TITLE 405 OFFICE OF THE SECRETARY OF FAMILY AND SOCIAL SERVICES

This section should include an overview of the proposed rulemaking, background, and high-level justification. Topics to address include (as applicable):

a. History and Background of the Rule – Explain the genesis for this rulemaking, including what prompted the agency to undertake this rulemaking. For example, is this rulemaking due to an update in state or federal law, court order, audit finding, operational issue or some other factor? When was the last major update to the rule? What process did the agency follow to develop this rule, for example was there a committee, external working groups, model code, etc.?

b. Scope of the Rule – Describe at a high-level the scope of the changes in the proposed rule. For example, is the rule simplifying a process, clarifying definitions, aligning the rules with current law, or is it a repeal and replace effort to assist with regulatory compliance and implementation. If it is a repeal and replace, explain why this method was chosen rather than simply amending the existing regulations.

c. Statement of Need – Provide a statement explaining the need for the rule and an evaluation of the policy rationale or goal behind the proposed rule, including an explanation as to whether the rule is intended to address 1) a federal or state statutory requirement; 2) a court order; 3) an audit finding, 4) an operational issue, or 5) another factor. For required changes, indicate what are the required changes and when were the new laws enacted, court order issued, audit conducted, etc.? If changes prompted by another factor, explain how that factor creates the need for the rulemaking.

d. Statutory Authority for the Proposed Rule – Include both the authority for the agency to generally regulate in the subject area and the specific authority for the agency to issue the proposed rule.

e. Fees, Fines, and Civil Penalties – Indicate whether the rule adds or increases any fees, fines, or civil penalties and needs to follow the additional steps in IC 4-22-2-19.6.

Response:

The proposed rule change is in response to federal regulation changes and confusions that have occurred. The changes outlined below are to align the State with federal regulations and alleviate operational issues.

The proposed rule will add definitions to 405 IAC 2-1-1 to include "community spouse", "ineligible spouse", "institutionalized spouse", and "retirement account." This will help clarify and clearly define the topics.

The proposed rule will amend subsection 405 IAC 2-1-2(e) to remove the requirement to submit the authorized representative paperwork in writing and aligns the rule with 42 CFR 435.907(a). The proposed rule amendment adds 405 IAC 2-1-2(j) to outline when a personal representative has the authority to act on behalf of a deceased individual or an individual's estate, pursuant to 45 CFR 164.502(g). This is updating Indiana Administrative Code to reflect current policy practice.

The proposed rule also amends 405 IAC 2-3-1.1 to specify that the transfer of all assets, other than those that fall under 42 U.S.C. 1396p(c)(2), occurred to become Medicaid eligible, and lists the requirements that apply for the verification of transfers.

The proposed rule removes 405 IAC 2-3-17(a) to include the terms in the definitions section (405 IAC 2-1-1). The proposed rule will add 405 IAC 2-3-17(e)-(h). Subsection (e) outlines when an institutionalized spouse or community spouse may request a finding of exceptional circumstances resulting in a significant financial duress. Further, it provides clear guidelines that the moving party must demonstrate that there are exceptional circumstances and significant financial duress that requires a higher allocation. It also provides examples of significant financial duress and what significant financial duress does not include. Subsection (e) states that failure to submit proof of exceptional circumstances by the required deadline will result in a determination that the exceptional circumstances no longer exist. Subsections (f) and (g) detail when a fair hearing is conducted when a Medicaid member or spouse is dissatisfied with the calculated spousal allocation and request that more of the institutionalized spouse's income be allocated to the community spouse. Subsection (h) adds enforcement methods for the resulting orders from a state court or an administrative proceeding.

The proposed rule will add section 405 IAC 2-3-26. This section adds rules for treatment of resources to be computed pursuant to 42 U.S.C. 1396r-5(c). It adds what resources are not included pursuant to 42 U.S.C. 1396b and 42 U.S.C. 1382b(a)(2)(A). It further defines resources such as cash, other liquid assets or real property that can be converted to cash per 42 U.S.C 1396r-5(c)(1). Self-funded retirement accounts of either or both spouses are included in the value of resources. After the Medicaid eligibility has been determined, resources solely in the community spouses name will no longer be counted in the Medicaid members budget, unless excepted under 405 IAC 2-3-1.2(e).

The proposed rule will add section 405 IAC 2-3-27. This section adds that service agreements, personal needs contracts and personal care agreements must be in writing, the services that are provided, the payment rate, the care provider(s) be listed, and they must be signed and notarized at the time the agreement was made unless documentation of the payments for services were made at the time the service was rendered are submitted to the Office. The rate must be reasonable and based on fair market value. A detailed log of all services and a list of some allowable services under the agreement must be provided. The contract is applied for future months and cannot be retroactively applied. The proposed rule also restricts lump sum payments for future services and the number of hours a care provider can work in a day (16 hours per day limit). Finally, it provides direction over what services will and will not be considered valid.

