Title of Regulation: 12VAC30-80. Methods and Standards for Establishing Payment Rate; Other Types of Care (adding 12VAC30-80-26).

Statutory Authority: § 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Public Hearing Information: The agency does not intend to hold a public hearing at the proposed stage.

Public Comment Deadline: February 16, 2022.

Effective Date: March 3, 2022.

Agency Contact: Emily McClellan, Regulatory Supervisor, Policy Division, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone (804) 371-4300, FAX (804) 786-1680, or email emily.mcclellan@dmas.virginia.gov.

Basis: Section 32.1-325 of the Code of Virginia authorizes the Board of Medical Assistance Services to administer and amend the State Plan for Medical Assistance and to promulgate regulations. Section 32.1-324 of the Code of Virginia authorizes the Director of the Department of Medical Assistance Services (DMAS) to administer and amend the State Plan for Medical Assistance and to promulgate regulations according to the board's requirements. The Medicaid authority, as established by § 1902(a) of the Social Security Act (42 USC § 1396a), provides governing authority for payments for services.

Purpose: This regulation is essential to protect the health, safety, and welfare of citizens in that it will help ensure access to medical care for members of the Mattaponi Tribe and for other Medicaid members.

Rationale for Using Fast-Track Rulemaking Process: This regulation is expected to be noncontroversial because it will increase access to Medicaid services and because the federal government will reimburse DMAS for 100% of the cost of services provided to Medicaid members.

Substance: Under § 1905(b) of the Social Security Act, the federal government is required to match state expenditures at the Federal Medical Assistance Percentage rate, which is 100% for state expenditures on behalf of American Indian or Alaskan Native Medicaid beneficiaries for covered services received through an Indian Health Service facility whether operated by the Indian Health Service or by a tribe or tribal organization (as defined in the Indian Health Care Improvement Act). The new section establishes reimbursement rates and payment methodologies for Indian Health Service facilities in Virginia.

Issues: The primary advantages of this regulation for the public and the Commonwealth are that the regulation allows greater access to medical care, and that services provided to Medicaid members at this new clinic will be reimbursed by the federal government. There are no disadvantages to the agency, the Commonwealth, or the public.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Department of Medical Assistance Services (DMAS) proposes to add a new section to 12VAC30-80 Methods and Standards for Establishing Payment Rate; Other Types of Care titled Reimbursement for Indian Health Service Tribal 638 Health Facilities. The new section would establish reimbursement rates and payment methodologies for Indian Health Service (IHS) facilities in Virginia. The proposed regulatory changes were prompted by the establishment of an IHS facility by the Upper Mattaponi Tribe in King William County earlier in 2021.

Background. The Upper Mattaponi Tribe, along with five other Indian tribes in Virginia, gained federal recognition through the passage of the Thomasina E. Jordan Indian Tribes of Virginia Federal Recognition Act of 2017 on January 12, 2018.¹ Federally recognized tribes have the authority to contract with IHS to establish and administer health facilities, which are also referred to as Tribal 638 Health Facilities.² Thus, following federal recognition, the Upper Mattaponi Tribe established a Tribal Health Clinic (THC) in King William County to meet the demand for primary care services in that locality, primarily (but not exclusively) among tribe members who reside there, including those enrolled in Virginia Medicaid.³ In doing so, they are the first Indian Tribe in Virginia to establish an IHS facility; other federally recognized tribes are likely to establish similar health facilities in the future

Federal law requires DMAS to recognize and reimburse IHS facilities as Medicaid providers and provides 100% federal coverage for Medicaid payments made to these facilities.⁴ Because IHS facilities differ in this way from private Medicaid providers, DMAS was required to file a state plan amendment (SPA) to establish appropriate reimbursement methodologies prior to making any payments to the Upper Mattaponi Tribe's THC.⁵ As per the SPA and the proposed amendments, any IHS facility in Virginia would be reimbursed for providing services to Medicaid enrollees at the All-Inclusive Rates (AIR or the "OMB rate") set by the federal government. The AIR is published in the Federal Register annually, and is primarily used for Medicare and Medicaid reimbursements to IHS facilities throughout the United States.⁶

