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Final Rule: Medical Support Enforcement (1980)

AT-80-04

Published: February 27, 1980
Information About:
State/Local Child Support Agencies
Topics:
Case Management, Medical Support, Funding, Federal Financial Participation (FFP), Incentive
Types:
Policy, Action Transmittals (AT), Regulations
Tags:
Cooperative Agreement

Medical Support Enforcement

REGULATION

ACTION TRANSMITTAL

OCSE-AT-80-04

February 27, 1980

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

SUBJECT: MEDICAL SUPPORT ENFORCEMENT

ATTACHMENT:Final regulations issued jointly by the Office of Child Support Enforcement and the Health Care Financing Administration authorizing States to implement a medical support enforcement program.

1) Final Regulations which amend 42 CFR Parts 433, 435 and 436 which:

- provide that a state may require, as a condition of eligibility, a medicaid applicant to assign to the State rights to medical support or other third party payment;

- adopt for the Medicaid program the same cooperation requirement and "good cause" policies that are in effect for the Child Support Enforcement program;

- allow State Medicaid agencies to enter into cooperative agreements with appropriate State agencies (including State IV-D agencies).

2) Final regulations which amend 45 CFR Parts 302, 304, and add a new Part 306 which:

- permit a IV-D Agency to secure and enforce medical support obligations under a cooperative agreement with the State Medicaid agency;

- establish the requirements for a cooperative agreement between the Medicaid Agency and the IV-D agency;

- provide that FFP at the 75 percent rate is not available under the IV-D Program for medical support enforcement activities;

- provide that no portion of the amounts collected for child support may be used to satisfy medical support obligations unless a specific amount for medical support is required by a court oradministrative order;

- authorize State IV-D agencies to accept FPLS applications from State or local agencies seeking to enforce medical support obligations.

REGULATION REFERENCE:42 CFR Part 433, subpart D; 42 CFR 435.604; and 42 CFR 436.604.

45 CFR 302.35(c)(1), 302.50(e), 302.80; 45 CFR 304.23(g); and 45 CFR Part 306.

EFFECTIVE DATE: May 12, 1980

ACTION REQUIRED:Make necessary amendments to title IV-D State Plan. Before medical support enforcement activities may be undertaken, the State IV-D agency must enter into cooperative agreements with the State Medicaid agency which meet the requirements of the new 45 CFR Part 306.

PLAN MATERIAL:Preprinted title IV-D State Plan amendment will be forthcoming.

INQUIRIES TO: OCSE Regional Representatives

Deputy Director

Office of Child Support

Enforcement

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

Health Care Financing Administration

Office of Child Support Enforcement

42 CFR Parts 433, 435, and 436

45 CFR Parts 302, 304, and 306

Assignment of Benefits; Collection of Medical Support and Payments

AGENCIES: Health Care Financing Administration (HCFA) and Office of Child Support Enforcement (OCSE), HEW.

ACTION: Final regulations.

SUMMARY: These regulations authorize States to require Medicaid applicants and recipients, as a condition of eligibility, to assign to the State their rights to medical support or other third party payments for medical care. Under these regulations, State Medicaid agencies can make agreements with other agencies (including State child support enforcement agencies) for assistance in collecting on third party liability. State agencies must make incentive payments to other States or political entities that collect medical support and payments, These incentive payments are taken from the Federal share of the collection. The regulations also prohibit Federal sharing in payments for medical assistance that would be covered by a private health insurance policy if that policy did not exclude services covered by Medicaid. The regulation implements section 11 of the Medicare-Medicaid Anti-Fraud and Abuse Amendments of 1977 (Pub. L. 95-142). The intent is to conserve Federal and State Medicaid funds by ensuring maximum use of available third party resources.

EFFECTIVE DATE: May 12, 1980.

FOR FURTHER INFORMATION CONTACT:

For HCFA: Elizabeth Matheson, 202-245-8097.

For OCSE: Steve Henigson, 301-443-5301.

SUPPLEMENTARY INFORMATION: Section 11 of Pub. L. 95-142 amended title XIX of the Social Security Act by adding a new section 1912, authorizing State Medicaid agencies to take new measures to collect from third parties who are legally obligated to pay for medical services that an individual has received under Medicaid. Under these measures a State may require individuals, as a condition of eligibility for medical assistance, to assign to the State their rights to any medical support or other payments for medical care, and to cooperate with the State, in establishing paternity and obtaining third-party payments. In addition, a State Medicaid agency may make cooperative arrangements with State Child Support Enforcement (title IV-D) agencies and otherappropriate agencies, courts, and law enforcement officials to assist in making collections. The State Medicaid agency must pay an incentive payment, taken from the Federal share of the amount collected, to the State, political subdivision or other entity that makes the collection.

