Montana Administrative Register Notice 37-585 No. 13   07/12/2012    
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In the matter of the amendment of ARM 37.86.3001, 37.86.3002, 37.86.3003, 37.86.3005, 37.86.3006, 37.86.3016, 37.86.3018, 37.86.3020, 37.86.3025, 37.86.3031, 37.86.3033, 37.86.3037, and 37.86.3109 and repeal of 37.86.3014 pertaining to Medicaid outpatient hospital services











TO:  All Concerned Persons


1.  On May 10, 2012, the Department of Public Health and Human Services published MAR Notice No. 37-585 pertaining to the public hearing on the proposed amendment and repeal of the above-stated rules at page 948 of the 2012 Montana Administrative Register, Issue Number 9.


2.  The department has amended ARM 37.86.3001, 37.86.3002, 37.86.3003, 37.86.3005, 37.86.3006, 37.86.3016, 37.86.3018, 37.86.3025, 37.86.3031, 37.86.3037, and 37.86.3109 and repealed ARM 37.86.3014 as proposed.


3.  The department has amended the following rules as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:



            (f)  The department will make separate payment for observation care procedure codes if the following criteria are met: for Medicare qualifying conditions or obstetric complications.  If an observation service does not meet these criteria for these services, payment for observation care will be considered bundled into the APC for other services.

            (i)  The diagnosis used to define a potential obstetric qualification will be taken from diagnosis related groups 382 (false labor) and 383 (other antepartum diagnosis with medical complications). hours or units of service must be equal to or greater than eight;

(ii)  must be The department will make separate payment for observation care procedure codes when billed as a direct admit or have a high level clinic visit, high level critical care, or high level emergency room visit; and.

(iii)  must have The department will make separate payment for observation care procedure codes if billed using a qualifying diagnosis as per the CMS Claims Processing Manual.

(g) through (2) remain as proposed.


AUTH:  53-2-201, 53-6-113, MCA

IMP:     53-2-201, 53-6-101, 53-6-111, 53-6-113, MCA


            37.86.3033  PROVIDER-BASED ENTITY SERVICES, RECIPIENT ACCESS AND NOTIFICATION  (1) through (4) remain as proposed.

            (5)  Recipients Clients must be notified that they will be assessed two cost shares for Medicaid and/or two copayment and deductible charges for cross-over claims per each visit.

            (a) remains as proposed.


AUTH:    53-2-201, 53-6-113, MCA

IMP:       53-6-101, 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:  One comment was received stating that it would be helpful if the department incorporated the criteria that providers must meet in order to obtain department approval regarding provider-based status.  An additional comment stated that the department is inconsistent in regard to written approval verifying provider-based status and urges the department to adopt a standard process for receipt of this approval.


RESPONSE #1:  The department has outlined the criteria that providers must meet in order to obtain department approval regarding provider-based status in ARM 37.86.3031.  The department recognizes that the language in the Statement of Reasonable Necessity regarding the proposed amendments to ARM 37.86.3031 should have specified "Medicaid criteria."  It is the intent of the proposed rule amendment to clarify Medicaid criteria regarding provider-based status.  The department believes it has been consistent in regard to obtaining written verification of provider-based status and that the rule provides a standard process for receipt of this approval.


COMMENT #2:  One comment was received seeking a clarification and a reference regarding national standards of practice in the use of off-label drugs.


RESPONSE #2:  At this time, the department will pay for drugs that are considered "off-label" when the usage of the off-label drug is considered to be a national standard of practice.  Off-label drugs that are prescribed to treat medical conditions other than the drug's intended purpose as approved by the FDA, and are identified as safe and effective, are considered to meet national standards of practice.  These off-label drugs can be identified in three officially recognized drug references: American Hospital Formulary Service, United States Pharmacopeia, and the Drugdex Information System.  The department believes that it is the responsibility of the provider to ensure any off-label drugs used in the treatment of Medicaid clients meets national standards of practice.  This is the intended outcome.  The obvious consequence is the nonpayment for the usage of off-label drugs that do not meet national standards of practice.


COMMENT #3:  Two comments were received suggesting that the proposed rule amendments are not well explained and that there is a lack of communication with the healthcare industry.


