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NPRM: Cooperation to Pursue Third Party Health Coverage

AT-89-11

Published: June 9, 1989
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Medical Support
Types:
Policy, Action Transmittals (AT)

PROPOSED IV-A REGULATION

ACTON TRANSMITTAL

OCSE-AT-89-11

June 9, 1989

TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT: Cooperation to Pursue Third Party Health Coverage

ATTACHMENT: Attached are proposed regulations published by the Office of Family Assistance, FSA, that implement section 12304 of the Consolidated Budget Reconciliation Act (COBRA) of 1985 which requires each applicant or recipient to cooperate with the State in identifying and providing information to assist States in pursuing any third party who may be liable to pay for care and services available under State plans for medical assistance under title XIX, unless such individual has good cause for refusing to cooperate as determined by the State agency in accordance with standards prescribed by the Secretary. The regulations are applicable to the AFDC program in all jurisdictions.

REGULATION

REFERENCE: 45 CFR Parts 232, 234, and 235.

COMMENT

PERIOD: Consideration will be given to comments received by June 23, 1989. Address comments to: Administrator, Family Support Administration, Attention: Ms. Diann Dawson, Director, Division of Policy, Office of Family Assistance, 5th Floor, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447, or delivered to the Office of Family Assistance, Family Support Administration, 5th Floor, 370 L'Enfant Promenade, S.W., Washington, D.C. between 8:00 a.m. and 4:30 p.m. on regular business days.

INQUIRIES TO: OCSE Regional Representatives.

______________________________

Robert C. Harris

Associate Deputy Director

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Family Support Administration

45 CFR Parts 232, 234, and 235

RIN 0970-AA49

Cooperation to Pursue Third Party Health Coverage

AGENCY: Family Support Administration, HHS.

ACTION: Notice of proposed rulemaking.

SUMMARY: These proposed rules implement section 12304 of the Consolidated Budget Reconciliation Act (COBRA) of 1985 which requires each applicant or recipient to cooperate with the State in identifying and providing information to assist States in pursuing any third party who may be liable to pay for care and services available under State plans for medical assistance under title XIX, unless such individual has good cause for refusing to cooperate as determined by the State agency in accordance with standards prescribed by the Secretary. The regulations are applicable to the AFDC program in all jurisdictions.

DATE: Comments will be considered if we receive them no later than June 23, 1989.

ADRESSES: Comments should be submitted in writing to the Administrator, Family Support Administration, Attention: Ms. Diann Dawson, Director, Division of Policy, Office of Family Assistance, 5th Floor, 370 L'Enfant Promenade SW., Washington, DC 20447, or delivered to the Office of Family Assistance, Family Support Administration, 5th floor, 370 L'Enfant Promenade SW., Washington, DC 20447 between 8:00 a.m. and 4:30 p.m. on regular business days. Comments received may be inspected during these same hours by making arrangements with the contact person identified below.

FOR FURTHER INFORMATION CONTACT: Ms. Diann Dawson, 5th Floor, 370 L'Enfant Promenade S.W., Washington, DC 20447, telephone (202) 252-5119.

SUPPLEMENTARY INFORMATION:

Discussion of Statutory Provision

Section 12304 of COBRA, Pub. L. 99-272, amended section 402(a)(26) of title IV-A of the Social Security Act (the Act) by adding a new subparagraph (C) which requires each applicant or recipient to cooperate with the State in identifying and providing information to assist the States in pursuing any third party who may be liable to pay for the care and services available under the State's plan for medical assistance under title XIX of the Act. An individual may be exempted from this requirement if he or she is determined to have good cause for refusing to cooperate as determined by the State agency in accordance with standards prescribed by the Secretary which take into consideration the best interest of the individuals involved.

The statute also provides that States shall not be subject to any financial penalty in the administration or enforcement of this provision as a result of any monitoring, quality control, or auditing requirements. According to the conference report, this provision is intended to exclude from the calculation of AFDC fiscal sanctions for assistance payments any errors resulting from the application of this policy. These statutory requirements are effective July 1, 1986.

