Medicaid Targeted Case Management (TCM) Benefits







Prepared for Members and Committees of Congress



Case management services assist Medicaid beneficiaries in obtaining needed medical and related
services. Targeted Case Management (TCM) refers to case management for specific Medicaid
beneficiary groups or for individuals who reside in state-designated geographic areas. Over the
past seven years of available data (1999-2005), total expenditures on Medicaid TCM increased
from $1.4 billion to $2.9 billion, an increase of 107%. In comparison, over the same period, total
Medicaid spending increased by 87%, from $147.4 billion to $275.6 billion.
TCM has been an active concern for both the executive and legislative branches. For instance, the
Bush Administration proposed legislative changes to reduce Medicaid TCM expenditures in
recent annual budget submissions. In the Deficit Reduction Act of 2005 (DRA, P.L. 109-171),
Congress added new statutory language to clarify the definition of case management and directed
the Secretary of Health and Human Services to promulgate regulations to guide states’ claims for
federal Medicaid matching funds for TCM. As a result of DRA requirements, the Centers for
Medicare and Medicaid Services (CMS) issued an interim final rule on December 4, 2007 for
case management, which took effect March 3, 2008. In the interim final rule, CMS estimated that
the new case management rules would reduce federal Medicaid expenditures by approximately
$1.3 billion between FY2008 and FY2012.
In April, the Economic Recovery in Health Care Act of 2008 (S. 2819), was introduced in the
Senate, which would impose a moratorium on implementation of the TCM regulation until April

1, 2009. On May 22, 2008, the Senate passed the Supplemental Appropriations Act of 2008 (H.R.


2642). H.R. 2642 included a moratorium until April 1, 2009, on implementation of the TCM and
other Medicaid regulations. H.R. 2642 was amended by the House and passed on June 19, 2008.
The House amendments to H.R. 2642 included moratoria on implementation of six Medicaid
regulations, including case management and TCM, until April 1, 2009. On June 26, 2008, the
Senate passed H.R. 2642 without changes to the House legislation, so that implementation of six
Medicaid regulations, including case management and TCM, would be delayed until April 1,

2009. The President signed P.L. 110-252 into law on June 30, 2008.


Earlier, on June 4 and 5, 2008, the Senate and House, respectively, adopted the final version of
the budget resolution (H.Rept. 110-659 accompanying S.Con.Res. 70). The conference agreement
established budget-neutral reserve funds that could be used to impose moratoria on Medicaid
rules and administrative actions and also includes a sense of the Senate provision on delaying
Medicaid administrative regulations including case management and TCM.
This report describes Medicaid case management services, presents major provisions of the
proposed Medicaid case management regulation, and provides various perspectives on the TCM
interim final rule. This report will be updated to reflect legislative and regulatory activity.






Medicaid Case Management...........................................................................................................1
Defini ti on ..................................................................................................................... ............. 1
Expenditures .............................................................................................................................. 1
Guidance to States.....................................................................................................................3
Case Management Interim Final Rule.............................................................................................5
Institutional Care.......................................................................................................................5
State Plan Amendments (SPAs).................................................................................................5
Case Managers..........................................................................................................................6
Treatment Plans.........................................................................................................................6
Payment to Providers of Case Management.............................................................................6
Denial of FFP in Certain Situations..........................................................................................7
Financial Impact of TCM Interim Final Rule..................................................................................7
Various Perspectives on the Interim Final Rule...............................................................................7
Legislative and Other Proposals................................................................................................9
Figure 1. States’ FY2005 Medicaid TCM, Per Beneficiary Expenditures......................................3
Table 1. Expenditures and Beneficiaries for Medicaid and TCM, FY1999 and FY2005...............2
Table 2. Medicaid Targeted Case Management Expenditures, Beneficiaries, and
Expenditures, Per Beneficiary, FY2005.....................................................................................10
Author Contact Information..........................................................................................................12






