4. Applicable Individuals in Certain Medical Institutions or Receiving Outpatient Services

The first short-term hardship event is described in section 1902(xx)(3)(B)(ii)(I) of the Act and pertains to applicable individuals who are receiving inpatient hospital services, nursing facility services, services in an ICF/IID, inpatient psychiatric hospital services, or such other services of similar acuity (including outpatient care relating to other services specified in this subclause) as the Secretary determines appropriate.

We note first that an individual who receives any of the services described in section 1902(xx)(3)(B)(ii)(I) of the Act may be a specified excluded individual based on being medically frail or otherwise having special medical needs under § 435.554(c)(5). For example, an individual who for all or part of a month receives services in an ICF/IID may be medically frail under § 435.554(c)(5)(i)(A) (relating to individuals who are blind or disabled as defined in section 1614 of the Act) or § 435.554(c)(5)(i)(D) (relating to individuals with a physical, intellectual, or developmental disability that significantly impairs their ability to perform one or more ADLs) if their physical, mental, or behavioral health condition significantly impair their ability to comply with the community engagement requirement. As we explain in II.F. of this IFC, if a State determines that an individual is a specified excluded individual in the month of application or when the State processes the renewal, it must not determine whether the individual meets the community engagement requirement or meets the criteria for a mandatory exception. The same outcomes described in II.F. of this IFC would apply in the context of the optional short-term hardship exception; that is, if a State that has elected the short-term hardship exception determines an individual to be a specified excluded individual in the month of application or when the State processes the renewal, it must not determine whether the individual met the community engagement requirement or met the optional short-term hardship exception. We implement this requirement at § 435.555(f).

“Inpatient hospital services” are defined for purposes of Medicaid State plan coverage in section 1905(a)(1) of the Act and § 440.10, and this definition specifically excludes services in an institution for mental diseases (IMD). Similarly, section 1905(a)(4)(A) of the Act and § 440.155 define “nursing facility services” for purposes of Medicaid State plan coverage and this definition excludes services in an IMD. In addition, services in an ICF/IID are defined for purposes of State plan coverage in section 1905(a)(15) of the Act and § 440.150 and this definition also excludes services in an IMD. IMDs are defined in section 1905(i) of the Act to mean “a hospital, nursing facility, or other institution of more than 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services.”

Because section 1905(a) of the Act and our implementing regulations define “inpatient hospital services,” “nursing facility services,” and “ICF/IID services” States must recognize services meeting the “inpatient hospital services,” “nursing facility services,” and “ICF/IID services” definitions at §§ 440.10, 440.155, and 440.150, respectively, for purposes of the short-term hardship exception at section 1902(xx)(3)(B)(ii)(I) of the Act. Applicable individuals who receive “inpatient hospital services” as defined at § 440.10, “nursing facility services” as defined at § 440.155, and “ICF/IID services” as defined at § 440.150 for part or all of a month must be deemed to have met the community engagement requirement for such month if the individual's State has adopted the short-term hardship exception. We have included receipt of “inpatient hospital services” as defined at § 440.10, “nursing facility services” as defined at § 440.155, and “ICF/IID services” as defined at § 440.150 as a short-term hardship event in our regulation at § 435.555(d)(1)(i).

We do not define “inpatient psychiatric hospital services” for all age groups. However, “inpatient psychiatric hospital services under age 21” are defined for purposes of Medicaid State plan coverage in section 1905(a)(16) of the Act and at § 440.160. In the absence of a definition of “inpatient psychiatric hospital services” for individuals of all ages in title XIX of the Act, we believe it is reasonable for States to consider our “inpatient psychiatric hospital services under age 21” definition at § 440.160 in the context of defining “inpatient psychiatric hospital services” for purposes of the short-term hardship exception. However, given that our definition at § 440.160 does not apply to all age groups, we do not believe it would be reasonable for States to solely use that definition in the context of section 1902(xx)(3)(B)(ii)(I) of the Act. It is also our understanding that some States define “inpatient psychiatric hospital services” under State law or follow “inpatient psychiatric hospital services” definitions used in universal coding constructs. In addition, many “inpatient psychiatric hospital services” are not coverable in Medicaid due to the IMD payment exclusion even though it would be reasonable for a State to consider such services as “inpatient psychiatric hospital services.” We believe it would be reasonable for States to follow definitions of “inpatient psychiatric hospital services” described in State law or universal coding even for services that are not otherwise coverable under the State plan. For these reasons we are defining “inpatient psychiatric hospital services” at § 435.555(d)(1)(i) as “inpatient psychiatric hospital services including the services defined at ( printed page 33383) § 440.160 for individuals under the age of 21 without regard to whether such services are in an institution for mental diseases” for purposes of the short-term hardship exception at section 1902(xx)(3)(B)(ii)(I) of the Act.