Discussion of Proposed Rule Provisions

These proposed rules require as a condition of eligibility for AFDC, each applicant and recipient to cooperate with the State in identifying, and providing information to assist the State in pursuing any third party who may be liable to pay for medical care and services. This is consistent with the Department's initiative to reduce medical costs to States and the Federal government, and with the concept of Medicaid as the payor of last resort. These rules facilitate the pursuit of third party resources and thereby assist in reducing Medicaid expenditures of States and the Federal government. When used in this provision, "third parties" include any individual, entity, or program that may be liable to pay all or part of the costs for medical care and services available under title XIX of the Act. The term may also include any employment related or other individual or group health insurance available to or through the dependent child's parents.

We have added a new section 45 CFR 232.13 to reflect this new eligibility requirement. We are also adding language to the current regulations at 45 CFR 235.70 to provide for the prompt notification to the title XIX agency of all relevant information to assist in their pursuit of liable third parties.

The statute provides that individuals who refuse to cooperate with the State in the pursuit of third-party liability for medical services must be removed from the assistance unit. The statute also provides that applicants and recipients may be exempted from this new provision if they are determined by the State agency to have good cause for refusing to cooperate in accordance with standards prescribed by the Secretary, which take into consideration the best interests of the individuals involved. This provision is similar in scope to current regulations at 45 CFR 232.12 which provide for such good cause determinations for refusal to cooperate in establishing paternity or obtaining support for an eligible child. Regulations at 45 CFR 232.11 on "Assignment of Rights to Support" currently include standards for making determinations of whether good cause exists for on individual's refusal to comply with child support requirements.

In order to provide for consistency between these similar requirements, we propose to make these same good cause standards applicable to the requirement under this provision. The existing regulations for refusing to cooperate at 45 CFR 282.40-232.49 and 235.70 are being amended, where appropriate to extend current procedures and policies regarding good cause determinations for child support to this new eligibility requirement. Specifically, we propose to amend 45 CFR 232.40 (a) and (b), 232.42 (a) and (c), 232.44 (a) and (b), 232.45 (a), (b), and (c), 232.48(g), 232.49 (a), (c), and (d), 235.70 (a) and (b), and Appendix A to Part 232, to incorporate those standards, as are appropriate, for use in determining good cause claims for refusal to identify and assist in the pursuit of third parties liable (or potentially liable) for medical services.

These rules would also require that the State must provide assistance to an eligible child in the form of protective payments for cases where the caretaker relative refuses to cooperate. This requirement is consistent with similar restrictions imposed in cases where individuals refused to cooperate in employment-related activities or in establishing paternity or obtaining support payments. In the latter case, Congress was concerned that continued receipt of assistance by the uncooperative adult on behalf of other family members would offset, to some degree, the penalty imposed by the State and may lead to a diversion of funds necessary for the well-being of the child.

The requirement to provide assistance in the form of protective payments has proven to be an effective method in meeting these concerns. Extension of this policy to refusal to cooperate in pursuing third-party liability for medical services is similarly essential for the well-being of the child end is therefore justified under the authority of section 1102 of the Act, which enables the Secretary to make such rules as are necessary for the efficient administration of the program. Accordingly, we propose to amend 45 CFR 234.60(a) to provide that protective payments are necessary in cases where good cause is not established.

Federal financial participation (FFP) is available for gathering third-party liability information as long as the activity is conducted as part of the administration of the title IV-A State plan. Such activities include making good cause determinations and providing assistance in the form of protective payment, as explained in proposed regulation 45 CFR 232.13(c). FFP is not available under title IV-A for activities outside the scope of the administration of a State plan for AFDC, such as the cost of providing medical care and services.

We consider the information gathering activities prescribed in this rule, such as interviewing agents and contacting collateral sources, as part of the administration of the AFDC program. This is necessary because the statute now requires cooperation in obtaining third party liability for medical care "as a condition of eligibility for aid". Moreover, the State plan must now require the IV-A agency to provide to the State Medicaid agency "all relevant information as prescribed by the State Medicaid agency" as set forth in proposed regulations at 45 CFR 235.70(b)(2). Thus, the information gathering requirement for third-party liability is now part of the larger information gathering requirement for the AFDC eligibility determination-these costs must therefore be claimed under title IV-A.