Medicaid case management consists of services to assist eligible beneficiaries in obtaining
medical and other services necessary for their treatment. Case management is not the direct
provision of medical and related services, but rather is assistance to help beneficiaries receive
care by identifying needed services, finding providers, and monitoring and evaluating the services 1
delivered. Targeted case management (TCM) refers to case management that is restricted to
specific beneficiary groups. Targeted beneficiary groups can be defined by disease or medical
condition, or by geographic regions, such as a county or a city within a state. Targeted
populations, for example, may include individuals with HIV/AIDS, tuberculosis, chronic physical
or mental illness, developmental disabilities, children receiving foster care, or other groups
identified by a state and approved by the Centers for Medicare and Medicaid (CMS). TCM and
case management are optional services that states may elect to cover, but which must be approved 2
by CMS through state plan amendment (SPAs).
The Medicaid statute covering case management has been amended a number of times, most
recently by the Deficit Reduction Act of 2005 (DRA, P.L. 109-171). Section 6052 of DRA added
new language that further defined case management services (including TCM) and directed the
Secretary of Health and Human Services to develop rules for states to follow in claiming
reimbursement for case management expenditures under Medicaid. To this end, CMS issued an 34
interim final rule governing the use and claiming of Medicaid case management services. As
stipulated in DRA, the Secretary’s case management interim final rule was open for public 5
comment for 60 days, until February 4, 2008. It became effective March 3, 2008.
Almost all states cover TCM benefits.6 Medicaid expenditures for TCM have increased rapidly.
As shown in Table 1, total federal and state Medicaid TCM expenditures more than doubled

1 Under section 1905(a)(19) of the Social Security Act (SSA), states are given the option to cover case management and
targeted case management in their Medicaid programs. Under Section 1915(g)(2), case management is defined as
“services which will assist individuals eligible under the plan [Medicaid plan] in gaining access to needed medical,
social, educational, and other services.”
2 For more information on optional and required benefits, see CRS Report RL33202, Medicaid: A Primer, by Elicia J.
Herz.
3 For a discussion of federal regulation, see CRS Report RL32240, The Federal Rulemaking Process: An Overview, by
Curtis W. Copeland.
4 “Medicaid Program; Optional State Plan Case Management Services, Interim Final Rule, Federal Register, vol. 72,
no. 232, December 4, 2007.
5 Although the recently passed P.L. 110-173, Medicare, Medicaid, and SCHIP Extension Act of 2007, contains a
moratorium prohibiting changes to regulations affecting payments for Medicaid rehabilitation and school-based
services until June 30, 2008, this moratorium does not apply to Medicaid case management.
6 Delaware is the only state that does not cover TCM. See The Kaiser Commission on Medicaid and the Uninsured,
Medicaid Benefits: Online Database (October 2006), at http://www.kff.org/medicaid/benefits/
service.jsp?gr=off&nt=on&so=0&tg=0&yr=3&cat=7&sv=40m.





between FY1999 ($1.4 billion) and FY2005 ($2.9 billion).7 Nationally, during the same period,
the number of beneficiaries receiving TCM increased 62.6%, from approximately 1.7 million in
FY1999 to approximately 2.7 million in FY2005. Average TCM expenditures per beneficiary also
increased from FY1999 to FY2005, rising by 26.9%. In comparison, overall Medicaid
expenditures also increased rapidly over the same period, rising from approximately $147 billion
in FY1999 to $276 billion in FY2005, an approximate 87% increase. The number of Medicaid
beneficiaries also increased during this period, rising by 43.1%, from FY1999 (40.3 million) to
FY2005 (57.7 million). During the same time period, average spending per Medicaid beneficiary
increased by approximately 30.7%, from $3,657 in FY1999 to $4,781 in FY2005.
Table 1. Expenditures and Beneficiaries for Medicaid and TCM, FY1999 and FY2005
Expenditures/Beneficiaries FY1999 FY2005 % Change
TCM (federal and state) Expenditures ($ billions) $1.41 $2.90 105.7%
TCM Beneficiaries 1,687,440 2,744,027 62.6%
TCM Expenditures per beneficiary $834 $1,058 26.9%
Total (federal and state) Medicaid Expenditures ($ billions) $147.37 $275.57 86.9%
Medicaid Beneficiaries 40,300,394 57,652,988 43.1%
Medicaid (federal and state) Expenditures per Beneficiary $3,657 $4,781 30.7%
Source: All Medicaid expenditure data discussed in this report include both federal and state expenditures, as
well as expenditures for Medicaid-expansions under the State Children’s Health Insurance Program (M-SCHIP).
Congressional Research Service, based on Medicaid Statistical Information System (MSIS) data from CMS
(downloaded December 14, 2007). FY2004 data were used for Maine as an estimate of FY2005 data.
Based on CMS reported data, total federal and state expenditures for TCM services in FY2005
ranged from approximately $535 million in California to approximately $872,000 in Hawaii (see
Table 2). During the same period, the number of beneficiaries receiving TCM services ranged 8
from 820,000 individuals in Illinois to 1,463 in Hawaii. National per beneficiary TCM
expenditures were $1,058 in FY2005, but per beneficiary expenditures for TCM expenditures
varied considerably by state, ranging from $5,778 in Massachusetts to $116 per beneficiary in
Ohio. In Figure 1, for comparison, states’ per beneficiary expenditures for TCM are displayed in
six expenditure level groupings. The majority of states that reported TCM expenditures in
FY2005 spent between $500 to $1,500 per beneficiary on TCM. Although most states cover
TCM, some do not show TCM expenditures in the Medicaid Statistical Information System
(MSIS) database compiled by CMS from state-reported information. As shown in Table 2, six
states and the District of Columbia reported no TCM expenditures in FY2005. Of these seven,
Delaware is the only state that indicates it does not cover TCM.