Section 11 also amends title XIX by prohibiting Federal matching of a State's Medicaid payment in any case where a private insurer would have been liable to pay for the care except that the insurance contract provides that this liability is modified or inapplicable when the individual is eligible for Medicaid.

These regulations: (1) Specify requirements State Medicaid agencies must meet when they implement these provisions; (2) provide the conditions under which title IV-D agencies may perform medical support collection functions; (3) incorporate the prohibition against payments where private insurer liability exists: and (4) implement the incentive payment authority.

Proposed regulations prepared jointly by HCFA and the Office of Child Support Enforcement (OCSE) were published on August 29, 1978 (43 FR 38668). The proposed regulations were reorganized and rewritten to conform with the format and style of program regulations revised as part of HCFA's Medicaid recodification project (43 FR 45177). This preamble summarizes, for both the Medicaid and child support programs, the comments received on the proposal and the content of the final rules.

Responses to NPRM-Medicaid Regulations

Thirty comments were received from State welfare and Medicaid agencies, State Child Support Enforcement agencies, advocates for the disadvantaged, attorneys for medical service providers, hospitals and the U.S. Department of the Interior. Suggestions were also received at meetings with the Health Insurance Association of America and other representatives of the health insurance industry.

Definition of Private Insurer

One commenter recommended a change in the definition of private insurer to include all types of self-insurance that meet requirements published by the United States Department of Labor under title I of the Employee Retirement income Security Act of 1974. Some of the large labor unions have such self-insurance for their memberships. Under section 1902(a)(25) of the Social Security Act, State Medicaid agencies may seek reimbursement from third parties who are liable to pay for medical care and services to beneficiaries. This language is broad-enough to cover all forms of insurance. This suggestion would further HEW's goal of maximizing use of third party resources. The regulation at

§ 433.136 has been changed accordingly.

Medicaid Provider Reimbursement Process

Seven commenters were concerned that the regulations wouldreduce total reimbursement to institutional providers by changing the normal claims payment procedures. They thought that providers would not be permitted to bill third parties first and then bill the Medicaid agency for any remaining amount. They were confusing the assignment of benefits under § 433.145 and the payment of claims under § 433.139. The final regulations at

§ 433.139 authorize two basic methods for claims payments:

(1) The provider bills the third party directly and bills the agency for the amount not covered by the third party; and

(2) The Medicaid agency pays the provider and seeks reimbursement from the third party.

The first method results in somewhat larger payments to providers because insurance companies pay claims on the basis of charges rather than cost. The second method results in prompter payments to providers. This is particularly important for solo and small group physician providers, because they usually lack the clerical resources needed for billing the various companies. Institutions are better staffed for claims processing and as a result favor direct negotiations with third parties.

Since the intent of this regulation is t() assure utilization of available third party resources of Medicaid patients, States may use either method of payment. Section 433.139 of the final regulation clarifies this.

If the State chooses to pay the provider before seeking reimbursement from a liable third party, it must seek reimbursement within 30 days after the end of the month in which it makes the payment. If the State agency learns of the existence of a liable third party after it has paid a claim, the agency must seek reimbursement from the third party within 30 days after the end of the month it learned of the existence of the liable third party. We believe the time allowed is sufficient for what the agency must do and will ensure that reimbursement is not delayed too long.

Timely Payment of Claims

One hospital and one State hospital association requested that States pay Medicaid claims more quickly. Timely payment of "clean" claims (those that require no additional information or verification) is required by section 2(b) of Pub. L. 95-142. HCFA published final rules on this requirement on May 25, 1979 (44 FR 30341).

Refund of Excess Collections

One State welfare agency, two provider representatives and a health insurance group objected to refunding to the individual any amount remaining after third parties reimburse the Medicaid agency. The overage occurs when providers are paid by the agency at State rates and reimbursement is obtained from third parties, usually at a higher rate (based on charges). Section 1912(b) of the Act specifically requires that any overage be paid to the individual, who is usually a person of limited resources.

Good Cause for Failure to Cooperate

Three State health or welfare agencies and two legal advocacy groups commented on the "good cause" issue. Basically, commenters wanted the good cause provisions for Medicaid to coincide with the provisions for AFDC. The NPRM provided that "good cause" for refusal to cooperate in establishing paternity or obtaining medical care support and payments exists if it is anticipated that cooperation will result in possible reprisal, and cause physical or emotional harm to the individual or child.

In May of 1978, HEW held a public hearing and obtained numerous written comments with respect to this policy when it was developed by the OCSE for collection of financial support from absent parents for AFDC children. The NPRM specified procedures for Medicaid that differed in minor respects from policies followed for AFDC. In the final regulation, we have responded to the "good cause" comments by adopting for Medicaid the same policies as the AFDC policies in 45 CFR Part 232 published on October 3, 1978 (43 FR 45742).

