[Federal Register Volume 66, Number 189 (Friday, September 28, 2001)]
[Rules and Regulations]
[Pages 49544-49547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24326]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare and Medicaid Services

42 CFR Parts 402 and 405

CMS-6145-FC

RIN 0938-AK49


Medicare Program; Civil Money Penalties, Assessments, and Revised 
Sanction Authorities

AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period is a technical rule that 
updates our civil money penalty (CMP) regulations to add CMP 
authorities already enacted as part of the Balanced Budget Act of 1997 
(BBA) and delegated to us. The rule delineates our authority to assess 
penalties for: failure to bill outpatient therapy services or 
comprehensive outpatient rehabilitation services (CORS) on an 
assignment-related basis, failure to bill ambulance services on an 
assignment-related basis, failure to provide an itemized statement for 
Medicare items and services to a Medicare beneficiary upon his/her 
request, and failure of physicians or nonphysician practitioners to 
provide diagnostic codes for items or services they furnish or failure 
to provide this information to the entity furnishing the item or 
service ordered by the practitioner. The rule also contains technical 
changes to further conform our current CMP rules to changes in the 
statute enacted by the BBA.

DATES: These regulations are effective on October 29, 2001. We will 
consider comments if we receive them at the appropriate address, as 
provided below, no later than 5 p.m. on November 27, 2001.

ADDRESSES: Mail written comments (one original and three copies) to the 
following address only: Centers for Medicare and Medicaid Services, 
Department of Health and Human Services, Attention: CMS-6145-FC, P.O. 
Box 8013, Baltimore, MD 21244-8013.
    Since comments must be received by the date specified above, please 
allow sufficient time for mailed comments to be received timely in the 
event of delivery delays. If you prefer, you may deliver your written 
comments (one original and three copies) by courier to one of the 
following addresses: Room 443-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201, or Room C5-16-03, 
Central Building, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    Comments mailed to the two above addresses may be delayed and 
received too late to be considered. Because of staffing and resource 
limitations, we cannot accept comments by facsimile (FAX) transmission. 
In commenting, please refer to file code CMS-6145-FC.
    Comments received timely will be available for public inspection as 
they are received, generally beginning approximately 3 weeks after 
publication of a document, in Room 443-G of the Department's offices at 
200 Independence Avenue, SW., Washington, DC 20201, on Monday through 
Friday of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT:  Joel Cohen, (410) 786-3349.

SUPPLEMENTARY INFORMATION:

I. Background

    On December 14, 1998, we published a final rule in the Federal 
Register (63 FR 68687), the procedures for pursuing civil money 
penalties (CMPs) and assessments now set forth at 42 CFR part 402. We 
are now amending part 402, subpart B, to incorporate additional CMPs 
authorized by sections 4541(a)(2), 4531(b)(2), 4311(b), and 4317 of the 
Balanced Budget Act of 1997 (BBA), Public Law 105-33. This final rule 
with comment period incorporates the statutory revisions of the BBA 
concerning CMPs and assessments into our existing CMP and assessment 
regulations at 42 CFR part 402, subparts A and B, as well as makes 
technical changes to existing delegated authority. BBA statutory 
revisions that would affect subpart C, which addresses our exclusion 
authority, are not addressed in this final rule, but will be addressed 
in a separate rulemaking.

II. Provisions of the Final Rule

    This final rule amends 42 CFR part 402, to incorporate changes 
resulting from the enactment of the BBA. Specifically, we are revising 
Secs. 402.1(c), 402.1(d), 402.105(d), and 402.107 and adding 
Sec. 402.105(g) with regard to the following statutory authorities that 
are delegated to us:

A. Payment for Outpatient Therapy Services and Comprehensive Outpatient 
Rehabilitation Services

    Section 4541(a)(2) of the BBA adds subsection (k) to section 1834 
of the Social Security Act (the Act), Payment for Outpatient Therapy 
Services and Comprehensive Outpatient Rehabilitation Services. 
Subsection (k)(6), through its cross-reference to section 1842(b)(18) 
of the Act, requires that billing for therapy services be subject to 
the mandatory assignment requirements of the Medicare statute. Failure 
to bill on an assignment-related basis may subject the violator to 
certain sanctions, including assessments and CMPs, as provided by 
section 1842(j)(2) of the Act. (See Sec. 402.105(d)(3).)

B. Fee Schedule for Ambulance Services

    Section 4531(b)(2) of the BBA adds paragraph (l) to section 1834 of 
the Act, Establishment of Fee Schedule for Ambulance Services. This 
provision requires the establishment of a fee schedule for ambulance 
services furnished and requires, in section 1834(l)(6) of the Act, 
suppliers of ambulance services to accept assignment (that is, to 
accept Medicare's approved payment amount as payment in full). Failure 
to bill on an assignment-related basis may subject the violator to 
sanctions, including assessments and CMPs, as provided by section 
1842(j)(2) of the Act. (See Sec. 402.105(d)(4).)

