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Montana Administrative Register Notice 37-512 No. 22   11/26/2010    
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BEFORE THE DEPARTMENT OF PUBLIC

HEALTH AND HUMAN SERVICES OF THE

STATE OF MONTANA

 

In the matter of the adoption of New Rules I through VI pertaining to Medicaid for Workers with Disabilities

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NOTICE OF ADOPTION

 

TO:  All Concerned Persons

 

1.  On May 27, 2010, the Department of Public Health and Human Services published MAR Notice No. 37-512 pertaining to the public hearing on the proposed adoption of the above-stated rules at page 1271 of the 2010 Montana Administrative Register, Issue Number 10.

 

2.   The department has adopted New Rules I (37.82.1002), II (37.82.1003), IV (37.82.1005), and V (37.82.1006) as proposed.

 

            3.  The department has adopted the following rules as proposed with the following changes from the original proposal.  Matter to be added is underlined.  Matter to be deleted is interlined.

 

            NEW RULE III (37.82.1004)  MEDICAID FOR WORKERS WITH DISABILITIES:  GENERAL ELIGIBILITY CRITERIA  (1)  An individual is eligible for benefits through the Medicaid for Workers with Disabilities program if the individual:

            (a)  remains as proposed.

            (b)  has a disability as defined in 42 USC 1382c, except that the individual has or has had earnings above the level for substantial gainful activity criteria that the individual must be unable to engage in substantial gainful activity does not apply;

            (c) through (e) remain as proposed.

 

AUTH:  53-6-113, MCA

IMP:  53-6-131, 53-6-195, MCA

 

            NEW RULE VI (37.82.1007)  MEDICAID FOR WORKERS WITH DISABILITIES:  COST SHARE FEES  (1) and (2) remain as proposed.

            (3)  The amount of an individual's cost share fee will be determined using the following table: 

 

Gross Income as a percentage of federal poverty level (FPL)

Monthly gross income dollar amount

Monthly payment

Up to 100%

$01.00 to $903

$35

Over 100% to 150%

$903.01 to $1,354

$75 $67

Over 150% to 200%

$1,354.01 to $1,805

$125 $100

Over 200% to 250%

$1805.01 to $2,256

$175 $135

 

AUTH:  53-6-113, 53-6-195, MCA

IMP:  53-6-131, 53-6-195, MCA

 

            4.  The department has thoroughly considered the comments and testimony received.  A summary of the comments received and the department's responses are as follows:

 

COMMENT #1:  A number of individuals and organizations commented that a person applying for Medicaid for Workers with Disabilities (MWD) should be treated as a household of one even if married.  They disagree with the policy of counting the income of the spouse of the person with a disability on a number of grounds:  They contend that it is unfair to place the responsibility of  meeting the needs of the disabled person on the spouse; that "the marriage penalty" may cause married persons with disabilities to seek a divorce in order to be able to work and still qualify for Medicaid; that the policy is discriminatory; and that it will limit the ability of persons with disabilities to work and become self-sufficient.

 

RESPONSE #1:  Montana law, under 40-2-102, MCA, specifies that spouses are required to support each other insofar as each spouse is able.  The eligibility determination budget does consider the means of the spouse and by function of that budget, does consider whether a spouse can afford to contribute to the support of a disabled spouse.  Inclusion of a spouse in determining Medicaid eligibility when spouses reside together is consistent among the 60+ Medicaid programs currently offered.  The department has not observed people divorcing in order for one spouse to be able to receive Medicaid benefits while working; it would seem that if this has not been an issue in attempts to qualify for far more restrictive Medicaid programs that it would be unlikely to occur with this much more liberal new program offering.  It would seem that if this phenomenon were to have occurred, it would have occurred before the MWD program came into being and disabled people found more, rather than less, program restrictions and higher, rather than lower costs associated with working while continuing to receive Medicaid benefits. 

 

The department does not believe the policy of counting spousal income subjects individuals with disabilities to illegal discrimination, as the policy is based on the legal obligation of spouses to support each other to the extent of each spouse's ability, as required by the Montana statute cited above.  Additionally, the department is not singling out individuals with disabilities for disparate treatment as the same policy applies to all other Medicaid coverage groups and is applied in determining eligibility for many other public assistance programs, such as supplemental security income (SSI), the Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF).  Finally, the department does not expect the policy will unreasonably limit the ability of persons with disabilities to work and become self-sufficient since the limit for net family income of 250% of the federal poverty level is fairly high for a needs-based program.