In addition, the Upper Mattaponi Tribe's THC has been enrolled with the Centers for Medicare and Medicaid Services as a Federally Qualified Health Center (FQHC). FQHCs are safety net providers that provide services typically given in an outpatient clinic.⁷ FQHC status allows these facilities to receive payments from DMAS using an alternative payment methodology (APM). Although the proposed new section does not specify any details about the APM, except that payment amounts will be as per the AIR, the SPA states that Virginia Medicaid will use a Prospective Payment System (PPS) for the THC.⁸ Details about the Medicaid PPS methodology can be found in the SPA as well as in section 25 of the same regulation, Reimbursement for federally qualified health centers (FQHCs) and rural health clinics (RHCs), which would immediately precede the proposed new section.⁹

Lastly, the proposed new section anticipates that other federally recognized tribes in the state are likely to follow the precedent set by the Upper Mattaponi Tribe and establish new IHS facilities. Under the proposed amendments, new IHS facilities established by any of Virginia's federally recognized tribes could be seamlessly enrolled as Medicaid providers in the future. New IHS facilities would be reimbursed at the AIR regardless of whether they enroll as an FQHC. As per the new section, facilities that enroll as FQHCs could potentially be paid under a different APM if they so choose, and DMAS would file an SPA if necessary in order to provide that payment methodology.

Estimated Benefits and Costs. The proposed amendments would directly benefit the Upper Mattaponi Tribe's THC by allowing it to provide services to Medicaid patients and receive payment from DMAS. The proposed amendments would also benefit tribe members and other county residents with Medicaid coverage by reducing the financial and travel costs of accessing primary healthcare. The proposed amendments would also benefit any other IHS facilities that are established in the future by allowing those facilities to become enrolled as Medicaid providers.

The proposed amendments do not expand Medicaid eligibility or increase coverage; thus, there are no new costs to the Medicaid program. Increased access to primary healthcare would likely lead to increased utilization; this may increase costs for payers in the short term, but could save them money in the long term to the extent that the specific services being utilized include preventative care

The proposed amendments would also yield modest savings for DMAS since Medicaid enrollees who use the THC would now be covered under a higher FMAP. In the absence of an IHS facility, tribe members with Medicaid would have obtained services from private providers, for which DMAS would be reimbursed at the standard FMAP. However, because IHS facilities receive a 100 percent FMAP, DMAS may save money even if healthcare utilization increases among this pool of enrollees. However, such savings are likely to be modest since a relatively small proportion of Medicaid enrollees would be affected by this change.

Businesses and Other Entities Affected. As mentioned previously, the proposed amendments primarily affect the THC established by the Upper Mattaponi Tribe in King William County and any future IHS facilities established in the state.

Small Businesses¹⁰ Affected. The proposed amendment would not affect any small businesses.

Localities¹¹ Affected.¹² The proposed amendment does not introduce new costs for local governments. The proposed amendments specifically benefits residents of King William County who are Medicaid recipients, by increasing their access to primary healthcare. Similarly, the proposed amendments would also benefit Medicaid recipients in localities where any new IHS facilities are established in the future.

Projected Impact on Employment. The proposed amendments may be associated with a modest increase in employment at the THC in King William County and future IHS facilities, to the extent that Medicaid recipients comprise a significant share of their patient volume and Medicaid reimbursements constitute a significant source of revenue.

Effects on the Use and Value of Private Property. By creating a conduit for the Upper Mattaponi Tribe's THC and future IHS facilities to receive Medicaid reimbursement revenues, the proposed amendments increase the value of these facilities. Real estate development costs are not affected.

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¹See https://www.wtvr.com/2018/01/12/bill-passes-to-give-6-va-native-american-tribes-federal-recognition/.

²The number 638 comes from Public Law 93-638, the Indian Self Determination and Education Assistance Act. See https://www.ihs.gov/odsct/title1/.

³See https://www.dailypress.com/tidewater-review/va-tr-kw-upper-mattaponi-clinic-0521-20210521-w2qh5sqrr5g2dccgmkb7g75egi-story.html.

⁴Under section 1905(b) of the Social Security Act, the federal government is required to match state expenditures at the Federal Medical Assistance Percentage (FMAP) rate, which is 100% for state expenditures on behalf of American Indian/Alaskan Native Medicaid beneficiaries for covered services "received through" an Indian Health Service facility whether operated by the Indian Health Service or by a Tribe or Tribal organization (as defined in section 4 of the Indian Health Care Improvement Act). Note that the standard FMAP for Virginia Medicaid enrollees has been 56.2% since FY 2020.

