[Federal Register Volume 66, Number 235 (Thursday, December 6, 2001)]
[Notices]
[Pages 63392-63400]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30005]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Privacy Act of 1974; System of Records

AGENCY: Department of Health and Human Services (HHS), Centers for 
Medicare & Medicaid Services (CMS), formerly Health Care Financing 
Administration (HCFA).

ACTION: Notice of a new system of records.

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SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, we are proposing to establish a new system of records. The 
proposed system is titled ``Medicare Beneficiary Database (MBD),'' HHS/
CMS/CBS, System No. 09-70-0536. The Medicare program is rapidly 
changing to accommodate expansion of new service delivery models and 
payment options, allowing for more medical choices for its 
beneficiaries. To successfully support ongoing and expanded program 
administration, service delivery modalities and payment coverage 
options, CMS proposes to establish an enterprise database. More 
specifically, the proposed system will contain a complete ``beneficiary 
insurance profile'' that reflects individual Medicare and Medicaid 
health insurance coverage and Medicare health plan and demonstration 
enrollment. Once fully developed, the MBD would provide a database of 
pertinent and comprehensive personal data on people with Medicare and 
persons dually eligible for both Medicare and Medicaid under either the 
Fee for Service or Managed Care Programs. It would support data 
processing, at the discrete beneficiary level, necessary for continued 
and evolving program operations including but not limited to Medicare 
claims payment, entitlement, Medicare + Choice elections and payments, 
coordination of benefits for the purpose of conducting Medicare 
business, payment demonstrations and Medicaid coverage. The data in 
this database is held at the person level and is identified through use 
of an individual health insurance claim number. As such, the MBD would 
serve as CMS's singular, reliable and authoritative data source, from 
which all systems can retrieve current, standard, valid and timely data 
necessary for Medicare Program administration. MBD will provide CMS 
with a centralized database that is able to communicate with other 
systems while being able to view, manage, and update beneficiary 
information. It will also provide new sets of data not found in 
existing CMS systems. Other groups of information maintained in this 
data management structure will be initially extracted from data 
elements currently maintained in other CMS systems of records: 
``Enrollment Database (EDB)'' (formerly known as the Health Insurance 
Master Record), System No. 09-70-0502, ``Group Health Plan (GHP), 
System No. 09-70-5001,'' and the ``Medicaid Statistical Information 
System (MSIS), System No. 09-70-4001.'' These systems will remain 
active for the purposes stated in their current notices. The data 
elements include, but are not limited to, standard data for 
identification such as health insurance claim number (HICN), social 
security number (SSN), sex, race/ethnicity, date of birth, geographical 
location, Medicare entitlement information, M+C plan elections and 
enrollment, End Stage Renal Disease (ESRD) coverage, primary insurance 
coverage, e.g., the ``working aged'' population, historic and current 
listing of residences, and Medicaid eligibility and Managed Care 
institutional status.
    The MBD is in its first stage of a multi-year implementation. In 
its full implementation the MBD will be the national source of 
comprehensive beneficiary information and provide consistent 
information throughout Medicare operations. The first application of 
the MBD focuses on the Medicare Managed Care Program. The system is 
being developed in several different stages and this notice addresses 
the initial stage of development that will contain data of interest to 
the Medicare Managed Care program rather than the Fee For Service 
Program. The initial stage will include two major functions: (1) Allows 
system users to view and update beneficiary data based upon role based 
security access and (2) allows accurate and timely processing of 
beneficiary residence information particularly for mailings and to 
processing managed care payments. The MBD update function will ensure 
the accuracy and timeliness of data using business rules developed to 
assess and validate the correctness of new and changed data. However, 
historic data will be retained to provide insurance profiles for 
specified ``points in time''. Further, for accurate beneficiary 
residence address processing, the MBD identifies the conditions where 
the acceptance of new or corrected address information will trigger the 
establishment of a new or corrected period of Beneficiary

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Residence History Information or Beneficiary Temporary Residency 
History Information. It also would identify the conditions where new 
Social Security Administration (SSA) State and County Codes must be 
derived when an address is changed. Future modifications of the MBD 
that substantially change the system of records will follow a 
corresponding modification or alteration of this system notice.
    The primary purpose of this system of records is to provide the 
Centers for Medicare & Medicaid Services (CMS) with a singular, 
authoritative, database of comprehensive data on people enrolled in 
Medicare. The development and operation of the MBD would establish 
within CMS, a singular, national source of comprehensive beneficiary 
information. This information would be consistent throughout the 
Medicare Program, providing key benefits to CMS's program, 
administrative and customer service goals. The MBD will combine and 
house beneficiary centric data that resides currently within CMS 
databases such as the EDB, MSIS and GHP. It will be the authoritative 
database for approved agency contractors who need specific types of 
data to support and implement business processes. Although the MBD does 
not replace any of these systems at this time, the MBD will provide the 
most current and reliable information for contractors to make timely 
decisions about payment and service delivery. The Information retrieved 
from this system of records will also be disclosed to: (1) Support 
regulatory, reimbursement, and policy functions performed within the 
agency or by a contractor or consultant, (2) another federal or state 
agency, agency of a state government, an agency established by state 
law, or its fiscal agent, (3) providers and suppliers of services for 
administration of Title XVIII, (4) third parties where the contact is 
expected to have information relating to the individual's capacity to 
manage his or her own affairs, (5) Peer Review Organizations, (6) other 
insurers for processing individual insurance claims, (7) facilitate 
research on the quality and effectiveness of care provided, as well as 
payment related projects, (8) support constituent requests made to a 
congressional representative, (9) support litigation involving the 
agency, and (10) combat fraud and abuse in certain health benefits 
programs. We have provided background information about the modified 
system in the SUPPLEMENTARY INFORMATION section below. Although the 
Privacy Act requires only that CMS provide an opportunity for 
interested persons to comment on the proposed routine uses, CMS invites 
comments on all portions of this notice. See EFFECTIVE DATES section 
for comment period.