One of the State agencies was concerned that services would not be available for an unborn child because of the failure of the mother to cooperate in establishing paternity or obtaining medical care support. Nothing in the regulation precludes a State from providing services for an eligible unborn child even though the mother has refused to cooperate and therefore loses her own eligibility. Several States have administrative mechanisms to limit the services rendered to the mother on behalf of the unborn child to obstetrics and prenatal care, for example, while not authorizing the payment of services which are of benefit only to the mother (e.g., eyeglasses).

A legal advocacy group commented that the definition of "cooperation" in § 433.147(b) should be amended to accommodate the physical or other limitations of aged, blind and disabled applicants and recipients. The group suggested that we require home visits to obtain information, reimbursement for costs incurred for court appearances and provision of transportation services. While we strongly urge States to provide these services to individuals in need of them, we have not mandated them in this regulation because of our efforts to focus on outcome rather than process requirements,

State Relationships With the Supplemental Security Income Program

Approximately three-fifths, of the States have agreements with the Social Security Administration (SSA) under section 1634 of the Act providing for SSA determinations of Medicaid eligibility for persons who are eligible for cash assistance under the Supplemental Security income (SSI) program for the aged, blind and disabled. Five States have expressed concern that these agreements may be canceled by SSA since the conditions of the agreement prohibit the imposition of any additional eligibility requirements such as assignment of rights to medical support or insurance benefits. After discussions between HCFA and SSA, SSA has agreed to amend its regulations to allowimposition of additional eligibility requirements without potential cancellation of the agreements.

Assignment of Rights to Medicare Benefits

In the final regulation, we have specifically excluded assignment of rights to Medicare benefits, because the assignment would carry with it a right for the State to appeal adverse Medicare decisions on claims. Current Medicare regulations at 42 CFR 405.710 allow only Medicare beneficiaries or providers of services, when the beneficiary has signed a statement that he will not appeal the decision, to file a request for reconsideration. Thus, § 405.710 currently precludes appeals by the State unless the State is the provider of services. Rather than allow assignment of such a limited right at this time,

HCFA is reviewing this issue to determine that effects allowing a State appeal would have. We welcome comments on this point.

Incentive Payments to Two or More Jurisdictions

The proposed rule required that the agency make incentive payments to two or more jurisdictions in accordance with instructions issued by OCSE. To avoid the necessity of Medicaid agencies obtaining the instructions from OCSE, we incorporated OCSE's instructions in the final regulation to specify the method of payment agencies must use in this situation.

Technical Changes

The final regulation reflects the recodification of Medicaid regulations published September 29, 1978 (43 FR 45176), including renumbering and terminology. In addition, § 450.32(f) of the proposed regulation, regarding compliance with safeguarding of information requirements, has been deleted as redundant with the basic safeguarding regulation in 42 CFR Subpart F, which applies to all activities of the Medicaid agency.

Responses to NPRM--Child Support Enforcement Regulations

The OCSE regulations, which define the role of IV-D agencies in assisting State Medicaid agencies in collecting medical support obligations, have been revised to make them simpler and clearer. The proposed Part 306 contained both Title IV-D State pian requirements and requirements for cooperative agreements with the Medicaid agency. The final regulations add a new State plan requirement at § 302.80 and Part 306 now deals exclusively with requirements for the cooperative agreement. Major policy changes are discussed below.

Establishment of Medical Support Obligation. The proposed regulation (45 CFR 302.31) would have required the State IV-D agency to undertake to secure health insurance as part of a child support order, if there would be no additional cost to the absent parent or if the additional cost would not reduce the absentparent's ability to pay child support by more than 10 percent. Under the proposed rule, this provision was mandatory on the IV-D agency even when the State Medicaid agency did not enter into a cooperative agreement with the IV-D agency or did not otherwise implement the provisions of Section 11.

Several comments criticized this new requirement. They felt that the provision should only be effective if the Medicaid agency implemented the medical support program. Obtaining insurance coverage without an effective collecting mechanism, would be a hollow requirement without potential benefit to the families or the State.

Many comments also discussed the 10 percent limitation as being arbitrary, difficult if not impossible to administer, and inevitably resulting in decreased child support collections. Many IV-D agencies requested that the 10 percent provision be deleted entirely and that health insurance should be pursued only when there will be no decrease in the ability of the absent parent to pay child support.

In response to these comments, the final regulations delete the 10% limitation and require pursuit of health insurance only under a cooperative agreement with the Medicaid agency and only when the health insurance coverage does not reduce the parent's ability to pay child support.