7 Expenditures for the territories and amounts that are not directly attributable to beneficiaries service use (e.g.,
administrative costs) are excluded. Maine MSIS data for FY2005 data were unavailable. As an estimate of Maine’s
FY2005 TCM expenditures and beneficiaries, FY2004 data were used.
8 Data are from the Medicaid Statistical Information System (MSIS) data. MSIS data are self-reported by states to CMS
from their administrative information systems. States have discretion in determining which expenditure categories to
use in reporting Medicaid spending.





Figure 1. States’ FY2005 Medicaid TCM, Per Beneficiary Expenditures
Source: Congressional Research Service, based on Medicaid Statistical Information System (MSIS) data from
CMS (downloaded February 28, 2008).
In the last days of the Clinton Administration (January 19, 2001), the CMS Director of Medicaid
and State Operations issued a letter to state Medicaid and Child Welfare directors. Although the
state Medicaid director letter (SMDL) addresses TCM claiming for children in foster care, it is
often cited as guidance for states on how to claim TCM expenditures under Medicaid more 9
generally. The SMDL reiterated statutory language that broadly defined TCM and left states
substantial flexibility on whether to cover and how to structure TCM services. In addition, the
2001 SMDL described examples that would be considered appropriate claiming of TCM
expenditures.
Subsequently, in the early years of the Bush Administration, states received indirect guidance on
TCM expenditure claiming from GAO and Health and Human Services Office of Inspector 10
General (HHS/OIG) reports that were critical of state and CMS practices on TCM, as well 11
congressional testimony presented by CMS officials. Moreover, in 2004, Maryland’s state plan
amendment to provide TCM services to children in the state’s foster care program was denied,

9 State Medicaid director letter (01-013), at http://www.cms.hhs.gov/SMDL/SMD/list.asp#TopOfPage.
10 For example, see Medicaid Financing, States Use of Contingency-Fee Consultants to Maximize Federal
Reimbursements Highlights Need for Improved Federal Oversight (pp. 4-6), Report to the Chairman, Committee on
Finance, U.S. Senate, U.S. Government Accountability Office, June 2005, at http://www.gao.gov/new.items/
d05748.pdf.
11 Dennis Smith, Director, Center for Medicaid and State Operations, Centers for Medicare and Medicaid Services,
testimony to Senate Committee on Finance hearing on Medicaid Fraud and Abuse, June 28, 2005, at
http://finance.senate.gov/hearings/testimony/2005test/DStest062805.pdf.