C. Request for Itemized Statement for Medicare Items and Services

    Section 4311(b) of the BBA adds section 1806 to the Act. Section 
1806(b), Request For Itemized Statement For Medicare Items and 
Services, provides that a Medicare beneficiary has the right

[[Page 49545]]

to request and receive an itemized statement from health care providers 
(for example, hospitals, nursing facilities, home health agencies, 
physicians, practitioners, and Durable Medical Equipment Prosthetics, 
Orthotics and Supplies (DMEPOS) suppliers). From the date of the 
beneficiary's request, the health care provider has 30 days to furnish 
this statement to the beneficiary. Any provider or supplier who fails 
to provide an itemized statement may be subject to a CMP of $100 for 
each failure. (See Sec. 402.105(g).)

D. Provision of Diagnostic Codes

    Section 4317 of the BBA amends section 1842(p) of the Act to 
include nonphysician practitioners under the requirement to provide 
diagnostic codes for items and services they furnish or to provide this 
information (if required) to the entity furnishing the item or service 
if ordered by the physician or nonphysician practitioner. Failure of 
these practitioners to supply required diagnostic codes subjects them, 
through a cross-reference to section 1842(j)(2) of the Act, to 
sanctions including assessments. (See Sec. 402.1(c)(16).)

E. Technical Amendment/Revision

    Section 4031(a)(2) of the BBA adds a new paragraph as section 
1882(s)(3) of the Act. As a result, the original section 1882(s)(3) of 
the Act is redesignated as section 1882(s)(4) of the Act. We have 
conformed the regulations to reflect this redesignation. (See 
Sec. 402.1(c)(29) and Sec. 402.1(e)(vii).)

F. Technical Correction

    Finally, this final rule makes a technical correction to 
Sec. 405.520(c), which currently lists the maximum civil money penalty 
amount as $2,000 for each bill or request for payment in which a 
beneficiary was billed in excess of Medicare coinsurance and deductible 
amounts. Section 231(c) of the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA), Public Law 104-191, increases the 
maximum civil money penalty amount to $10,000 for certain acts 
described in section 1128A(a) of the Act. Section 1128A(a) of the Act 
provides the basis for the amount of CMPs that may be imposed under 
Sec. 405.520(c). We are accordingly clarifying that the maximum CMP 
amount under Sec. 405.520(c) is $10,000 for each bill or request for 
payment. To do this, we are revising Sec. 405.520(c) because the CMP it 
describes was again addressed in part 402 when it was published on 
December 14, 1998 (63 FR 68690). Specifically, Secs. 402.1(c)(11) and 
402.105(d)(2)(viii) address CMPs that we may impose when practitioners 
bill for services on a nonassigned basis in violation of section 
1842(b)(18) of the Act. When part 402 was published, however, it did 
not take into account the existing provision in Sec. 405.520(c) that 
addresses the same issues. To eliminate any confusion that the 
duplication may cause, we are revising the CMP provision that appears 
in Sec. 405.520(c) to make the appropriate cross-reference to the 
provision that now appears in Secs. 402.1(c)(11), 402.105(d)(2)(viii), 
and 402.107(b)(8). This conforming change serves as a cross-reference 
to the appropriate CMP provisions and automatically corrects the 
maximum penalty amount for the CMP described in Sec. 405.520(c).

III. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite prior public comment on proposed rules. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    In the present rulemaking, we find that subjecting this rule to a 
notice and comment period is unnecessary because this final rule with 
comment period incorporates technical changes to previously published 
CMP authorities and codifies additional authorities that result from 
the enactment of sections 4541(a)(2), 4531(b)(2), 4311(b), 4317, and 
4031(a)(2) of the BBA and section 231(c) of the HIPAA. This final rule 
with comment period does not alter the legal responsibilities and 
regulatory requirements of the affected program participants, and does 
nothing more than update our regulations to reflect already existing 
statutory obligations.
    Therefore, we find good cause to waive the notice of proposed 
rulemaking and to issue this final rule on an interim basis. We are 
providing a 60-day comment period for the public.

