on Federal Medicaid funding levels as the 2014 final rule is the status quo in light of the district court's decision in California v. Azar. As discussed in the 2014 final rule, the similar policies proposed in the 2021 proposed rule would not require any change in State funding to the extent that practitioner rates have already factored in the cost of benefits, skills training, and other benefits customary for employees. As proposed, this rule would simply ensure flexibility for States to pay for such costs directly on behalf of practitioners and ensure access to benefits, such as health insurance, skills training, and other benefits customary for employees. We noted that should the rule be finalized as proposed, there may even be cost savings resulting from the collective purchase of such benefits and greater workforce stability. We solicited public comments on the extent to which the payment arrangements that would be permitted under the 2021 proposed rule would benefit States and practitioners, particularly if and how a practitioner's access to benefits would be impacted, as well as any adverse impacts that may have not been anticipated. Additionally, we sought comments on other permissible actions based on our proposed statutory interpretation that might similarly simplify and streamline States' operations of their Medicaid State plans and payment processes.[2] |
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Significant impact
- See also: Significant regulatory action
Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.
Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1] }}
The text of the Medicaid Program; Reassignment of Medicaid Provider Claims rule states that OMB deemed this rule economically significant under E.O. 12866.
| “ | Based on our estimates, OMB's OIRA has determined that this rulemaking is “economically significant” under Executive Order 12866 and “major” under Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act).[2] | ” |
Text of the rule
The full text of the rule is available below:[1]
See also
External links
Footnotes