and an administrative appeal upheld that decision.12 The denial of Maryland’s SPA for foster care 13
TCM provided states additional unofficial information but, as found by GAO, contributed to 14
ambiguity on TCM because other states were allowed to continue similar practices. For
example, GAO reviewed a sample of Massachusetts and Georgia TCM claims and found a
number of claims where TCM services billed to Medicaid were integral parts of other programs, 15
such as foster care. Nevertheless, TCM expenditures continued to increase, raising questions
about whether some states were delivering direct medical and social services to beneficiaries
through other social services programs (e.g., child welfare, foster care, juvenile justice, special
education) and classifying those expenditures as Medicaid TCM. Subsequent HHS/OIG audits
found state practices for TCM claiming inconsistent with current CMS policy, federal, or state 16
laws, and/or Medicaid rules. Moreover, Bush administration officials testified that state
practices for claiming TCM and other Medicaid services were abusive and violated the federal-
state Medicaid partnership by inappropriately shifting costs for other federal programs to 17
Medicaid and claiming services directly delivered by other federal programs as TCM.
In 2005, Congress passed DRA, which contained Section 6052, “Reforms of the Case
Management and Targeted Case Management.” Sec. 6052 refined the case management definition
by adding new language that narrowed what services could be considered case management. The
DRA case management provision identified case management services, such as assessment,
development of care plans, referral and related activities, and monitoring and follow up of
beneficiaries, and elaborated on the overall content of these services. The DRA also reiterated that
case management, including TCM, excluded the direct delivery of underlying medical,
educational, social, and other services. The DRA also specifically explained that federal matching
payments would not be permitted to assist non-eligible individuals, including those individuals
ineligible for a TCM target group. The DRA also reiterated that Medicaid third-party rules

12 Medicaid, States Efforts to Maximize Federal Reimbursements Highlight Need for Improved Federal Oversight (pp.
16-17), Kathryn G. Allen, Director, Health Care, Testimony Before the Committee on Finance, U.S. Senate, June 28,
2005, U.S. Government Accountability Office, at http://finance.senate.gov/hearings/testimony/2005test/
KATest062805.pdf. In addition to Maryland, Illinoiss (2002) TCM SPA was denied, and Texass (2004) TCM claims
were denied.
13 There were three reasons for denying Maryland’s SPA: (1) the services proposed by Maryland were not
encompassed by the statutory definition of case management, (2) the SPA provided for payment for services available
without charge, and (3) it restricted beneficiary freedom of choice by limiting providers to employees of public welfare
agencies.
14 Medicaid, States Efforts to Maximize Federal Reimbursements Highlight Need for Improved Federal Oversight (p.
17), Kathryn G. Allen, Director, Health Care, Testimony Before the Committee on Finance, U.S. Senate, June 28,
2005, U.S. Government Accountability Office, at http://finance.senate.gov/hearings/testimony/2005test/
KATest062805.pdf.
15 See Medicaid Financing, States Use of Contingency-Fee Consultants to Maximize Federal Reimbursements
Highlights Need for Improved Federal Oversight (p. 19), Report to the Chairman, Committee on Finance, U.S. Senate,
U.S. Government Accountability Office, June 2005, at http://www.gao.gov/new.items/d05748.pdf.
16 See, for example, Iowa Medicaid Payments for Targeted Case Management for FY2003-2004 (A-07-06-03078),
November 2007; Review of Minnesota Medicaid Reimbursement for Targeted Case Management Services for FY2003-
2004 (A-05-05-00059), October 2007; Department of Health and Human Services, Office of Inspector General, at
http://oig.hhs.gov/oas/oas/cms.html.
17 As examples of abusive TCM claiming, CMS cited states Medicaid claims for court appearances, crisis counseling,
parental training, and transportation related to foster care and child welfare; see Dennis Smith’s testimony to the Senate
Committee on Finance hearing on Medicaid Fraud and Abuse, June 28, 2005, at http://finance.senate.gov/hearings/
testimony/2005test/DStest062805.pdf. See also Testimony of HHS Secretary Michael Leavitt at the House Budget
Committee hearing on the President’s Health and Human Services FY2009 Budget, February 27, 2008, at
http://budget.house.gov/hearings/2008/02.27leavitt_testimony.pdf.





applied to case management, so payments for TCM would be permitted only if no other third
parties are available to pay. DRA Section 6052 also specifically noted that states should cost-
allocate when costs for case management services were shared between another federally funded
program in accordance with OMB circular A-87. The DRA also instructed the Secretary of HHS
to promulgate interim final regulations to implement the case management changes. The TCM
interim final rule was published on December 4, 2007.

