(D) At the completion of the period provided for under plans established under paragraph (a)(2)(ii)(A) of this section, the institution (or distinct part thereof) has achieved full compliance with such plans and is found in compliance with the requirements for staffing (§ 449.13(b)(5), the Life Safety Code

(§ 449.12(a)(5)), living units

(§ 449.13(b)(6) (i); (ii)(D); (iii), (iv), (v), (vii), (viii), (iv) and (xii)); dining rooms (§ 449.13(c)(4)(viii)) and therapy areas (§ 449.13(c)(8)(vi)); except for any provisions waived in accordance with § 449.12(a)(5), and § 449.13(f)(1)(iv) or subject to approved variances under § 449.13(b)(6)(i) (C) and (D).

(3) Provide that any intermediate care facility receiving payments under the plan must supply to the licensing agency of the State full and complete information, and promptly report any changes which would affect the current accuracy of such information, as to the identity:

(i) of each person having (directly or indirectly) an ownership interest of 10 percent or more in such facility, or who is the owner (in whole or in part) of any mortgage, deed of trust, note, or other obligation. secured (in whole or in part) by such intermediate care facility or any of the property or assets of such facility,

(ii) In case a facility is organized as a corporation, of each officer and director of the corporation, and

(iii) In case a facility is organized as a partnership, of each partner;

(4) Provide that certification by the survey agency designated pursuant to § 450.100(c) of this chapter will be subject to the following provisions and exclusions:

(i) For

purposes of paragraph (a)(1)(i) of this section, the facility is in compliance with each condition of participation as determined by the manner and degree to which the facility satisfies the standards within each condition;

(ii) For purposes of paragraphs (a)(1)(i) and (a)(2) of this section, the facility is in full compliance with the standards or meets the following conditions for any standards not fully met:

(A) The deficiencies noted, individually or in combination neither jeop

ardize the health and safety of patients nor are of such character as to seriously limit the provider's capacity to render adequate care. A written justification of such findings is maintained on file by the survey agency; and

(B) The facility provides in writing a plan of correction acceptable to the survey agency;

(iii) In the case of facilities certified under the provisions of paragraph (a)(4)(ii) (A) and (B) of this section certification will be for:

(A) A period that is no later than the 60th day following the end of the time period specified for the correction of deficiencies in a written plan which the survey agency has approved; however in no case may the certification period exceed 12 full calendar months except as provided for under paragraph (a)(2)(i) or (ii) of the section or

(B) A conditional term of 12 full months, subject to an automatic cancellation clause that the certification will expire at the close of a predetermined date which is no later than the 60th day following the end of the time period specified for the correction of deficiencies: Provided, That such date will occur within such 12-month period, unless the survey agency finds that all required corrections have been satisfactorily completed, or unless the survey agency finds and notifies the State agency that the facility has made substantial progress in correcting such deficiencies and has resubmitted in writing a new plan of correction acceptable to the survey agency. Except as provided in paragraph (a)(6) of this section, the period of a certification shall not exceed 12 calendar months.

(iv) No second certification under the condition specified in paragraph (a)(4)(ii), except as provided for under paragraphs (a)(2)(i) and (ii)(A)(3) of this section, may be executed if:

(A) The standard found deficient was in compliance during the previous certification period, except where the survey agency has made a determination based upon documented evidence that the facility despite intensive efforts or for reasons beyond its control was unable to maintain compliance

and despite the deficiency(ies) the facility is making the best use of its resources to render adequate care; or

(B) The standards found deficient are the same as those which occasioned the prior certification, except:

(1) In a case where a facility can document to the State survey agency's satisfaction that it achieved compliance with a previously unmet standard during the period of certification but for reasons beyond its control and despite, in the judgment of the survey agency, a good faith effort to maintain compliance with the standard, was again out of compliance by the time of the next survey; or

(2) In the case of a skilled nursing facility completing the second of two successive agreements under provisions for certification in effect prior to July 1, 1973 and having the same deficiency(ies) which occasioned the two agreements, the survey agency will review the performance of such facility (which may be limited to a review of the documentation of record) in providing safe and adequate patient care and in progressing toward correction of such deficiency(ies). On the basis of its evaluation, the survey agency will advise the single State agency that:

(i) No provider agreement may be executed with such facility,

(ii) A new provider agreement may be executed for a period related to the time required to correct such deficiencies, but not to exceed 6 months; or

(iii) A new provider agreement may be executed for a period of 12 months but subject to a provision for automatic cancellation 60 days following the scheduled date for correction unless the survey agency finds and notifies the State agency that all required corrections have been satisfactorily completed. If the facility continues to be out of compliance with the same standard(s) at the end of the term of the agreement, a recertification may not be made.

(v) For purposes of this subparagraph (4), waivers granted pursuant to section 1902(a)(28) of the Act or § 449.12 are not considered deficiencies.

