F. OVERSIGHT AND ENFORCEMENT
1. Oversight of the Medicaid Act
The Medicaid program is authorized by Title XIX of the Social Security Act, 42 U.S.C. §§ 1396 et seq., as a joint federal-state program designed to furnish medical assistance to persons "whose income and resources are insufficient to meet the costs of necessary medical services." 42 U.S.C. § 1396. Congress entrusted administration of the Medicaid program to the Secretary of Health and Human Services (Secretary), who delegated that authority to the Centers for Medicare and Medicaid Services (CMS). Ark. HHS v. Ahlborn, 547 U.S. 268, 275 (2006). Participation in the program is voluntary; however, once a state chooses to participate, it must comply with the requirements of the Medicaid Act and its regulations. Doe v. Kidd III, 656 Fed. Appx. 643, 647 (4th Cir. 2016); see also Harris v. McRae, 448 U.S. 297, 300 (1980).
CMS is responsible for the administration of all Medicaid programs and promulgation of regulations interpreting the Medicaid Act. CMS publishes the State Medicaid Manual to direct participating states in their implementation of Medicaid requirements. The State Medicaid Manual (SMM) "serves as the official HHS interpretation" of the Medicaid law and regulations. Pennsylvania Dept. Of Public Welfare v. U.S. Dept. of Health and Human Servs., 647 F.3d 506, 509 (3d Cir. 2011); Katie A. v. Los Angeles County, 481 F.3d 1150, fn. 11 (9th Cir. 2007) ("Courts have accorded CMS' interpretations of the Medicaid Act, such as that found in the State Medicaid Manual, 'respectful consideration' based on the agency's expertise, the statute's complexity and technical nature, and the broad authority delegated to the Secretary of Health and Human Services under the Act."). For example, directives related to fair hearings are located at SMM in Chapter 2 at Section 2900 et. seq available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021927 (last viewed October 23, 2020).
The South Carolina Supreme Court has ruled that Medicaid waiver applications submitted by DHHS, once approved by CMS, "carry the force and effect of law." Joseph v. S.C. Dep't of Labor, Licensing & Regulation, 417 S.C. 436, 464, 790 S.E.2d 763, 778 n.9 (2016) (citing Stogsdill v. S.D. Dep't of Health Human Servs, 410 S.C. 273, 280, 763 S.E.2d 638, 642 (Ct. App. 2014) (holding that in the context of Medicaid waivers, once the State's waiver application is approved by CMS, the waiver's terms carry the force and effect of federal law and need not be promulgated as regulations pursuant to the Administrative Procedures Act).
2. Appeals and Judicial Enforcement of the Medicaid Act
Careful thought needs to be given to litigation strategy in determining whether to pursue an administrative appeal through the fair hearing process or to pursue remedies through the state or federal courts. In some cases, it may be advisable to simultaneously pursue administrative remedies through a fair hearing while litigating violations of state and/or federal law in the courts. Appeals of decisions to deny, reduce, or terminate Medicaid services, or to challenge other violations of the Medicaid Act can be extremely complex and time consuming, and, therefore, costly. To continue existing services, the administrative appeals process must be initiated within ten days of the "action," although an administrative appeal may be filed within 30 days, where continuation of services is not requested.
a. DHHS Fair Hearings
The Medicaid Act requires that the state must grant "an opportunity for a fair hearing before the State agency to any individual whose claim for medical assistance under the plan is denied or is not acted upon with reasonable promptness." 42 U.S.C. § 1396a(a)(3).53 Federal regulations implementing this statute are found at 42 C.F.R. §§ 431.200 to 431.250. CMS regulations define "action" as "a termination, suspension of, or reduction in covered benefits or services, or a termination, suspension of, or reduction in Medicaid eligibility or an increase in beneficiary liability, including a determination that a beneficiary must incur a greater amount of medical expenses in order to establish income eligibility in accordance with § 435.121(e)(4) or § 435.831 of this chapter or is subject to an increase in premiums or cost-sharing charges under subpart A of part 447 of this chapter." K.W. ex. rel. D.W. v. Armstrong, 789 F.3d 962, 970 (9th Cir. 2015); 42 C.F.R. § 431.201.