The case management interim final rule elaborates on changes to the TCM definition authorized
and initiated in DRA by providing specific guidance on how states may claim federal financial
participation (FFP) for TCM expenditures. It also directly addresses case management issues that
previously might have been considered open to interpretation. CMS stipulated that the case
management interim final rule applies to all Medicaid authorities, so that all case management, 18
including TCM and services delivered through waivers, would be covered under the rule. CMS
estimated that the case management regulation will reduce federal Medicaid expenditures by
approximately $1.28 billion between FY2008 and FY2012. CMS also estimated that federal
foster care expenditures would increase by $369 million between FY2008-FY2012. Some of the
changes addressed in the proposed rule are outlined below.
Federal financial participation (FFP) would be paid for case management provided to individuals
who reside in community settings or who want to transition from institutions to community
settings. In general, states may not receive FFP for beneficiaries residing in inpatient acute care
facilities, although there is an exception for individuals with complex or chronic medical needs
(as defined by states). The interim final rule permits states to receive FFP to assist individuals
who are able to transition from an institution to a community setting. This provision would enable
states to claim FFP to assist individuals in transitioning to community settings during either the
last 14 days (for beneficiaries institutionalized for short-term stays) or the last 60 days (for
beneficiaries who were institutionalized for long-term stays). However, for states to receive FFP
for beneficiaries transitioning to the community, the beneficiary must receive the TCM services
for terms that span their inpatient and community placement. In addition, under the new
regulations, FFP would be payable only after the date on which beneficiaries’ community
residence begins. States may use TCM to help coordinate other services, such as housing and
transportation, for individuals transitioning to community settings.
States that now cover case management services and want to continue to do so after March 2009
would need to amend their Medicaid state plans, specifying, among other things, whether services
are or are not targeted (and what beneficiary group is targeted, if applicable), the geographic area
served, the kinds of case management services offered, frequency of assessments and monitoring

18 TCM Regulation Summary, Minnesota Department of Human Services, January 8, 2008, at
http://www.dhs.state.mn.us/main/groups/county_access/documents/pub/dhs16_140351.pdf.





by case managers, the qualifications of service providers, and the payment methodology. States
also must prepare separate SPAs for each case management target group and subgroup.
States need to establish qualifications for providers who will deliver case management services.
In addition, the rule specifies the services case managers can provide, such as assessments to
determine beneficiaries’ needs, development of specific care plans, referral and related activities,
and monitoring and follow-up activities. To ensure beneficiaries have a unified planning process,
as well as to reduce fragmentation and maintain quality of care, states would need to assign each
beneficiary only one case manager. However, case managers may not serve as gatekeepers or
make medical necessity determinations. Further, beneficiaries must have free choice of all
qualified case managers, and beneficiaries’ access to case management can not be contingent
upon use of certain providers. If beneficiaries might fit in several target groups, states must
decide which target group to assign beneficiaries. The new regulations would allow for a delayed
compliance date for states to transition to one case manager to provide comprehensive services to 19
individuals. Case managers may not provide direct medical and related services, unless such
services are billed to Medicaid as services other than case management (e.g., rehabilitation).
Medicaid beneficiaries receiving case management services must have treatment plans. Case
management excludes diagnostic testing (but testing might be covered under other Medicaid
benefit categories). Case managers must maintain detailed case records that document
beneficiaries’ dates of service; progress toward treatment goals; units of case management
delivered; timelines for services described in the treatment plan, as well as reassessment dates;
and needs for coordination with case managers of other programs.
States may not use bundled payment methodologies.20 When case management is reimbursed on a 21
fee-for-service basis, the new rules would require states to use unit-of-time reimbursement
methodologies based on time intervals of 15 minutes or less. For beneficiaries included in
managed care/capitated contracts, states may not claim FFP for case management of medical
services. The interim rule indicates that case management is an implicit part of managed care and
capitation, and additional FFP for such case management of medical services under managed care
would be considered duplicate payment. However, an exception to the managed care exclusion
could be made when the case management services extend beyond the medical components of

19 The new case management rule specifies that states are permitted the lesser of two years or one year after the close of
the first regular session of the state legislature that begins after the regulation becomes final, before HHS will take
enforcement action.
20 A payment bundle might exist when more than one service is furnished during a fixed period of time or the payment
is the same regardless of the number of services furnished.
21 Fee-for-service refers to situations where providers are reimbursed for individual services rendered to beneficiaries.
Medicaid beneficiaries may also be covered under capitated contracts, where a managed care organization assumes
financial responsibility for all of a beneficiaries medical and related care in exchange for a fixed monthly payment.
Many states utilize managed care/capitated contracts, primarily for children and families.





typical managed care contracts to include gaining access to educational, social, and other (non-
medical) services.
The interim final rule would prohibit FFP to states for the direct delivery of underlying medical,
social, educational, or other services funded by other programs. DRA specifically addressed
foster care, but the interim final rule would extend the rule to include other programs, such as
child welfare and protective services, parole and probation, public guardianship, and special
education. In addition, this FFP prohibition would apply to therapeutic foster care because these
activities would be considered inherent to the foster care program and are separate from
Medicaid. This provision would apply to paying for services delivered by staff of other social
service agencies, but the rules would permit FFP for referral services, overseeing placements,
training of workers, supervision, court attendance, and compensation for foster care patients.
Moreover, the rule would prohibit FFP to states for administrative components of other programs,
such as foster care, juvenile justice, parole and probation, guardianship, courts, and special
education.

