New Federal Rule Addresses Medicaid Transportation

The federal-state Medicaid program continues to be the largest single purchaser of public transportation services in the country. When provisions of the health reform legislation begin to kick in, Medicaid is slated to become an even larger purchaser of public transit services. Meanwhile, you may recall that there has been some controversy in the past few years, as the Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees Medicaid, made efforts to implement some significant provisions under the Deficit Reduction Act of 2005 (DRA).

So, it's important to take note of a notice published in the April 30, 2010, Federal Register, in which CMS announces its final rules concerning "State Flexibility for Medicaid Benefits Packages." This rule implements a language in the DRA that gives states the option to establish Medicaid services that are "benchmarked" to other forms of insurance, such as the Federal Employees Health Benefits Program, state employees' health coverage, etc.

State Medicaid agencies will be reading this rule in detail from beginning to end. For transportation providers, the most important thing is the new regulation at 42 CFR Section 440.390, which reads "If a benchmark or benchmark-equivalent plan does not include transportation to and from medically necessary covered Medicaid services, the State must nevertheless assure that emergency and non-emergency transportation is covered for beneficiaries enrolled in the benchmark or benchmark-equivalent plan, as required under Section 431.53 of this chapter."

In other words, states continue to be responsible, by CMS regulation, for assuring non-emergency medical transportation for all their Medicaid beneficiaries, regardless of whether those people are in a benchmark plan or are served by "traditional" Medicaid.

This rule concerning "benchmark" plans in Medicaid takes effect July 1, 2010. States' requirement to assure non-emergency medical transportation is nothing new; that has been in place for many years, first as a result of federal court cases, and then as a matter of CMS regulation.

Now that medical transportation providers may be feeling some level of justified comfort that their services are not going to be ended (that was a very real fear in response to CMS' initial proposals on this rule), there are some points of this latest rulemaking that bear careful consideration.

1. "Benchmark" plans are an option that is available to states. There is no requirement that states adopt this optional approach to elements of their Medicaid programs. However, CMS estimates that 90 percent of states will have some form of benchmark programs in place within a year or two. Given the nature and scope of the newest federal health legislation, that number is probably too low, and it's much more likely that nearly every state will have some form of benchmark-like coverage in their Medicaid programs in the near future. Therefore, anyone who's trying to set up systems for the future implementation of Medicaid should read more of today's rule, and see how CMS is beginning to instruct states in their relations with insurance companies, managed care organizations, and other intermediaries.

2. The rule on benchmark plans has some reminders that CMS has an option by which states can provide Medicaid transportation through a brokered program (defined by regulation at 42 CFR Section 440.170(a)(4), in which case these transportation expenses can be covered as "medical services" (and thus reimbursed by CMS at the state's Federal Medical Assistance Percentage rate, instead of the fixed 50 percent reimbursement for Medicaid program administrative costs) even if certain requirements for medical services (such as patient freedom of choice) are not part of the "brokerage." As with the benchmark program, it is very important to remember that such Medicaid transportation brokerages are an option available to states; they are not required.

3. For the first time that I've ever noticed, the benchmark rule has a requirement for public participation in Medicaid planning. It's a narrow window, and simply requires states to solicit public comment if they are preparing a state Medicaid plan amendment in pursuit of creating a benchmark program. Maybe there's always been a requirement for public input; if so, it may be something to be more aggressively publicized.

4. In case people hadn't been following this trend, in both the previous and current presidential administrations, CMS is having options and features of Medicaid being addressed by states through Medicaid plan amendments, and not through waiver requests. Although Medicaid planning is nothing at all like transportation planning, the fact that more process-driven approaches are being dictated by the federal government may give more opportunities for meaningful involvement by stakeholders as states pursue their Medicaid strategies.

5. And for those people who follow federal interagency coordination policies, there is this verbiage, as it appears in the CMS rulemaking notice: "We do not believe that Executive Order 13330, which relates to the coordination of transportation among Federal agencies, is relevant to this rule."
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