IV. Regulatory Impact Statement

    We have examined the requirements of Executive Order 12866 
(September 1993, Regulatory Planning and Review), the Regulatory 
Flexibility Act (RFA) (September 19, 1980 Public Law 96-354), Executive 
Order 13132 (August 4, 1999, Federalism) and the Unfunded Mandates 
Reform Act of 1995 (2 USC 1532).
    Executive Order 12866 found in 58 FR 51735 directs agencies taking 
``significant regulatory action'' to reflect consideration of all costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). This technical rule is not 
a significant regulatory action as defined by section 3(e) of Executive 
Order 12866. We believe that there are no significant costs associated 
with this technical rule that would impose any mandates on State, local 
or tribal governments, or the private sector that would result in an 
expenditure of $100 million in any given year. This rule incorporates 
technical changes to previously published CMP authorities and 
establishes in regulation additional authorities mandated by the BBA. 
We expect that all program participants will comply with the statutory 
and regulatory requirements making unnecessary the imposition of a CMP. 
Therefore, we do not anticipate more than a de minimis economic impact 
as a result of this technical change. Further, any impact that may 
occur will only affect those limited few individuals or entities that 
engage in prohibited behavior. We do not anticipate any savings or 
costs as a result of this technical change.
    The Regulatory Flexibility Act of 1980 codified in 15 USC 603(a), 
as modified by the Small Business Regulatory Enforcement Fairness Act 
of 1996 (SBREFA), requires agencies to determine whether this technical 
rule will have a significant economic effect on a substantial number of 
small entities and, if so, to identify regulatory options that could 
mitigate the impact when publishing a general notice of proposed 
rulemaking. We believe that any impact as a result of the technical 
rule will be minimal, since, as mentioned above, the only individuals 
or entities affected will be those limited few who engage in prohibited 
conduct. Since the vast majority of program participants comply with 
statutory and regulatory requirements, any aggregate economic impact 
will not be significant.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in an expenditure in any 1 year by 
State, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million (2 U.S.C. 1532). We believe that there 
are no

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significant costs associated with this technical rule that would impose 
any mandates on State, local or tribal governments, or the private 
sector that would result in an expenditure of $100 million in any given 
year. As was previously mentioned, since the majority of program 
participants comply with statutory and regulatory requirements, any 
aggregate economic impact will not be significant. Accordingly, we 
believe that a full analysis under the Regulatory Flexibility Act is 
not necessary.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. We have determined that this technical rule will not 
significantly affect the rights, roles, or responsibilities of the 
States. This rule does not impose substantial direct requirement costs 
on State or local governments, preempt State law, or otherwise 
implicate Federalism.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 402

    Administrative practice and procedure, Health facilities, Health 
professions, Medicaid, Medicare, Penalties.

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medicare, Reporting and recordkeeping 
requirements, Rural areas, X-rays.


    For the reasons stated in the preamble, the Centers for Medicare 
and Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 402--CIVIL MONEY PENALTIES, ASSESSMENTS, AND EXCLUSIONS

    A. Part 402 is amended as set forth below:
    1. The authority citation for part 402 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


    1. In Sec. 402.1, the following changes are made:
    A. Paragraph (c) introductory text is revised to read as set forth 
below.
    B. Paragraph (c)(16) is revised to read as set forth below.
    C. Paragraph (c)(29) introductory text is revised to read as set 
forth below.
    D. Paragraphs (c)(31), (c)(32), and (c)(33) are added to read as 
set forth below.
    E. Paragraph (d) introductory text is republished.
    F. Paragraph (d)(2) is revised to read as set forth below.
    G. Paragraph (e)(1) introductory text is republished.
    H. Paragraph (e)(1)(ii) is revised to read as set forth below.
    I. Paragraph (e)(1)(vii) is revised to read as set forth below.


Sec. 402.1  Basis and scope.