Estimates of the financial impact of the interim final rule vary. Some argue that CMS
underestimated the impact of the case management and other regulations, and that CMS is 22
attempting to shift Medicaid costs to states. CMS estimated that the TCM changes in the interim
final rule will reduce federal Medicaid outlays by $1.28 billion over five years, whereas CBO
estimated that the TCM provision in DRA would reduce federal expenditures by $760 million.
CBO’s estimate of the impact of DRA provisions was for the period FY2006-FY2010, whereas
CMS’s estimate was for the five year period FY2008-FY2012. In a more recent estimate for the
period FY2008-FY2012, CBO forecasted that gross Medicaid outlays would decrease by $2.0
billion for the five year period, with a $1.5 billion net reduction (including effects in foster care
administration) in Medicaid outlays for that time period. A survey of state Medicaid directors by
the House Committee on Oversight and Government Reform estimated the financial impact of the
TCM regulation to be approximately $3.1 billion over the five years from FY2009-FY2013.

There are at least three distinct perspectives on TCM policy issues: (1) the perspective of
advocates representing children and adults who could receive Medicaid TCM services, (2) state
governments and Medicaid agencies, and (3) the federal regulatory agency (CMS) responsible for
implementing DRA and enforcing states’ compliance with federal Medicaid statutes.
As CMS indicates in the interim final rule, DRA required the agency to write regulations.
Specific guidance and definitions, CMS contends, were needed to avoid further “excessive”

22 See The Administration’s Medicaid Regulations: State-by-State Impacts, United States House of Representatives,
Committee on Oversight and Government Reform, Majority Staff, March 2008, at http://oversight.house.gov/features/
medicaid08/.





federal outlays. CMS points out that the proposed rule clarifies when Medicaid will, and will not,
pay for case management services. CMS further claims the proposed rule will reduce past
confusion about the overlap between Medicaid TCM and non-Medicaid programs. Moreover,
CMS cites GAO studies, OIG audits, and review of SPAs that document past abuses of Medicaid
TCM claiming.
Advocates for children and adult Medicaid beneficiaries who receive TCM services contend that 23
the rule is more restrictive than what Congress intended in DRA. Advocates also fear that
reduced federal Medicaid funding for TCM will need to come from other programs or services
that do not have funding, resulting in cuts to TCM services. States cite administrative
complexities of the rule that will increase state costs while decreasing provider participation and
beneficiaries’ quality of care. Further, states and advocates also believe that the complexity of the
rule will make it difficult for states to implement within the specified time frame.
Child welfare advocates and organizations representing mentally retarded and developmentally
disabled individuals, many of whom need Medicaid TCM, believe that the interim final rule will
cut TCM services for these beneficiaries. Child welfare advocates argue that by requiring
Medicaid to reimburse providers based on 15-minute billing segments, costs of care would
increase and provider participation would decrease. They also argue that new requirements for
record keeping and claims processing will discourage provider participation and reduce actual
beneficiary services. Advocates claim that states already cannot afford to fund enough TCM
services and that with more restrictions, states will be forced to cut services further. According to
advocates, with less TCM available, children receiving foster care and protective services will get
fewer health care services, causing their existing medical and related conditions to deteriorate.
Moreover, they argue, without TCM, these beneficiaries will ultimately require more costly 24
health care treatment in the future.
Some Medicaid and other state officials believe that the CMS case management rule will increase 25
costs by creating additional administrative activities. For example, Medicaid agencies have
raised objections to the additional reporting requirements and other administrative complexities
contained in the interim final rule because they believe these rules will make it harder for them to
provide TCM to beneficiaries. Medicaid agencies claim that new delayed billing requirements for
providers who assist TCM beneficiaries in transitioning from institutions are burdensome and 26
may reduce patient access to TCM services.
As noted earlier, the interim final rule proposes to permit states up to two years to comply with
the one-provider provision for case management. The additional time for states to comply
suggests that CMS recognizes the complexity for states to adapt their systems and
administratively comply with the proposed rules. In the same vein, state Medicaid agencies