Parent Locator Service. Under the proposed regulations, any State or local agency enforcing medical support obligations would have been allowed to request the State IV-D agency to access the Federal Parent Locator Service (FPLS). Commenters requested that such access be provided only when the requesting agency has a cooperative agreement with the IV-D agency. The final regulations require all medical support enforcement activities to be conducted under a cooperative agreement between the Medicaid agency and the IV-D agency (§ 302.80). Therefore, in order to be under the IV-D State plan, all applications to use the FPLS for Medical support enforcement activities would have to be covered by such a cooperative agreement. Pursuant to a cooperative agreement, application for FPLS information could be made directly by the Medicaid agency to the IV-D agency, or by any other State or local agency conducting medical support enforcement activities.

Federal Financial Participation. Comments suggested that the Medicaid and IV-D provisions on the availability and rate of Federal financial participation (FFP) are not equitable. The Medicaid program rate of FFP for medical support activities performed by or for the Medicaid agency is 50 percent, while the IV-D program provides a 75 percent rate for child support enforcement activities. Pub. L. 95-142 amended the Medicaid statute only, it did not amend the IV-D statute. Therefore, the Department does not have the statutory authority to match the Medical Support Enforcement program at 75 percent.

Under regulations (45 CFR 433.152(b)(2) and 45 CFR 306.30), a cooperative agreement between the Medicaid agency and the IV-D agency must provide for full reimbursement to the IV-D agency forall functions performed under the agreement. It is then the Medicaid agency's responsibility to obtain Federal matching payments at the rate that is available under the Medicaid program.

Maintenance of Effort. Several IV-D agencies expressed concern regarding the maintenance of effort requirements contained in the proposed regulations (§ 306.40). Particular concern was expressed regarding the requirement that the IV-D agency hire additional staff to be used solely in the Medical Support Enforcement program and that this staff will be prohibited from working simultaneously on medical and child support enforcement. We agree that this requirement could result in inefficient use of personnel and have deleted it.

The final regulation requires that the IV-D agency obtain the necessary additional staff to carry out its responsibilities under the cooperative agreement, but does not limit the activities of this staff to medical support enforcement activities. The IV-D agency is required to properly allocate costs of the medical support enforcement activities.

At this time, regulations do not contain a specific mechanism for enforcing the maintenance of effort requirement. However, OCSE intends to closely monitor activities under this regulation to insure that the medical support enforcement program does not diminish the primary IV-D agency function of collecting child support. Also, OCSE audits of each State's IV-D program under Part 305 will be conducted without regard to the State's efforts at medical support enforcement. If a State diverts staff to enforce medical support and thereby fails to meet any of the audit requirements of Part 305, the State could be found not to have an effective IV-D program and could be penalized.

A. 42 CFR Part 433 is amended as set forth below:

1. The table of contents for Subpart D is amended to read as follows:

Subpart D-Third Party Liability

Sec.

433.135 Basis and purpose.

433.136 Definitions.

433.137 State pian requirements and options.

433.138 Determining liability of third parties.

433.139 Payment of claims.

433.140 FFP and repayment of Federal share.

Assignment of Rights to Benefits.

Sec.

433.145 Assignment of rights to benefits - State plan option.

433.146 Rights assigned; assignment method.

433.147 Cooperation in establishing paternity and obtaining support.

433.148 Denial or termination of eligibility.

433.149 Restoration of rights.

Cooperative Agreements and lncentive Payments

433.151 Cooperative agreements and incentive payments - State plan options.

433.152 Requirements for cooperative agreements for third party collections.

433.153 Incentive payments to States and political subdivisions.

433.154 Distribution of collections.

Authority: Secs. 1102, 1902(a)(25), 1903(d)(2), 1903(o), 1903(p), and 1912 of the Social Security Act (42 U.S.C. 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396k).

2. Subpart D is revised as set forth below:

Subpart D-Third Party Liability

§ 433.135 Basis and purpose.

This subpart implements secs. 1902(a)(25), 1903(d)(2), 1903(o), 1903(p), and 1912 of the Act by setting forth State plan requirements and options concerning-

(a) The legal liability of third parties to pay for services provided under the plan;

(b) Assignment to the State of an individual's rights to third party payments; and

(c) Cooperative agreements between the Medicaid agency and other entities for obtaining third party payments.

§ 433.136 Definitions.

For purposes of this subpart-"Private insurer" means:

(1) Any commercial insurance company offering health or casualty insurance to individuals or groups (including both experience-rated insurance contracts and indemnity contracts);

(2) Any profit or nonprofit prepaid plan offering either medical services or full or partial payment for the diagnosis; or treatment of an injury, disease, or disability; and

(3) Any organization administering health or casualty insurance plans for professional associations, unions,

fraternal groups, employer-employee benefit plans, and any similar organization offering these payments of services, including self-insured and self funded plans.

"Third party" means any individual, entity or program that is or may be liable to pay all or part of the medical cost of injury, disease, or disability of the applicant or recipient.