The proposed rule will add section 405 IAC 2-3-28 which states that spousal impoverishment protections do not apply when both spouses are institutionalized. When both spouses are institutionalized, regular Medicaid budgeting applies.

The proposed rule will add the section 405 IAC 2-3-29. This section provides definitions of Miller Trusts and Qualified Income Trusts as well as following 42 U.S.C. 1396p(d)(4)(B). The section further defines when a transfer penalty will not apply, that pursuant to 42 U.S.C 1396p(d)(4)9B(ii), upon death, the State of Indiana will receive the remaining funds held in the trust and lists allowable distributions of the trust. The trust must be maintained in a separate account and not be comingled with other accounts and can only be funded monthly using the beneficiary's income in the amount which exceeds the special income limit.

The proposed rule repeals 405 IAC 2-6-2 to add the content to 405 IAC 2-6-3 and amends subsections (2) and (3) in section 405 IAC 2-6-3. Subsection (2) adds that upon attaining age 18, the section applies. Subsection (3) adds that a member that was enrolled in a State Plan under 42 U.S.C. Ch. 7 Title XIX will maintain Medicaid coverage.

The proposed rule does not add or increase any fees, fines, or civil penalties. The proposed rule improves definitions and provides clear guidance to applicants and their representatives. The OMPP has rulemaking authority under IC 12-15-1-10; and IC 12-15-21-2.

This section should include a discussion of the impact of the proposed rulemaking on State and local government expenditures and revenues. Topics to address include (as applicable):

a. Anticipated Effective Date of the Rule

Response: 30 days after filing with the publisher

b. Estimated Fiscal Impact on State and Local Government – Does the rule impact expenditures and revenues of State agencies or local government? If so, to the extent possible, quantify the total impact by year.

c. Sources of Expenditures or Revenues Affected by the Rule – If the rule impacts expenditures and revenues of State agencies or local government, indicate (1) which units of government are impacted, (2) which years are impacted, and (3) which funds are impacted (if known).

1. Definitions

There is no fiscal impact with this addition. The administrative clarification and simplification will alleviate the confusion that can lead to administrative appeals.

2. Removes the requirement for authorized representatives for Medicaid to be in writing

There is no fiscal impact with this addition. The administrative clarification and simplification will alleviate the confusion that can lead to administrative appeals.

3. Requires that any motion filed seeking to increase the allowed spousal support or resource allotment to qualify are served to the Office of General Counsel prior to the scheduled hearing. Any approved motions apply going forward and are not retroactively applied. Significant financial duress must be demonstrated and submitted in writing.

*Due to data collection restrains, the listed numbers are very conservative estimates of the cost savings. It is nearly impossible to determine the number of applications that have been approved for Medicaid that would otherwise not meet the eligibility criteria. In addition, this estimate is only considering the reported income transfer, due to the nature of the orders, resources/assets are unknown.

4. Defines that all resources, up to and including community spouse's IRA's or other available retirement funds, owned by either spouse must be included in establishing the resource assessment amount.

*FSSA reached out to CMS to confirm that Indiana is interpreting the USC correctly. They agreed that the community spouses self-funded retirement accounts should count in the computation of the resource assessment. Because of disagreements with this policy, many attorneys have not been submitting the community spouse self-funded retirement accounts making it nearly impossible to determine the fiscal impact. Due to the data collection restraints, the listed numbers are very conservative estimates and are based on the few community spouse self-funded accounts that have been submitted to FSSA.

5. Adds a section regarding service agreements, personal needs contracts or personal care agreements

This is the current policy that is followed, there will be no fiscal impact with this addition. The administrative clarification and simplification will alleviate the confusion that can lead to administrative appeals.

6. Spousal impoverishment protections when both spouses are in an institution

This is the current policy that is followed, there will be no fiscal impact with this addition. The administrative clarification and simplification will alleviate the confusion that can lead to administrative appeals.

7. Adds a section regarding Miller Trusts

This is the current policy that is followed, there will be no fiscal impact with this addition. The administrative clarification and simplification will alleviate the confusion that can lead to administrative appeals.

