DEPARTMENT OF HEALTH AND SOCIAL SERVICES

Division of Medicaid and Medical Assistance

Statutory Authority: 31 Delaware Code, Ch. 5, §512 (31 Del.C., Ch. 5, §512)

FINAL

ORDER

Diamond State Health Plan 1115 Demonstration Waiver

Nature of the Proceedings:

Delaware Health and Social Services (“Department”) / Division of Medicaid and Medical Assistance initiated proceedings to submit a request to the Centers for Medicare and Medicaid Services (CMS) to renew Delaware’s Section 115 demonstration waiver, entitled “The Diamond State Health Plan” for the period January 1, 2007 through December 31, 2009. The Department’s proceedings to amend its regulations were initiated pursuant to 29 Delaware Code Section 10114 and its authority as prescribed by 31 Delaware Code Section 512.

The Department published its notice of proposed regulation pursuant to 29 Delaware Code Section 10115 in the July 2006 Delaware Register of Regulations, requiring written materials and suggestions from the public concerning the proposed regulations to be produced by July 31, 2006 at which time the Department would receive information, factual evidence and public comment to the said proposed regulations.

Summary of Proposal

Statutory Authority

• Social Security Act §1115, Demonstration Projects

• 42 CFR §441, Subpart G, Home and Community-Based Services Waiver Requirements

Background

The Diamond State Health Plan (DSHP) implemented a mandatory Medicaid managed care program statewide on January 1, 1996. Using savings achieved under managed care, Delaware expanded Medicaid health coverage to additional low-income adults in the State with incomes less than 100% of the Federal Poverty Level (FPL).

Goals of the DSHP are to improve and expand access to health care to more adults and children throughout the State, create and maintain a managed care delivery system emphasizing primary care, and to strive to control the growth of health care expenditures for the Medicaid population.

The current demonstration project #11-W-0063/3 expires on December 31, 2006. To assure the continuation of the DSHP, the Division of Medicaid & Medical Assistance has submitted a three-year extension request for the DSHP 1115 Waiver to the CMS for the period January 1, 2007 through December 31, 2009.

Summary of Proposal

DMMA is announcing a thirty-day comment period on the DSHP 1115 Waiver Extension request submitted to CMS.

The application to renew documents how the State has met its goals of improving access to services, expanding coverage to additional populations and substantially improving quality of care for eligible individuals enrolled in the Diamond State Health Plan (DSHP). The State intends no changes to the DSHP during the renewal period. The waiver application will be made available upon request.

The provisions of this waiver are subject to approval by the Centers for Medicare and Medicaid Services (CMS).

Summary of Comments Received with Agency Response and Explanation of Changes

The Disabilities Law Program (DLP), Community Legal Aid Society, Inc. offered the following observations and recommendations summarized below. The Governor’s Advisory Council for Exceptional Citizens (GACEC) and the State Council for Persons with Disabilities (SCPD) endorse the comments by the DLP regarding the renewal application for Delaware’s Medicaid managed care program.

DMMA has considered each comment and responds as follows:

The DLP is the statewide protection and advocacy agency for persons with disabilities in Delaware. Medicaid is one of the primary areas of concentration for DLP’s advocacy. We focus primarily on eligibility, access to services, and the promotion of consumer-friendly managed-care policies. The DLP has advised and represented numerous clients statewide on these important issues.

In light of increasing health care costs across the private and public sectors, the DLP appreciates that Delaware has continued to maintain its array of covered services and eligibility groups in its Medicaid program. The DLP supports Delaware’s expansion of the Medicaid-eligible population to include all uninsured Delawareans at or below 100% of the federal poverty level through the Diamond State Health Plan waiver. The DLP also values the state’s participation in managed care meetings open to the public convened by a group of Medicaid beneficiaries and parents. These meetings are regularly attended by representatives from the Division of Medicaid & Medical Assistance, the Health Benefits Manager, and Diamond State Partners and provide a forum to address issues and concerns expressed by Medicaid managed care beneficiaries.

The DLP offers the following comments in areas in which Medicaid managed care in Delaware may be able to be further improved:

1.) Effective Communication for People with Disabilities

The waiver renewal application describes the Health Benefits Manager’s (HBM) “comprehensive, culturally sensitive, linguistically appropriate educational program…designed to assure that clients gain a complete understanding of managed care in general and the responsibilities of the client under this system.” Without intending to detract from the important legal responsibility to provide access to this information to persons with limited English proficiency, the DLP encourages DHSS to include language referencing its contractors’ legal responsibility to ensure effective communication with people with disabilities. See, Americans with Disabilities Act, 42 U.S.C. §§ 12132 – 12133, and implementing regulations regarding effective communication at 28 CFR §§ 35.130, 35.160; Section 504 of the Rehabilitation Act, 29 U.S.C. §794. For example, the use of the telephone system as the primary means of program enrollment may not be accessible for people who are deaf and without telephone/TTY access and written materials should be provided in alternative formats for people with visual impairments. Similarly, language be as clear and simple as possible for people with cognitive limitations.