To some extent, the information gathering activities prescribed in this rule may overlap or even duplicate information gathering activities prescribed In 45 CFR 306.50, "Securing Medical Support Information." Nevertheless, the State must claim the costs under title IV-A, rather than title IV-D, since current regulations at 45 CFR 304

23(a) deny FFP under title IV-D for activities related to the IV-A program. Only where the State IV-A agency fails to provide the information specified under 45 CFR 306.50(a), and the information must be collected and forwarded by the IV-D agency pursuant to that section, is FFP available under title IV-D.

Regulatory Provisions

Executive Order 12291

These proposed rules do not meet any of the criteria specified in Executive Order 12291 for a major regulation because the cost of implementation is expected to be insignificant.

Paperwork Reduction Act

Public reporting burden for the collection of information requirements at 45 CFR 232.48 is estimated to average 60 minutes per response, including the time for reviewing instructions, seal existing data sources, gathering maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate of or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Family Assistance, 6th floor, 370 L'Enfant Promenade SW., Washington, DC 20447; and to the Office of Management and Budget, Paperwork Reduction Project, Washington, DC 20503.

Regulatory Flexibility Act

The primary impact of these proposed rules is on State governments and individuals. Therefore, we certify that these rules, if promulgated, will not have a significant economic impact on a substantial number of small entities because they affect benefits to individuals and payments to States. Thus, a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act, is not required.

(Catalog of Federal Domestic Assistance Program 13.806, Public Assistance.)

List of Subjects

45 CFR Part 232

Aid to families with dependent children, Child support, Grant programs- social programs.

45 CFR Part 234

Grant programs-social programs, Health care, Public assistance programs, Rent subsidies.

45 CFR Part 235

Aid to families with dependent children, Fraud, Grant programs- Social programs, Public assistance programs.

Dated: June 29, 1988.

Wayne A. Stanton,

Administrator, Family Support

Administration.

Approved: December 2, 1988.

Otis R. Bowen,

Secretary of Health and Human Services.

Part 232 of Chapter II, Title 45, Code of Federal Regulations is proposed to be amended as set forth below:

PART 232-SPECIAL PROVISIONS APPLICABLE TO TITLE IV-A OF THE SOCIAL SECURITY ACT

1. The authority citation for Part 232 is reused to read as follows:

Authority: Sec. 1102 of the Social Security Act, (42 U.S.C 1302).

2. Part 232 is amended by adding a new §232.13 to read as follows:

§232.13 Cooperation in pursuing liability for medical services.

(a) The State plan must provide that as a condition of eligibility, each applicant for or recipient of AFDC will be required to cooperate (unless good cause for refusing to do so is determined by the Director of the State IV-A agency to exist in accordance with §§232.40 through 232.49 with the State in:

(1) Identifying any third party who may be liable for care and services available under the State's title XIX State plan in behalf of the applicant or recipient or in behalf of any other family member (including parents and siblings as required under §206.10(a)(1)(vii) (A) and (B)) for whom the applicant or recipient is applying for or receiving assistance; and

(2) Providing relevant information to assist the State in pursuing any such potentially liable third parties. Such information shall include, but is not limited to, the name, address, telephone number, type of liability of the third party as well as other pertinent information, such as the third party's employer, type of medical plan, policy number, etc.

(b) The plan shall provide that if the applicant or recipient fails to cooperate as required by this section (unless good cause is determined to exist), the State or local agency shall:

(1) Deny assistance to the applicant or recipient without regard to other eligibility factors; and

(2) Provide assistance to the eligible child in the form of protective payments as described in §234.60 of this chapter. Such assistance will be determined without regard to the needs of the applicant or recipient.

(c) Federal financial participation (FFP) is available for title IV-A administrative costs associated with identifying and providing information about a third party provider as part of the eligibility determination for the AFDC program. FFP is also available for IV-A administrative costs associated with determining good cause for failure to cooperate and providing assistance in the form of protective payments.