CMS regulations provide that the date of the "action" is the "intended date on which a termination, suspension, reduction, transfer or discharge becomes effective," not to the date of the notice. "Action" may also refer to the date of the determination made by a State with regard to the preadmission screening and annual resident review (PASARR) requirements of section 1919(e)(7) of the Medicaid Act. 42 C.F.R. § 431.201.
A "notice" is a "written statement that meets the requirements of § 431.210." 42 C.F.R. § 431.201. A "request for a hearing" includes any clear expression by the applicant or beneficiary, or his authorized representative, that he wants the opportunity to present his case to a reviewing authority. DHHS must provide Medicaid participants with a choice of receiving notices and required information in electronic format, or by regular mail. 42 C.F.R. § 435.918. DHHS must confirm the election to receive electronic notices by regular mail and must send an email or other electronic communication alerting the individual that a notice has been posted to his or her account. The agency also must send a notice by regular mail when an electronic communication is undeliverable. On request, the state must also provide through regular mail any notice posted to the individual's electronic account. The term "service authorization" means a managed care enrollee's request for the provision of a service.
The federal regulations provide that the state must grant a hearing to:
(1) Any individual who requests it because he or she believes the agency has taken an action erroneously, denied his or her claim for eligibility or for covered benefits or services, or issued a determination of an individual's liability, or has not acted upon the claim with reasonable promptness including, if applicable--
(i) An initial or subsequent decision regarding eligibility;(2) Any resident who requests it because he or she believes a skilled nursing facility or nursing facility has erroneously determined that he or she must be transferred or discharged.
(ii) A determination of the amount of medical expenses that an individual must incur in order to establish eligibility in accordance with § 435.121(e)(4) or § 435.831 of this chapter; or
(iii) A determination of the amount of premiums and cost sharing charges under subpart A of part 447 of this chapter;
(iv) A change in the amount or type of benefits or services; or
(v) A request for exemption from mandatory enrollment in an Alternative Benefit Plan.
(3) Any individual who requests it because he or she believes the State has made an erroneous determination with regard to the preadmission and annual resident review requirements of section 1919(e)(7) of the Act.
(4) Any MCO, Prepaid Inpatient Health Plan (PIHP), or Prepaid Ambulatory Health Plan (PAHP) enrollee who is entitled to a hearing under subpart F of part 438 of this chapter.
(5) Any enrollee in a non-emergency medical transportation PAHP (as that term is defined in § 438.9 of this chapter) who has an action as stated in this subpart.
(6) Any enrollee who is entitled to a hearing under subpart B of part 438 of this chapter.
DHHS must include in notices (1) the action the agency, skilled nursing facility, or nursing facility intends to take and the effective date of such action; (2) a clear statement of the specific reasons supporting the intended action; (3) the specific regulations that support, or the change in Federal or State law that requires, the action; (4) an explanation of the individual's right to request a fair hearing; (5) in cases of an action based on a change in law, the circumstances under which a hearing will be granted; and (6) an explanation of the circumstances under which Medicaid is continued if a hearing is requested. 42 C.F.R. § 431.210(1).
With few exceptions, the notice should be sent at least ten days before the date of the action, namely the termination, suspension of, or reduction in covered benefits or services. 42 C.F.R. § 431.211. If a hearing is requested prior to the date of the action, the agency must stay the adverse action until after the hearing and a decision is made, with some exceptions. 42 C.F.R. § 431.230. If the agency takes the adverse action without the advance notice required by 42 C.F.R. § 431.211, and an appeal is brought within ten days of the action, then the agency must reinstate and continue the services until a decision is rendered, if that is requested as part of the appeal. If notice is received not as much as ten days prior to the date of the action, but before the action, then if the beneficiary requests a hearing within ten days from the date they received notice, then again, the agency must reinstate or continue the services, if a request is made. One exception to the agency having to continue the services pending the fair hearing decision is if, at the hearing, it is determined that the sole issue is one of Federal or State law or policy. 42 C.F.R. § 431.231.
Notices of reductions or terminations sometimes advise the participant that if the adverse action is upheld, the participant or representative may be required to repay the cost of benefits provided during the appeal process. The federal regulations allow the state to recover from the participant or beneficiary amounts paid during an appeal when the agency's action is sustained by the hearing decision. 42 C.F.R. § 431.230(b). In their notices, DDSN and DHHS have informed...