In the DLP’s experience, DHSS has reasonably accommodated people who are deaf by providing sign language interpreters at regularly scheduled appointments upon request, pursuant to DHSS Administrative Notice A-01-2006 (Jan. 9, 2006). The DLP recommends that this Administrative Notice be shared with DHSS’s HBM and managed care contractors, and language referencing this legal obligation be included in the waiver renewal application and/or expanded upon in the Request for Proposals to be submitted for FY 2007.

Agency Response: Your concerns are related to the ability for persons with disabilities, as well as language barriers, to have access to comprehensive, culturally sensitive, linguistically appropriate information. You cite references from the Americans with Disabilities Act. I will add that a new chapter to the 42 CFR, Chapter 438, was specifically drafted for guidance to Managed Care program for the Medicaid and Medicare populations. This Chapter also addresses many of your concerns. Diamond State Health Plan (DSHP) has incorporated this language into its contracts with its managed care organizations as well making this a requirement for Diamond State Partners. DMMA understands your concerns and support your recommendations. We will continue our efforts to expand this access in the future.

2.) EPSDT Outreach and Screening Services

DHSS’s waiver renewal application does not mention the responsibility to provide outreach and information services under the Medicaid Early Periodic Screening Diagnostic and Treatment (EPSDT) benefit as one of the HBM’s enrollment responsibilities. See, 42 U.S.C. §1396a(a)(43)(A). Congress has instructed states to take “aggressive action” to inform all Medicaid-eligible children from birth through age 21 and their families about the availability of EPSDT benefits. The waiver renewal application also does not identify the provision of EPSDT screenings as a managed care quality measure (although perinatal care services are so identified, see, DSHP Renewal Application at 36). The DLP recommends that the responsibility for EPSDT outreach services be clearly identified as appropriate in the waiver renewal application and/or upcoming Request for Proposals. The DLP also recommends that DHSS track the provision of the required EPSDT screens as one of its quality measures.

Agency Response: The Waiver Renewal does not specifically address EPSDT Services. However, the DSHP Contract with its vendors does address EPSDT in some length. In addition, the Quality Strategy, required in this renewal, also addresses these needs. The Quality Strategy is just being updated and completed. The main emphasis on all of the DSHP services for our clients must be in the primary contract between the State and its vendors. DHSP expects to release a new Request for Proposal (RFP) for Managed Care Organizations in the late summer. That RFP will include detailed references to all EPSDT requirements.

3. Managed Care Appeals Process

The waiver renewal application states that managed care “appeals processes include requirements compliant with Federal Regulations.” The current managed care organization’s contract with DHSS does include those requirements. However, the DLP has received complaints from several clients who have requested appeals with Delaware Physicians Care, Inc. but who have not been afforded the opportunity to present evidence in-person to the managed care organization in accordance with 42 CFR §438.406(b)(2). The DLP recommends that DHSS investigate and track the provision of in-person appeal hearings by its managed care contractors.

The waiver renewal application section on Diamond State Partners’ (DSP) quality assurance initiatives refers to the DSP review of inpatient admissions within 10 days of a previous stay. DSHP Renewal Application at 51-52. That section states that “[i]f a decision is made to deny DSP payment for the readmission, the provider is notified and has opportunity for appeal.” Id. at 52. When the decision to deny Medicaid services is made, adequate written notice and the opportunity for a fair hearing must be offered to the Medicaid beneficiary, not the provider. See, e.g., 42 CFR §§ 431.206, 431.210, 431.220. In the DLP’s experience, notices at times are issued only to the provider and not directly to the Medicaid recipient. While DHSS and its contractors may wish to inform the prescriber about its decisions, the DLP recommends that DHSS ensure that adequate, timely written notice of all decisions to deny or terminate Medicaid services be provided directly to the Medicaid recipient.

Agency Response: Your recommendation to track and investigate the provision of in person appeals is a good one. You are also correct that while the appropriate language is in our contract, it may not be carried out to the degree we expect. DMMA will implement your recommendation as soon as possible but no later than January 1, 2007.

The issuance of denial letters to our hospital vendors upon review of claims which could be denied is done with the expectation that the hospital will not and should not bill the Medicaid client for any denials. This is true of almost all Medicaid services. As you are aware, Medicaid does not issue an Explanation of Benefits to its clients. This is because in almost all cases the Medicaid Client cannot or should not be billed. When a service is requested that has been denied, reduced or limited, the client is notified. In this case the client could appeal the denial, reduction or limited.

4. Managed Care Benefits Package

The waiver renewal application explains that while most Medicaid services are included in the managed care benefits package, there are several categories of services for managed care enrollees that continue to be covered under the state’s traditional Medicaid system. The composition of the benefits package raises several issues.

