[Federal Register Volume 68, Number 204 (Wednesday, October 22, 2003)]
[Notices]
[Pages 60396-60401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26626]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Resources and Services Administration


Children's Hospitals Graduate Medical Education Payment Program: 
Final Policies on Withholding and Reconciliation Process and 
Methodology for Calculating Reconciliation Payments, Use of Wage Index 
in Calculating Indirect Medical Education Payments, Dissemination of 
Program Data, and Audit; Updates on Calculation of National Per 
Resident Amount and Government Performance and Results Act Measures

AGENCY: Health Resources and Services Administration, HHS.

ACTION: Final notice.

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SUMMARY: This notice adopts policies for the Children's Hospitals 
Graduate Medical Education Payment Program (CHGME PP) regarding the 
CHGME PP withholding and reconciliation process and calculation of 
reconciliation payments, use of the wage index to calculate CHGME PP 
indirect medical education (IME) payments, dissemination of CHGME PP 
data, and audits. This notice also provides updates and clarification 
on the CHGME PP calculation of a national per resident amount and CHGME 
PP compliance with Government Perfornance and Results Act (GPRA) 
measures.

DATES: This notice is effective November 21, 2003. See discussion under 
Supplemental Information.

FOR FURTHER INFORMATION CONTACT: Ayah E. Johnson, Ph.D., Chief, 
Graduate Medical Education Branch, Division of Medicine and Dentistry, 
Bureau of Health Professions, Health Resources and Services 
Administration, Room 9A-05, Parklawn Building, 5600 Fishers Lane, 
Rockville, Maryland 20857; telephone (301) 443-1058 or e-mail address 
[email protected].

SUPPLEMENTARY INFORMATION: The CHGME PP, as authorized by section 340E 
of the Public Health Service Act (42 U.S.C. 256e) (the Act), provides 
funds to children's hospitals that operate graduate medical education 
(GME) programs. Pub. L. 106-310 amended the CHGME PP statute to 
continue the program through Federal fiscal year (FFY) 2005.
    On September 25, 2002, the Secretary published a notice in the 
Federal Register (67 FR 60241) clarifying hospital eligibility criteria 
for the CHGME PP. That notice also sought public comments on proposals 
for (1) establishing a methodology to determine direct medical 
education (DME) and IME payments during the withholding and 
reconciliation processes stipulated in the CHGME PP statute; (2) 
updating the wage index used in the calculation of IME payments; (3) 
disseminating CHGME PP data; and (4) auditing.
    During the comment period, the Department received comments from 
six interested parties, including hospitals and professional 
associations. The Secretary thanks the respondents for the quality and 
thoroughness of their comments. As a result of these comments, the 
Department has made revisions and clarifications in this final notice. 
The comments and Department's responses to the comments, as well as the 
final rules are set forth below. Subsequent to the publication of this 
notice, CHGME PP policies will be codified.
    As indicated in the September 25 Federal Register notice, an 
updated listing of children's hospitals potentially eligible to 
participate in the CHGME PP will be posted on the CHGME PP Web site 
(http://bhpr.hrsa.gov/childrenshospitalgme), during the third quarter 
of each year.
    Effective dates. To the extent this notice reiterates or clarifies 
past practices of the CHGME program, those policies continue in effect. 
To the extent

[[Page 60397]]

this notice creates new duties and obligations which cannot be directly 
drawn from the statute, the effective date shall be November 21, 2003.

Final Provisions

    The Department is finalizing the following provisions: (1) 
Methodology for withholding DME and IME payments and determining 
reconciliation payments as stipulated in the CHGME PP statute; (2) 
updating of the wage index used in calculating lIME payments; (3) 
dissemination of CHGME PP data; and (4) audit.
    In its September 25, 2002 Federal Register notice, the Department 
proposed for public comment its methodology for the withholding and 
reconciliation of CHGME PP payments as stipulated by statute. The 
Department proposed to withhold up to 25% of both DME and lIME payments 
to ensure that hospitals did not receive overpayment. It also proposed 
a methodology to determine reconciliation payments using changes in FTE 
resident counts that occur during the Federal fiscal year (FFY) for 
which payments are being made.
    In the same Federal Register notice, the Department also proposed 
that the most recently available wage index (WI) be used in the 
determination of IME payments. To date, the Department had been using 
the FY 1999 WI published by the Centers for Medicare and Medicaid 
Services (CMS) to determine IME since its use is statutorily mandated 
in the determination of DME.
    The Department also proposed that each hospital could request its 
own information (i.e., its application information and information used 
to determine payments) from the CHGME PP but would need to request all 
other information (e.g., information for other hospitals or for all 
hospitals) through the HRSA Freedom of Information Act (FOIA).
    Finally, the Department proposed that the 0MB A-133 review 
requirements originally imposed on hospitals participating in the CHGME 
PP be replaced with an assessment conducted by an outside contractor 
familiar with Medicare policies of the FTE resident counts.
    A description of the Department's final policies on these issues as 
well as the public comments and the Department's response is included 
in the following sections.