8-9. Removes section and adds language to the next section that former foster children on Medicaid from other states that move to Indiana can continue to qualify for Medicaid

i. Fee for service (FFS)

ii. Managed care

iii. Total Fiscal Impact

This section should identify all parties that may be impacted from the proposed rule. This will serve as the multiplier for costs and benefits. Consider the impact of the rule on all persons affected by the rule, not just regulated persons. Impacted parties can be determined by a variety of sources including, but not limited to, agency records, calculation, research, estimates, and surveys. Agencies can exclude parties already in compliance from the cost-benefit analysis.

Response:

1. The OMPP estimates that 405 IAC 2-1-1 should have no impact to members or providers.

2. The OMPP estimates that 405 IAC 2-1-2 should have little or no impact on applicants or providers. This is updating Indiana Administrative Code to reflect current policy practice.

3. The OMPP estimates that 405 IAC 2-3-1.1 will have no impact to members or providers.

4. The OMPP estimates that 405 IAC 2-3-17 will minimally impact applicants and will have no impact on providers.

5. The OMPP estimates that 405 IAC 2-3-26 will have minimal impact on applicants, but no impact on providers.

6. The OMPP estimates that 405 IAC 2-3-27 will affect minimal applicants and will have no impact on providers.

7. The OMPP estimates that 405 IAC 2-3-28 will have no impact on applicants, and no impact on providers.

8. The OMPP estimates that 405 IAC 2-3-29 will have no impact applicants, and no impact on providers.

9. The OMPP estimates that removing 405 IAC 2-6-2 will have no impact on applicants.

10. The OMPP estimates that 405 IAC 2-6-3 will impact 479 applicants.

This section should identify all changes from existing regulation. This can be done by creating a list of changes or showing the changes in a table format. Failure to identify all changes in the proposed rule is the biggest reason for delays in the OMB review of a proposed rule. Be sure to check legal authority for each provision.

As part of this process, identify all requirements that are being included as part of the proposed rulemaking but are imposed by another source of law. For example, these requirements could be in statute, other regulations, federal regulations, court orders, or compacts. These sources should be included in a list, table, or annotation on the proposed rule language. Requirements that are imposed by another source of law should be excluded from the cost-benefit analysis.

Also, as part of this process, identify all requirements that are being included as part of the proposed rulemaking that incorporate an existing agency standard that is contained in a non-rule document. For example, these standards can be contained in a policy, manual, handbook, contract, form, application, etc. These sources should be included in a list, table, or annotation along with an estimate of the current compliance rate by regulated parties with the standard.

Response:

1. Amend 405 IAC 2-1-1 to add definitions for "community spouse", "ineligible spouse", "institutionalized spouse" and "retirement account." The definition of ineligible spouse in 405 IAC 2-1-1 uses the same definition in 20 CFR 416.1160(d).

2. Amend 405 IAC 2-1-2 to bring the state into compliance with 42 CFR 435.907(a) and to outline when a personal representative has the authority to act on behalf of a deceased individual or an individual's estate, pursuant to 45 CFR 164.502(g).

3. The proposed rule amendment 405 IAC 2-3-1.1 to specify that the transfer of all assets, other than those that fall under 42 U.S.C. 1396p(c)(2), occurred to become Medicaid eligible, and lists the requirements that apply for the verification of transfers.

4. Adds subsections to 405 IAC 2-3-17 to provide guidance for spousal allocation calculation adjustments and that financial duress must be displayed. The amendment also provides guidelines for significant financial duress.

5. Adds 405 IAC 2-3-26 to define what assets are counted in the resource assessment, up to and including community spouses self-funded retirement accounts and references 42 U.S.C 1396r-5(c), 42 U.S.C. 1396b, 42 U.S.C 1382b(a)(2)(A), 42 U.S.C 1396r-5(c)(1) and 405 IAC -2-3-1.2(e).

6. Adds 405 IAC 2-3-27 to provide clear guidance on the creation and use of compensation of service agreements, personal needs contracts and personal care agreements.

7. Adds 405 IAC 2-3-28 to follow 42 U.S.C. 1396r-5 to specify that when both spouses are institutionalized, regular Medicaid rules apply to the eligibility.

8. Adds 405 IAC 2-3-29 to include reference to 42 U.S.C. 1396p(d)(4)(B) and provides guidelines on the establishment and maintenance of Miller Trusts, otherwise known as Qualified Income Trusts.

9. Repeals 405 IAC 2-6-2 and amends 405 IAC 2-6-3 to broaden former foster youth eligibility beyond just the State of Indiana, follows 1902(a)(10)(A)(i)(IX) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(IX)). The amendment adds that a member that was enrolled in a State Plan under 42 U.S.C. Ch. 7 Title XIX will maintain Medicaid coverage.