3. Section 232.40 is amended by revising paragraphs (a), (b)(1), (b)(2)(i) (A), (B), and (C), and (b)(2)(ii) (C), (E), and (F) to read as follows:

§232.40 Claiming good cause for refusing to cooperate.

(a) Opportunity to claim good cause. The plan shall provide that an applicant for, or recipient of, AFDC will have the opportunity to claim good cause for refusing to cooperate as required by §232.12 or §232.13.

(b) * * *

(1) The plan shall provide that: (i) Prior to requiring cooperation under §232.12 or §232.13, the State or local agency will notify the applicant or recipient of the right to claim good cause as an exception to the cooperation requirement and of all the requirements applicable to a good cause determination;

(ii) The notice will be in writing, with a copy furnished to the applicant or recipient; and

(iii) The applicant or recipient and the caseworker will acknowledge that the applicant or recipient received the notice by signing and dating a copy of the notice, which will be placed in the case record.

(2) * * *

(i) * * *

(A) Advise the applicant or recipient of the potential benefits the child may derive from the establishment of paternity, security support, and pursuing liability for medical services;

(B) Advise the applicant or recipient that by law, cooperation in establishing paternity, securing support, and pursuing liability for medical services is a condition of eligibility for AFDC;

(C) Advise the applicant or recipient of the sanctions provided by§§232.12 and 232.13 for refusal to cooperate without good cause;

* * * * *

(ii) * * *

(C) Inform the applicant or recipient that on the basis of the corroborative evidence supplied and the agency's investigation if necessary, the State or local agency will determine whether cooperation would be against the best interests of the child for whom support or liability for medical services would be sought;

* * * * *

(E) Inform the applicant or recipient that the State Child Support Enforcement agency and the State Medicaid agency may review the State or local agency's findings and basis for a good cause determination and may participate in any hearings concerning the issue of good cause; and

(F) As applicable, (see §232.49) inform the applicant or recipient that either: The State Child Support Enforcement agency will not attempt to establish paternity and collect support and the State Medicaid agency will not pursue third parties liable for medical services in those cases where the applicant or recipient is determined to have good cause for refusing to cooperate; or the State Child Support Enforcement agency may attempt to establish paternity and collect support and the State Medicaid agency may pursue liable third parties in those cases where the State or local agency determines that this can be done without risk to the applicant or recipient if done without their participation.

* * * * *

5. Section 232.41 is amended by revising paragraph (d)(2) to read as follows:

§232.41 Determination of good cause for refusal to cooperate.

* * * * *

(d) * * *

(2) Continued refusal to cooperate will result in imposition of the sanctions provided in §232.12 or §232.13.

6. Section 232.42 is amended by revising paragraphs (a) introductory text, (a)(1) introductory text, (a)(2), and (c)(5) to read as follows:

§232.42 Good cause circumstances.

(a) Circumstances under which cooperation may be "against the best interests of the child." The plan shall provide that the State or local agency will determine that cooperation in establishing paternity, securing support or pursuing any third party who may be liable to pay for medical services available under the State's Medicaid plan is against the best interests of the child only if:

(1) The applicant's or recipient's cooperation in establishing paternity, securing support, or pursuing third parties potentially liable for medical services is reasonable anticipated to result in:

* * * * *

(2) At least one of the following circumstances exists, and the State or local agency believes that because of the existence of that circumstance proceeding to establish paternity, secure support, or pursue third party liability for medical services would be detrimental to the child for whom support would be sought.

* * * * *

(c) * * *

(5) The extent of involvement of the child in the paternity establishment, support enforcement activity or pursuit of third parties to be undertaken.

7. Section 232.44 is revised to read as follows:

§232.44 Participation by the State IV-D or Medicaid Agency.

The plan shall provide that:

(a) Prior to making a final determination of good cause for refusing to cooperate, the State or local agency will:

(1) Afford the IV-D agency or the Medicaid agency, as appropriate, the opportunity to review and comment on the findings and basis for the proposed determination; and

(2) Consider any recommendation from the IV-D agency or the Medcaid agency, as appropriate.

