January 16, 2008

CMS Rule Changes on Targeted Case Management under Medicaid State Plans Could Have Broader Implications

The Centers for Medicare and Medicaid Services (CMS) has published an interim final rule to govern targeted case management services under Medicaid (Federal Register, December 4, 2007, Vol. 72, No. 232, 68077-68093). The rule, which goes into effect on March 3, 2008, was issued to update regulations in response to changes made under the Deficit Reduction Act of 2005 (DRA), in particular changes made under Section 6052 pertaining to how Medicaid will fund targeted case management activities. This provision defined targeted case management to include services that will "assist individuals eligible under the State plan in gaining access to medical, social, educational, and other services."

The DRA specified that targeted case management under the State plan could include assessment of service needs; the development of a care plan; referral to assist beneficiaries in accessing needed services; and monitoring and follow-up activities to ensure that the care plan is effectively carried out. In addition, targeted case management can be provided without regard to Medicaid's statewideness and comparability requirements.

While CMS's publication of the interim final rule is intended to update current regulations in response to the DRA's targeted case management provision, it seems clear that CMS intends for the new definitions and requirements to apply more broadly to Medicaid, which could adversely impact 1915 (c) waiver program services as well as Money Follows the Person demonstration grant initiatives.

n4a believes that the CMS rule changes go beyond congressional intent for the Section 6052 provision under DRA. In an April 5, 2006 letter to HHS Secretary Michael Leavitt, the provision's author, Senator Charles Grassley (R-IA), then Chairman of the Senate Finance Committee, explained that the DRA provisions were intended to "insert clarity as to what is an appropriate TCM service under Medicaid, and therefore appropriately claimed under Medicaid, and what is not." The CMS rule changes, however, go much further than clarifying the areas where targeted case management can be claimed under Medicaid.

Overview of Major Rule Changes

• Consumer choice of case manager: States must allow individuals the choice of any qualified Medicaid provider within the geographic area identified in the plan. However, states can restrict the type of providers for certain targeted groups including individuals with developmental disabilities or chronic mental illness, but these limitations must be specified in the state plan along with how the providers will ensure access to services. Notwithstanding the exceptions for these target groups (provided for through §441.18(i) of OBRA '87), the rule would prevent states from identifying a single provider, such as AAAs, of case management services for other targeted groups.
• Single case management provider: Case management services must be provided by a single case management provider, even if the client is eligible for more than one case management service because of complex needs.
• No "gatekeeping," changes in payment methodology and units of service: Case managers are responsible for developing a care plan, but they cannot authorize services in the plan. The regulation specifically would prohibit case managers from serving as gatekeepers to other services under Medicaid. Case management services would have to be reimbursed in 15-minute increments or less.
• Functional eligibility: Case managers would not have the authority to determine functional eligibility.
• Transition from institutional setting: Costs for targeted case management services provided to beneficiaries to help them transition from an institution to the community can be claimed only during the last 60 days of a stay in an institution (for institutional stays of 180 days in duration or more) and 14 days if the stay is less than 180 days. This change could impact waiver programs and Money Follows the Person demonstration grants, which allow for longer transition periods, in some cases up to 180 days.
• Unbundling of services: States with a single entry point system may have to unbundle the process for accessing services by allowing community case management agencies to complete the assessment and care plan and designate state staff to determine eligibility, approve the care plan and authorize services.
• Case management as an administrative activity: States would be limited in their ability to claim reimbursement for case management as an administrative activity. Changes in the types of activities that can be claimed as administrative could cause states to have to rearrange their current systems and lead to fragmentation or unbundling.

Take Action: Assess the Rule Changes and Provide Comments to CMS

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For more information, please contact Amy E. Gotwals (agotwals@n4a.org) or K.J. Hertz (khertz@n4a.org), n4a’s Public Policy and Legislative Affairs staff. 202-872-0888.