EFFECTIVE DATES: CMS has filed a new system of records report with the 
Chair of the House Committee on Government Reform and Oversight, the 
Chair of the Senate Committee on Governmental Affairs, and the 
Administrator, Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB) on November 28, 2001. We will not disclose 
any information under a routine use until 40 days after notification to 
OMB and Congress, whichever is latest. We may defer implementation of 
this system of records or one or more of the routine use statements 
listed below if we receive comments that persuade us to defer 
implementation.

ADDRESSES: The public should address comments to: Director, Division of 
Data Liaison and Distribution (DDLD), CMS, Room N2-04-27, 7500 Security 
Boulevard, Baltimore, Maryland 21244-1850. Comments received will be 
available for review at this location, by appointment, during regular 
business hours, Monday through Friday from 9 a.m.-3 p.m., eastern time 
zone.

FOR FURTHER INFORMATION CONTACT: William Seabrease, Health Insurance 
Specialist, Center for Beneficiary Choices, CMS, Mail-stop C5-16-15, 
7500 Security Boulevard, Baltimore, Maryland 21244-1850. The telephone 
number is (410) 786-6187.

SUPPLEMENTARY INFORMATION:

I. Description of the New System of Records

A. Background

    The MBD was established to provide CMS with a singular, 
authoritative database of comprehensive data on people with Medicare. 
The MBD is necessary to successfully support ongoing program 
administration including Medicare claims payment, entitlement; Medicaid 
coverage, Medicare+Choice elections and payments; coordination of 
benefits for the purpose of conducting Medicare business; payment 
demonstrations; and demographic research. As CMS's authoritative 
enterprise beneficiary database, it will provide new sets of data that 
is not currently available in the EDB, GHP or MSIS. The ``Medicare 
Beneficiary Database (MBD),'' System No. 09-70-0536 will also maintain 
beneficiary data elements extracted from existing CMS systems of 
records: EDB, GHP, and MSIS. The renamed ``Enrollment Database,'' was 
established in 1965 to maintain accurate and complete data on Medicare 
enrollment and entitlement. Notice of the modification to this system, 
``Health Insurance Master Record (HIMR),'' HHS/CMS/BDMS, System No. 09-
70-0502 was published in the Federal Register at 55 FR 37549 (September 
12, 1990), 61 FR 6645 (Feb. 21, 1996) (added unnumbered social security 
use), 63 FR 38414 (July 16, 1998) (added three fraud and abuse uses), 
and 65 FR 50552 (Aug. 18, 2000) (deleted one and modified two fraud and 
abuse uses). The ``Group Health Plan (GHP),'' System No. 09-70-4001, 
published in the Federal Register at 57 FR 60819 (December 22,1992), 
was established to maintain a master file of group health plan members 
for accounting control, to expedite the exchange of data with the 
plans, and to control the posting of pro-rata amounts to the part B 
deductible of enrolled members. The ``Medicaid Statistical Information 
System (MSIS),'' System No. 09-70-6001, published in the Federal 
Register at 59 FR 41327 (August 11, 1994), was established to maintain 
an accurate, current, and comprehensive database containing 
standardized enrollment, eligibility, and paid claims of Medicaid 
beneficiaries to be used for the administration of the Medicaid program 
at the Federal level, produce statistical reports, support Medicaid 
research, and assist in the detection of fraud and abuse.
    CMS has long realized that the Medicare program is in the middle of 
rapidly changing health insurance industry characterized by an 
expansion of service delivery models and payment options. The 
Medicare+Choice provisions of the Balance Budget Act (BBA) of 1997 
(Pub. L. 105-217) has made the challenge of managing beneficiary health 
choices one of the most critical challenges facing CMS and the health 
industry at large. To be of maximum use, the data must be organized and 
categorized into a comprehensive system. CMS sought to identify key 
sources, including both organizations and systems that could provide 
valid and reliable information. Medicare will no longer exist within an 
environment characterized by limited health insurance options and 
standard delivery models. The MBD provides CMS with a timely model for 
data inventory of beneficiary information retained in a database 
environment that provides flexibility to react quickly to changing 
Medicare program needs.
    Data relating to Medicare Managed Care beneficiaries will be the 
initial focus of the system implementation.

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The MBD provides a solution as a singular, reliable and authoritative 
source, in which all systems can retrieve current, standard, valid and 
timely data for processing beneficiary selections of capitated delivery 
options. It will provide a comprehensive ``national view'' of 
beneficiary information that is consistent throughout the Medicare 
program, which will primarily benefit CMS's operational and customer 
service business goals. In addition to providing a flexible system to 
accommodate changes, the MBD will support significant improvements in 
the accuracy of the beneficiary residence address used for capitation, 
determining payments and will serve as the first identifying record of 
dual Medicare/Medicaid eligible population which is essential to the 
capitation process.
    An independent technical evaluation of CMS's managed care systems 
found that without major enhancements, Medicare+Choice provisions could 
not be supported by existing Medicare systems. Also the comprehensive 
review of existing systems was necessary in order to proceed with a 
development effort that would ensure that future customer service and 
program management objectives were met. The MBD alters an old 
architecture that could only support two beneficiary Medicare choice 
options: Fee-for service or traditional Health Maintenance 
Organizations (HMO). As these models merge and additional choices 
become available, (i.e., Medicare+Choice Organizations, Medicare 
Savings Accounts (MSA) and Private Fee for Service options), CMS 
determined the need for a beneficiary management structure, the MBD, 
designed to support these expanded program and coverage options.
    The MBD design will accommodate the future growth in delivery 
service options; scalable to support the entire Medicare beneficiary 
population of approximately 42 million. This would include both the 
targeted sets of business requirements and processes for beneficiary 
choice between capitated delivery service options, now, and later to 
support all beneficiaries remaining in the traditional Medicare Fee For 
Service Program.
    The MBD includes standard data for identification such as the 
Medicare HICN, SSN, sex, race/ethnicity, date of birth, and 
geographical location for Medicare beneficiaries. Further, the MBD will 
maintain data on the following types of beneficiary information: 
demographic information, Medicare entitlement information, Medicare 
Secondary Payer data, hospice election, Plan elections and enrollments, 
End Stage Renal Disease (ESRD) entitlement, historic and current 
listing of residences, and Medicaid eligibility and Managed Care 
institutional status. The MBD will have a common interface layer that 
enables existing legacy systems and new applications to access MBD in a 
uniform fashion. The system shall support both online and batch 
transaction volumes up to 200,000-batch update transaction per-day; up 
to 2 million interactive inquiries per-day. An operational day is 
assumed to be 16 hours. It is envisioned to be capable of supporting 
access and interoperability across mainframe, mid-tier, and desktop 
systems. The MBD is currently scoped to encompass up to 15 logical 
database tables, containing about 250 logically grouped data elements. 
The logical database tables include: The Beneficiary Demographics and 
Communication Profiles, Medicare Entitlement Information, Hospice 
Election and Usage Information, Beneficiary Service and Delivery 
Elections, Other Beneficiary Explicit Elections, Fee-For-Service 
Periods, Managed Care Institutional Status Information, ESRD Medicare 
entitlement information, Medicaid Eligibility information, and Other 
Required Beneficiary Specific information. It also will accommodate new 
and modified beneficiary data that was determined to be necessary to 
support effective implementation of the BBA.