As previously noted, section 1902(xx)(3)(B)(ii)(I) of the Act also references “such other services of similar acuity (including outpatient care relating to other services specified in this subclause) as the Secretary determines appropriate.” We are interpreting and implementing this language at § 435.555(d)(1)(ii), as described below.

We recognize that individuals may receive inpatient services that do not meet our benefit definitions for “inpatient hospital services,” “nursing facility services,” “ICF/IID services,” and “inpatient psychiatric hospital services.” Specifically, an individual may receive Medicaid-covered inpatient services in a critical access hospital (CAH) consistent with § 440.170(g) or an emergency hospital consistent with § 440.170(e), respectively, in States that cover such services. Further, an individual may receive inpatient services in an IMD or in other facilities that are not covered under section 1905(a) of the Act as inpatient services. We believe an exception would be warranted for an individual receiving inpatient services furnished in a CAH consistent with § 440.170(g), inpatient services furnished in an emergency hospital consistent with § 440.170(e), services in an IMD, and inpatient services furnished by other facilities that are not covered under Medicaid but are otherwise recognized by the State as “other services of similar acuity” for purposes of this short-term hardship exception. We believe that this is warranted, because an individual that is an inpatient in such facilities would be equally unable to meet the community engagement requirement as an individual receiving services in one of the facilities identified in section 1902(xx)(3)(B)(ii)(I) of the Act. Further, the inpatient services furnished by such facilities can be nearly identical to the services furnished by an inpatient hospital, nursing facility, ICD/IID, or inpatient psychiatric hospital.

For example, inpatient services provided by a VA medical facility do not meet the “inpatient hospital services” definition at § 440.10, as such facilities are not certified as a hospital under the Medicare Conditions of Participation requirements at 42 CFR part 482 and do not participate in Medicaid, but the services provided by such facilities can be nearly identical to Medicaid-covered “inpatient hospital services.” We note that under section 1905(a) of the Act there is a general prohibition on Medicaid payment for any services provided to an individual in an IMD. While Medicaid payment cannot generally be made for services provided to an individual in an IMD, we believe it is reasonable to consider such services as “other services of similar acuity,” when the services are provided to an inpatient, since such an individual's Medicaid eligibility is not terminated on the basis that they receive inpatient services in an IMD, they are unable to meet the community engagement requirement while receiving such services, and the inpatient services provided by an IMD can be nearly identical to “inpatient hospital services,” “nursing facility services,” or “ICF/IID services.” We are specifying at § 435.555(d)(1)(ii)(A) through (D) that “other services of similar acuity” includes inpatient services furnished in a CAH consistent with § 440.170(g), inpatient services furnished in an emergency hospital consistent with § 440.170(e), inpatient services furnished in an IMD, and inpatient services furnished by other facilities that are not covered under Medicaid but are otherwise recognized by the State in an IMD, and inpatient services furnished by other facilities that are not covered under Medicaid but are otherwise recognized by the State.

Regulations at § 440.2 define an “inpatient” for purposes of coverage of services under the State plan to be, among other things, an individual who “(1) Receives room, board and professional services in the institution for a 24 hour period or longer, or (2) Is expected by the institution to receive room, board and professional services in the institution for a 24 hour period or longer even though it later develops that the patient dies, is discharged or is transferred to another facility and does not actually stay in the institution for 24 hours.” States would use this definition when an applicable individual qualifies for a section 1902(xx)(3)(B)(ii)(I) exception because they are receiving the types of Medicaid-covered services to which this exception applies. States must also use the inpatient definition at § 440.2 when an applicable individual has an exception under section 1902(xx)(3)(B)(ii)(I) of the Act based on “inpatient” services that are not Medicaid-covered services. We recognize that States might not follow our “inpatient” definition at § 440.2 with respect to non-Medicaid-covered inpatient services. However, we believe that the “inpatient” definition at § 440.2 is a standard that non-Medicaid-covered inpatient services should reasonably be able to meet and that for purposes of this short-term hardship exception it would be more administratively simple to apply one definition of “inpatient” services. For these reasons, we are providing at § 435.555(d)(1)(iii) that States must use the definition of “inpatient” at § 440.2 for any of the inpatient services described in the preceding paragraphs for purposes of the short-term hardship exception at section 1902(xx)(3)(B)(ii)(I) of the Act.

