HCFA: Medicaid Program--Coverage of Personal Care Services

Published by the Government Accountability Office on 1997-09-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      September 30, 1997

      The Honorable William V. Roth
      The Honorable Daniel Patrick Moynihan
      Ranking Minority Member
      Committee on Finance
      United States Senate

      The Honorable Thomas J. Bliley, Jr.
      The Honorable John D. Dingell
      Ranking Minority Member
      Committee on Commerce
      House of Representatives

      Subject:   Department of Health and Human Services, Health Care Financing
                 Administration: Medicaid Program; Coverage of Personal Care Services

      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, Health
      Care Financing Administration (HCFA), entitled "Medicaid Program; Coverage of
      Personal Care Services" (RIN: 0938-AH00). We received the rule on September 15,
      1997. It was published in the Federal Register as a final rule on September 11,
      1997. 62 Fed. Reg. 47896.

      The final rule revises the requirements for Medicaid coverage of personal care
      services furnished in a home or other location as an optional benefit, effective for
      services furnished on or after October 1, 1994. This rule conforms the Medicaid
      regulations to the provisions of section 13601(a)(5) of the Omnibus Budget
      Reconciliation Act of 1993.

      Enclosed is our assessment of HCFA'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 HCFA complied with the applicable requirements.

If you have any questions about this report, please contact James Vickers, Assistant
General Counsel, at (202) 512-8210. The official responsible for GAO evaluation
work relating to the Department of Health and Human Services, Health Care
Financing Administration, is William Scanlon, Director, Health Financing and
Systems Issues. Mr. Scanlon can be reached at (202) 512-7114.

Robert P. Murphy
General Counsel


cc: Mr. Bruce C. Vladeck
    Health Care Financing Administration

Page 2                                                             GAO/OGC-97-64

       ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                ISSUED BY
                            (RIN: 0938-AH00)

(i) Cost-benefit analysis

HCFA performed a cost-benefit analysis of the final rule. HCFA notes in the
preamble to the final rule that it is difficult to predict the exact cost increases or
economic impact of the rule because the exact number and type of personal care
services furnished by individual states or how much these services currently cost
are unknown. Also, it is unknown how many of the 32 states that currently offer
coverage for personal care services will choose to cover services furnished outside
the home and if any other states may opt to offer the services.

HCFA estimates that the total additional Medicaid program expenditures associated
with furnishing these services outside the home as:

                   FY   1998      $195   million
                   FY   1999      $455   million
                   FY   2000      $560   million
                   FY   2001      $700   million
                   FY   2002      $875   million

HCFA estimates the costs to the states of the final rule to be:

                   FY   1998      $145   million
                   FY   1999      $340   million
                   FY   2000      $425   million
                   FY   2001      $535   million
                   FY   2002      $665   million

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607, and 609

For purposes of the Regulatory Flexibility Act, HCFA does not consider states and
individuals to be small entities but providers are considered small entities. HCFA
points out that the major provisions of the rule are required by statute and that the
rule, in and of itself, has little or no independent effect or burden.

The preamble to the final rule does contain a discussion of the impact of the final
rule on recipients, providers, states, and Medicaid expenditures. HCFA labels this
discussion "a voluntary regulatory flexibility analysis."

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

The final rule does not impose a federal intergovernmental or private sector
mandate, as defined in the Unfunded Mandates Reform Act of 1995. The provision
of the personal care services is optional with the states.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

HCFA promulgated the final rule under the notice and comment procedures of
5 U.S.C. § 553 and section 1871(b) of the Social Security Act, 42 U.S.C. § 1395hh(b).1
On March 8, 1996, HCFA published a notice of proposed rulemaking in the Federal
Register (61 Fed. Reg. 9405) and requested comments. The final rule was published
on September 11, 1997, 62 Fed. Reg. 47896, and the preamble to the final rule
contains a discussion of the 73 comments received and the actions taken by HCFA
in response.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The final rule contains an information collection requirement subject to review by
the Office of Management and Budget (OMB) under the Paperwork Reduction Act.

The collection requires states to amend their plans to specify whether they will
cover personal care services and where it will be provided. HCFA has estimated
the burden hours of this requirement to be 1 hour per state. HCFA has submitted
the requirement with the necessary information to OMB for its approval and HCFA
will publish a notice in the Federal Register when approval of the requirement is

Statutory authorization for the rule

The final rule cites the Secretary's broad authority to promulgate regulations
necessary for the efficient administration of the Medicaid program, Section 1102 of
the Social Security Act, 42 U.S.C. § 1302. In addition, the preamble notes that the

 Section 1871(b) states that, with exceptions not pertinent here, before issuing any
final rule, the Secretary shall provide for notice of the proposed regulation in the
Federal Register and a comment period of at least 60 days.

Page 2                                                              GAO/OGC-97-64
rule is required by section 13601(a)(5) of the Omnibus Budget Reconciliation Act of
1993, which added section 1905(a)(24) to the Social Security Act.

Executive Order No. 12866

The final rule has been determined to be an "economically significant regulatory
action" and was reviewed by the Office of Management and Budget. The Office of
Information and Regulatory Affairs of OMB approved the final rule as complying
with the requirements of the order based on the information supplied by HCFA,
including a planned regulatory action document describing the reason for the rule
and an assessment of the costs and budgetary impact of the rule.

In its submission, HCFA did not identify any other statute or executive order
imposing procedural requirements relevant to the final rule.

Page 3                                                             GAO/OGC-97-64