CMS-10216 HOA Pre-print Final

OMB Approval # 0938-1007

Section 3.1-H.
ALTERNATIVE BENEFITS
STATE PLAN AMENDMENT
HEALTH OPPORTUNITY ACCOUNTS DEMONSTRATION PROGRAM
I.

Approved State Demonstration Programs
The implementation date of this program is ___________. (must be after January 1, 2007)
Check all items (marked ___/) that specifically apply to this amendment.

II.

Program Elements

A.

1938(a)(1)

The State elects to operate a demonstration program to provide
alternative benefits, as defined in section V. The alternative
benefits consist of at least (1) coverage for medical expenses in a
year for items and services which would otherwise be provided
under Medicaid, after an annual deductible has been met and
(2) contributions into a Health Opportunity Account (HOA) as
defined under subsections (c) and (d) under section 1938 of the
Social Security Act (the Act).

B.

1938(c)

The State will contribute to an HOA. The amount of the annual
deductible must be at least 100 percent and no more than 110
percent of the amount of the HOA contribution. See section VI.
B. for the specific amount the State will contribute for each
eligibility group.

C.

1938(a)(3)

The State demonstration program addresses/incorporates all of the
following criteria as described in section 1938(a)(3) of the Act.
Describe how each of these required program elements are
implemented, monitored, and measured (below or on a separate
page).

__________________
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information
unless it displays a valid OMB control number. The valid OMB control number for this information collection is 09381007. The time required to complete this information collection is estimated to average 1 hour per response, including
the time to review instructions, search existing data resources, gather the data needed, and complete and review the
information collection. If you have comments concerning the accuracy of the time estimate(s) or suggestions for
improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA Reports Clearance Officer, Mail Stop
C4-26-05, Baltimore, Maryland 21244-1850.

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1. Creating patient awareness of the high cost of medical care;
2. Providing incentives to patients to seek preventive care
services;
3. Reducing inappropriate use of health care services;
4. Enabling patients to take responsibility for health outcomes;
5. Providing enrollment counselors and ongoing education
activities;
6. Providing transactions involving HOAs to be conducted
electronically and without cash; and
7. Providing access to negotiated provider payment rates.
D.

1938(a)(3)

_______/ The State provides incentives for individuals enrolled
in the HOA demonstration to obtain appropriate preventive care
as defined for purposes of section 223(c)(2)(C) of the Internal
Revenue Code of 1986, such as additional account contributions
for an individual demonstrating healthy prevention practices,
regardless of whether they have met the deductible. Preventive
care does not generally include any service or benefit intended to
treat an existing illness, injury, or condition.
If the State provides incentives for preventive care, describe the
incentives and how they will be implemented.
____/
____/

____/
____/
_____/
_____/
_____/
_____/
III.

Statewideness

A.

1938(a)(4)

Additional account contributions for an individual
demonstrating healthy prevention practices.
Periodic health evaluations, including tests and diagnostic
procedures ordered in connection with routine
examinations, such as annual physicals.
Routine prenatal and well-child care.
Child and adult immunizations.
Tobacco cessation programs.
Obesity weight loss programs.
Screening services.
Other (describe)

_____/ The State implements this demonstration on a statewide
basis.

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OR
B.

1938(a)(4)

_______/ The State implements this demonstration on less than a
statewide basis, specifically, only in the following areas:
(Specify)

IV.

Eligibility

A.

1938(b)(2)

The following individuals will not be enrolled in the
demonstration during the first 5 years after it is approved:
• Individuals who are 65 years of age or older;
• Individuals who are disabled, regardless of whether or not their
eligibility for medical assistance under this title is based on such
disability;
• Individuals who are eligible for medical assistance under this title
only because they are (or were within the previous 60 days)
pregnant;
• Individuals who have been eligible for medical assistance for a
continuous period of less than 3 months; and

B.