RESPONSE #3:  The department will be cognizant of writing complete and concise proposed rules when formulating future rule language.  In addition, the department recognizes the need for effective communication with providers regarding proposed rule amendments.  It is the department's position that communication with the healthcare industry did occur through the following:  a presentation at the spring Hospital Financial Managers Association (HFMA) conference in Missoula, Montana where the proposed rule amendments were presented and discussed; the releasing of the proposed rule amendments for public comment on May 10, 2012; and the mailing/e-mailing of the proposed rule amendments to all interested parties listed on the interested parties list on May 11, 2012.  The department acknowledges and thanks the commenters for their concerns.


COMMENT #4:  One comment was received regarding partial hospitalization and the need for providers to add additional administrative resources and staffing to meet the requirements of the proposed rule amendment with no additional Medicaid compensation.  The commenter inquired as to what the intended consequences and outcomes are regarding partial hospitalization.  An additional comment sought to understand the rationale for ARM 37.86.3006(2)(c)(vii).


RESPONSE #4:  The department is not changing or adding any requirements to the already existing rule regarding partial hospitalization.  The language regarding partial hospitalization was moved from the definitions in ARM 37.86.3001 to ARM 37.86.3006 which is the rule that addresses mental health outpatient hospital services.  By moving this language, the rule is organized into one appropriate location instead of two locations.  Because the requirements for partial hospitalization have not been changed, the department believes there is no need for providers to add additional staffing or administrative resources.


COMMENT #5:  One comment was received suggesting that the department is changing the criteria for obstetric observation and that there would be financial implications to providers.


RESPONSE #5:  The department is not changing or adding any requirements to the already existing policy regarding obstetric observation.  With this rule revision, the department is updating language to the rule that reflects current policy.  The department believes that the proposed removal of the language in ARM 37.86.3020(1)(f) is necessary because this current language limits payment for observation care to only four primary diagnosis codes.  By removing this language, Montana Medicaid will not limit services regarding observation care to just four primary diagnoses.  Because the requirements for obstetric observation have not been changed, but simply added to rule, the department believes there are no financial implications to providers and current services to clients are maintained.


COMMENT #6:  One comment indicated that Medicare allows for self-attestation for provider-based providers.  It was suggested that Medicaid is falling behind Medicare by not allowing self-attestation when Medicaid requires a CMS letter verifying provider-based status.  By requiring this verification, it was suggested that Medicaid is putting a burden upon providers.


RESPONSE #6:  The department does not allow self-attestation and believes it is necessary to require a CMS letter verifying provider-based status.  This is one of several requirements regarding provider-based status that are currently in rule.  Because this is in the existing rule, the department believes that this is not a burden upon providers.


COMMENT #7:  Two comments suggested that notifying clients of two cost shares when a client seeks services from a provider-based provider creates a bureaucratic burden upon provider-based providers.


RESPONSE #7:  The department believes that it is the responsibility of the provider-based provider to notify Medicaid clients of the two cost shares and/or two coinsurance and deductible charges that will be assessed.  The department recognizes and understands the concerns of the provider that compliance with this rule could be difficult if clients must be notified per each visit.  For this reason, the proposed language in ARM 37.86.3033 will be removed from the rule. Also, the term "recipient" was updated to meet current standards.


COMMENT #8:  One comment indicated that the department cannot make the implementation date of the rule retroactively effective because the proposed rule amendments imply a change in services and a change in payments to providers.


RESPONSE #8:  Because no new criteria are being proposed in the rule amendments, the department believes that the proposed amendments are budget neutral and will not affect payment to providers.  In addition, no change in the level of services offered to clients will occur.  The department believes that an effective date retroactive to July 1, 2012, is appropriate.


COMMENT #9:  One comment suggested that fewer services would be available to out-of-state clients if the department fails to recognize out-of-state provider-based status, and that this would also create a budget impact.


RESPONSE #9:  Since the department has never recognized out-of-state provider-based status, the department wishes to document this information in rule as a point of clarification to out-of-state providers.  Therefore, the purpose of the proposed rule amendment is to reflect current policy and convey this policy to affected providers.  The department believes that there is no change in the service levels provided by out-of-state providers from current service levels.  In addition, with no change in reimbursement methodologies, this rule amendment would also remain budget neutral.


            5.  The department intends to apply these rules retroactively to July 1, 2012.  A retroactive application of the proposed rules does not result in a negative impact to any affected party.




/s/ John Koch                                                 /s/ Anna Whiting Sorrell                               

Rule Reviewer                                               Anna Whiting Sorrell, Director

                                                                        Public Health and Human Services


Certified to the Secretary of State July 2, 2012


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