"Title IV-D agency" means the organizational unit in the State that has the responsibility for administering or supervising the administration of a State plan for child support enforcement under title IV-D of the Act.

§ 433.137 State plan requirements and options.

(a) A State plan must provide that requirements in

§ § 433.138 and 413.139 of this subpart are met.

(b) A plan may provide for assignment of rights to benefits and, if it does, for cooperative agreements and incentive payments for collection of benefits. See § § 433.146-433.154 forplan requirements if a State elects these options,

§ 433.138 Determining liability of third parties.

The agency must take reasonable measures to determine the legal liability of third parties to pay for services under the plan.

§ 433.139 Payment of claims.

(a) The agency has the following options for payment of claims:

(1) It may pay the amount remaining, under the agency's payment schedule, after the amount of the third party's liability has been established. Under this method, the agency may not withhold payment for services provided to a recipient if third party liability or the amount of liability cannot be currently established or is not currently available to pay the recipient's medical expense,

(2) It may pay the full amount allowed under the agency's payment schedule for the claim and seek reimbursement from any liable third party to the limit of legal liability. If the agency chooses this option, it must seek reimbursement from the third party within 30 days after the end of the month in which payment is made.

(b) If, after a claim is paid, the agency learns of the existence of a liable third party, it must seek reimbursement from the third party within 30 days after the end of the month it learned of the existence of the liable third party.

§ 433.140 FFP and repayment of Federal share.

(a) FFP is not available in Medicaid payments if --

(1) The agency failed to fulfil] the requirements of

§ § 433.138 and 433.139 with regard to establishing liability and seeking reimbursement from a third party;

(2) The agency received reimbursement from a liable third party: or

(3) A private insurer would have been obligated to pay for the service except that its insurance contract limits or excludes payments if the individual is eligible for Medicaid.

(b) FFP is available at the 50 percent rate for the agency's expenditures in carrying out the requirements of this subpart. (c) If the State receives FFP in Medicaid payments for which it receives third party reimbursement, the State must pay the Federal government a portion of the reimbursement determined in accordance with the FMAP for the State. This payment may be reduced by the total amount needed to meet the incentive payment in § 433.153.

Assignment of Rights to Benefits

§ 433.145 Assignment of rights to benefits-State plan option.

A plan may provide that, as a condition of eligibility, eachlegally able applicant and recipient assign his rights to medical support or other third party payments to the Medicaid agency and cooperate with the agency in obtaining medical support or payments. If a plan requires this assignment, it must provide that the requirements of § 433.146 through § 433.149 are met.

§ 433.146 Rights assigned; assignment method.

(a) Except as specified in paragraph (b) of this section. the agency must require the individual to assign to the State --

(1) His own rights to any medical care support available under an order of a court or an administrative agency, and any third party payments for medical care; and

(2) The rights of any other individual eligible under the plan, for whom he can legally make an assignment.

(b) Assignment of rights to benefits may not include assignment of rights to Medicare benefits.

(c) If assignment of rights to benefits is automatic because of State law, the agency may substitute such an assignment for an individual executed assignment, as long as the agency informs the individual of the terms and consequences of the State law.

§ 433.147 Cooperation in establishing paternity and obtaining support.

(a) Scope of requirement. The agency must require the individual who assigns his rights to cooperate in--

(1) Establishing paternity of a child born out of wedlock for whom he can legally assign rights; and

(2) Obtaining medical care support and payments for himself and any other individual for whom he can legally assign rights.

(b) Essentials of Cooperation. As part of a cooperation, the agency may require an individual to --

(1) Appear at a State or local office designated by the agency to provide information or evidence relevant to the case;

(2) Appear as a witness at a court or other proceeding;

(3) Provide information, or attest to lack of information, under penalty of perjury;

(4) pay to the agency any support or medical care funds received that are covered by the assignment of rights: and

(5) Take any other reasonable steps to assist in establishing paternity and securing medical support and payments,

(c) Waiver of cooperation for good cause. The agency must waive the requirements in paragraphs (a) and (b) of this section if it determines that the individual has good cause for refusing to cooperate.

(1) With respect to establishing paternity of a child born out of wedlock or obtaining medical care support and payments for a child for whom the individual can legally assign rights, the agency must find that cooperation is against the best interests of the child, in accordance with factors specified for the Child Support Enforcement Program at 45 CFR Part 232. If the State title IV-A agency has made a finding that good cause for refusal to cooperate does or does not exist, the Medicaid agency mustadopt that finding as its own for this purpose.

(2) With respect to obtaining medical care support and payments for an individual in any case not covered by paragraph (c)(1) of this section, the agency must find that cooperation is again, at the best interests of the individual or other person to whom Medicaid is being furnished, because it is anticipated that cooperation will result in reprisal against, and cause physical or emotional harm to the individual or other person.