23 See First Focus, CMS’ Medicaid Regulations: Implications for Children with Special Health Care Needs, Sara
Rosenbaum, J.D., March 2008, at http://firstfocus.net/Download/CMS.pdf.
24 See Child Welfare League of America, Comments on Medicaid Interim Final Regulation on Targeted Case
Management, February 1, 2008, at http://www.cwla.org/advocacy/medicaid080201.htm.
25 New Medicaid Rules Would Limit Care for Children in Foster Care and People With Disabilities in Ways Congress
Did Not Intend, Judith Solomon, Center on Budget and Policy Priorities, December 21, 2007, at http://oig.hhs.gov/oas/
oas/cms.html.
26 Letter to Kerry Weems, Administrator, Centers for Medicare and Medicaid Services, February 4, 2008, (p. 4), from
the American Public Human Services Association and its affiliate, the National Association of State Medicaid
Directors, at http://www.aphsa.org/home/doc/NASMDltr_TCMcmntFeb408.pdf.





believe that the effective date of the interim final rule is inadequate to permit states sufficient time
to comply with the regulations, so that states’ FFP for case management will be withdrawn 27
suddenly or recovered later under auditors’ disallowances. Observers maintain that an extension
of time for states to comply might help to moderate stakeholder concerns, while giving states the
opportunity to provide an orderly transition and realistically comply with the regulations that
have been under development for some time.
In January 2008, legislation was introduced (H.R. 5173 and S. 2578) that would impose a
moratorium on changes to Medicaid case management services until April 1, 2009. The Indian
Health Care Improvement Act Amendments of 2008 (S. 1200) was to delay implementation of the
case management interim final rule until April 1, 2009. A bill, Protecting the Medicaid Safety Net
Act of 2008 (H.R. 5613), was introduced in March that would impose a moratorium until April 1,
2009, on implementation of the TCM and other Medicaid regulations. The House Energy and
Commerce Committee voted on April 16, 2008, to send H.R. 5613 to the full House. H.R. 5613
would require the Secretary to submit a report by July 1, 2008, to the House Energy and
Commerce and the Senate Finance Committees. The Secretary’s report would be required to
cover three topics: (1) an outline of specific problems the TCM and other Medicaid regulations
were intended to correct, (2) an explanation of how the regulations would address these problems,
and (3) the legal authority for the regulations. In addition, H.R. 5613 would require the Secretary
to retain an independent contractor to prepare a comprehensive report to be completed by March
1, 2009, which also would be submitted to the House Energy and Commerce and the Senate
Finance Committees. The independent contractor’s report would describe the prevalence of the
specific problems identified in the Secretary’s report, identify existing strategies to address these
problems, and assess the impact of the Medicaid regulations on each state and the District of
Columbia. In the Senate, a similar measure to H.R. 5613, the Economic Recovery in Health Care
Act of 2008 (S. 2819), was introduced in April. Like H.R. 5613, S. 2819, would impose a
moratorium until April 1, 2009, on implementation of the case management, TCM and five other
Medicaid regulations until April 1, 2009.
On May 22, 2008, the Senate passed the Supplemental Appropriations Act of 2008 (H.R. 2642).
H.R. 2642 included a moratorium until April 1, 2009, on implementation of the TCM and six
other Medicaid regulations. The provision in H.R. 2642 covering Medicaid regulations included
requirements, similar to H.R. 5613, for the Secretary to submit reports to the House Energy and
Commerce and the Senate Finance Committees. H.R. 2642 was amended by the House and
passed on June 19, 2008. The House amendments included moratoria on implementation of six
Medicaid regulations, including case management and TCM, until April 1, 2009. In addition,
H.R. 2642 retained requirements from H.R. 5613 for the Secretary to report to the House Energy
and Commerce and Senate Finance Committees, and to hire an independent contractor to report
on the specific impact of Medicaid regulations. On June 26, 2008, the Senate passed H.R. 2642
without changes to the latest House measure, including the moratoria on implementation of six
Medicaid regulations (until April 1, 2009). H.R. 2642 also retains the requirements for the
Secretary and an independent contractor to submit reports on the Medicaid regulations to the
House Energy and Commerce and Senate Finance Committees. The President signed P.L. 110-

252 into law on June 30, 2008.