1938(b)(3)

The following individuals within a category of assistance described in
section 1937(a)(2)(B) of the Act will not be enrolled in the
demonstration:
• The individual is a pregnant woman who is required to be covered
under the State plan under section 1902(a)(10)(A)(i) of the Act.
• The individual qualifies for medical assistance under the State plan
on the basis of being blind or disabled (or being treated as being
blind or disabled) without regard to whether the individual is
eligible for supplemental security income benefits under title XVI
on the basis of being blind or disabled and including an individual
who is eligible for medical assistance on the basis of section
1902(e)(3) of the Act.
• The individual is entitled to benefits under any part of title XVIII.
• The individual is terminally ill and is receiving benefits for hospice
care under title XIX.
• The individual is an inpatient in a hospital, nursing facility,
intermediate care facility for the mentally retarded, or other
medical institution, and is required, as a condition of receiving
services in such institution under the State plan, to spend for costs
of medical care all but a minimal amount of the individual’s
income required for personal needs.
• The individual is medically frail or otherwise an individual with
special medical needs (as described by the Secretary). For
purposes of this section, the Secretary has previously described

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•

•

•

•

•

C.

1938(b)(4)(A)

individuals with special needs to include those groups defined in
Federal regulations at 42 CFR 438.50(d) of the managed care
regulations (e.g., dual eligibles and certain children under 19 who
are eligible for SSI; eligible under section 1902(e)(3) of the Act; in
foster care or other out of home placement; or receiving foster care
or adoption assistance).
The individual qualifies based on medical condition for medical
assistance for long-term care services described in section
1917(c)(1)(C) of the Act.
The individual is an individual with respect to whom aid or
assistance is made available under part B of title IV to children in
foster care and individuals with respect to whom adoption or foster
care assistance is made available under part E of title IV, without
regard to age.
The individual qualifies for medical assistance on the basis of
eligibility to receive assistance under a State plan funded under
part A of title IV (as in effect on or after welfare reform effective
date defined in section 1931(i) of the Act). This provision relates
to those individuals who qualify for Medicaid solely on the basis
of qualification under the State’s TANF rules (i.e., the State links
Medicaid eligibility to TANF eligibility).
The individual is a woman who is receiving medical assistance by
virtue of the application of sections 1902(a)(10)(ii)(XVIII) of the
Act and 1902(aa) of the Act. This provision relates to those
individuals who are eligible for Medicaid based on the breast or
cervical cancer eligibility provisions.
The individual qualifies for medical assistance on the basis of
section 1902(a)(10)(A)(ii)(XII) of the Act or is not a qualified alien
(as defined in the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996) and receives care and services
necessary for the treatment of an emergency medical condition in
accordance with section 1903(v) of the Act (Tuberculosis infected
individuals).
_______/The State will further limit eligibility by excluding the
following groups:
(List and Define Groups)

D.

1938(b)(1)

The demonstration will include the following groups of
individuals:
(List and define groups)

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E.

1938(b)(4)(B)

______/ The State allows individuals enrolled in a Medicaid
MCO to participate in the HOA demonstration.
The State assures that the following conditions are met with
respect to each managed care organization that is participating.
1.

2.

3.

F.

1938(b)(5)

The number of individuals enrolled in the
MCO(s) who participate in the HOA program do not exceed
5 percent of the total number of individuals enrolled in the
MCO;
The proportion of enrollees in the MCOs who participate in
the HOA is not significantly disproportionate to the
proportion of such enrollees in other MCOs who participate
in the HOA; and
The State will provide an adjustment in the per capita
payments to the MCO to account for participation in the
HOA. This shall take into account the difference in the likely
use of health care services between MCO enrollees who
participate in the HOA and MCO enrollees who do not
participate in the HOA. (Describe how this adjustment will
be calculated below.)

Voluntary Participation
An eligible individual will be enrolled in the State demonstration
program only if the individual voluntarily enrolls. Enrollment
will be effective for a period of 12 months, and may be extended
for additional periods of 12 months each with the consent of the
individual.
Describe how the State will assure and document an individual’s
voluntary enrollment.

G. 1938(b)(6)

One Year Moratorium for Enrollment
An individual who, for any reason, is disenrolled from a State
demonstration program under this section shall not be permitted
to re-enroll before the end of the 1-year period that begins on the
effective date of the disenrollment.

V.

Alternative Benefits

A.

1938(c)(1)

The alternative benefits consist of:

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1.

2.

Coverage for medical expenses for items and services for which
Medicaid benefits are otherwise provided, after the annual
deductible described in section V.B. has been met; and
A State contribution into an HOA, as described in section
VI.B.2.

/____/ 3. Coverage of preventive care without regard to the annual
deductible, as described in section II.D.
B.