I. Withholding and Reconciliation Processes and Methodology for 
Calculating Reconciliation Payments

    The Department is finalizing the methodology for withholding 
children's hospitals DME and IME payments to reduce the likelihood that 
a hospital is overpaid on an interim basis, determining revised full 
time equivalent (FTE) resident counts, and calculating reconciliation 
payments described in the September 25, 2002 Federal Register notice. 
The CHGME PP began implementing this methodology beginning with the 
payments it awarded to children's hospitals issued in Federal Fiscal 
Year (FFY) 2002.

Withholding Process

    The CHGME PP statute, as amended, states that ``the Secretary shall 
withhold up to 25% from each interim (payment) installment for direct 
and indirect graduate medical education * * * as necessary to ensure a 
hospital will not be overpaid on an interim basis.'' The statute also 
indicates that, prior to the end of each FFY, the Secretary must 
determine any changes to the number of FTE residents reported by a 
hospital in its annual initial application for CHGME PP funding. This 
determination by the Secretary will be used to calculate the final 
amount payable to that hospital for the FFY. Funding withheld during 
the interim period will be allocated to children's hospitals following 
the determination by the Secretary of any changes to the number of FTE 
residents reported by participating hospitals. The Secretary has 
statutory authority to reconcile FTE resident counts only. It should be 
noted, however, that the Secretary does have the discretion to audit 
any and all variables used to determine CHGME PP payments to children's 
hospitals.

Reporting Revised Resident Counts

    To assess the impact of payment resulting from the FTE assessment 
process, during the third quarter (March 1-June 30) of each FFY for 
which payments are being made, the CHGME PP will release a 
reconciliation application for use by participating hospitals to report 
changes in the FTE resident counts reported in their initial 
applications. The reconciliation application will include forms HRSA-99 
(Hospital Demographics), HRSA-99-1 (Reconciliation of FTE resident 
counts), HRSA 99-2 (Determination of Indirect Medical Education Data), 
HRSA-99-3 (Certification), and HRSA-99-4 (Required Data Reporting for 
Government Performance and Results Act). This collection of information 
has been approved under 0MB Information Collection No. 09 5-0247. 
Hospitals will have 30 days to complete and return the reconciliation 
application. If a hospital fails to complete and return the 
reconciliation application according to the terms and conditions of the 
CHGME PP, the Department may suspend the award, pending corrective 
action, or may terminate the award for cause.
    Hospitals that were not eligible to participate or did not apply 
for funding during the initial application cycle are not eligible to 
apply for and receive funding during the reconciliation process. These 
hospitals must wait until the next initial application cycle to apply.

Determining Changes in FTE Resident Counts

    Hospitals will report revised FTE resident counts to the CHGME PP 
by submitting a complete reconciliation application. Any changes to 
resident FTE counts reported on the reconciliation application must be 
for the same Medicare cost report (MCR) period(s) identified in the 
hospital's initial application for the FFY. Hospitals whose resident 
counts have not changed are not exempt from completing and submitting a 
CHGME PP reconciliation application. For purposes of clarification, an 
FTE resident is measured in terms of time worked during a residency 
training year. It is not a measure of individual residents who are 
working.
    Prior to FFY 2003, assessment of FTE resident counts was done by 
the Medicare fiscal intermediaries (FIs) for the subset of children's 
hospitals that filed full MCRs. The Secretary has established an 
assessment process that will ensure this determination is made for FTE 
resident counts submitted by all children's hospitals. Beginning in FFY 
2003, the CHGME PP is contracting with FIs to assess the FTE resident 
counts submitted by participating hospitals in their FFY 2003 initial 
CHGME PP application. This assessment of FTE resident counts will be 
performed for all hospitals regardless of the type of MCR they file 
(e.g., full, low or no utilization). This process is designed to assess 
FTE resident counts for all children's hospitals within the CHGME PP 
time constraints in an equitable fashion. The resident FTE counts 
reported by the hospitals in their reconciliation application must be 
consistent with those reported by the hospital's CHGME FI to be 
accepted by the Department. The Department will provide final review 
and determination of the hospitals' FTE counts. The reconciliation 
process requires that participating hospitals comply with requests from 
the CHGME PP FI. The CHGME PP has placed a guidance document providing 
further information about the FTE resident count assessment on the 
program's Web site