First, the DLP is aware of several instances in which division of services between managed care and fee-for-service has created a “catch-22” situation for Medicaid beneficiaries. For example, the DLP represented a client whose doctors would not discharge him from the hospital until the client’s prescription for adequate private duty nursing hours was approved. Those hours fell into the “specialized services for children” that the state has reserved for payment by traditional Medicaid, and the state refused to approve the nursing hours as medically necessary. At the same time, the managed care organization decided that it would no longer provide inpatient hospitalization services because the client was medically ready for discharge, with the provision of adequate nursing hours for care at home. While this particular case was resolved, it demonstrates how the division of covered services into managed care and fee-for-service can create conflicts. Especially in the case of a child with serious disabilities, the denial of services necessary to maintain the child in the hospital or at home cannot be a result consistent with the aims and requirements of the Medicaid program. The DLP recommends that DHSS take steps to avoid future situations in which beneficiaries’ claims for alternative services are denied by both entities by addressing this issue as appropriate in the waiver renewal application and/or the upcoming Request for Proposals.

Second, the issue as to whether medically necessary services should be provided by the Medicaid managed care organization or by a child’s school district through an Individualized Education Program (IEP) continues to recur. While Medicaid is generally the payor of last resort, when a service is both medically and educationally necessary, Medicaid’s obligation to provide the service precedes that of the school district. See, 20 U.S.C. § 1412(a)(12)(A)(i); 20 U.S.C. § 1412(a)(12)(B)(i); 42 U.S.C. § 1396b(c); 34 CFR § 300.142(a)(1); 34 CFR § 300.142(b)(1)(i). The DLP has represented several clients whose outpatient therapy services were terminated or denied by the managed care organization on the basis the child was receiving services through an IEP and paid for by the school district. The IEP services often are narrower in scope than outpatient therapy and should not be categorically viewed by the managed care organizations as duplicative services. Compare Individuals with Disabilities Education Act, 20 U.S.C. §1401(26) (requiring school districts to provide services only “ as may be required to assist a child with a disability to benefit from special education”) with Medicaid Act 42 U.S.C. § 1396d(a)(13) (requiring, for EPSDT beneficiaries pursuant to 42 U.S.C. § 1396dŽ(5), state Medicaid programs to provide “any medical or remedial services…recommended by a physician…for the maximum reduction of physical or mental disability and restoration of an individual to the best possible functional level”); see also Bd. of Education of Hendrick Hudson Central School Dist. V. Rowley, 453 U.S. 176, 199 (1982) (holding that a school district is not required to provide services to “maximize a student’s potential”). Consistent with this legal authority, the DLP recommends that the Medicaid managed care contractors’ responsibility to provide medically necessary services be clarified as appropriate in the waiver renewal application and/or the upcoming Request for Proposals.

Third, the waiver renewal application indicates that managed care behavioral health benefits are “limited to 20 units of outpatient services and 30 days of inpatient services per year”. DSHP Renewal Application at Attachment H. While states are permitted to employ some utilization controls, absolute categorical numeric limits on medically necessary services are not allowable. See, 42 U.S.C. § 1396dŽ(5) (state’s obligation to provide all services necessary to correct or ameliorate physical and mental health conditions for Medicaid beneficiaries from birth through age 21). The DLP recommends that DHSS make clear to Medicaid beneficiaries that behavioral health services beyond these numerical limits will be covered where medically necessary through traditional Medicaid.

Agency Response: The State believes that the example of challenges with the Managed Care Benefit package used in your letter is the exception rather than the rule. As you note, this was resolved. I believe you will find that the majority of cases of this type are also resolved and always in the client’s best interest. We agree that increase communication between the MCO and the States units that are not familiar with a managed care environment can be strengthened and we are working toward that goal.

The State’s contract with its MCOs is clear about the MCO responsibilities as they relate to IFSPs and IEPs. We work closely with the MCO to avoid the issues you mentioned. However, we cannot be seen, by CMS, as duplicating services that should, and often are, provided by another State Agency, i.e. the School districts. Again, this is a challenge better dealt with in the State’s contract with its MCOs and we will attempt to further clarify this benefit in that venue.

The State does provide parity in the Behavioral Health benefit. DSHP and the Division for Substance Abuse and Mental Health (DSAMH) work closely with the MCOs to assure that services that are exhausted under the MCO benefit, or in cases where the patient is in need of more serious treatment than is available through its MCO, are continued under services offered by DSAMH. This issue is clearly addressed in the DSHP contract with its MCOs.

Thank you again for you response to our request for comments. We value our supporters in the community and look forward to working with you in the future. Please feel free to call us at any time with your concerns.

Findings of Fact:

The Department finds that the proposed regulation as set forth in the July 2006 Register of Regulations should be adopted.

THEREFORE, IT IS ORDERED, that the proposed regulation regarding the three-year extension of the Diamond State Health Plan 1115 Demonstration Waiver is adopted and shall be final effective September 10, 2006.

Vincent P. Meconi, Secretary, DHSS, 8/14/06

10 DE Reg. 549 (09/01/06) (Final)