 

COMMENT #2:  The department states that it rejected the approach of counting only the income of the person seeking Medicaid even if the applicant is married because this approach is not consistent with the policy applied to all other Medicaid coverage groups.  The department states that there is no reason to make an exception to the usual for this coverage group which is already being given the benefit of significantly higher income and resource limits than other groups.  Individuals in the MWD coverage group should be treated differently because they are different from persons in other coverage groups in that persons seeking MWD are working and are paying a cost share amount.  These differences are sufficient reasons to make an exception to the usual policy of counting spousal income.

 

RESPONSE #2:  The MWD group is, in fact, a subset of the larger disabled group identified as a covered group under Medicaid.  Individuals in this group are people with disabilities.  The MWD group is also a subset of the general Medicaid population, many of whom are working.  Individuals with earned income receive extensive additional deductions from the earnings prior to testing their income against the Medicaid income standards.  Further, the offering of any Medicaid program must be within the ability of the state of Montana to afford the program.  The more liberal the program, the more expensive the program.  In this time of budget restrictions in all facets of government, it is not viable or sustainable to offer a program with few or no limitations. 

 

COMMENT #3:  Using gross income without any deductions or disregards to determine an individual's cost share amount while at the same time using net family income to determine eligibility could be problematic and is inequitable.  For example, an individual who is a household of one who has gross income of $2,500 per month is eligible for the program (assuming the person is also eligible in regard to resources) the person's net family income is ($2,500-85)/2 = $1,207.50 per month. However, using the person's gross income of $2,500/month to determine the person's cost share amount puts the person off the chart, even though the person is eligible, because the maximum income shown on the chart is $2,256.  The cost share methodology should be changed so that the cost share fee is based on the individual's net family income or the layout of the cost share fee table should be changed so that the gross amounts do not fall within levels of FPL that only the net family income is required to fall into. 

 

RESPONSE #3:  Conversely, using family income to determine cost share fee would then create inequity if the person's spouse were the higher wage earner.  If a couple comprised of a disabled individual (the "qualifying spouse") and either a disabled spouse who is not working or a spouse who is not disabled were to be considered (the "not qualifying" spouse), including the couple's income could result in a higher cost share fee for the qualifying spouse than if only his or her individual income were to be used.  Further, another state proposed a methodology nearly identical to what commentator suggests, and such methodology was rejected by the Centers for Medicare and Medicaid Services (CMS) because this methodology could result in an inappropriately high cost share fee.  Cost share fees are limited to no more than 7.5% of the individual's own income.  The department has discovered that the proposed cost share fees for the program in Montana could also result in a cost of more than 7.5% of an individual's own income.  Thus, some of the cost share amounts in New Rule VI (37.82.1007) have been reduced to ensure that the amount does not exceed 7.5% of the individual's income.  The cost share amount for individuals with income over 100% of the federal poverty level (FPL) up to 150% of the FPL has been reduced from $75 to $67, the amount for individuals with income over 150% up to 200% of the FPL has been reduced from $125 to $100, and the amount for individuals with income over 200% up to 250% of the FPL has been reduced from $175 to $135.  The cost share amount for individuals with income below 100% of the FPL remains at $35 because this does not exceed 7.5% of the individual's income for any members of the income range.  The minimum income for an individual in this income range is $694.01 (individuals with income less than that would be categorically needy using another program), and 7.5% of $694 is $51.95, so the amount of $35 originally set for this income range is well below the 7.5% cap.  Regarding changing the "layout" of the cost share fee table, since federal regulations limit cost share fee basis to that of the individual worker with disabilities, family income may not be included, and, to eliminate the broad income ranges for a "sliding fee scale" methodology would shift program costs from benefits for recipients to administration and increase the complexities for both the recipient and the department.

 

COMMENT #4:  The department states it rejected the option of having higher resource limits or no resource limits at all because this would benefit a person while the person was working and eligible under this coverage group but would disqualify the person from receiving Medicaid under a different coverage group if the person lost eligibility under this group.  This rationale is without merit.  The resource limits should not be based on whether the person will be eligible for Medicaid under another coverage group when the person no longer is eligible for MWD.  It should not be based on the premise that people with disabilities are just going to stop working.