[[Page 60398]]

(http://bhpr.hrsa.gov/childrenshospitalgme).
    Comment: One respondent noted that the Department should seek FI 
review of hospitals' resident counts and reporting of those counts 
consistent with the review for a given point in time and that the FIs 
should not be required to attest to hospitals' resident counts. The 
respondent noted that such an attestation suggests that the FI could be 
held legally liable for a hospital's error in resident counts even 
though the FI is not responsible for the maintenance and accuracy of 
the hospital's records. In addition, the review of resident counts 
reflects those counts at a point in time: The counts may be subject to 
change over time due to a variety of factors such as a cost report re-
opening.
    Response: The Department will not require the CHGME FIs to attest 
to a hospital's FTE resident count but instead will require a review of 
the FTE resident counts. This review will be based on the FTE resident 
counts submitted by the hospitals with their initial application for 
funding in a particular FFY. It will reflect the hospitals' FTE 
resident counts at a point in time just prior to the submission of the 
hospitals' reconciliation application. The hospital's reconciliation 
application must be consistent with the results of this CHGME PP FI FTE 
resident count assessment. The Department also recognizes that these 
FTE resident counts may change over time.
    Comment: One respondent commented that although the Department 
should contract with FIs to provide independent review of resident 
counts for the CHGME PP, the hospitals should be able to have the same 
FI providing both the review and processing of their MCR and the 
assessment of resident FTE counts for their CHGME PP application.
    Response: In developing a contract with the FIs to assess the FTE 
resident counts training in children's hospitals, the Department made 
every effort to ensure that the same FI would work with the hospital on 
both their MCR and their CHGME PP application. However, not all FIs 
chose to participate in the CHGME PP FTE resident assessment contract 
and, as a result, some hospitals will have different FIs reviewing 
their MCR and their CHGME PP application. It is important to note that 
the prime contractor for Medicare and the CHGME PP is the same. As a 
result, communications are facilitated between the Medicare and CHGME 
PP FIs in instances where the two are different entities. In those 
instances where a children's hospital has one FI for Medicare and one 
for CHGME PP, information and FTE assessment results will be shared 
between both FIs.

Determining Revised Resident Counts for ``New Children's Teaching 
Hospitals''

    New children's teaching hospitals'', as defined by the CHGME PP in 
its July 20, 2001 Federal Register notice, do not include those 
hospitals with a newly approved residency training program as described 
in 42 CFR 413.86(g)(6)(i). These ``new children's teaching hospitals'' 
will calculate FTE resident counts for the reconciliation application 
process using the methodology proposed in the September 25 Federal 
Register notice. This proposed methodology provides that the hospital 
would calculate its FTE resident counts in one of two ways:
    1. If a hospital has filed a Medicare cost report (MCR) by the 
CHGME PP reconciliation application deadline, the hospital would report 
the actual number of resident FTEs trained during that cost reporting 
period;
    2. If a hospital has not filed an MCR by the CHGME PP 
reconciliation application deadline, the hospital would determine the 
FTE residents training at the hospital from the beginning of the FFY 
for which payments are being made up to the reconciliation application 
deadline. The revised FTE resident count will equal the average number 
of FTE residents trained per day during this period multiplied by the 
total number of days the hospital will be training residents during the 
FFY for which payments are being made. In the event that a ``new 
children's teaching hospital'' counts residents in excess of its FTE 
resident cap as a result of an affiliation agreement with one or more 
other hospitals, it is important to note that the total number of FTE 
residents counted by members of the affiliated group cannot exceed the 
aggregate FTE cap for member hospitals. ``New children's teaching 
hospitals'' will report these updated FTE resident counts on form HRSA 
99-1 of the reconciliation application.