1938(c)(2)

Annual deductible.
The amount of the annual deductible described in paragraph (A)
above shall be at least 100 percent, but no more than 110 percent, of
the annualized amount of contributions to the HOA under section
VI.B.1.a., determined without regard to any limitation described in
section VI.C.2.. For each eligibility group please specify the amount
of the deductible (between 100 percent and 110 percent of the
annualized State contribution to the HOA – see section VI.B. below):
Eligibility Group

C.

1938(c)(3)

Annual Deductible

Access to Negotiated Provider Payment Rates
1.

Fee-for-service enrollees. In the case of an individual who is
participating in a State demonstration program and who is not
enrolled with a Medicaid MCO, the State assures that the
individual may obtain demonstration program Medicaid services
from-a. any participating provider under this section at the same
payment rates that would be applicable to such services if the
deductible described in section V.B. above was not
applicable; or
b. any other provider at payment rates that do not exceed 125
percent of the payment rate that would be applicable to such
services furnished by a participating provider under this
section if the deductible described in section V.B. above was
not applicable.

2. Treatment under Medicaid managed care plans. In the case of an
individual who is participating in a State demonstration program
and is enrolled with a Medicaid MCO, the State assures it has
entered into an arrangement with the organization under which
the individual may obtain demonstration program Medicaid
services from any provider described in section V.C.1. at

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payment rates that do not exceed the payment rates that may be
imposed under that clause.
3. Computation. The payment rates described in sections 1 and 2
above shall be computed without regard to any cost sharing that
would be otherwise applicable under sections 1916 and 1916A of
the Act.
4. Definitions. For purposes of this section:
a. The term `demonstration program Medicaid services' means,
with respect to an individual participating in the State
demonstration program, services for which the individual
would be provided medical assistance under this title but for
the application of the deductible described above in V.B.
b. The term `participating provider' means-i. with respect to an individual described in section V.C.1.,
a health care provider that has entered into a participation
agreement with the State for the provision of services to
individuals entitled to benefits under the State plan; or
ii. with respect to an individual described in section V.C.2.
who is enrolled in a Medicaid MCO, a health care
provider that has entered into an arrangement for the
provision of services to enrollees of the organization
under this title.
D.

1938(c)(4)

No effect on Subsequent Benefits.
After the individual has satisfied the annual deductible described in
paragraphs A and B of this section, alternative benefits for an eligible
individual shall consist of at least the benefits that would otherwise be
provided to the individual, including cost sharing relating to such
benefits, if the individual was not enrolled in the demonstration.

E.

1938(c)(5)

Overriding Cost Sharing and Comparability Requirements for
Alternative Benefits
The Medicaid provisions relating to cost sharing for benefits
(including sections 1916 and 1916A of the Act) will not apply with
respect to benefits to which the annual deductible under section V.A.
applies. The provisions of section 1902(a)(10)(B) of the Act (relating
to comparability) shall not apply with respect to the provision of
alternative benefits (as described in this section).

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F.

1938(c)(7)

Use of Tiered Deductible and Cost Sharing
____/ 1. The State will use a tiered deductible. The amount of the
annual deductible is based on the income of the family
involved. The amount will not favor families with higher
income over those with lower income; and
____/ 2. The State will have tiered cost sharing. The amount of the
maximum out-of-pocket cost sharing is based on the income
of the family involved. The amount does not favor families
with higher income over those with lower income.
a. Maximum Out-of-Pocket Cost Sharing. For purposes of
this section the term `maximum out-of-pocket cost
sharing' means, for an individual or family, the amount
by which the annual deductible level applied under
section V.A. to the individual or family exceeds the
balance in the HOA for the individual or family.

VI.

Health Opportunity Account

A.

1938(d)(1)

The term `HOA' means an account that meets the requirements
of this section.

B.

1938(d)(2)

Contributions
1.

No contribution may be made into an HOA except-a. contributions by the State under 1938 of the Act; and
b. contributions by other persons and entities, such as
charitable organizations, as permitted under section
1903(w) of the Act.

2. State Contribution – Specify for each eligibility group the
contribution amount that shall be deposited into an HOA. See section
V.B. for limits on annual deductibles for the groups based on these
contributions.
Eligibility Group
C.