 

RESPONSE #4:  The statement quoted by the commenter was meant primarily as an observation, although the notice mistakenly stated this was a reason for the policy decision regarding resource limits.  The department is not suggesting that people with disabilities are "just going to stop working".  The department is merely considering the reality that people, all people, experience stops and starts in their work activities.  This can include loss of employment due to changes in the economy or job market, moving to a different area, temporary or permanent inability to work due to one's own health or that of a family member, retirement, and many other reasons.  One cannot assume that just because a person has a job today or this year, the same person will continue to work for the remainder of his or her life.  And a sudden work stoppage resulting in a person losing eligibility for MWD, but under which the person had accumulated significant resources in excess of other programs, could result in loss of all Medicaid benefits.  The other Medicaid programs will not presently be revised to exclude resources accumulated while receiving MWD benefits.  Such a policy could be exceedingly complex to trace when individual dollars in a bank account, for example, were accumulated.  Further, the department has previously stated that the option of higher resource limits or no resource limits was rejected by the department as it would create an unfair disparity between workers with disabilities and other individuals with disabilities (as well as those in the similar aged and blind groups).  The department believes it would be clearly unfair to discriminate in such a significant way in favor of an individual with disabilities who is working versus an individual with disabilities who is either unable to work or has been unable to secure or maintain employment.  Medicaid is a needs-based program and therefore logically would consider resources and establish a reasonable limit on resources as a way of defining "need".

 

COMMENT #5:  These resource limits are unreasonable and don't allow participants to accumulate money for their retirement. 

 

RESPONSE #5:  Participants can, in fact, accumulate money for retirement.  MWD allows for exclusion of resources accumulated in retirement funds while an individual is participating in MWD.  When a working individual retires and potentially applies for other Medicaid programs at that time, some retirement savings could be considered countable resources or income for determination of Medicaid upon retirement.  What the commenter seems to be suggesting is amendments to all the other 60+ Medicaid programs offered in Montana.  MWD is a new program, and was not intended to provide for administratively cumbersome and confusing amendments to the other Medicaid programs.  Tracking individual "dollars" accumulated for a specific purpose as people enter and leave the program would be excessively difficult and unsustainable.

 

COMMENT #6:  The department states it rejected the option of having higher resource limits or no resource limits at all because this would create an unfair disparity between disabled workers and other aged, blind, or disabled individuals who are not working and who are subject to the SSI resource limits.  It is not unfair.  If it is unfair, then it is also unfair to allow people without disabilities to acquire unlimited resources simply because they have the option of getting health insurance instead of being dependent on Medicaid when people with disabilities don't have the option of getting health insurance that meets their needs because there is none.

 

RESPONSE #6:  The department agrees that people with disabilities generally don't have the option of getting health insurance that meets their needs.  That is why participants in MWD are allowed to qualify for Medicaid using higher income and resource limits than those applied in other Medicaid coverage groups.  However, aged, blind, or disabled individuals who are not working also are unable to get health insurance that meets their needs.  The department stands by its statement that it would be unfair to require individuals who are aged, blind, or disabled and may be unable to work to meet the very strict SSI resource limit while eliminating the resource limit altogether for workers with disabilities.

 

COMMENT #7:  People should be allowed to accumulate wealth.  It is good for individuals and good for the economy.  Having resource limits for MWD does not promote this.

 

RESPONSE #7:  The offering of any Medicaid program must be within the ability of the state of Montana to afford the program.  The more liberal the program, the more expensive the program.  In this time of budget restrictions in all facets of government, it is not viable or sustainable to offer a program with few or no limitations.  Further, Medicaid is a needs-based program and therefore logically would consider resources and establish a reasonable limit on resources as a way of defining "need".

 

COMMENT #8:  One individual suggested that participation in MWD should not be restricted by resource limits because MWD is an insurance program.

 

RESPONSE #8:  The department disagrees because MWD is not an insurance program.  It is merely a new coverage group in Medicaid, which is a needs-based public assistance program.  Since Medicaid is needs-based, it is appropriate to have resource as well as income limits.  The cost share fees paid by participants in MWD are not insurance premiums.  Insurance premiums are based on actuarial calculations to predict the likely cost of providing coverage for a specific risk, whereas the amount of the cost share fees is unrelated to the estimated cost of paying the participants' medical expenses.  The cost share fees are based solely on the participant's ability to pay as measured by the participant's income level and are not intended to bring in sufficient revenue to pay for the participants' medical expenses.