B. Statutory and Regulatory Basis for System of Records

    Authority for maintenance of the system is given under Secs. 226, 
226A, 1811, 1818, 1818A, 1831, 1833(a)(1)(A), 1836, 1837, 1838, 1843, 
1866, 1876, 1881, and 1902(a)(6) of the Social Security Act and Title 
42 United States Code (U.S.C.) 426, 1395(a)(1)(A), 1395c, 1395cc, 
1395i-2, 1395i-2a, 1395j, 1395l, 1395mm, 1395o, 1395p, 1395q, 1395rr, 
1395v, and 1396(a).

II. Collection and Maintenance of Data in the System

A. Scope of the Data Collected

    Individuals age 65 or over who have been, or currently are, 
entitled to health insurance (Medicare) benefits under Title XVIII of 
the Social Security Act or under provisions of the Railroad Retirement 
Act; individuals under age 65 who have been, or currently are, entitled 
to such benefits on the basis of having been entitled for not less than 
24 months to disability benefits under title II of the Act or under the 
Railroad Retirement Act; individuals who have been, or currently are, 
entitled to such benefits because they have end-stage renal disease; 
individuals age 64 and 8 months or over who are likely to become 
entitled to health insurance (Medicare) benefits upon attaining age 65, 
individuals under age 65 who have at least 21 months of disability 
benefits who are likely to become entitled to Medicare upon the 25th 
month of entitlement to such benefits, and the populations dually 
eligible for both Medicare and Medicaid (Title XIX of the Social 
Security Act).
    The data elements include, but are not limited to, standard data 
for identification such as HICN, SSN, sex, race/ethnicity, date of 
birth, geographic location, Medicare enrollment and entitlement 
information, Medicare Secondary Payer (MSP) data containing insurance 
information on payers primary to Medicare necessary for appropriate 
Medicare claim payment, hospice election, plan elections and 
enrollment, End Stage Renal Disease (ESRD) entitlement, historic and 
current listing of residences, and Medicaid eligibility and 
institutional status.

B. Agency Policies, Procedures, and Restrictions on the Routine Use

    The Privacy Act permits us to disclose information without an 
individual's consent if the information is to be used for a purpose 
that is compatible with the purpose(s) for which the information was 
collected. Any such disclosure of data is known as a ``routine use.'' 
The government will only release MBD information that can be associated 
with an individual as provided for under ``Section III. Proposed 
Routine Use Disclosures of Data in the System.'' Both identifiable and 
non-identifiable data may be disclosed under a routine use. We will 
only disclose the minimum personal data necessary to achieve the 
purpose of the MBD. CMS has the following policies and procedures 
concerning disclosures of information that will be maintained in the 
system. Disclosure of information from the system of records will be 
approved only to the extent necessary to accomplish the purpose of the 
disclosure and only after CMS:
    1. Determines that the use or disclosure is consistent with the 
reason that the data is being collected, e.g., ensuring proper 
enrollment, establishing the validity of individual's entitlement to 
benefits, verifying the accuracy of information presented by the 
individual, insuring proper reimbursement for services provided, and 
claims payment.
    2. Determines that:
    a. The purpose for which the disclosure is to be made can only be

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accomplished if the record is provided in individually identifiable 
form;
    b. The purpose for which the disclosure is to be made is of 
sufficient importance to warrant the effect and/or risk on the privacy 
of the individual that additional exposure of the record might bring; 
and
    c. There is a strong probability that the proposed use of the data 
would in fact accomplish the stated purpose(s).
    3. Requires the information recipient to:
    a. Establish administrative, technical, and physical safeguards to 
prevent unauthorized use of disclosure of the record;
    b. Remove or destroy at the earliest time all patient-identifiable 
information; and
    c. Agree to not use or disclose the information for any purpose 
other than the stated purpose under which the information was 
disclosed.
    4. Determines that the data are valid and reliable.