Determining IME Payments for ``New Children's Teaching Hospitals''

    All hospitals, including ``new children's teaching hospitals,'' 
must submit a complete reconciliation application. In completing form 
HRSA 99-2 (Indirect Medical Education) in the reconciliation 
application, ``new children's teaching hospitals'' will use the 
methodology described in the September 25 Federal Register notice. 
Those hospitals that have not filed an MCR or completed a full Medicare 
cost reporting period will use the timeframe from the beginning of the 
FFY for which payments are being made up to the reconciliation 
application deadline date to determine the estimates needed to complete 
the form.

Reconciliation Payment Process

    The Secretary will determine any balance due or any overpayment 
made to individual hospitals following the determination of changes, if 
any, to the number of residents reported by hospitals in their 
reconciliation applications. Hospitals will be notified, in writing, of 
the Secretary's final reconciliation payment determination during the 
fourth quarter (July 1-September 30) of the FFY in which payments are 
being made.
    Hospitals that have been notified of an overpayment will have 30 
days to return the overpayment to the Department without accrual of 
interest. Hospitals that fail to return overpayments within the 
specified timeframe will accrue and be responsible for any interest.
    Reconciliation payments will be made to individual hospitals on or 
before the end of the FFY (September 30) in which payments are being 
made. The Secretary will include in the reconciliation payments all 
funding initially withheld from the hospital as a result of withholding 
required by statute. At the end of the FFY, the CHGME PP may make a 
final payment to distribute any remaining funds, including those funds 
that have been returned to the Department during the course of the FFY 
as a result of overpayment or hospitals' loss of eligibility.
    All hospitals, whether or not they report changes to their resident 
FTE resident counts during the reconciliation process, can expect 
changes to their final payment determination as a result of FTE 
resident count changes reported by other participating hospitals. This 
is due to the methodology used to determine CHGME PP payments. Payments 
to individual hospitals are based upon the hospital's share of the 
total amount of DME and IME funding available for a given FFY. A 
hospital's portion of the total DME and IME funding available is 
calculated based on payment variables in the CHGME PP statute and 
regulations. This individual hospital portion (the numerator) is then 
divided by the sum of all hospitals' portions (the denominator) to 
determine the share of the total available funding to be distributed to 
the hospital. Hence, although an individual hospital's FTE resident 
count and subsequent portion (numerator) may not change at the time

[[Page 60399]]

of the reconciliation application process, the denominator of the 
payment calculation may change as a result of changes in FTE resident 
counts reported by other hospitals. More detailed information is 
available on the CHGME PP payment formulas in the June 19, 2000 Federal 
Register notice (DME payment formula) and the July 20, 2001 Federal 
Register notice (IME payment formula). Information on the payment 
formulas is also available on the CHGME PP Web site http://bhpr.hrsa.gov/childrenshospitalgme/.
    As provided by statute, for disputes greater than $10,000, a 
hospital may request a hearing on the Secretary's payment determination 
by the Provider Reimbursement Review Board under section 1878 of the 
Social Security Act (42 U.S.C. 1395oo), implemented by regulations at 
42 CFR part 405, subpart R.
    It should also be noted that the reconciliation process does not 
take the place of a separate audit process to which the hospitals may 
be subject. Participating children's hospitals are subject to audit 
(other than OMB Circular A-133 as described in section IV below) to 
determine whether the applicant hospital has complied with applicable 
laws, regulations, and its application for funding.
    Comment: One respondent requested that the interest rate charged by 
the Government be published.
    Response: Interest will be accrued at a rate set on a quarterly 
basis by the Secretary of the Treasury pursuant to 45 CFR 30.13.

