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GAO reviewed the Department of Health and Human Services, Centers for Medicare & Medicaid Services' (CMS) new rule on the Medicaid Program; reassignment of Medicaid provider claims. GAO found that the final rule removes the regulatory text that allows a state to make Medicaid payments to third parties on behalf of an individual provider for benefits such as health insurance, skills training, and other benefits customary for employees.





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B-331036
May 21, 2019
The Honorable Chuck Grassley
Chairman
The Honorable Ron Wyden
Ranking Member
Committee on Finance
United States Senate
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Ranking Member
Committee on Energy and Commerce
House of Representatives
Subject: Department of Health and
Human Services, Centers for Medicare & Medicaid Services: Medicaid Program;
Reassignment of Medicaid Provider Claims
Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
major rule promulgated by the Department of Health and Human Services, Centers for Medicare
& Medicaid Services (CMS) entitled ?Medicaid Program; Reassignment of Medicaid
Provider Claims? (RIN: 0938-AT61).  We received the rule on May 6, 2019.
 It was published in the Federal Register as a final rule on May 6, 2019. 
84 Fed. Reg. 19718.  The effective date of the rule is July 5, 2019.
The final rule removes the regulatory text that allows a state to make Medicaid payments
to third parties on behalf of an individual provider for benefits such as health insurance,
skills training, and other benefits customary for employees.  CMS concluded that this
provision is neither explicitly nor implicitly authorized by statute, which identifies the
only permissible exceptions to the rule that only a provider may receive Medicaid
payments.  CMS states that, as it noted in its prior rulemaking, section 1902(a)(32)
of the Social Security Act provides for a number of exceptions to the direct payment
requirement, but it does not authorize the agency to create new exceptions.
The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a
major rule from the date of publication in the Federal Register or receipt of the
rule by Congress, whichever is later.  5 U.S.C. § 801(a)(3)(A).  The final rule
was published in the Federal Register on May 6, 2019.  84 Fed. Reg.
19718.  It was received by the House of Representatives on May 9, 2019, and
received by the Senate on May 6, 2019.  165 Cong. Rec. H3786, S2687.  The rule
has a stated effective date of July 5, 2019.  There is no finding of good cause and
brief statement of reasons incorporated in the rule issued for the rule to take effect
earlier than 60 days from publication or receipt by the Congress.  See 5
U.S.C. § 808(2).  Therefore the final rule does not have the required 60-day
delay in its effective date. 
Enclosed is our assessment of CMS?s compliance with the procedural steps required by
section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  If you have
any questions about this report or wish to contact GAO officials responsible for the
evaluation work relating to the subject matter of the rule, please contact Janet
Temko-Blinder, Assistant General Counsel, at (202) 512-7104.
  signed
Shirley A. Jones
Managing Associate General Counsel
Enclosure
cc: Calvin E. Dukes II
Regulations Coordinator
Department of Health and Human ServicesENCLOSURE
REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A
MAJOR RULE
ISSUED BY THE
DEPARTMENT OF Health and Human Services,
centers for medicare & medicaid services ENTITLED
?Medicaid Program; Reassignment of
Medicaid Provider Claims? (RIN: 0938-AT61)
(i) Cost-benefit analysis
The Centers for Medicare & Medicaid Services (CMS), Department of Health and Human
Services (HHS) states that it lacks information with which to quantify the potential impact
of this rule change.  Specifically, in the January 16, 2014, final rule (79 Fed. Reg.
2947, 3039), CMS authorized states to make payments to third parties on behalf of
individual providers ?for benefits such as health insurance, skills training, and other
benefits customary for employees.?  CMS states that it lacks information with which to
quantify the potential impacts of this change on these types of payments as HHS does not
formally track the amount of reimbursement that is being reassigned to third parties under
the regulatory provision that is being removed by this rule. 
CMS offered the example that one likely impact of this rulemaking is that states will
stop redirecting a portion of homecare workers? payments to unions for membership
dues.  CMS estimated that unions may collect as much as $71 million from such
assignments.  While CMS did not similarly quantify the amount of other authorized
reassignments, such as health insurance, skills training, or other benefits, CMS estimated
that the amount of payments made to third parties on behalf of individual providers for the
variety of benefits within the scope of this rulemaking could potentially be in excess of
$100 million.
(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§
603-605, 607, and 609
CMS did not prepare an analysis for the RFA because CMS determined, and the Secretary of
Health and Human Services certified, that the final rule will not have a significant impact
on a substantial number of small entities.
(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act
of 1995, 2 U.S.C. §§ 1532-1535
CMS found that the rule will not have a significant impact on state, local, or tribal
governments or on the private sector.
(iv) Other relevant information or requirements under acts and executive
orders
Administrative Procedure Act, 5 U.S.C. §§ 551et seq.
On July 12, 2018, CMS published a proposed rule.  83 Fed. Reg. 32252. 
CMS received 7,166 comments from citizens, parents of disabled individuals, health care
providers, unions, state agencies, and advocacy groups.  The comments ranged from
general support to opposition to the proposed rule.  CMS responded to the comments in
the final rule. 
Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520
CMS found that, to the extent a state changes its payment as a result of this rule, the
state will be required to notify entities of the pending change in payment and update its
payment system.  CMS believes that the associated burden is exempt from PRA in
accordance with 5 C.F.R. § 1320.3(b)(2).  CMS states that the time, effort, and
financial resources necessary to comply with the requirement would be incurred by the state
during the normal course of its activities, and therefore, should be considered usual and
customary business practices.
Statutory authorization for the rule
The authority citation for part 447 of CMS?s regulations is found at 42 U.S.C.
§ 1302.
Executive Order No. 12,866 (Regulatory Planning and Review)
CMS states that, in accordance with the provisions of Executive Order No. 12,866, the
rule was reviewed by the Office of Management and Budget.
Executive Order No. 13,132 (Federalism)
CMS found that the rule does not impose any costs on state or local governments, and
thus Executive Order No. 13,132 was not applicable.




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