(d) Procedure for waiving cooperation. With respect to establishing paternity or obtaining medical care support and payments for a child for whom the individual can legally assign rights, the agency must use the procedures specified for the Child Support Enforcement Program at 45 CFR Part 232. With respect to obtaining medical care support and payments for any other individual, the agency must adopt procedures similar to those specified in 45 CFR Part 232, excluding those procedures applicable only to children.

§ 433.148 Denial or termination of eligibility.

In administering the assignment of rights provision, the agency must:

(a) Deny or terminate eligibility for any applicant or recipient who--

(1) Refuses to assign his own rights or those of any other individual for whom he can legally make an assignment; or

(2) Refuses to cooperate as required under § 433.147(a) unless cooperation has been waived;

(b) Provide Medicaid to any individual who--

(1) Cannot legally assign his own rights; and

(2) Would otherwise be eligible for Medicaid but for the refusal, by a person legally able to assign his rights, to assign his rights or to cooperate as required by this subpart; and

(c) In denying or terminating eligibility, comply with the notice and hearing requirements of Part 431, Subpart E of this subchapter.

§ 433.149 Restoration of rights.

If an individual's Medicaid eligibility ends, the agency must immediately restore to him any future rights to benefits assigned under § 433.146, using whatever method is least burdensome to the individual.

§ 433.151 Cooperative agreements and incentive payments - State plan options.

A plan that provides for assignment of rights may provide for written cooperative agreements for enforcement of rights to, and collection of, third party benefits. These agreements may be with the State title IV-D agency, any other State agency, courts, law-enforcement officials, and other States. If a plan provides for cooperative agreements, it must provide that the specific agreement requirements in § 433.152, and the incentive payment requirements in §§ 433.153 and 433.154 are met.

§ 433.152 Requirements for cooperative agreements for third party collections.

(a) All agreements must specify--

(1) The terms for referral of cases;

(2) How and by whom priorities will be set for collection activities;

(3) Which agency will make collections and distribute them;

(4) The terms of reimbursement by the agency for functions performed under the agreement by another agency;

(5) The duration of the agreement; and

(6) Provisions governing any other maters of common concern to the agencies.

(b) Agreements with title IV-D agencies must also specify that the Medicaid agency will--

(1) Refer only absent parent cases; and

(2) Provide full reimbursement of all functions performed by the IV-D agency under the agreement.

(c) The Medicaid agency must retain final responsibility for third party liability collection functions that are not covered by cooperative agreements.

§ 433.153 lncentive payments to States and political subdivisions.

(a) When payments are required. The agency must make an incentive payment to a political subdivision, a legal entity of the subdivision such as a prosecuting or district attorney or a friend of the court, or another State that enforces and collects medical support and payments for the agency.

(b) Amount and source of payment. The incentive payment must equal 15 percent of the amount collected, and must be made from the Federal share of that amount.

(c) Payment to two or more jurisdictions. If more than one State or political subdivision is involved in enforcing and collecting support and payments:

(1) The agency must pay all of the incentive payment to the political subdivision, legal entity of the subdivision, or another State that collected medical support and payments at the request of the agency.

(2) The political subdivision, legal entity or other State that receives the incentive payment must then divide the incentive payment equally with any other political subdivisions, legal entities, or other States that assisted in the collection, unless an alternative allocation is agreed upon by all jurisdictions involved.

§ 433.154 Distribution of collections.

The agency must distribute collections as follows--

(a) To itself, an amount equal to State Medicaid expenditures for the individual on whose right the collection was based.

(b) To the Federal Government, the Federal share of the State Medicaid expenditures, minus any incentive payment made inaccordance with § 433.153.

(c) To the recipient, any remaining amount. This amount must be treated as income or resources under Part 435 or Part 436 of this subchapter, as appropriate.

B. Part 435, Subpart G, is amended at follows:

1. The title and table of contents are revised as set forth below:

PART 435-ELIGIBILITY IN THE STATES AND DISTRICT OF COLUMBIA

* * * * *

Subpart G -- General Financial Eligibility Requirements and Options

Sec.

435.600 Scope.

435.602 Limitation on the financial responsibility of relatives.

435.603 Applications for other benefits.

435.604 Assignment of rights to benefits.

2. Section 435.600 is revised to read as follows:

Subpart G-General Financial Eligibility Requirements and Options

§ 435.600 Scope.

This subpart prescribes general financial requirements and options for determining the eligibility of both categorically and medically needy individuals specified in subparts B, C, and D of this part. Subparts H and I prescribe additional financial requirements

3. A new § 435.604 is added to read as follows:

§ 435.604 Assignment of rights to benefits.

