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GAO reviewed the Department of Health and Human Services, Centers for Medicare and Medicaid Services' (CMS) new rule on state flexibility for Medicaid benefit packages. GAO found that (1) The final rule implements provisions of section 6044 of the Deficit Reduction Act of 2005 (Pub. L No. 109 - 171, 120 Stat. 4, 88 (Feb. 8, 2006)), which amends the Social Security Act by adding a new section 1937 related to the coverage of medical assistance under approved state plans, and provides states increased flexibility under an approved state plan to define the scope of covered medical assistance by offering coverage of benchmark or benchmark-equivalent benefit packages to certain Medicaid recipients; and (2) CMS complied with the applicable requirements in promulgating the rule.





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Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicaid Program; State Flexibility for Medicaid Benefit Packages, GAO-09-259R, December 16, 2008 B-317565 December 16, 2008 The Honorable Max Baucus Chairman The Honorable Charles E. Grassley Ranking Minority Member Committee on FinanceUnited States Senate The Honorable Charles B. Rangel Chairman The Honorable Jim McCrery Ranking Minority Member Committee on Ways and Means House of Representatives Subject: Department of Health and Human Services, Centers for Medicare and Medicaid Services: Medicaid Program; State Flexibility for Medicaid Benefit Packages 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 and Medicaid Services (CMS), entitled –Medicaid Program; State Flexibility for Medicaid Benefit Packages— (RIN: 0938-AO48). We received the rule on December 3, 2008. It was published in the Federal Register as a final rule on December 3, 2008. 73 Fed. Reg. 73,694. The final rule implements provisions of section 6044 of the Deficit Reduction Act of 2005 (Pub. L No. 109 ? 171, 120 Stat. 4, 88 (Feb. 8, 2006)), which amends the Social Security Act by adding a new section 1937 related to the coverage of medical assistance under approved state plans. It also provides states increased flexibility under an approved state plan to define the scope of covered medical assistance by offering coverage of benchmark or benchmark-equivalent benefit packages to certain Medicaid recipients. The final rule has an effective date of February 2, 2009. Enclosed is our assessment of the 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. Our review indicates that CMS complied with the applicable requirements. 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 Shirley A. Jones, Assistant General Counsel, at (202) 512-8156. signed Robert J. Cramer Associate General Counsel Enclosure cc: Ann Stallion Program Manager, ODRM Department of Health andHuman Services ENCLOSURE REPORT UNDER 5 U.S.C. sect. 801(a)(2)(A) ON A MAJOR RULE ISSUED BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES, CENTERS FOR MEDICARE AND MEDICAID SERVICES ENTITLED "MEDICAID PROGRAM; STATE FLEXIBILITY FOR MEDICAID BENEFIT PACKAGES" (RIN: 0938-AO48) (i) Cost-benefit analysis CMS performed a cost-benefit analysis of the final rule. CMS projects that the use of benchmark plans under the final rule will result in $2.3 billion in federal savings from 2006 ? 2010. The actual savings will depend on the number of states that implement these plans, the number of beneficiaries states cover with these plans, and the specific design and selection of benchmark plans. (ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. sections 603-605, 607, and 609 CMS certified that the final rule would not have a significant impact on a substantial number of small entities, and, therefore, did not prepare a Final Regulatory Flexibility Analysis. (iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. sections 1532-1535 CMS concluded that, because the final rule does not mandate state participation in using beneficiary plans, there is no obligation for states to make any change in their Medicaid programs. For this reason, the final rule does not mandate expenditures in excess of the threshold in the Unfunded Mandates Reform Act of approximately $127 million. (iv) Other relevant information or requirements under acts and executive orders Administrative Procedure Act, 5 U.S.C. sections 551 et seq. The final rule was issued using the notice and comment procedures found at 5 U.S.C. sect. 553. CMS published a proposed rule in the Federal Register on February 22, 2008. 73 Fed. Reg. 9714. In response to the proposed rule, CMS received over 1,100 timely items of correspondence. The majority of the commenters represented transportation providers, medical providers, and Medicaid beneficiaries, particularly Medicaid beneficiaries who rely on dialysis treatments. Other commenters represented state and local advocacy groups, national associations that represent various aspects of beneficiary groups, physician and provider groups, medical associations and hospitals, state Medicaid agency senior officials, and human services agencies. CMS responds to the comments in the final rule. Paperwork Reduction Act, 44 U.S.C. sections 3501-3520 The final rule does not contain new information collection requirements subject to review by the Office of Management and Budget (OMB) under the Act. Statutory authorization for the rule The final rule implements provisions of sections 6044 of the Deficit Reduction Act of 2005, Pub. L No. 109 ? 171, 120 Stat. 4, 88 (Feb. 8, 2006). Executive Order No. 12,866 The final rule was reviewed by OMB and found to be an –economically significant— regulatory action under the Order. Executive Order No. 13,132 (Federalism) CMS determined that the final rule would not impose direct requirement costs on states or local governments or preempt state law. CMS noted that the final rule will provide states the option to implement alternative Medicaid benefits through a Medicaid state plan amendment.



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