The statutory language addressing other services of similar acuity also specifies that those services include “outpatient care relating to other services specified” in section 1902(xx)(3)(B)(ii)(I) of the Act. We noted that the services specifically identified in section 1902(xx)(3)(B)(ii)(I) of the Act, and the ones we are adding to § 435.555(d)(1)(ii)(A) through (D), as described above, are exclusively provided in institution-based settings. We want to acknowledge the growing availability of services provided in the community as an alternative to institutional placement. When appropriate, such services have the potential to divert the need for the higher-cost institutional based services by treating certain conditions in a community setting or in an individual's home. There are a wide range of medical and non-available in non-institutional settings. [ 89 ] Indeed, States have actively increased and continue to increase the availability of community that individuals have the choice to receive services in settings other than institutions. [ 90 ]

Thus, we believe that limiting the short-term hardship exception described in section 1902(xx)(3)(B)(ii)(I) of the Act to individuals receiving services in institutions and not allowing it to be available to individuals receiving services of similar acuity outside of institutions would fail to account for the realities of current service delivery methods and place favor on institutional-based care in a way that is ( printed page 33384) inconsistent with our efforts and policies with regard to individual choice. We also believe that individuals with service needs similar in acuity to an institutional stay, but who choose to receive their services in the community, would be similarly challenged in their ability to demonstrate community engagement compared to individuals receiving services in institutions. Therefore, we are interpreting “other services of similar acuity” to include certain noninstitutional services.

We have considered which noninstitutional services may qualify as “other services of similar acuity” as compared to the specific institutional-based services described in section 1902(xx)(3)(B)(ii)(I) of the Act. We believe it is clear that section 1902(xx)(3)(B)(ii)(I) of the Act requires that there be a connection between the specific institutional services described therein and any “services of similar acuity” included as part of this short-term hardship event. Section 1902(xx)(3)(B)(ii)(I) also refers to “outpatient care” relating to the other services specified in that subclause. In light of this language in section 1902(xx)(3)(B)(ii)(I) of the Act and in alignment with our position that the short-term hardship authorized under this provision should allow for noninstitutional services, at § 435.555(d)(1)(ii)(E) we are adding to the definition of this short-term hardship event noninstitutional services that an applicable individual receives that, but for the receipt of such services, would likely result in the individual receiving services provided in an inpatient hospital, nursing facility, ICF/IID, inpatient psychiatric hospital or other inpatient institutional settings of similar acuity (that is, services specified in section 1902 (xx)(3)(B)(ii)(I) of the Act and § 435.555(d)(1)(i) and (ii)(A) through (D)).

We believe it may sometimes be possible for States to identify these noninstitutional services on a categorical basis. We considered whether there are noninstitutional services that in all circumstances are delivered to an individual who has an acuity level similar to that of an individual who receives services from one of the specified institutions. We concluded that it is difficult to identify a complete list of such services, as many services, for example, that are authorized for section 1915(c) waivers (which serve individuals who, but for the receipt of such authorized services, would be treated in hospitals, nursing facilities, or ICF-IIDs) are also available under Medicaid to people who do not have such a clinical need.

However, a scenario that could meet the specified criteria would be an individual whose hospital discharge care plan prescribes services that could be provided in either one of the institutions specified or in the individual's home or other noninstitutional setting and who elects the noninstitutional services. In this circumstance, the prescribed institutional services would clearly reflect that the individual would likely need such services in the absence of the individual's election of the noninstitutional services. While the individual would still have to request the exception, the State could make the categorical determination of the individual's need for “other services of similar acuity” without additional review of the individual's acuity.

States could identify other circumstances in which an individual receives certain noninstitutional services that, matched with discrete circumstances, could lead to the categorical determination that, but for the individual's noninstitutional services, the individual would likely require services in one of the institutions specified in § 435.555(d)(1)(i) and (ii)(A) through (D). Under § 435.555(d)(1)(ii)(E), a State could provide the short-term hardship exception for noninstitutional services in these circumstances.

States could also make individual evaluations for all applicable individuals who assert having services needs that, but for their receipt of noninstitutional services, would likely require that they be in one of the institutions specified in § 435.555(d)(1)(i) and (ii)(A) through (D). When making such individualized determinations, the State would have to identify the particular noninstitutional services that the individual receives that help the individual avoid the likelihood of requiring one of the institutional services described in § 435.555(d)(1)(i) and (ii)(A) through (D), as the provision is limited to individuals who, if not receiving one of the specified services, receive “other services of similar acuity.”