III. Proposed Routine Use Disclosure of Data in the System

A. Entities Who May Receive Disclosures Under Routine Use

    These routine uses specify circumstances, in addition to those 
provided by statute in the Privacy Act of 1974, under which CMS may 
release information from the MBD without the consent of the individual 
to whom such information pertains. Each proposed disclosure of 
information under these routine uses will be evaluated to ensure that 
the disclosure is legally permissible, including but not limited to 
ensuring that the purpose of the disclosure is compatible with the 
purpose for which the information was collected. In addition, our 
policy will be to prohibit release even of non-identifiable data, 
except pursuant to one of the routine uses, if there is a possibility 
that an individual can be identified through implicit deduction based 
on small cell sizes (instances where the patient population is so small 
that individuals who are familiar with the enrollees could, because of 
the small size, use this information to deduce the identity of the 
beneficiary). We are proposing to establish the following routine use 
disclosures of information maintained in the system:
    1. To agency contractors, or consultants who have been engaged by 
the agency to assist in accomplishment of a CMS function relating to 
the purposes for this system of records and who need to have access to 
the records in order to assist CMS.
    We contemplate disclosing information under this routine use only 
in situations in which CMS may enter into a contractual or similar 
agreement with a third party to assist in accomplishing a CMS function 
relating to purposes for this system of records.
    CMS occasionally contracts out certain of its functions when doing 
so would contribute to effective and efficient operations. CMS must be 
able to give a contractor or consultant whatever information is 
necessary for the contractor or consultant to fulfill its duties. In 
these situations, safeguards are provided in the contract prohibiting 
the contractor or consultant from using or disclosing the information 
for any purpose other than that described in the contract and requires 
the contractor or consultant to return or destroy all information at 
the completion of the contract.
    2. To another federal or state agency, agency of a state 
government, an agency established by state law, or its fiscal agent to:
    a. Contribute to the accuracy of CMS's proper payment of Medicare 
benefits,
    b. Enable such agency to administer a federal health benefits 
program, or as necessary to enable such agency to fulfill a requirement 
of a federal statute or regulation that implements a health benefits 
program funded in whole or in part with federal funds, and/or
    c. Assist federal/state Medicaid programs within the state.
    Other federal or state agencies in their administration of a 
federal health program may require MBD information in order to support 
evaluations and monitoring of Medicare claims information of 
beneficiaries, including proper reimbursement for services provided;
    The Internal Revenue Service may require MBD data for the 
application of tax penalties against employers and employee 
organizations that contribute to Employer Group Health Plan or Large 
Group Health Plans that are not in compliance with 42 U.S.C. 1395y(b);
    In addition, other state agencies in their administration of a 
federal health program may require MBD information for the purposes of 
determining, evaluating and/or assessing cost, effectiveness, and/or 
the quality of health care services provided in the state;
    The Railroad Retirement Board requires MBD information to 
administer provisions of the Railroad Retirement and Social Security 
Acts relating to railroad employment and/or the administration of the 
Medicare program;
    The Social Security Administration requires MBD data to enable them 
to assist in the implementation and maintenance of the Medicare 
program;
    Disclosure under this routine use shall be used by state Medicaid 
agencies pursuant to agreements with the Department of Health and Human 
Services for determining Medicaid and Medicare eligibility, for quality 
control studies, for determining eligibility of recipients of 
assistance under Titles IV, XVIII, and XIX of the Social Security Act, 
and for the administration of the Medicaid program. Data will be 
released to the state only on those individuals who are patients under 
the services of a Medicaid program within the state or who are 
residents of that state;
    3. To providers and suppliers of services directly or through 
fiscal intermediaries or carriers for the administration of Title XVIII 
of the Social Security Act.
    Providers and suppliers of services require MBD information in 
order to establish the validity of evidence or to verify the accuracy 
of information presented by the individual, as it concerns the 
individual's entitlement to benefits under the Medicare program, 
including proper reimbursement for services provided.
    4. To third party contacts in situations where the party to be 
contacted has, or is expected to have information relating to the 
individual's capacity to manage his or her affairs or to his or her 
eligibility for, or an entitlement to, benefits under the Medicare 
program and,
    a. The individual is unable to provide the information being sought 
(an individual is considered to be unable to provide certain types of 
information when any of the following conditions exists: the individual 
is confined to a mental institution, a court of competent jurisdiction 
has appointed a guardian to manage the affairs of that individual, a 
court of competent jurisdiction has declared the individual to be 
mentally incompetent, or the individual's attending physician has 
certified that the individual is not sufficiently mentally competent to 
manage his or her own affairs or to provide the information being 
sought, the individual cannot read or write, cannot afford the cost of 
obtaining the information, a language barrier exists, or the custodian 
of the information will not, as a matter of policy, provide it to the 
individual), or
    b. The data are needed to establish the validity of evidence or to 
verify the accuracy of information presented by the individual, and it 
concerns one or more of the following: the individual's entitlement to 
benefits under the Medicare program, the amount of reimbursement, and 
in cases in which the evidence is being reviewed as a

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result of suspected fraud and abuse, program integrity, quality 
appraisal, or evaluation and measurement of activities.
    Third parties contacts require MBD information in order to provide 
support for the individual's entitlement to benefits under the Medicare 
program; to establish the validity of evidence or to verify the 
accuracy of information presented by the individual, and assist in the 
monitoring of Medicare claims information of beneficiaries, including 
proper reimbursement of services provided.
    5. To Peer Review Organizations (PRO) in connection with review of 
claims, or in connection with studies or other review activities, 
conducted pursuant to Part B of Title XI of the Social Security Act and 
in performing affirmative outreach activities to individuals for the 
purpose of establishing and maintaining their entitlement to Medicare 
benefits or health insurance plans.
    The PRO will work to implement quality improvement programs, 
provide consultation to CMS, its contractors, and to state agencies. 
The PRO will assist state agencies in related monitoring and 
enforcement efforts, assist CMS and intermediaries in program integrity 
assessment, and prepare summary information for release to CMS.
    6. To insurance companies, third party administrators (TPA), 
employers, self-insurers, managed care organizations, other 
supplemental insurers, non-coordinating insurers, multiple employer 
trusts, group health plans (i.e., health maintenance organizations 
(HMO) or a Medicare-approved health care prepayment plan (HCPP), 
directly or through a contractor. Information to be disclosed shall be 
limited to Medicare enrollment data. In order to receive the 
information, they must agree to:
    a. Certify that the individual about whom the information is being 
provided is one of its insured or employees;
    b. Utilize the information solely for the purpose of processing the 
individual's insurance claims; and
    c. Safeguard the confidentiality of the data and prevent 
unauthorized access.
    Other insurers, HMO, and HCPP may require MBD information in order 
to support evaluations and monitoring of Medicare claims information of 
beneficiaries, including proper reimbursement for services provided.
    7. To an individual or organization for a research project or in 
support of an evaluation project related to the prevention of disease 
or disability, the restoration or maintenance of health, or payment 
related projects.
    The MBD data will provide for research or in support of evaluation 
projects, a broader, longitudinal, national perspective of the status 
of Medicare beneficiaries. CMS anticipates that many researchers will 
have legitimate requests to use these data in projects that could 
ultimately improve the care provided to Medicare beneficiaries and the 
policy that governs the care.
    8. To a Member of Congress or to a congressional staff member in 
response to an inquiry of the congressional office made at the written 
request of the constituent about whom the record is maintained.
    Beneficiaries sometimes request the help of a Member of Congress in 
resolving an issue relating to a matter before CMS. The Member of 
Congress then writes CMS, and CMS must be able to give sufficient 
information to be responsive to the inquiry.
    9. To the Department of Justice (DOJ), court or adjudicatory body 
when:
    a. The agency or any component thereof, or
    b. Any employee of the agency in his or her official capacity, or
    c. Any employee of the agency in his or her individual capacity 
where the DOJ has agreed to represent the employee, or
    d. The United States Government,