This section should include a discussion of the benefits of the changes made in the proposed rule compared to existing requirements. For each new requirement in the proposed rule, consider the benefits to the general public, regulated community, businesses and other regulated entities, your agency, other state agencies, local partners, individuals, families, and small businesses.

When considering possible direct and indirect benefits, consider questions such as the following: Will the regulation save time or money for your agency or another agency? Does the regulation decrease compliance costs? Does the regulation increase business profitability by reducing costs? Does the regulation make the market more competitive? Does the regulation decrease the price of goods or services? Does the regulation create benefits for public health or safety?

If benefits cannot be monetized or quantified, the agency should explain why and include a thorough description of the non-quantifiable benefits as well as a determination whether such benefits will be significant.

Topics to address include (as applicable):

a. Estimate of Primary and Direct Benefits of the Rule – A direct benefit is one that occurs as an immediate result of the stated goals of the regulation without any intervening steps or actions and can include things such as the impact on consumer protection, worker safety, the environment, or business competitiveness. For example, the amount of time an employee saves by not having to complete a certain form and the amount of time the agency saves by not having to review the form.

b. Estimate of Secondary or Indirect Benefits of the Rule - An indirect benefit is one that occurs because of the regulation but is unrelated to its stated goals. Continuing from the direct benefit example, an indirect benefit of getting rid of a form would be using money saved to upgrade a certain technology in the agency. The rule change was not made with the goal of updating technology, but that is an added benefit of the change.

c. Estimate of Any Cost Savings to Regulated Industries – Indicate if the proposed rule will provide cost savings individuals and/or businesses. Please note if the savings are from a change in an existing requirement or the imposition of a new requirement.

Response: The primary benefits of the rule amendments and additions are to clarify definitions, and provide guidance to Medicaid applicants, elder law attorneys and other interested parties, as well as comply with federal regulation. OMPP does not expect the rule amendments to have an impact on consumer protection, worker safety, the environment or business competitiveness. Any secondary or indirect benefits of the rule amendments and additions are to eliminate barriers to access Medicaid, eliminate inconsistencies with the processing of Medicaid applications and to provide guidance for the applicants. There are no estimated cost savings to regulated entities as a result of this rule amendment. These changes and additions improve definitions and provide guidance to applicants and their representatives.

This section should include a comprehensive enumeration of the cost imposed by the changes made in the proposed rule compared to existing requirements, including tangible and intangible costs. For each new requirement in the proposed rule, consider the costs to the general public, regulated community, businesses and other regulated entities, your agency, other state agencies, local partners, individuals, families, and small businesses.

When considering possible direct and indirect costs, consider questions such as the following: Does the regulation increase compliance costs? Will the regulation require individuals or businesses to change their behavior or procedures to comply? Will the regulation require regulated parties to buy new equipment or software, take more time to complete tasks, hire new workers, take new training, develop new procedures, provide additional information, or take additional actions to comply? Will the regulation require more time or money for your agency or another agency? Does the regulation decrease business profitability by increasing costs? Does the regulation make it more difficult to enter the market? Does the regulation increase the price of goods or services?

If costs cannot be monetized or quantified, the agency should explain why and include a thorough description of the non-quantifiable costs as well as a determination whether such costs will be significant.

Topics to address include (as applicable):

a. Estimate of Compliance Costs for Regulated Entities – Costs are the burden of complying with the rule and can include the costs of fees, new equipment or supplies, increased labor and training, education, supervisory costs, and any other compliance cost imposed by the requirements of the rule. Consider both direct and indirect costs. Direct costs are an immediate result of the regulation without any intervening steps or actions. Indirect costs occur because of the regulation but are unrelated to its stated goals. If possible, agencies should monetize the costs by expressing them in numbers.

b. Estimate of Administrative Expenses Imposed by the Rules – To the extent possible, quantify any legal, consulting, reporting, accounting or other administrative expenses imposed by the requirements of the rule. This includes any additional time regulated parties will need to spend to understand the requirements and comply with them through new processes or procedures.

c. The fees, fines, and civil penalties analysis required by IC 4-22-2-19.6 – If the rule adds or increases a fee, fine, or civil penalty, the agency must define what the fee, fine, or civil penalty is doing / seeking to punish; the circumstances for which the agency will assess a fee, fine, or civil penalty; and provide a calculation of how the agency decided the specific dollar amount (or formula). For a fee, discuss how the amount of a fee is reasonably based on the amount necessary to carry out the purposes for which the fee is imposed. For a fine or civil penalty, discuss how the amount of the fine or civil penalty was determined based on the following considerations as applicable: Whether the violation has a major or minor impact on the health, safety, or welfare of a person or animal; whether the number of previous violations committed by the offender of laws, rules, or programs administered by the agency; the need for deterrence of future violations; and whether the conduct, if proved beyond a reasonable doubt, would constitute a criminal offense, and the level of penalty set by law for the criminal offense.