1938(d)(2)

Contribution

Limitation on Annual State Contribution Provided and Permitting
Imposition of Maximum Account Balance

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_______/ 1. The maximum amount that will be deposited into an
HOA by the State in a year is $_________.
_______/ 2. If the balance in an HOA reaches $______ no more
contributions can be made under VI.B.2
3.
Except as described in subsections 4. and 5. below for 2006
the State will not provide contributions described in section VI.B.1. to
an HOA on behalf of an individual or family to the extent the amount
of such contributions (including both State and Federal shares)
exceeds, on an annual basis, $2,500 for each individual (or family
member) who is an adult and $1,000 for each individual (or family
member) who is a child. For subsequent years these amounts will be
the updated amounts specified by the Secretary.
4. Budget neutral adjustment. The State provides assurances that
contributions otherwise made to other individuals will be reduced in a
manner so as to provide for aggregate contributions that do not
exceed the aggregate contributions that would otherwise be permitted
under this subparagraph.
______/ 5. The State will provide contributions in excess of the
above limitations, will not claim and is not entitled to claim Federal
financial participation under section 1903(a) of the Act for the excess
contributions.
6. The State will not claim and is not entitled to claim Federal
financial participation under section 1903(a) of the Act for any
contributions made to an HOA pursuant to section VI.B.1.b., above.
D.

1938(d)(2)

Application of Different Matching Rates –
The State will have a method for identifying expenditures from
HOAs that are eligible for an enhanced matching rate consistent with
guidance from the Secretary.

E.

1938(d)(3)

Use
1.

General Uses
a. Amounts in an HOA may be used for payment of the
following health care expenditures, which must be for
payment of medical care (as defined by section 213(d) of
the Internal Revenue Code of 1986), except at provided
in section VI.F.2.

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b. State Restrictions i. ____/ Amounts in an HOA may not be used to pay
providers of items and services unless the providers
are licensed or otherwise authorized under State law
to provide the item or service. The State will deny
payment for such a provider if the provider has been
found, whether with respect to title XIX of the Act or
any other health benefit program, to have failed to
meet quality standards or to have committed any acts
of fraud or abuse;
ii. _______/ Amounts in an HOA may not be used to
pay providers of items and services if the State finds
that the items and services are not medically
appropriate or necessary. The State will deny
payment for such a provider if the provider has been
found to have submitted claims for such items and
services.
c. Electronic Withdrawals - The State demonstration
program will use the following method to ensure that
withdrawals will be made from the HOA using an
electronic system, and that withdrawals will not be
permitted in cash.
Describe the method.
F.

1938(d)(3)

Maintenance of HOA After Becoming Ineligible for Public Benefit
1.

If an account holder of an HOA becomes ineligible for
benefits under title XIX of the Act because of an increase in
income or assets—
a. no additional contribution will be made into the account
by the State under section VI.B.1.a.;
b. the balance in the account will be reduced by 25 percent,
except to the extent it represents private contributions to
the account; and
c.

consistent with the provisions described in this section,
the account shall remain available to the account holder
for 3 years after the date on which the individual
becomes ineligible for such benefits for withdrawals

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under the same terms and conditions as if the account
holder remained eligible for such benefits.
2.

Special Rules - Withdrawals from an account-a. can be used to purchase health insurance coverage; and
b. ______/ may, subject to 4. below, be used for the
following additional expenditures:
______/ job training
______/ tuition expenses
______/ other (please describe)

G.

3.

Condition for Non-Health Withdrawals - No withdrawal will
be permitted from an account under 2.b. above unless the
account holder has participated in the demonstration program
for at least 1 year.

4.

No Requirement for Continuation of Coverage - An account
holder of an HOA, after becoming ineligible for medical
assistance under this title, is not required to purchase highdeductible or other insurance as a condition of maintaining or
using the account.

1938(d)(4)

_____/ Administration - The State will coordinate administration
of HOAs through the use of a third party administrator and
reasonable expenditures for the use of such administrator will be
reimbursable to the State in the same manner as other
administrative expenditures under section 1903(a)(7) of the Act.

H.

1938(d)(5)

Treatment - Amounts in, or contributed to, an HOA shall not be
counted as income or assets for purposes of determining eligibility
for benefits under this title.

I.

1938(d)(6)

Unauthorized Withdrawals - The State will establish procedures—
1.

to penalize or remove an individual from the HOA based on
nonqualified withdrawals by the individual from such an
account; and

2.

to recoup costs that derive from such nonqualified
withdrawals.

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