is a party to litigation or has an interest in such litigation, and by 
careful review, CMS determines that the records are both relevant and 
necessary to the litigation.
    Whenever CMS is involved in litigation, or occasionally when 
another party is involved in litigation and CMS's policies or 
operations could be affected by the outcome of the litigation, CMS 
would be able to disclose information to the DOJ, court or adjudicatory 
body involved.
    10. To a CMS contractor (including, but not limited to fiscal 
intermediaries and carriers) that assists in the administration of a 
CMS-administered health benefits program, or to a grantee of a CMS-
administered grant program, when disclosure is deemed reasonably 
necessary by CMS to prevent, deter, discover, detect, investigate, 
examine, prosecute, sue with respect to, defend against, correct, 
remedy, or otherwise combat fraud or abuse in such programs.
    We contemplate disclosing information under this routine use only 
in situations in which CMS may enter into a contract or grant with a 
third party to assist in accomplishing CMS functions relating to the 
purpose of combating fraud and abuse;
    CMS occasionally contracts out certain of its functions when doing 
so would contribute to effective and efficient operations. CMS must be 
able to give a contractor or grantee whatever information is necessary 
for the contractor or grantee to fulfill its duties. In these 
situations, safeguards are provided in the contract prohibiting the 
contractor or grantee from using or disclosing the information for any 
purpose other than that described in the contract and requiring the 
contractor or grantee to return or destroy all information.
    11. To another federal agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States (including any state or local governmental agency), that 
administers, or that has the authority to investigate potential fraud 
or abuse in, a health benefits program funded in whole or in part by 
federal funds, when disclosure is deemed reasonably necessary by CMS to 
prevent, deter, discover, detect, investigate, examine, prosecute, sue 
with respect to, defend against, correct, remedy, or otherwise combat 
fraud or abuse in such programs.
    Other agencies may require MBD information for the purpose of 
combating fraud and abuse in such federally funded programs.

B. Additional Provisions Affecting Routine Use Disclosures

    In addition, our policy will be to prohibit release even of non-
identifiable data, except pursuant to one of the routine uses, if there 
is a possibility that an individual can be identified through implicit 
deduction based on small cell sizes (instances where the patient 
population is so small that individuals who are familiar with the 
enrollees could, because of the small size, use this information to 
deduce the identity of the beneficiary).
    This System of Records contains Protected Health Information as 
defined by the Department of Health and Human Services' regulation 
``Standards for Privacy of Individually Identifiable Health 
Information'' (45 CFR parts 160 and 164, 65 FR 82462 as amended by 66 
FR 12434). Disclosures of Protected Health Information authorized by 
these routine uses may only be made if, and as, permitted or required 
by the ``Standards for Privacy of Individually Identifiable Health 
Information.''

IV. Safeguards

    The MBD system will conform to applicable law and policy governing 
the privacy and security of federal automated information systems. 
These include but are not limited to: the

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Privacy Act of 1974, Computer Security Act of 1987, the Paperwork 
Reduction Act (PRA) of 1995, the Clinger-Cohen Act of 1996, and OMB 
Circular A-130, Appendix III, ``Security of Federal Automated 
Information Resources.'' CMS has prepared a comprehensive system 
security plan as required by the Office and Management and Budget (OMB) 
Circular A-130, Appendix III. This plan conforms fully to guidance 
issued by the National Institute for Standards and Technology (NIST) in 
NIST Special Publication 800-18, ``Guide for Developing Security Plans 
for Information Technology Systems.'' Paragraphs A-C of this section 
highlight some of the specific methods that CMS is using to ensure the 
security of this system and the information within it.

A. Authorized Users

    Personnel having access to the system have been trained in Privacy 
Act and systems security requirements. Employees and contractors who 
maintain records in the system are instructed not to release any data 
until the intended recipient agrees to implement appropriate 
administrative, technical, procedural, and physical safeguards 
sufficient to protect the confidentiality of the data and to prevent 
unauthorized access to the data. In addition, CMS is monitoring the 
authorized users to ensure against excessive or unauthorized use. 
Records are used in a designated work area or workstation and the 
system location is attended at all times during working hours.
    To assure security of the data, the proper level of class user is 
assigned for each individual user as determined at the agency level. 
This prevents unauthorized users from accessing and modifying critical 
data. The system database configuration includes five classes of 
database users:
    b Database Administrator class owns the database objects; e.g., 
tables, triggers, indexes, stored procedures, packages, and has 
database administration privileges to these objects;
    b Quality Control Administrator class has read and write access to 
key fields in the database;
    b Quality Indicator (QI) Report Generator class has read-only 
access to all fields and tables;
    b Policy Research class has query access to tables, but are not 
allowed to access confidential patient identification information; and
    b Submitter class has read and write access to database objects, 
but no database administration privileges.