Response: The OMPP does not expect any additional compliance costs for regulated entities imposed by this rule amendment. These changes improve definitions and eligibility criteria. The OMPP does not expect any additional administrative costs for regulated entities imposed by this rule amendment. These changes improve definitions and provide guidance to applicants and their representatives.

The proposed rule does not add or increase any fees, fines, or civil penalties. The proposed rule improves definitions and provides clear guidance to applicants and their representatives.

This section should include a discussion of the sources of outside information utilized to calculate the cost and benefits for the rule. Topics to address include (as applicable):

a. Independent Verifications or Studies - Were there any studies that were relied upon in the cost-benefit analysis? Potential sources include the following: official government reports (e.g., federal, state, or local); academic, technical, or professional articles; commercial literature; businesses' websites; survey data; and word of mouth (e.g., inquiring among business owners). If any source listed above was relied upon in the cost benefit analysis, provide citations to where the studies can be located or indicate how a person can obtain copies from the agency to review.

b. Sources Relied Upon in Determining and Calculating Costs and Benefits – Did the agency use any outside sources to calculate costs and benefits? For example, the consumer price index database, bureau of labor statistics, IRS data, or any internal, industry specific databases. If these were used, provide a citation to view the source or indicate how a person can obtain copies from the agency to review. Did the agency consult with industry groups or associations or conduct a survey of regulated parties to help determine the costs and benefits? If so, please provide a description of what was done and the information obtained.

Response:

1. For 405 IAC 2-3-27, the OMPP conducted research on how these policies are handled in other states as well as researching guidance provided by elder law attorneys and other organizations. The allowable services are framed after the HCBS waivers.

2. 405 IAC 2-3-29 includes the information located on the FSSA template at https://www.in.gov/fssa/ompp/home/miller-trust/ which has been in place since 2014.

3. Changes to 405 IAC 2-6-3 were calculated in partnership with Myers & Stauffer by looking at the estimated increased costs of removing the income limitation for the former foster youth population and by looking at the number of out-of-state individuals who were already covered and were going to age out of coverage under the previous policy.

Conclude with an aggregated tally of the costs and benefits for each new requirement along with the agency's determination whether the benefits are likely to exceed the costs.

Response: The proposed changes to 405 IAC 2-1-1; 405 IAC 2-3-27; 405 IAC 2-3-28; 405 IAC 2-3-29 will have no fiscal impact.

The proposed changes to 405 IAC 2-3-17 for spousal allocation adjustments and definitions will provide a conservatively estimated total of $270,000 in savings in SFY 2024 and $360,000 in SFY 2025. In SFY 2024, the federal share of estimated savings will be $180,000, and the state share of estimated savings will be $90,000. In SFY 2025, the federal share of estimated savings will be $240,000, and the estimated state share of savings will be $120,000.

The proposed changes to 405 IAC 2-3-26 for defining that all resources, up to and including community spouse's IRA's or other available retirement funds, owned by either spouse must be included in establishing the resource assessment amount may result in a conservatively estimated total of $710,000 in savings in SFY 2024 and $940,000 in SFY 2025. In SFY 2024, the federal share of estimated savings will be $470,000, and the state share of estimated savings will be $230,000. In SFY 2025, the federal share of estimated savings will be $630,000, and the state share of estimated savings will be $310,000.

Repealing 405 IAC 2-6-2 and amending 405 IAC 2-6-3 to add language that former foster children on Medicaid from other states that move to Indiana can continue to qualify for Medicaid will have an estimated cost of $1,940,000 in SFY 2024 and $2,580,000 in SFY 2025. In SFY 2024, the federal share of the estimated cost will be $1,280,000, and the state share of the estimated cost will be $660,000. In SFY 2025, the federal share of the estimated cost will be $2,580,000, and the state share of the estimated cost will be $880,000.

The total fiscal impact of the proposed changes to Article 2 will be an estimated cost of $960,000 in SFY 2024, with a state share of $340,000. In SFY 2025, the total estimated cost will be $1,280,000, with a state share of $450,000.

OMPP has determined that the benefits outweigh the costs.

First Notice of Public Comment Period with Proposed Rule: 20231227-IR-405230819FNA

LSA Document #23-819

Notice of Determination Received: November 1, 2023

DIN: 20231227-IR-405230819RAA

Composed: May 19,2024 11:35:59PM EDT

A PDF version of this document.