(a) As a condition of eligibility, in addition to other requirements of this part, the agency may require legally able applicants and recipients to assign rights to medical support or other third party payments and to cooperate with the agency in obtaining medical support or payments. See Part 433, Subpart D, for specific requirements.

(b) If an agency requires assignment of rights, it must do so uniformly for all groups covered under the plan,

c. Part 436, Subpart G, is amended as follows:

1. The title and table of contents are revised as set forth below:

PART 436-ELIGIBILITY IN GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS

* * * * *

Subpart G-General Financial Eligibility Requirements and Options

Sec.

436.600Scope.

436.602 Limitation on the financial responsibility of relatives.

436.603 Applications for other benefits.

436.604 Assignment of rights to benefits.

2. Section 436.600 is revised to read as follows:

Subpart G-General Financial Eligibility Requirements and Options

§ 436.600 Scope.

This subpart prescribes general financial requirements and options for determining the eligibility of both categorically needy and medically needy individuals specified in subparts B, C, and D of this part. Subparts H and I prescribe additional financial requirements.

3. A new § 436.604 is added to read as follows:

§ 436.604 Assignment of rights to benefits.

(a) As a condition of eligibility, the agency may require legally able applicants and recipients to assign rights to medical support and other third party payments and to cooperate with the agency in obtaining medical support or payments. See Part 433, Subpart D, for specific requirements.

(b) If an agency requires assignment of rights, it must do so uniformly for all groups covered under the plan.

D. 45 CFR Part 302 is amended as follows.

1. The table of contents is revised to read as follows:

PART 302-STATE PLAN REQUIREMENTS

* * * * *

Sec.

302.80 Medical support enforcement.

2. Section 302.35 is amended by revising paragraph (c)(1) to read as follows:

§ 302.35 State parent locator service.

The State plan shall provide that:

* * * * *

(c) The IV-D agency will accept applications to utilize the Federal PLS from:

(1) Any State or local agency or official seeking to collect child support or medical support obligations under the State plan.

3. Section 302.50 is amended by adding a new paragraph (e) to read as follows:

§ 302.50 Support obligations.

The State plan shall provide as follows:

(e) No portion of any amounts collected which represent a support obligation assigned under § 232.11 of this title may be used to satisfy a medical support obligation unless the court or administrative order requires a specific amount for medical support.

4. A new § 302.80 is added to read as follows:

§ 302.80 Medical support enforcement.

The State plan may provide for the IV-D agency to secure and enforce medical support obligations under a cooperative agreement between the IV-D agency and the State Medicaid agency. Cooperative agreements must comply with the requirements contained in Part 306 of this chapter.

E. 45 CFR Part 304 is amended by revising § 304.23 to add a new paragraph (g) to read as follows:

§ 304.23 Expenditures for which Federal financial participation is not available.

* * * * *

(g) Medical support enforcement activities. (See Part 306 of this chapter and 42 CFR 433.140(b) concerning the availability of funding for these activities.)

F. 45 CFR Chapter III is amended by adding a new Part 306 to read as follows:

PART 306-MEDICAL SUPPORT ENFORCEMENT

Sec.

306.0 Scope of this part.

306.1 Definitions.

306.2 Cooperative agreement.

306.10 Functions to be performed under a cooperative agreement.

306.11 Administrative requirements of cooperative agreements.

306.20 Prior approval of cooperative agreements.

306.21 Subsidiary cooperative agreements with courts and law enforcement officials.

306.22 Purchase of service agreements.

306.30 Source of funds.

306.40 Maintenance of effort.

§ 306.0 Scope of this part.

This part defines the requirements for a cooperative agreement between the IV-D agency and the Medicaid agency for the purpose of enforcing medical support obligations under Section 1912 of the Act.

§ 306.1 Definitions.

When used in this part, unless the context indicates otherwise:

(a) The definitions found in § 301.1 of this chapter also apply to this part.

(b) "Medicaid agency" means the single State agency that has the responsibility for the administration of, or supervising the administration of, the State, plan under title XIX of the Act.

(c) "Medicaid" means medical assistance provided under a State plan approved under title XIX of the Act.

§ 306.2 Cooperative agreement.

The cooperative agreement between the IV-D agency and the Medicaid agency shall be a written agreement for the IV-D agency to assist the Medicaid agency by securing and enforcing the medical support obligation of an absent parent to a child for whom an assignment of medical support rights has been executed under 42 CFR 433.146.

The functions that the IV-D agency may perform under the cooperative agreement are set forth in § 306.10. The administrative requirements are set forth at § 306.11.

§ 306.10 Functions to be performed under a cooperative agreement.

The functions that the IV-D agency may perform under a cooperative agreement with the Medicaid agency are limited to one or any combination of the following activities.

The agency may:

(a) Receive referrals from the Medicaid agency.