B. Physical Safeguards

    All server sites have implemented the following minimum 
requirements to assist in reducing the exposure of computer equipment 
and thus achieve an optimum level of protection and security for the 
MBD system: Access to all servers is controlled, with access limited to 
only those support personnel with a demonstrated need for access. 
Servers are to be kept in a locked room accessible only by specified 
management and system support personnel. Each server requires a 
specific log-on process. All entrance doors are identified and marked. 
A log is kept of all personnel who were issued a security card, key 
and/or combination, which grants access to the room housing the server, 
and all visitors are escorted while in this room. All servers are 
housed in an area where appropriate environmental security controls are 
implemented, which include measures implemented to mitigate damage to 
Automated Information System (AIS) resources caused by fire, 
electricity, water and inadequate climate controls.
    Protection applied to the workstations, servers and databases 
include:
    b User Log-ons--Authentication is performed by the Primary Domain 
Controller/Backup Domain Controller of the log-on domain.
    b Workstation Names--Workstation naming conventions may be defined 
and implemented at the agency level.
    b Hours of Operation--May be restricted by Windows NT. When 
activated all applicable processes will automatically shut down at a 
specific time and not be permitted to resume until the predetermined 
time. The appropriate hours of operation are determined and implemented 
at the agency level.
    b Inactivity Log-out--Access to the NT workstation is automatically 
logged out after a specified period of inactivity.
    b Warnings--Legal notices and security warnings display on all 
servers and workstations.
    b Remote Access Services (RAS)--Windows NT RAS security handles 
resource access control. Access to NT resources is controlled for 
remote users in the same manner as local users, by utilizing Windows NT 
file and sharing permissions. Dial-in access can be granted or 
restricted on a user-by-user basis through the Windows NT RAS 
administration tool.

C. Procedural Safeguards

    All automated systems must comply with federal laws, guidance, and 
policies for information systems security as stated previously in this 
section. Each automated information system should ensure a level of 
security commensurate with the level of sensitivity of the data, risk, 
and magnitude of the harm that may result from the loss, misuse, 
disclosure, or modification of the information contained in the system.

V. Effect of the New System of Records on Individual Rights

    CMS proposes to establish this system in accordance with the 
principles and requirements of the Privacy Act and will collect, use, 
and disseminate information only as prescribed therein. We will only 
disclose the minimum personal data necessary to achieve the purpose of 
MBD. Disclosure of information from the system of records will be 
approved only to the extent necessary to accomplish the purpose of the 
disclosure. CMS has assigned a higher level of security clearance for 
the information maintained in this system in an effort to provide added 
security and protection of data in this system.
    CMS will take precautionary measures to minimize the risks of 
unauthorized access to the records and the potential harm to individual 
privacy or other personal or property rights. CMS will collect only 
that information necessary to perform the system's functions. In 
addition, CMS will make disclosure from the proposed system only with 
consent of the subject individual, or his/her legal representative, or 
in accordance with an applicable exception provision of the Privacy 
Act.
    CMS, therefore, does not anticipate an unfavorable effect on 
individual privacy as a result of the disclosure of information 
relating to individuals.

    Dated: November 28, 2001.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
09-70-0536

System Name:
    Medicare Beneficiary Database, HHS/CMS/CBS.

Security Classification:
    Level Three Privacy Act Sensitive Data.

System Location:
    CMS Data Center, 7500 Security Boulevard, North Building, First 
Floor, Baltimore, Maryland 21244-1850, and at various other remote 
locations (See Appendix A).

[[Page 63398]]

Categories of Individuals Covered by the System:
    Individuals age 65 or over who have been, or currently are, 
entitled to health insurance (Medicare) benefits under Title XVIII of 
the Social Security Act or under provisions of the Railroad Retirement 
Act; individuals under age 65 who have been, or currently are, entitled 
to such benefits on the basis of having been entitled for not less than 
24 months to disability benefits under title II of the Act or under the 
Railroad Retirement Act; individuals who have been, or currently are, 
entitled to such benefits because they have end-stage renal disease; 
individuals age 64 and 8 months or over who are likely to become 
entitled to health insurance (Medicare) benefits upon attaining age 65, 
and individuals under age 65 who have at least 21 months of disability 
benefits who are likely to become entitled to Medicare upon the 25th 
month of entitlement to such benefits and those populations that are 
dually eligible for both Medicare and Medicaid (Title XIX of the Social 
Security Act).

Categories of Records in the System:
    The data elements include, but are not limited to, standard data 
for identification such as health insurance claim number (HICN), social 
security number (SSN), sex, race/ethnicity, date of birth, geographic 
location, Medicare enrollment and entitlement information, Medicare 
Secondary Payer data necessary for appropriate Medicare claim payment, 
hospice election, plan elections and enrollment, End Stage Renal 
Disease (ESRD) entitlement, historic and current listing of residences, 
and Medicaid eligibility and Managed Care institutional status.

Authority for Maintenance of the System:
    Authority for maintenance of the system is given under sections 
226, 226A, 1811, 1818, 1818A, 1831, 1833(a)(1)(A), 1836, 1837, 1838, 
1843, 1866, 1876, 1881, and 1902(a)(6) of the Social Security Act and 
Title 42 United States Code (U.S.C.) 426, 1395(a)(1)(A), 1395c, 1395cc, 
1395i-2, 1395i-2a, 1395j, 1395l, 1395mm, 1395o, 1395p, 1395q, 1395rr, 
1395v, and 1396(a).

Purpose(s):
    The primary purpose of this system of records is to provide the 
Centers for Medicare & Medicaid Services (CMS) with a singular, 
authoritative, database of comprehensive data on people with Medicare. 
The development and operation of the MBD would establish within CMS, a 
singular, national source of comprehensive beneficiary information. 
This information would be consistent throughout the Medicare Program, 
providing key benefits to CMS's operation, administrative and customer 
service goals. The MBD will combine and house beneficiary centric data 
that resides currently within CMS databases such as the EDB, MSIS and 
GHP. It becomes the authoritative database for approved agency 
contractors who need specific types of data to support and implement 
business processes, based upon a beneficiary's health insurance needs. 
Although the MBD does not replace any of these systems at this time, 
the MBD does provide the most current and reliable information for 
contractors to make timely decisions about payment and service delivery 
elections. Information retrieved from this system of records will also 
be disclosed to: (1) Support regulatory, reimbursement, and policy 
functions performed within the agency or by a contractor or consultant, 
(2) another federal or state agency, agency of a state government, an 
agency established by state law, or its fiscal agent, (3) providers and 
suppliers of services for administration of Title XVIII, (4) third 
parties where the contact is expected to have information relating to 
the individual's capacity to manage his or her own affairs, (5) Peer 
Review Organizations, (6) other insurers for processing individual 
insurance claims, (7) facilitate research on the quality and 
effectiveness of care provided, as well as payment related projects, 
(8) support constituent requests made to a congressional 
representative, (9) support litigation involving the agency, and (10) 
combat fraud and abuse in certain health benefits programs.