 

COMMENT #9:  The department states that one reason for choosing to exclude retirement and pension funds and plans from consideration as resources is to maintain consistency of eligibility requirements between Medicaid coverage groups, but retirement and pension funds and plans are actually counted in determining eligibility for other coverage groups.

 

RESPONSE #9:  The department agrees and thanks this person for calling the error to its attention.  It is true that retirement accounts are counted in determining eligibility for Medicaid under all coverage groups other than MWD.  Such accounts are not being excluded to maintain consistency with other coverage groups.  They are being excluded because it is desirable to allow participants in MWD to save money to meet their needs in retirement.

 

COMMENT #10:  The decision not to count retirement funds as a resource in determining eligibility for MWD is an excellent one.  However, it makes no sense to allow a person with disabilities to accumulate resources for retirement while in the MWD program without protecting these funds if the persons stops working and has to transfer to another Medicaid coverage group.  The person will just have to liquidate the funds he or she has accumulated in order to qualify for Medicaid under another coverage group.  This gives participants in MWD no incentive to save for their retirement and is not good for individuals with disabilities.  The department should protect retirement funds accumulated while participating in MWD from being counted when a person leaves the program and applies for other Medicaid coverage. 

 

RESPONSE #10:  When any working individual retires and potentially applies for other Medicaid programs at that time, retirement savings could be considered countable resources or income for determination of Medicaid upon retirement.  There are currently several options available for an individual with disabilities to save toward retirement without affecting Medicaid resource eligibility, including some employer-sponsored retirement plans, as well as the use of Special Needs Trusts and Self-Sufficiency Trusts of Montana, which are available to individuals with disabilities under the age of 65.  The department believes the currently available options are adequate without creating additional allowances specific to one unique program.  What the commentator is suggesting is amendments to all the other 60+ Medicaid programs offered by the department.  MWD is a new program, and was not intended to provide for administratively cumbersome and confusing amendments to the other Medicaid programs.  Tracking individual "dollars" accumulated for a specific purpose as people enter and leave the program would be excessively difficult and unsustainable.

 

COMMENT #11:  Several individuals and organizations commented that participants should be allowed to retain Medicaid coverage under MWD when they are temporarily unemployed.

 

RESPONSE #11:  Montana originally proposed a "grace period" for participants in MWD who are temporarily unemployed.  Unfortunately, CMS rejected Montana's plan to provide such grace periods, apparently because CMS concluded they were inconsistent with the Ticket to Work and Work Incentives Improvement Act (TWWIIA) and Balance Budget Act of 1997 (BBA), the federal statutes that provide authority for MWD.  TWWIIA and BBA allow states to provide Medicaid coverage to people with disabilities who are working using more liberal income and resource limits, but benefits cannot be provided under this special coverage group to a person who is not working, even temporarily.

 

COMMENT #12:  One individual suggested that cancelling a person's Medicaid coverage under MWD when the person is unable to work because of an illness related to the person's disability may violate the Americans with Disabilities Act (ADA).

 

RESPONSE #12:  The department does not believe it violates the ADA to terminate participation in MWD when a person with a disability is unable to work due to an illness related to his or her disability.  MWD is a program specifically for persons with disabilities who are working, so being employed is a bona fide eligibility criterion.  It is not discriminatory or violative of the ADA to terminate participation in MWD when a person no longer meets the eligibility criteria.  

 

COMMENT #13:  One individual asked whether a self-employed person will lose eligibility during a period of time when the person is not making a profit at the person's self-employment business.

 

RESPONSE #13:  Self-employment is not defined by the amount of net income produced; it is defined by the continued work activities involved in the "profit motive".  Thus, if a person is actively participating in self-employment activities as defined in the rule, the individual is acknowledged to be working regardless of whether their endeavor is presently generating a net income; many self-employment endeavors do not immediately generate positive net income.

 

COMMENT #14:  New Rule III (37.82.1004) states that in order to be eligible for the MWD program a person must have a disability as defined in 42 U.S.C. 1382c, except that the individual has or has had earnings above the level for substantial gainful activity.  Does this mean that an individual must have earnings over the substantial gainful activity (SGA) level to qualify for MWD?  If so, an individual would have to work a minimum of 32 hours per week at minimum wage to qualify.  This will exclude many people with disabilities and will discourage and prevent many from entering the workforce.  Many people with disabilities due to unique health-related circumstances may not be able to work at that level.  Even people who can only work part time would still be contributing to the tax base and doing their best to decrease their dependency on government assistance programs.  They should not be shut out of the MWD program. 

