[Federal Register Volume 67, Number 115 (Friday, June 14, 2002)]
[Rules and Regulations]
[Pages 40988-40989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-14748]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 400 et al.



Medicaid Program; Medicaid Managed Care; Final Rules

  Federal Register / Vol. 67, No. 115 / Friday, June 14, 2002 / Rules 
and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 400, 430, 431, 434, 435, 438, 440, and 447

[CMS-2001-F4]
RIN 0938-AL83


Medicaid Program; Medicaid Managed Care

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

ACTION: Withdrawal of final rule with comment period.

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SUMMARY: This document withdraws all provisions of the final rule with 
comment period on Medicaid managed care that we published in the 
Federal Register on January 19, 2001 (66 FR 6228) with an initial 
effective date of April 19, 2001. This January 19, 2001 final rule, 
which has never taken effect, would have combined Medicaid managed care 
regulations in a new part 438, implemented Medicaid managed care 
requirements of the Balanced Budget Act of 1997 (Pub. L. 105-33), and 
imposed new requirements on entities currently regulated as ``prepaid 
health plans'' (PHPs). The regulations set forth in the final rule 
being withdrawn have been superseded by regulations promulgated in a 
subsequent rulemaking initiated on August 20, 2001 (66 FR 43613). In 
addition, this document addresses comments received in response to an 
interim final rule with comment period that we published on August 17, 
2001 in the Federal Register (66 FR 43090) that further delayed, until 
August 16, 2002, the effective date of the January 19, 2001 final rule 
with comment period.

DATES: The final rule with comment period amending 42 CFR parts 400, 
430, 431, 434, 435, 438, 440, and 447 that was published in the January 
19, 2001 Federal Register (66 FR 6228), delayed in the February 26, 
2001 Federal Register (66 FR 11546) until June 18, 2001, delayed 
further in the June 18, 2001 Federal Register (66 FR 32776) until 
August 17, 2001, and further delayed in the August 17, 2001 Federal 
Register (66 FR 43090) until August 16, 2002 is withdrawn effective 
June 14, 2002.

FOR FURTHER INFORMATION CONTACT: Bruce Johnson, (410) 786-0615.

SUPPLEMENTARY INFORMATION:

I. Background

    In a final rule published in the Federal Register (66 FR 11546) on 
February 26, 2001, we announced a 60-day delay in the effective date of 
the January 19, 2001 final rule with comment period implementing 
Medicaid managed care provisions in the Balanced Budget Act of 1997 
(BBA). This 60-day delay postponed the effective date of the final rule 
until June 18, 2001. This delay in effective date was necessary to give 
newly appointed Department officials the opportunity for review and 
consideration of the new regulations. During that review, we heard from 
key stakeholders in the Medicaid managed care program, including 
States, advocates for beneficiaries, and provider organizations. These 
parties expressed strong (sometimes opposing) views about the January 
19, 2001 final rule. In particular, concerns were expressed about 
revisions made in the final rule that were based on public comments we 
received on the proposed rule. Other commenters raised concerns about 
how we chose to implement those provisions in the final rule without 
further opportunity for public comment. As a result of these comments, 
on June 18, 2001, we published another final rule in the Federal 
Register that delayed the effective date of the January 19, 2001 final 
rule an additional 60 days, from June 18, 2001 until August 17, 2001, 
(66 FR 32776) for further review and consideration on the most 
appropriate way to address the concerns expressed by key stakeholders.
    After careful consideration, we decided the best approach was to 
make some modifications to the January 19, 2001 final rule with comment 
period, and republish it as a proposed rule. This would enable the 
public the opportunity to comment on all of the provisions and 
revisions. Therefore, as noted above, on August 20, 2001 we published a 
new proposed rule in the Federal Register (66 FR 43613). In addition, 
in order to give us time to consider the public comments and take 
action on the new proposed rule, we also published an interim final 
rule with comment period on August 17, 2001 in the Federal Register (66 
FR 43090) that further delayed until August 16, 2002, the effective 
date of the January 19, 2001 final rule with comment period.
    In response to those comments submitted on the August 20, 2001 
proposed rule, we have published, elsewhere in this Federal Register 
issue, a final rule amending the Medicaid regulations to implement the 
managed care provisions of the BBA, and to establish new standards for 
prepaid health plans (PHPs), which are, under this new final rule, 
divided into two categories, prepaid inpatient health plans (PIHPs) and 
prepaid ambulatory health plans (PAHPs). In light of the publication of 
the superseding final rule, we are withdrawing the provisions of the 
January 19, 2001 final rule with comment period.

II. Analysis of and Response to Public Comments on the August 17, 2001 
Interim Final Rule With Comment Period

    We received approximately 23 public comments expressing 
dissatisfaction with the delay in the effective date of the January 19, 
2001 final rule with comment period.
    Comment: Numerous commenters contended that ``courts have held that 
the effective date of a regulation is a substantive term of the 
regulation itself, and the Administrative Procedure Act (APA) requires 
that the public be given prior notice and opportunity to comment before 
substantive terms of a regulation may be legally changed.''
    Response: None of these commenters cited the court cases upon which 
they purport to rely for the proposition that withdrawing a regulation 
that has never taken effect constitutes a change in the regulations. We 
are not aware of any case that suggests that an agency must go through 
notice and comment to delay the effective date of a regulation that has 
not taken effect (or to withdraw a regulation, as we are doing here). 
Under the APA, notice and comment generally is required to promulgate 
new rules or to change rules that are already in place. Currently, the 
Medicaid managed care regulations that are in effect are those set 
forth in part 434, because the regulations published on January 19, 
2001 have not become effective. We would agree that notice and comment 
is required to change the Medicaid managed care regulations in part 
434, and we have done so in the final rule responding to comments on 
the August 20, 2001 proposed rule. We do not agree, however, that 
notice and comment is required in order to delay the effective date of 
regulations that have been published in the Federal Register but have 
never taken effect. In that case, there is no ``rule'' in effect, just 
an announcement of a ``future'' rule. We do not believe that notice and 
comment was required to change the effective date of a ``future rule.'' 
Nor do we believe that notice and comment is required in order to 
withdraw a rule before it takes effect. We note that even if notice and 
comment were required, we have engaged in public notice and

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comment on the final rule that supersedes the rule we are withdrawing.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: April 17, 2002.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: May 14, 2002.
Tommy G. Thompson,
Secretary.
[FR Doc. 02-14748 Filed 6-13-02; 8:45 am]
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