27 Ibid., p. 3.





Earlier, on June 4 and 5, 2008, the Senate and House, respectively, adopted the final version of
the budget resolution (H.Rept. 110-659 accompanying S.Con.Res. 70). Among other provisions,
the conference agreement establishes a number of deficit-neutral reserve funds and a sense of the
Senate provision that would delay Medicaid administrative regulations, including Medicaid case
management and TCM.
In addition to the interim final rule, the Bush Administration’s FY2009 federal budget submission
proposed that legislation is needed to restrict Medicaid TCM claiming to the lower 50% rate
provided for administrative activities, rather than federal medical assistance percentage rates for 28
covered benefits. The Administration has not offered legislation restricting TCM claiming rates
yet.
Table 2. Medicaid Targeted Case Management Expenditures, Beneficiaries, and
Expenditures, Per Beneficiary, FY2005
$ Per
States Expenditures Beneficiaries Beneficiary
Alabama $47,079,039 28,436 $1,656
Alaska $7,395,511.00 4,310 $1,71
Arizonaa 0.00
Arkansas $15,688,320 45,430 $345
California $535,768,383 418,922 $1,279
Coloradoa 0 0
Connecticut $26,461,108 17,592 $1,504
Delaware 0 0
District of Columbiaa 0
Florida $123,073,255 85,794 $1,435
Georgia $128,704,852 117,526 $1,09
Hawaii $872,458 1,463 $596
Idaho $11,844,337 10,636 $1,114
Illinois $222,685,899 820,976 $271
Indiana $13,143,144 13,793 $953
Iowa $22,827,509 10,942 $2,086
Kansas $74,943,822 21,140 $3,545
Kentucky $22,077,584 15,233 $1,449
Louisiana $21,983,190 14,080 $1,561
Maine $96,493,716 35,068 $2,752
Maryland $5,601,164 16,129 $347
Massachusetts $221,258,249 38,294 $5,778

28 In its annual budget proposals for the federal FY2009, the Bush administration proposes to limit Medicaid matching
rates for TCM to 50%, the administrative matching rate. See http://www.hhs.gov/budget/docbudget.htm.





$ Per
States Expenditures Beneficiaries Beneficiary
Michigan $19,726,427 52,251 $378
Minnesota $224,214,087 101,823 $2,202
Mississippi $39,345,391 44,926 $876
Missouri $60,530,941 39,387 $1,537
Montana $3,314,715 4,679 $708
Nebraska $19,974,036 NA NA
Nevada $21,913,738 13,911 $1,575
New Hampshirea 0 0
New Jersey $6,669,245 5,456 $1,222
New Mexico $12,875,580 11,150 $1,155
New York $210,161,965 103,755 $2,026
North Carolina $186,068,397 143,440 $1,297
North Dakota $4,063,820 4,565 $890
Ohio $1,270,746 10,913 $116
Oklahoma $47,414,174 38,959 $1,217
Oregon $67,604,053 42,664 $1,585
Pennsylvania $57,964,007 69,275 $837
Rhode Island $8,052,616 9,266 $869
South Carolina $70,833,597 50,941 $1,391
South Dakotaa 0 0
Tennessee a
Texas $184,761,615 211,513 $874
Utah $16,810,410 7,699 $2,183
Vermont $7,644,346 6,436 $1,188
Virginia $1,677,454 4,023 $417
Washington $3,606,705 4,129 $874
West Virginia $3,875,936 8,643 $448
Wisconsin $22,136,862 36,077 $614
Wyoming $1,637,081 2,382 $687
United States $2,902,049,484 2,744,027 $1,058
Source: All Medicaid expenditure data discussed in this report include both federal and state expenditures, as
well as expenditures for Medicaid-expansions under the State Children’s Health Insurance Program (M-SCHIP).
Medicaid Statistical Information System (MSIS), FY2005, downloaded January 24, 2008. FY2004 data were used
for Maine as an estimate of FY2005 data.
a. Although these states indicate they provide TCM, they did not report TCM expenditures in their FY2005
MSIS data.





Cliff Binder
Analyst in Health Care Financing
cbinder@crs.loc.gov, 7-7965