⁵DMAS' SPA submission can be found at https://www.dmas.virginia.gov/media/3305/spa-21-007-tribal-health-clinic-final-03-26-2021.pdf. The approved SPA, effective February 24, 2021, can be found at https://www.medicaid.gov/medicaid/spa/downloads/VA-21-0007.pdf.

⁶See https://www.ihs.gov/businessoffice/reimbursement-rates/.

⁷See https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/FQHC-Text-Only-Factsheet.pdf for information on FQHCs.

⁸See https://www.nachc.org/wp-content/uploads/2016/02/IB69-PPS-Complete.pdf for more information on payment methodologies for FQHCs, including the evolution of APMs in general and PPS in particular.

⁹See https://law.lis.virginia.gov/admincode/title12/agency30/chapter80/section25/.

¹⁰Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

¹¹"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹²§ 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to Economic Impact Analysis: The agency has reviewed the economic impact analysis prepared by the Department of Planning and Budget and raises no issues with this analysis.

Summary:

The Upper Mattaponi Tribe has established a tribal health clinic (THC) to meet the primary care health needs of tribal members, including those enrolled in Virginia Medicaid. Federal law requires the Department of Medical Assistance Services to recognize and reimburse THCs as Medicaid providers, and the amendments conform regulation to the requirement. The THC will be enrolled as a federally qualified health center and will be reimbursed for services to Medicaid members at a rate set annually by the federal government. The Centers for Medicare and Medicaid Services will cover 100% of the department's payments to the Upper Mattaponi THC for services to Medicaid members.

12VAC30-80-26. Reimbursement for Indian Health Service tribal 638 facilities.

A. Reimbursement for tribal health clinics.

1. Services provided by or through facilities of the Indian Health Services (IHS), including at the option of the tribe, facilities operated by a tribe or tribal organization, and funded by Title I or Title V of the Indian Self Determination and Education Assistance Act of 1975 (25 USC § 5301 et seq.), also known as tribal 638 facilities, are paid at the applicable IHS U.S. Office of Management & Budget (OMB) rate published annually in the Federal Register of Regulations by IHS.

2. The most current published IHS OMB outpatient per visit rate, also known as the outpatient all-inclusive rate, is paid for up to five outpatient visits per beneficiary per calendar day for professional services. An outpatient visit is defined as a face-to-face or telemedicine contact between any health care professional at or through the IHS facility authorized to provide services under the State Plan and a beneficiary for the provision of Title XIX defined services, as documented in the beneficiary's medical record.

3. Included in the outpatient per visit rate are Medicaid-covered pharmaceuticals or drugs, dental services, rehabilitative services, behavioral health services, ancillary services, and emergency room services provided on-site, and medical supplies incidental to the services provided to the beneficiary.

B. Virginia Medicaid reimburses tribal 638 facilities in accordance with the most recently published annual update of reimbursement rates for Indian Health Services, which is published in the Federal Register of Regulations and on the Indian Health Services website at https://www.ihs.gov on the page for reimbursement rates. Encounters or visits are limited to health care professionals as approved under the Virginia Medicaid State Plan. A tribal health program selecting to enroll as a federally qualified health center (FQHC) and agreeing to an alternate payment methodology (APM) will be paid using the APM.

C. Alternative payment methodology for tribal facilities recognized as FQHCs

1. Outpatient health programs or facilities operated by a tribe or tribal organization that choose to be recognized as FQHCs in accordance with § 1905 (I)(2)(B) of the Social Security Act and the Indian Self-Determination and Education Assistance Act of 1975 (25 USC § 5301 et seq.) will be paid using an APM for services, that is the published, all-inclusive rate (AIR). The APM/AIR rate is paid for up to five face-to-face encounters or visits per recipient per day.

2. The individual FQHC must agree to receive the APM. If a tribal FQHC does not agree to accept the APM, the Department of Medical Assistance Services shall seek accommodation with the FQHC, which may include submitting a State Plan amendment to authorize an alternative means of reimbursement for the FQHC.