 

RESPONSE #14:  It was never the department's intention to limit participation in the MWD program to individuals who are or have been employed at the SGA level.  Title 42 U.S.C. 1382c(3)(A) provides that "an individual shall be considered to be disabled for purposes of this title if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months".  The department simply meant to say that to be considered disabled for purposes of the MWD program an individual must satisfy all of the criteria of 42 U.S.C. 1382c (3)(A) apply except the criterion that the person must be unable to engage in any substantial gainful activity.  In other words,  a person is disabled for purposes of the MWD program if the person has any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months and the physical or mental impairment is sufficiently severe that it results in functional limits to gainful employment, but a person who meets those criteria is considered disabled without regard to whether or not the person has earnings above the dollar amount defined as constituting substantial gainful employment in regulations published by the Commissioner of Social Security.  The department has revised New Rule III(1)(b) (37.82.1004) to clarify this point.

 

COMMENT #15:  MWD is not merely an expansion of the Supplemental Security Income program and therefore eligibility for MWD should not be tied to the SSI eligibility rules.

 

RESPONSE #15:  Title 42 CFR, part 435.601 requires that "…in determining financial eligibility of individuals a categorically or medically needy, the agency must apply the financial methodologies and requirements of the cash assistance program that is most closely categorically related to the individual's status".  Further, this section defines the most closely related cash assistance program for the aged, blind, and disabled categories to be that of the SSI or State supplement programs.  As such, the state has no options regarding the financial methodologies used. 

 

COMMENT #16:  The fiscal impact statement estimates that 43 individuals will participate in MWD in the first three months of the program.  Where did this estimate come from?  Is participation limited to 43 individuals? 

 

RESPONSE #16:  Participation is not limited to a fixed number of participants.  Anyone who applies and meets the eligibility requirements may participate.  By the end of the third month of its operation, MWD already had 146 participants.  The estimate of 43 participants in the first three months was calculated by Allen Jensen, director of the Work Incentives Project at George Washington University.  He reviewed data from 39 states that implemented Medicaid buy-in programs for workers with disabilities from 1999 through 2007.  He examined the data on numbers of participants in their programs and extrapolated that to the population of Montana, taking into consideration the number of adults aged 18 through 64 getting social security disability insurance (SSDI) and SSI on the basis of disability and the percentage of SSI beneficiaries in Montana with earned income, which was 17.8% in 2006.  Montana's percentage of SSI beneficiaries with earned income is the 8th highest among the 50 states, so perhaps it is not surprising that the number of participants in Montana's program in the first three months was more than three times the department's estimate.

 

COMMENT #17:  Are patients at Montana State Hospital who work eligible for MWD?

 

RESPONSE #17:  No, patients at Montana State Hospital (MSH) who work are not eligible for MWD.  Pursuant to federal Medicaid regulations at 42 CFR 435.1008 that prohibit Medicaid coverage for certain institutionalized individuals, patients at MSH who are between the ages of 21 and 65 are ineligible for Medicaid.  Additionally, MWD is specifically for individuals who are not living in medical institutions.

 

COMMENT #18:  New Rule III(1)(b) (37.82.1004) provides that to be eligible for MWD a person must have a disability as defined in 42 U.S.C. 1382c.  The rule should list the criteria contained in 42 U.S.C. 1382c so that a reader will not have to refer to the statute to determine if the reader qualifies for MWD on the basis of disability.

 

RESPONSE #18:  The social security disability criteria in 42 U.S.C. 1382c take up many pages.  The rule would be extremely long and complex if these criteria were included in the rule. Additionally, it is unnecessary to include the criteria in the rule because most applicants for MWD have already been determined to be disabled according to the SSA criteria.

 

            5.  The department intends to apply these new rules retroactively to July 1, 2010.  A retroactive application of the proposed new rules does not result in a negative impact to any affected party.

 

/s/  Barbara Hoffmann                                  /s/  Hank Hudson for                        

Rule Reviewer                                               Anna Whiting Sorrell, Director

                                                                        Public Health and Human Services

           

Certified to the Secretary of State November 15, 2010.

 

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