(5) Provide that the survey agency designated pursuant to § 450.100(c) of this chapter will:

(i) Review information contained in medical review and independent professional review team inspections made pursuant to State plan provisions under section 1902(a) (26) and (31) of the Social Security Act;

(ii) Review statements obtained from each facility setting forth (from payroll records) the average numbers and types of personnel (in full-time equivalents) on each shift during at least 1 week of each quarter, such week to be selected by the survey agency and to occur irregularly in each quarter of the year;

(iii) Review and evaluate such reports as they reflect on health and safety requirements and as necessary take appropriate action to achieve compliance or withdraw certification; and

(iv) Perform, with qualified personnel, on-site inspections at least once during the term of a certification and every six months as provided for under paragraphs (a)(2)(i)(D) and (ii)(c) of this section or more frequently if there is a question of compliance.

(6) Provide that execution of the single State agency provider agreement with a facility for payments under the plan shall be contingent upon certification in accordance with the provisions of paragraph (a) (1) and (2) of this section. The term of an agreement may not exceed a period of 1 year and the effective date of such agreement may not be earlier than the date of certification. Execution of a provider agreement shall be for the term and in accordance with the provisions of certification determined by the survey agency except that the single State agency for good cause based on adequate and documented evidence may elect to execute a provider agreement for a term less than the full period of certification or may elect not to execute a provider agreement or may cancel a provider agreement for participation by a facility certified under the State plan. Notwithstanding the provisions of this subparagraph the single State agency may extend such term for a period not exceeding 2 months where the survey

agency has notified the single State agency in writing prior to the expiration of a provider agreement that the health and safety of the patients will not be jeopardized thereby, and that such extension is necessary to prevent irreparable harm to such facility or hardship to the individuals being furnished items or services or that it is impracticable within such provider agreement period to determine whether such facility is complying with the provisions and requirements under the

program.

(7) [Reserved] (8) [Reserved]

(9) Provide that in the case of skilled nursing facilities certified under the provisions of title XVIII of the Social Security Act, the term of a provider agreement shall be subject to the same terms and conditions and coterminous with the period of approval of eligibility specified by the Secretary pursuant to that title, and upon notification that an agreement with a facility under title XVIII of the Act has been terminated or cancelled, the single State agency will take appropriate action to terminate the facility's participation under the plan. A facility whose agreement has been cancelled or otherwise terminated may not be issued another agreement until the reasons which cause the cancellation or termination have been removed and reasonable assurance provided the survey agency that they will not recur.

(10) Provide that facilities which do not qualify under this section are not recognized as skilled nursing facilities or intermediate care facilities for purposes of payment under title XIX of the Act.

(b) Federal financial participation. (1) Federal financial participation is available at 75 percentum in expenditures of the single State agency for compensation (or training) of its skilled professional medical personnel and staff directly supporting such personnel, which are necessary to carry out these regulations.

(2) Federal financial participation at applicable rates is also available for the single State agency to enter into a written contract (under the supervision of the Medical Assistance Unit) with the survey agency designated

pursuant to § 450.100(c) of this chapter as necessary to carry out its responsibilities under these regulations. Such Federal financial participation is available only for those expenditures of the survey agency which are not attributable to the overall cost of meeting responsibilities under State law and regulations for establishing and maintaining standards but which are necessary and proper for carrying out these regulations.

[39 FR 2254, Jan. 17, 1974; 39 FR 8918, Mar. 7, 1974, as amended at 39 FR 16972, May 10, 1974; 39 FR 41611, Nov. 29, 1974; 40 FR 28793, July 9, 1975; 42 FR 28703, June 3, 1977. Redesignated at 42 FR 52827, Sept. 30, 19771

§ 449.40 Cost sharing and similar charges.

(a) State plan requirements. A State plan for medical assistance under title XIX of the Social Security Act must:

(1) With respect to the categorically needy, provide that no enrollment fee, premium, or similar charge will be imposed with respect to services available under the plan, and no deduction, cost sharing or similar charge will be imposed with respect to the care and services listed in clauses (1) through (5) and (7) of section 1905(a) of the Act.

(2) If an enrollment fee, premium, or similar charge is imposed on the medically needy, specify the amount of and the period of liability for such charges, and define the State's policy regarding the effect on the recipient of non-payment of required charges. Any such amount shall be related to total gross income of each family as follows:

(i) A minimum charge equivalent to $1.00 per month shall be imposed on each 1- or 2-person family with monthly gross income of $150 or less, on each 3 or 4 person family with monthly gross income of $300 or less, and on each family of 5 or more persons with monthly gross income of $350 or less. An appropriately higher charge shall be imposed on each family with higher income.

(ii) Income-related charges above the minimum shall not exceed amounts equivalent to the monthly charges found in the following table:

(3) If any deductible, coinsurance or co-payment is imposed on the categorically needy (for services other than those listed in clauses (1) through (5) and (7) of section 1905(a) of the Act) or the medically needy (for any service under the plan), specify the services for which such charges are applied and the amounts and the basis for determining the charges. States may impose a deductible or coinsurance or co-payment charge for a particular type of service, but may not impose more than one of such charges on any particular type of service.