Routine Uses of Records Maintained in the System, Including Categories 
or Users and the Purposes of Such Uses:
    These routine uses specify circumstances, in addition to those 
provided by statute in the Privacy Act of 1974, under which CMS may 
release information from the MBD without the consent of the individual 
to whom such information pertains. Each proposed disclosure of 
information under these routine uses will be evaluated to ensure that 
the disclosure is legally permissible, including but not limited to 
ensuring that the purpose of the disclosure is compatible with the 
purpose for which the information was collected. In addition, our 
policy will be to prohibit release even of non-identifiable data, 
except pursuant to one of the routine uses, if there is a possibility 
that an individual can be identified through implicit deduction based 
on small cell sizes (instances where the patient population is so small 
that individuals who are familiar with the enrollees could, because of 
the small size, use this information to deduce the identity of the 
beneficiary). We are proposing to establish the following routine use 
disclosures of information maintained in the system:
    1. To agency contractors, or consultants who have been engaged by 
the agency to assist in accomplishment of a CMS function relating to 
the purposes for this system of records and who need to have access to 
the records in order to assist CMS.
    2. To another federal or state agency, agency of a state 
government, an agency established by state law, or its fiscal agent to:
    a. Contribute to the accuracy of CMS's proper payment of Medicare 
benefits,
    b. Enable such agency to administer a federal health benefits 
program, or as necessary to enable such agency to fulfill a requirement 
of a federal statute or regulation that implements a health benefits 
program funded in whole or in part with federal funds, and/or
    c. To assist federal/state Medicaid programs within the state.
    3. To providers and suppliers of services directly or through 
fiscal intermediaries or carriers for the administration of Title XVIII 
of the Social Security Act.
    4. To third party contacts in situations where the party to be 
contacted has, or is expected to have information relating to the 
individual's capacity to manage his or her affairs or to his or her 
eligibility for, or an entitlement to, benefits under the Medicare 
program and,
    a. The individual is unable to provide the information being sought 
(an individual is considered to be unable to provide certain types of 
information when any of the following conditions exists: the individual 
is confined to a mental institution, a court of competent jurisdiction 
has appointed a guardian to manage the affairs of that individual, a 
court of competent jurisdiction has declared the individual to be 
mentally incompetent, or the individual's attending physician has 
certified that the individual is not sufficiently mentally competent to 
manage his or her own affairs or to provide the information being 
sought, the individual cannot read or write, cannot afford the cost of 
obtaining the information, a language barrier exist, or the custodian 
of the information will not, as a matter of policy, provide it to the 
individual), or
    b. The data are needed to establish the validity of evidence or to 
verify the accuracy of information presented by the individual, and it 
concerns one or

[[Page 63399]]

more of the following: the individual's entitlement to benefits under 
the Medicare program, the amount of reimbursement, and in cases in 
which the evidence is being reviewed as a result of suspected fraud and 
abuse, program integrity, quality appraisal, or evaluation and 
measurement of activities.
    5. To Peer Review Organizations (PRO) in connection with review of 
claims, or in connection with studies or other review activities, 
conducted pursuant to Part B of Title XI of the Social Security Act and 
in performing affirmative outreach activities to individuals for the 
purpose of establishing and maintaining their entitlement to Medicare 
benefits or health insurance plans.
    6. To insurance companies, third party administrators (TPA), 
employers, self-insurers, managed care organizations, other 
supplemental insurers, non-coordinating insurers, multiple employer 
trusts, group health plans (i.e., health maintenance organizations 
(HMO), Cost Plans, or a Medicare-approved health care prepayment plan 
(HCPP), Programs for All Inclusive Care for the Elderly, Medicare + 
Choice Organizations (i.e. Coordinated Care Plans (CCPs), Religious 
Based Fraternal Plans Private Fee For Service (PFFS), Medical Savings 
Accounts (MSAs), Demonstrations) directly or through a contractor. 
Information to be disclosed shall be limited to Medicare enrollment 
data. In order to receive the information, they must agree to:
    a. Certify that the individual about whom the information is being 
provided is one of its insured or employees;
    b. Utilize the information solely for the purpose of processing the 
individual's insurance claims; and
    c. Safeguard the confidentiality of the data and prevent 
unauthorized access.
    7. To an individual or organization for a research project or to 
support an evaluation project related to the prevention of disease or 
disability, the restoration or maintenance of health, or payment 
related projects.
    8. To a Member of Congress or to a congressional staff member in 
response to an inquiry of the congressional office made at the written 
request of the constituent about whom the record is maintained.
    9. To the Department of Justice (DOJ), court or adjudicatory body 
when:
    a. The agency or any component thereof, or
    b. Any employee of the agency in his or her official capacity, or
    c. Any employee of the agency in his or her individual capacity 
where the DOJ has agreed to represent the employee, or
    d. The United States Government, is a party to litigation or has an 
interest in such litigation, and by careful review, CMS determines that 
the records are both relevant and necessary to the litigation.
    10. To a CMS contractor (including, but not limited to fiscal 
intermediaries and carriers) that assists in the administration of a 
CMS-administered health benefits program, or to a grantee of a CMS-
administered grant program, when disclosure is deemed reasonably 
necessary by CMS to prevent, deter, discover, detect, investigate, 
examine, prosecute, sue with respect to, defend against, correct, 
remedy, or otherwise combat fraud or abuse in such programs.
    11. To another federal agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States (including any state or local governmental agency), that 
administers, or that has the authority to investigate potential fraud 
or abuse in, a health benefits program funded in whole or in part by 
federal funds, when disclosure is deemed reasonably necessary by CMS to 
prevent, deter, discover, detect, investigate, examine, prosecute, sue 
with respect to, defend against, correct, remedy, or otherwise combat 
fraud or abuse in such programs.

Policies and Practices for Storing, Retrieving, Accessing, Retaining, 
and Disposing of Records in the System:
Storage:
    All records are stored on magnetic media.