(b) The State or local agency will give the IV-D agency or the Medicaid agency, as appropriate, the opportunity to participate in any hearing (under §205.10 of this chapter) that rests from an applicant's or recipient's appeal of any agency action under §232.40 through 232.49.

8. Section 232.45 is revised to read as follows:

§232.45 Notice to the IV-D or Medicaid Agency.

The plan shall provide that:

(a) If the notice, required by §235.70 of this chapter, has previously been provided to the IV-D agency or Medicaid agency, as appropriate, the State or local agency will promptly report to the IV-D agency or Medicaid agency, as appropriate, that good cause has been claimed;

(b) The State or local agency will promptly report to the agency or Medicaid agency, as appropriate, all cases in which it has determined that there is good cause for refusal to cooperate and if applicable, its determination whether or not child support enforcement or pursuit of third parties potentially liable for medical services may proceed without the participation of the caretaker relative; and

(c) The State and local agency will promptly report to the IV-D agency or Medicaid agency, as appropriate, all cases in which it has determined that there is not good cause for refusal to cooperate.

Second Notice of Right to Claim Good Cause for Refusal to Cooperate in Child Support enforcement and the Pursuit of Third Parties Liable for Medical Services.

Good Cause Circumstances

You may claim to have good cause for refusing to cooperate if you believe that such cooperation would not be in the best interests of your child. The following circumstances under which the Welfare Agency may determine that you have hood cause for refusing to cooperate:

o Cooperation is anticipated to result in serious physical or emotional harm to the child;

o Cooperation is anticipated to result in physical or emotional harm to you which is so serious it refutes your ability to care for the child adequately;

o The child was born after forcible rape or incest;

o Court proceedings are going on for adoption of the child; or

o You are working with an agency helping you to decide whether to place the child for adoption.

Proving Good Cause

It is your responsibility to:

o Provide the Welfare Agency with the evidence needed to determine whether you have good cause for refusing to cooperate (if your reason for claiming good cause is your fear of physical harm and it is impossible to obtain evidence, the Welfare Agency may still be able to make a good cause determination after an investigation of your claim).

o Give the necessary evidence to the agency within 20 days after claiming good cause. The Welfare Agency will give you more time only if it determines that more than 20 days are required because of the difficulty in obtaining the evidence.

The welfare Agency may:

o Decide your claim based on the evidence which you give to the agency, or

o Decide to conduct an investigation to further verify your claim. If the Welfare Agency decides an investigation is needed, you may be required to give information, such as the absent parent's name and address, to help the investigation. The agency will not contact the absent parent without first telling you.

Note: If you are an applicant for assistance, you will not receive your share of the grant until you have given the agency the evidence needed to support your claim, and, if requested, the information needed to permit an investigation of your claim.

Examples of Acceptable Evidence

The following are examples of acceptable kinds of evidence the Welfare Agency can use in determining if good cause exists.

If you need help in getting a copy of any of the documents, ask the Welfare Agency. the Welfare Agency will give you reasonable assistance which is needed to help you obtain the necessary documents to support our claim.

o Birth certificates, or medical or law enforcement records, which indicate that the child was conceived as the result or incest or forcible rape;

o Court documents or other records which indicate that legal proceedings for adoption are pending in court;

o Court, medical , criminal, child protective services, social services, psychological, or law enforcement records which indicate that the alleged or absent father might inflict physical or emotional harm on you or the child;

o Medical records which indicate emotional health history and presents health status of you or the child or whom support would be sought; or written statements forma mental health professional indicating a emotional health of you or the child;

o A written statement from a public or private agency confirming that you are being assisted in resolving the issue of whether to keep or give up the child for adoption; and

o Sworn statements from individuals, including friends, neighbors, clergymen, social workers, and medical professionals who might have knowledge of the circumstances providing the basis of your good cause claim.

Child Support Agency and Medicaid Agency Participation and Enforcement

The Child Support Enforcement Agency or the Medicaid Agency may review the Welfare Agency's findings and the basis for a good cause determination in your case. If you request a hearing regarding this issue of good cause for refusing to cooperate, the Child Support enforcement Agency or the Medicaid Agency may participate in that hearing.