(b) Locate the absent parent, using the State Parent Locator Service and the Federal Parent Locator Service, as needed.

(c) Establish Paternity if necessity.

(d) Determine whether the parent has a health insurance policy or plan that covers the child.

(e) Obtain sufficient information about the health insurance policy or plan to permit the filing of a claim with the insurer.

(f) File a claim with the insurer; or transmit the necessary information to the Medicaid agency, or to the appropriate State agency or fiscal agent for the filing of the claim; or require the absent parent to file a claim.

(g) Secure health insurance coverage through court or administrative order, when it will not reduce the absent parent's ability to pay child support.

(h) Take direct action against the absent parent to recover amounts necessary to reimburse medical assistance payments when the absent parent does not have health insurance and the amounts collected will not reduce the absent parent's ability to pay child support.

(i) Receive medical support collections.

(j) Distribute the collections as required by 45 CFR 443.154 including calculation and payment of the incentives provided for by 42 CFR 433.153.

(k) Perform other functions as may be specified by instructions issued by the Office of Child Support Enforcement.

§ 306.11 Administrative requirements of cooperative agreements.

(a) Organizational structure. The cooperative agreement must:

(1) Describe the organizational structure of the unit or units within the IV-D agency that are responsible for medical support enforcement activities.

(2) List the medical support enforcement functions that are to be performed outside of the IV-D agency with the name of the organization responsible for performance.

(3) Provide that the IV-D agency shall have responsibility for securing compliance with the requirements of the cooperative agreement by individuals or agencies outside the IV-D agency performing medical support enforcement functions.

(b) Maintenance of records. The cooperative agreement must specify that the IV-D agency will establish and maintain case records of medical support enforcement activities in accordance with the provisions of § 302.15 of this chapter.

(c) Safeguarding information. The cooperative agreement must provide that the use or disclosure of information concerning applicants for, or recipients of, medical support enforcement services is subject to the limitations in § 302.18 of this chapter.

(d) Fiscal policies and accountability.

(l) The cooperative agreement must provide that the IV-D agency will maintain an accounting system and supporting fiscal records adequate to assure that claims for reimbursement from the Medicaid agency are in accordance with applicable Federal requirements in 45 CFR Part 74.

(2) The cooperative agreement must provide for the establishment of a method for properly allocating those costs that cannot be directly charged to the medical support enforcement effort.

§ 306.20 Prior approval of cooperative agreements.

(a) Prior to implementation, the IV-D agency must submit two copies of any cooperative agreement entered into under this part to the Regional Representative for approval.

(b) The Regional Representative will review the cooperative agreement for conformity with the requirements of this part and 42 CFR 433.152.

(c) The Regional Representative will promptly notify the State of approval or disapproval. The State may consider the agreement approved if notification is not received within 60 days after the agreement is received by the Regional Representative.

§ 306.21 Subsidiary cooperative agreements with courts and law enforcement officials.

The IV-D agency will enter into subsidiary written cooperative agreements with appropriate courts and law enforcement officials to the extent necessary to perform those functions specified in the cooperative agreement between the IV-D agency and the Medicaid agency. These agreements must be made inaccordance with the requirements of § 302.34 (Cooperative arrangements).

§ 306.22 Purchase of service agreements.

The IV-D agency will enter into written purchase of service agreements to the extent necessary to fulfill the requirements of its cooperative agreement with the Medicaid agency.

§ 306.30 Source of funds.

The cooperative agreement must specify that the IV-D agency will receive full reimbursement from the Medicaid agency for all medical support enforcement activities performed under the agreement. (See § 306.11(d) for requirements on fiscal policies and accountability.)

§ 306.40 Maintenance of effort.

A title IV-D agency entering into a cooperative agreement with a State Medicaid agency shall insure that as a result of its effort under the agreement there will be no decrease in Child Support Enforcement program activities, personnel or resources from the level allocated for the quarter in which these regulations become effective. If necessary to carry out its responsibilities under the cooperative agreement, the IV-D agency must obtain additional personnel and resources. The IV-D agency must be able to document continued compliance with this maintenance of effort requirement.

[Sections 1102, 1902(a)(25), 1903(d)(2), 1903(o), 1903(p), and 1912 of the Social Security Act (42 U.S.C. 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396k)]

[Catalog of Federal Domestic Assistance Program No. 13.679, Child Support Enforcement Program, and No. 13.714, Medical Assistance Program]

Dated: November 14, 1979

Leonard D. Schaeffer,

Administrator, Health Care Financing Administration

Stanford G. Ross,

Director, Office of Child Support Enforcement.

Approved: January 29, 1980.

Patricia Roberts Harris,

Secretary.

[FR Doc. 80-4030 Filed 2-8-80;8:45am]

BILLING CODE 4110-35-M