Retrievability:
    All Medicare records are accessible by Health Insurance Claim 
Number, and SSN search. This system supports both on-line and batch 
access.

Safeguards:
    CMS has safeguards for authorized users and monitors such users to 
ensure against excessive or unauthorized use. Personnel having access 
to the system have been trained in the Privacy Act and systems security 
requirements. Employees who maintain records in the system are 
instructed not to release any data until the intended recipient agrees 
to implement appropriate administrative, technical, procedural, and 
physical safeguards sufficient to protect the confidentiality of the 
data and to prevent unauthorized access to the data.
    In addition, CMS has physical safeguards in place to reduce the 
exposure of computer equipment and thus achieve an optimum level of 
protection and security for the MBD system. For computerized records, 
safeguards have been established in accordance with the Department of 
Health and Human Services (HHS) standards and National Institute of 
Standards and Technology guidelines, e.g., security codes will be used, 
limiting access to authorized personnel. System securities are 
established in accordance with HHS, Information Resource Management 
(IRM) Circular No. 10, ``Automated Information Systems Security 
Program;'' CMS's ``IT Systems Securities Policies, Standards, and 
Guidelines Handbook;'' OMB Circular No. A-130 (revised), Appendix III.

Retention and Disposal:
    Records are maintained in the active files for a period of 15 
years. The records are then retired to archival files maintained at the 
Health Care Data Center.

System Manager(s) and Address:
    Acting Director, Center for Medicare Choices & Deputy Director for 
Beneficiary Education in the Center for Beneficiary Choices, CMS, 7500 
Security Boulevard, C5-18-27, Baltimore, Maryland 21244-1850.

Notification Procedure:
    For purpose of access, the subject individual should write to the 
system manager who will require the system name, health insurance claim 
number, address, date of birth, and sex, and for verification purposes, 
the subject individual's name (woman's maiden name, if applicable), and 
social security number (SSN). Furnishing the SSN is voluntary, but it 
may make searching for a record easier and prevent delay.

Record Access Procedure:
    For purpose of access, use the same procedures outlined in 
Notification Procedures above. Requestors should also reasonably 
specify the record contents being sought. (These procedures are in 
accordance with department regulation 45 CFR 5b.5(a)(2)).

Contesting Record Procedures:
    The subject individual should contact the system manager named 
above, and reasonably identify the record and specify the information 
to be contested. State the corrective action sought and the reasons for 
the correction with supporting justification. (These procedures are in 
accordance with department regulation 45 CFR 5b.7).

[[Page 63400]]

Record Source Categories:
    The data contained in this system of records are extracted from 
other CMS systems of records: Enrollment Database, Group Health Plan, 
and the Medicaid Statistical Information System.

Systems Exempted from Certain Provisions of the Act:
    None.
    Appendix A. Health Insurance Records
    Medicare records are maintained at the CMS Central Office (see 
section 1 below for the address). Health Insurance Records of the 
Medicare program can also be accessed through a representative of the 
CMS Regional Office (see section 2 below for addresses). Medicare 
records are also maintained by private insurance organizations that 
share in administering provisions of the health insurance programs. 
These private insurance organizations, referred to as Managed Care 
Organizations, are under contract to the Centers for Medicare & 
Medicaid Services and the Social Security Administration to perform 
specific task in the Medicare program (see section three below for 
information on MCOs).
    1. Central Office Address: CMS Data Center, 7500 Security 
Boulevard, North Building, First Floor, Baltimore, Maryland 21244-1850.
    2. CMS Regional Offices: BOSTON REGION--Connecticut, Maine, 
Massachusetts, New Hampshire, Rhode Island, Vermont. John F. Kennedy 
Federal Building, Room 1211, Boston, Massachusetts 02203. Office Hours: 
8:30 a.m.-5 p.m.
    NEW YORK REGION--New Jersey, New York, Puerto Rico, Virgin Islands. 
26 Federal Plaza, Room 715, New York, New York 10007, Office Hours: 
8:30 a.m.-5 p.m.
    PHILADELPHIA REGION--Delaware, District of Columbia, Maryland, 
Pennsylvania, Virginia, West Virginia. Post Office Box 8460, 
Philadelphia, Pennsylvania 19101. Office Hours: 8:30 a.m.-5 p.m.
    ATLANTA REGION--Alabama, North Carolina, South Carolina, Florida, 
Georgia, Kentucky, Mississippi, Tennessee. 101 Marietta Street, Suite 
702, Atlanta, Georgia 30223, Office Hours: 8:30 a.m.-4:30 p.m.
    CHICAGO REGION--Illinois, Indiana, Michigan, Minnesota, Ohio, 
Wisconsin. Suite A--824, Chicago, Illinois 60604. Office Hours: 8 a.m.-
4:45 p.m.
    DALLAS REGION--Arkansas, Louisiana, New Mexico, Oklahoma, Texas, 
1200 Main Tower Building, Dallas, Texas. Office Hours: 8 a.m.-4:30 p.m.
    KANSAS CITY REGION--Iowa, Kansas, Missouri, Nebraska. New Federal 
Office Building, 601 East 12th Street, Room 436, Kansas City, Missouri 
64106. Office Hours: 8 a.m.-4:45 p.m.
    DENVER REGION--Colorado, Montana, North Dakota, South Dakota, Utah, 
Wyoming. Federal Office Building, 1961 Stout Street, Room 1185, Denver, 
Colorado 80294. Office Hours: 8 a.m.-4:30 p.m.
    SAN FRANCISCO REGION--American Samoa, Arizona, California, Guam, 
Hawaii, Nevada. Federal Office Building, 10 Van Ness Avenue, 20th 
Floor, San Francisco, California 94102. Office Hours: 8 a.m.-4:30 p.m.
    SEATTLE REGION--Alaska, Idaho, Oregon, Washington. 1321 Second 
Avenue, Room 615, Mail Stop 211, Seattle, Washington 98101. Office 
Hours 8 a.m.-4:30 p.m.
    3. Managed Care Organizations: Monthly report of Managed Care 
Organizations is available at www.cms.gov.

[FR Doc. 01-30005 Filed 12-5-01; 8:45 am]
BILLING CODE 4120-03-P