The Notice must include one of the following statements, as applicable depending on the State plan option chose. See §232.49.

Option 1. If you are found to have good cause for not cooperating, the Child Support Enforcement Agency may attempt to establish paternity or collect support and the State Medicaid agency may pursue third parties potentially liable for medical services only if the welfare agency determines that this can be done without risk to you or your child. This will not be done without first telling you.

Option 2. If you are found to have good cause for not cooperating, the Child Support enforcement Agency will not attempt to establish paternity or collect support and, as appropriate, the State Medicaid agency will not pursue third parties potentially liable for medical services.

I have read this notice concerning my right to claim good cause for refusing to cooperate.

__________________________________

(Signature of applicant/recipient)

__________________________________

(Date)

Part 234 of Chapter II, Title 45, Code of Federal Regulations is proposed to be amended as set forth below:

PART 234 - FINANCIAL ASSISTANCE TO INDIVIDUALS

1. The authority citation for Part 234 is revised to read as follows:

Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302).

2. Part 234.60 is amended by revising paragraphs (a)(1) and (a)(13) to read as follows:

§234.60 Protective, vendor and two-party payments to dependent children.

(a) * * * (1) If a State plan for AFDC under title IV-A of the Social Security Act provides for protective, vendor and two-party payments for cases other than failure to participate in WIN, employment search, or Community Work Experience Programs (CWEP), or failure by the caretaker relative to meet the eligibility requirements of §232.11, 232.12, or 232.13 of this chapter. It must meet the requirements in paragraphs (a)(2) through (11) of this section. In addition, the plan may provide for protective, vendor, and two-party payments at the request of the recipient as provided in paragraph (a)(14) of this section.

(13) For cases in which a caretaker relative fails to meet the eligibility requirements of §§232.11, 232.12, or 232.13 of this chapter by failing to assign rights to support or cooperate in determining paternity, securing support, or pursuing third-party liability for medical services, the State plan must provide that only the requirements of paragraphs (a)(7) and (9)(ii) of this section will be applicable. For such cases the entire amount of the assistance payment will be in the form of protective or vendor payments will be terminated, with return to money payment status, only upon compliance by the caretaker relative with the eligibility requirements of §§232.11, 232.12, and 232.13 of this chapter. However, if after making all reasonable efforts, the State agency is unable to locate an appropriate individual to whom protective payments can be made, the State may continue to make payments on behalf of the remaining members of the assistance unit to the sanctioned caretaker relative.

* * * * *

Part 235 of Chapter II, title 45, Code of Federal Regulations is proposed to be amended as set forth below:

PART 235 - ADMINISTRATION OF FINANCIAL PROGRAMS

1. The authority citation for Part 235 is added to read as set forth below, and the authority citations following any section in the part are removed.

Authority: Secs. 2, 3, 402, 403, 1002, 1003, 1102, 1402, 1403, 1602, and 1603, Social Security Act as amended (42 U.S.C. 302, 303, 602, 603, 1202, 1203, 1302, and Part XXIII of Pub. L. 97-35, 1352, 1353, 1382, and 1383)

2. Section 235.70 is amended by revising the section heading and introductory text of paragraph (a) and paragraph (b)(2) to read as follows:

§235.70 Prompt notice to IV-D or Medicaid Agency.

(a) A state plan under title Iv-A of the social Security Act must provide for prompt notice to the state or local child support agency designated pursuit to section 454(3) of the Social Security Act and to the State Medicaid agency, as appropriate, whenever:

* * * * *

(b) * * *

(2) "Prompt notice" means written notice including a copy of the AFDC case record, or all relevant information as prescribed by the child support agency. Prompt notice must also include all relevant information as prescribed by the State Medicaid agency for the pursuant of liable third parties. The prompt notice shall be provided within two working days of the furnishing of aid or the determination that an individual is a recipient under §233.20(a)(3)(viii)(D). The title Iv-A agency, the child support agency and the Medicaid agency may agree to provide notice immediately upon the filing of an application for assistance.

* * * * *

[FR Doc. 89-12179 Filed 5-23-89; 8:45 am]

BILLING CODE 4150-04-M