II. Updating the Wage Index in Calculation of Indirect Medical 
Education Payment

    The Department has determined that it will continue to use the wage 
index (WI) determined by the Centers for Medicare and Medicaid Services 
(CMS) for fiscal year (FY) 1999 to calculate the indirect medical 
education (IME) payment for children's hospitals. In its September 25, 
2002 Federal Register notice, the CHGME PP proposed that the wage index 
(WI) from the most recent fiscal year available be used to calculate 
IME payments. Although the CHGME PP statute states that the factor 
applied under section 1886(d)(3)(E) of the Social Security Act (i.e., 
the wage index calculated by the Centers for Medicare and Medicaid 
Services) for discharges occurring during fiscal year 1999 for the 
hospital's area be used in the calculation of direct medical education 
(DME) payments, the Secretary has discretion to choose the WI used in 
the calculation of IME payments. Since the statute specifies the use of 
the FY 1999 WI to determine DME, however, the use of the WI from the 
most recent fiscal year available to calculate IME payments would 
result in two different WI being used to determine the CHGME PP 
payments to children's hospitals. After consideration of the public 
comments on this topic, the Department has determined that it will 
continue to use the wage index (WI) determined by the Centers for 
Medicare and Medicaid Services (CMS) for fiscal year (FY) 1999 to 
calculate the indirect medical education (IME) payment for children's 
hospitals. In using the WI to determine CHGME PP payments for both DME 
and IME, the Secretary will use the most recently available Medicare 
PPS labor-related (and non-labor-related) share; currently, the PPS 
labor-related share is 71.1%.
    Comment: Several respondents expressed concern regarding use of the 
updated CMS WI because of current Congressional efforts to make 
substantive changes in the determination of the CMS WI. As the outcome 
of these efforts (i.e., if and when a bill is passed) and the resulting 
implications for recalculation of the WI by CMS are not clear, the 
respondents encouraged the CHGME PP to postpone implementation of this 
policy.
    Response: Since its inception, determination of the WI has been 
subject to change both at the Congressional and Department level. Given 
this ongoing iterative process and the lack of statutory directive 
regarding the use of WI in the calculation of IME, the Department has 
determined that it will continue to use the WI from FY 1999 to 
calculate the IME payment.
    Comment: One respondent was concerned about the potential confusion 
that could result from using two different WI values, one for DME and 
one for lIME, to determine payments for the participating hospitals.
    Response: The Department recognizes the potential confusion that 
using two different WI values could create among hospitals 
participating in the CHGME PP. In order to prevent such confusion, the 
WI from FY 1999 will continue to be used to calculate IME.
    Comment: One respondent commented that it may be more appropriate 
to postpone the implementation of the proposed WI policy until it could 
be assessed in light of the findings of the ongoing analytic activities 
related to the CHGME PP IME payment formula.
    Response: The Department agrees that it may be best to introduce 
any changes to the IME payment formula simultaneously and not in an 
incremental fashion. It should be noted, however, that the payment 
formulas used by the program may be subject to statutory amendment.

III. Dissemination of CHGME PP Data

    The Department considers all CHGME PP information obtained by the 
program in hospital applications and generated by the program to 
determine payments to be fully disclosable; that is, its release to the 
public poses no potential harm to the hospital(s) that originally 
submitted the Program application. The Department is finalizing the 
following procedure for the dissemination of information related to the 
CHGME PP.
    Each hospital participating in the CHGME PP may request its own 
hospital-specific data related to the CHGME PP through a written 
request to the CHGME PP. Contact information is provided earlier in 
this notice.
    All other requests for information (e.g., information requested 
about another participating hospital or all participating hospitals) 
must be submitted to the Freedom of Information Act (FOIA) Officer for 
the Health Resources and Services Administration (HRSA). The HRSA FOIA 
Office address is 5600 Fishers Lane, Room 14-45, Rockville Maryland 
20857.
    In addition, the CHGME PP will follow the policies regarding fees 
and charges associated with release of information as stated in 45 CFR 
part 5, subpart D.

IV. Audit

    In the March 1, 2001 Federal Register notice, the Department 
announced that awards under the CHGME PP must be audited under Office 
of Management and Budget (OMB) Circular A-133. The Department has 
reconsidered its position with respect to this requirement, and is 
making final the policy proposed in the September 25 Federal Register 
notice that CHGME PP awards are not subject to review/audit under OMB 
Circular A-133. This policy will be in effect beginning with the FFY 
2003 CHGME PP application.
    The relevant compliance requirements that the Department needs for 
the CHGME PP are the FTE resident counts reported on the initial and 
reconciliation applications for the Program. Since the Secretary must 
account for change in the number of FTE residents prior to the close of 
each FFY, the Department is required to assess FTE resident counts per 
the applications prior to the end of each FFY for all CHGME PP 
participating hospitals. The Department has established a process to 
assess the FTE resident counts submitted by children's