* * * * *
    (c) Civil money penalties. CMS or OIG may impose civil money 
penalties against any person or other entity specified in paragraphs 
(c)(1) through (c)(33) of this section under the identified section of 
the Act. (The authorities that also permit imposition of an assessment 
or exclusion are noted in the applicable paragraphs.)
* * * * *
    (16) Section 1842(p)(3)(A)--Any physician or practitioner who 
knowingly and willfully fails promptly to provide the appropriate 
diagnosis code or codes upon request by CMS or a carrier on any request 
for payment or bill not submitted on an assignment-related basis for 
any service furnished by the physician. (This violation, if it occurs 
in repeated cases, may also cause exclusion.)
* * * * *
    (29) Section 1882(s)(4)--
* * * * *
    (31) Sections 1834(k)(6) and 1842(j)(2)--Any person or entity who 
knowingly and willfully bills or collects for any outpatient therapy 
services or comprehensive outpatient rehabilitation services on other 
than an assignment-related basis. (This violation may also include an 
assessment and cause exclusion.)
    (32) Sections 1834(l)(6) and 1842(j)(2)--Any supplier of ambulance 
services who knowingly and willfully bills or collects for any services 
on other than an assignment-related basis. (This violation may also 
include an assessment and cause exclusion.)
    (33) Section 1806(b)(2)(B)--Any person who knowingly and willfully 
fails to furnish a beneficiary with an itemized statement of items or 
services within 30 days of the beneficiary's request.
    (d) Assessments. CMS or OIG may impose assessments in addition to 
civil money penalties for violations of the following statutory 
sections:
* * * * *
    (2) Section 1834: Paragraphs (a)(11)(A), (a)(18)(B), (b)(5)(C), 
(c)(4)(C), (h)(3), (j)(4), (k)(6), and (l)(6).
* * * * *
    (e) Exclusions. (1) CMS or OIG may exclude any person from 
participation in the Medicare program on the basis of any of the 
following violations of the statute:
* * * * *
    (ii) Section 1834: Paragraphs (a)(11)(A), (a)(18)(B), (b)(5)(C), 
(c)(4)(C), (h)(3), (j)(4), (k)(6), and (l)(6).
* * * * *
    (vii) Section 1882: Paragraphs (a)(2), (p)(8), (p)(9)(C), 
(q)(5)(C), (r)(6)(A), (s)(4), and (t)(2).
* * * * *

    3. In Sec. 402.105, the following changes are made:
    A. Paragraph (a) is revised to read as set forth below.
    B. Paragraphs (d)(3) and (d)(4) are added to read as set forth 
below.
    C. Paragraph (g) is added to read as set forth below.


Sec. 402.105  Amount of penalty.

    (a) $2,000. Except as provided in paragraphs (b) through (g) of 
this section, CMS or OIG may impose a penalty of not more than $2,000 
for each service, bill, or refusal to issue a timely refund that is 
subject to a determination under this part and for each incident 
involving the knowing, willful, and repeated failure of an entity 
furnishing a service to submit a properly completed claim form or to 
include on the claim form accurate information regarding the 
availability of other health insurance benefit plans 
(Sec. 402.1(c)(21)).
* * * * *
    (d) * * *
    (3) CMS or OIG may impose a penalty of not more than $10,000 for 
each violation, if a person or entity knowingly and willfully bills or 
collects for outpatient therapy or comprehensive rehabilitation 
services other than on an assignment-related basis.
    (4) CMS or OIG may impose a penalty of not more than $10,000 for 
each violation, if a person or entity knowingly and willfully bills or 
collects for outpatient ambulance services other than on an assignment-
related basis.
* * * * *
    (g) $100. CMS or OIG may impose a penalty of not more than $100 for 
each violation if the person or entity does not furnish an itemized 
statement to a Medicare beneficiary within 30 days of the beneficiary's 
request.

    4. In Sec. 402.107, the introductory text to the section and 
paragraph (b) introductory text are republished, and

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paragraph (b)(8) is revised to read as follows:


Sec. 402.107  Amount of assessment.

    A person subject to civil money penalties specified in 
Sec. 402.1(c) may be subject, in addition, to an assessment. An 
assessment is a monetary payment in lieu of damages sustained by HHS or 
a State agency.
* * * * *
    (b) For the violations specified in this paragraph occurring after 
January 1, 1997, the assessment may not be more than three times the 
amount claimed for each service that was the basis for a civil money 
penalty. The violations are the following:
* * * * *
    (8) Knowingly and willfully billing or collecting for any services 
on other than an assignment-related basis for a person or entity 
specified in sections 1834(k)(6), 1834(l)(6), or 1842(b)(18)(B) 
(Sec. 402.1(c)(11), (c)(31), or (c)(32)).
* * * * *

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart E--Criteria for Determining Reasonable Charges

    B. Part 405, subpart E is amended as set forth below:


    1. The authority citation for part 405, subpart E continues to read 
as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. In Sec. 405.520, paragraph (c) is revised to read as follows:


Sec. 405.520  Payment for a physician assistant's, nurse 
practitioner's, and clinical nurse specialist's services and services 
furnished incident to their professional services.

* * * * *
    (c) Civil money penalties. Any person or entity who knowingly and 
willingly bills a Medicare beneficiary amounts in excess of the 
appropriate coinsurance and deductible is subject to a civil money 
penalty as described in Secs. 402.1(c)(11), 402.105(d)(2)(viii), and 
402.107(b)(8) of this chapter.

(Catalog of Federal Domestic Assistance Program No. 93.773, 
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: September 19, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.

    Dated: September 21, 2001.
Tommy G. Thompson,
Secretary.
[FR Doc. 01-24326 Filed 9-27-01; 8:45 am]
BILLING CODE 4120-01-P