(i) For noninstitutional services: (A) Co-payments shall be limited in accordance with the following table:

co-payment charge for each admission shall be limited to fifty percent of the State's payment for the first day of

care.

(iii) The maximum co-payment amounts defined in paragraphs (a)(3) (i) and (ii) of this section may be applied to the State's average or typical payment for service, to establish a standard co-payment amount which may be applied to each such service. For example, if the typical payment for prescribed drugs is about $4.00 to $5.00 per prescription, a State might set a standard co-payment of $0.50 per prescription.

(iv) In addition to applying cost sharing charges within the maximums specified in paragraph (a)(3) (i) and (ii) of this section, States may also establish a cumulative maximum on all deductible, coinsurance or co-payment charges which may be imposed on a family during a given period of time.

(v) States may establish income-related cost sharing charges; e.g., by charging a higher rate to the medically needy than to the categorically needy. However, the highest level of charges must be within the limits defined in paragraphs (a)(3)(i) and (ii) of this section.

(vi) The State's payment to any provider shall not be increased to offset deductible, coinsurance or co-payment amounts which have been waived by the provider or are uncollectible, except as required for payment of bad debts of providers reimbursed under reasonable cost reimbursement standards and principles described in 42 CFR 405.402-405.454, in accordance with 450.30 of this chapter. Payments to prepaid capitation organizations which do not impose deductibles, coinsurance or co-payments must take into account the actuarial value of the State's cost sharing system applied to the scope of services offered by the organization, and must be calculated as if the appropriate charges were collected.

(b) Federal financial participation. Federal financial participation at the appropriate rate in the expenditures for medical services and care provided in accordance with the approved State plan is available to the extent that such expenditures (1) do not include

any amounts which should have been paid as deductibles, coinsurance, copayments or similar charges required by the State plan (except for amounts paid as bad debts of providers reimbursed under reasonable cost reimbursement standards and principles described in 42 CFR 405.402-405.454, in accordance with $450.30 of this chapter); (2) have been reduced by the amount for premiums, enrollment fees, or similar charges collected or due to be collected as provided by this section where the State plan provides for the imposition of such charges; and (3) do not include any amounts paid on behalf of ineligible individuals, whether or not the individual had paid any required premium or enrollment fee.

(Sec. 1102, 49 Stat. 647 (42 U.S.C. 1302))

[39 FR 5553, Feb. 13, 1974, as amended at 39 FR 36590, Oct. 11, 1974; 39 FR 39267, Nov. 6, 1974. Redesignated at 42 FR 52827, Sept. 30, 1977]

§ 449.41 Coordination of title XIX with part B of title XVIII, Social Security Act.

(a) Requests for "buy-in" agreements. (1) States had through December 31, 1969, to request a "buy-in” agreement for the following two groups:

(i) Individuals receiving money payments under the plan of the State approved under titles I, X, XIV, and XVI, and part A of title IV of the Social Security Act and

(ii) All individuals who are eligible to receive medical assistance under the State's plan under title XIX of the act.

(2) Effective January 1, 1974, as provided in section 1843(b) of the act, such agreements continue in effect subject to modifications necessary as a result of termination of State plans in effect prior to January 1, 1974, and establishment of a supplementary payment program under title XVI of the act.

(b) Comparability. Payment made by a State of premiums under title XVIII, part B of the act, whether through a "buy-in" agreement or otherwise, or provision for meeting part or all of the cost of the deductibles, cost sharing, or similar charges under

part B, does not impose an obligation on the State to make comparable services available to other title XIX recipients. This provision permits the States to enter into agreements to pay the premium charges under part B or to pay the deductibles and other charges under that program without obligating themselves to provide the range of part B benefits to other individuals who are under title XIX of the act. Any State implementing this provision must amend its plan accordingly.

(c) Federal financial participation. (1) There will be no Federal financial participation in the monthly insurance premium under title XVIII, part B of the act which the title XIX State agency pays on behalf of nonmoney payment individuals eligible to receive medical assistance under title XIX of the act, except for those persons required to be covered pursuant to § 448.1(b)(1)(ii) of this chapter (AFDC families eligible for continued Medicaid coverage under section 209(a) of Pub. L. 92-603), and § 448.1(b)(3)(ii) of this chapter (persons eligible for continued Medicaid coverage despite increased income from benefits, as provided under section 249E of Pub. L. 92-603).

(2) There will also be no Federal financial participation for State expenditures for medical assistance after December 31, 1969, under title XIX of the act, which would not have been so expended if the individuals involved had been enrolled in the insurance program established by part B of title XVIII of the act. This applies to all persons who could have been covered under such program, whether on an individual basis or through the "buyin." However, Federal financial participation will be available for such expenditures made under the requirements 45 CFR of § 206.10(a)(6)(ii) regarding retroactive coverage.

[39 FR 16972, May 10, 1974. Redesignated at 42 FR 52827, Sept. 30, 1977]

§ 449.70 Liens and recoveries.

State plan requirements: A State plan under title XIX of the Social Security Act must provide that:

(a) No lien or encumbrance of any kind will be required from or be im