[[Page 60400]]

hospitals in their applications for funds from the CHGME PP. The 
process is based on the assessment process utilized by CMS in their 
review of FTE resident counts submitted on MCR. The process will be 
implemented by Department contractors familiar with both CMS procedures 
and CHGME PP requirements.
    The Department believes this approach is more effective than an 
audit/review under OMB Circular A-133, as it provides the Department 
up-front assurance on the reconciliation of FTE resident counts as 
mandated in statute. Excluding the CHGME PP from the definition of 
Federal awards expended under OMB Circular A-133 removes a potential 
duplication of effort that would result from an auditor testing FTE 
counts that the Department has already verified, and may allow these 
audit resources to be used to test other Federal programs of higher 
risk.
    Comment: Several respondents commented that the elimination of the 
requirement for compliance with OMB Circular A-133 should be made 
retroactive.
    Response: The compliance reviews under OMB Circular A-133 will have 
been initiated and/or completed for FFYs 2000-2002 prior to the 
finalization of the Department's policy on this issue. As a result, the 
Department is not in a position to make the elimination of this 
compliance requirement retroactive. The Department policy will become 
effective with the FFY 2003 funding cycle. Furthermore, the 
comprehensive FTE resident count assessment process undertaken by the 
Department was not in place prior to FFY 2003.

Clarification of Provisions

    The Department wishes to clarify its current rules related to the 
calculation of a national per resident amount for determining CHGME PP 
payments and the measures used by the CHGME PP to be in compliance with 
the Government Performance and Results Act (GPRA).

V. Calculation of National Per Resident Amount

    The CHGME PP statute specifies the calculation of a baseline 
national per resident amount (NPRA) using FFY 1997 data. As amended, 
the statute also specifies that this baseline amount should be updated 
annually using the estimated percentage increase in the consumer price 
index (CPI) for all urban consumers during the period beginning October 
1997 and ending with the midpoint of the federal fiscal year for which 
payments are made. The NPRA is used in the calculation of DME payments.
    The March 1, 2001 Federal Register notice indicated that the NPRA 
for cost reporting periods ending in FFY 1997, using the methodology 
prescribed by the CHGME PP statute, is $67,688. This amount has only 
been updated by the program once to date. As published in the March 1, 
2001 Federal Register notice, the updated amount for FFY 2000 was 
estimated at $71,709. Since the NPRA appears as the same number in both 
the individual hospital portion (numerator) and the sum of all 
hospitals' portions (denominator) used to determine DME payments, it 
doesn't affect the calculation of payments; as a result, the update has 
not been performed annually.
    Beginning with FFY 2002, the NPRA will be updated annually using 
the methodology included in the statute. The updated amount will be 
posted on the CHGME PP Web site (http://bhpr.hrsa.gov/childrenshospitalgme) in the third quarter of each year. For FFY 2002, 
the updated NPRA is estimated at $74,890--determined by applying the 
percent increase in CPI from October 1997 to April 2002 to the baseline 
NPRA from FFY 1997.

VI. Government Performance and Results Act (GPRA) Measures

    In order to be in compliance with the GPRA, the CHGME PP collects 
information on a series of measures determined by the Department in its 
annual performance plan. These performance measures are developmental 
and are subject to periodic modification. In the future, the CHGME PP 
will post annual updates of its GPRA performance measures on the CHGME 
PP Web site (http://bhpr.hrsa.gov/childrenshospitalgme).
    The following measures are being used by the Department to evaluate 
the performance of the CHGME PP for FFY 2003: (1) Maintain the number 
of FTE residents in training in eligible children's teaching hospitals; 
(2) Report the percentage of hospitals funded by the program with 
negative total margins; and (3) Report the proportion of hospitals' 
gross revenue from patient care attributed to public insurance 
(Medicaid, Medicare, SCHIP) and uninsured patients.

Other Applicable Laws, Executive Orders, and Policies

    Economic and Regulatory Impact: Executive Order 12866 directs 
agencies to assess all costs and benefits of available regulatory 
alternatives, and when rulemaking is necessary, to select regulatory 
approaches that provide the greatest net benefits (including potential 
economic, environmental, public health, safety, distributive, and 
equity effects). In addition, under the Regulatory Flexibility Act 
(RFA) of 1980, if a rule has a significant economic effect on a 
substantial number of small entities, the Secretary must specifically 
consider the economic effect of the rule on small entities and analyze 
regulatory options that could lessen the impact of the rule.
    Executive Order 12866 requires that all regulations reflect 
consideration of alternatives of costs, benefits, incentives, equity, 
and available information. Regulations must meet certain standards, 
such as avoiding an unnecessary burden. Regulations which are 
``significant'' because of cost, adverse effects on the economy, 
inconsistency with other agency actions, effects on the budget, or 
novel legal or policy issues, require special analysis.
    In accordance with the RFA and the Small Business Regulatory 
Enforcement Act of 1996, which amended the RFA, the Secretary certifies 
that this action will have a significant effect on a substantial number 
of small entities, in that this action will provide significant funding 
to eligible children's hospitals. The Department has determined that 
the only burden this action will impose on children's hospitals is the 
allocation of resources required to submit an application to the CHGME 
PP. Since this action will not impose a significant burden on a 
substantial number of small entities, the Department has not examined 
any alternatives for reducing the burden on children's hospitals. The 
Secretary has also determined that this action does not meet criteria 
for a major rule as defined by Executive Order 12866 and would have no 
major effect on the economy or Federal expenditures.
    The Department has determined that the proposed rule is not a major 
rule within the meaning of the statute providing for Congressional 
Review of Agency Rulemaking, 5 U.S.C. 801. Similarly, the proposed rule 
will not have effects on State, local and tribal governments and on the 
private sector such as to require consultation under the Unfunded 
Mandates Reform Act of 1995.
    Further, Executive Order 13132 establishes certain requirements 
that an agency must meet when it promulgates a rule that imposes 
substantial direct compliance costs on State and local governments, 
preempts State law, or otherwise has Federalism implications. The 
Department has reviewed this action under the threshold criteria of 
Executive Order 13132, Federalism, and has determined that this action 
would not have substantial direct effects on the

[[Page 60401]]

rights, roles, and responsibilities of States.

Paperwork Reduction Act of 1995

    In accordance with section 3507(a) of the Paperwork Reduction Act 
(PRA) of 1995, the Department is required to solicit public comments 
and receive final 0MB approval on collections of information. In order 
to implement the CHGME PP, certain information is required, as set 
forth in this notice, in order to determine eligibility for payment and 
amount of payment. In accordance with the PRA, we have received final 
0MB approval on the collection of information for the reconciliation 
procedures beginning in the FFY 2002 cycle (0MB No. 0915-0247).
    Collection of Information: The Children's Hospitals Graduate 
Medical Education Payment Program.
    Description: Data is collected on the number of full-time 
equivalent residents in applicant children's hospitals' training 
programs to determine the amount of direct and indirect medical 
education payments to be distributed to participating children's 
hospitals. Indirect medical education payments will also be derived 
from a formula that requires the reporting of discharges, beds, and 
case mix index information from participating children's hospitals. 
Hospitals will be requested to submit such information in an annual 
application. Hospitals will also be requested to submit data on the 
number of full-time equivalent residents a second time during the 
Federal fiscal year to participate in the reconciliation payment 
process.
    Description of Respondents: Children's hospitals operating approved 
graduate medical residency training programs.
    Estimated Annual Reporting: The estimated average annual reporting 
for this data collection is approximately 150 hours per hospital. The 
estimated annual burden is as follows:

----------------------------------------------------------------------------------------------------------------
                                                     Number of     Responses per     Hours per     Total  burden
                      Form                          respondents     respondent       response          hours
----------------------------------------------------------------------------------------------------------------
HRSA-99-1.......................................              54               1            99.9           5,395
HRSA99-1 (Reconciliation of FTE counts).........              54               1               8             432
HRSA99-2........................................              54               1              14             756
HRSA-99-4.......................................              54               1              28           1,512
                                                 -----------------
    Total.......................................              54  ..............  ..............           8,095
----------------------------------------------------------------------------------------------------------------

    Education and Service Linkage: As part of its long-range planning, 
HRSA will be targeting its efforts to strengthen linkages between 
Department education programs and programs that provide comprehensive 
primary care services to the underserved.
    Smoke-Free Workplace: The Department strongly encourages all award 
recipients to provide a smoke-free workplace and promote abstinence 
from all tobacco products, and Pub. L. 103-227, the ProChildren Act of 
1994, prohibits smoking in certain facilities that receive Federal 
funds in which education, library, day care, health care, and early 
childhood development services are provided to children.
    This program is not subject to the Public Health Systems Reporting 
Requirements.

    Dated: September 2, 2003.
Elizabeth M. Duke,
Administrator, Health Resources and Services Administration.
    Dated: October 16, 2003.
Tommy G. Thompson,
Secretary.
[FR Doc. 03-26626 Filed 10-21-03; 8:45 am]
BILLING CODE 4165-15-P