[Federal Register Volume 69, Number 178 (Wednesday, September 15, 2004)]
[Rules and Regulations]
[Pages 55515-55516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20842]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Part 160

[CMS-0010-IFC]
RIN 0938--AM63


Civil Money Penalties: Procedures for Investigations, Imposition 
of Penalties, and Hearings--Extension of Expiration Date

AGENCY: Office of the Secretary, HHS.

ACTION: Final rule.

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SUMMARY: An interim final rule establishing procedures for the 
imposition, by the Secretary of Health and Human Services, of civil 
money penalties on entities that violate standards adopted by the 
Secretary under the Administrative Simplification provisions of the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA) was 
published on April 17, 2003. The interim final rule expires on 
September 16, 2004. This regulatory action extends the expiration date 
one year to avoid the disruption of ongoing enforcement actions while 
HHS proceeds with rulemaking to develop a more comprehensive 
enforcement rule.

DATES: Effective September 15, 2004, the expiration date of 45 CFR part 
160, subpart E is extended from September 16, 2004, to September 16, 
2005.

FOR FURTHER INFORMATION CONTACT: Karen Shaw, (202) 205-0154.

SUPPLEMENTARY INFORMATION:

I. Background

    On April 17, 2003, the Secretary of Health and Human Services 
published an interim final rule with request for comments. 68 FR 18895. 
The interim final rule adopted rules of procedure for the imposition by 
the Department of Health and Human Services (HHS) of civil money 
penalties on entities that violate standards and requirements adopted 
by HHS under the Administrative Simplification provisions of the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA), Public 
Law 104-191. These rules are codified at 45 CFR part 160, subpart E 
(subpart E).
    As corrected at 68 FR 22453 (April 28, 2003), subpart E expires on 
September 16, 2004. HHS intends to propose in the near future a rule to 
establish complete procedural and substantive provisions for the 
enforcement of the HIPAA rules through the imposition of civil money 
penalties. The final rule that will result from this forthcoming 
rulemaking will supersede subpart E. However, as additional time is 
needed to complete the rulemaking, HHS has decided to extend the 
expiration date of subpart E from September 16, 2004 to September 16, 
2005.

II. Comments on Subpart E

    The April 17, 2003 interim final rule requested comment, and HHS 
received 19 public comments during the public comment period. We will 
describe and respond to those comments in the preamble to the 
forthcoming proposed rule.

III. Procedural Requirements

A. Determination To Issue Final Rule Extending Expiration Date Without 
Notice and Comment, To Be Effective in Less Than 30 Days

    As noted, HHS expects to propose a rule to amend subpart E in the 
near future. However, this forthcoming rulemaking will not be completed 
by September 16, 2004, when the interim final rule that adopted subpart 
E is scheduled to expire. The resulting hiatus in the procedures for 
civil money penalty enforcement actions could

[[Page 55516]]

create confusion for both the public and HHS with respect to 
enforcement during this period. Thus, HHS hereby extends the expiration 
date of subpart E by one year. This action is being taken under HHS's 
authority at 42 U.S.C. 1302(a) and 1320d-6.
    Notwithstanding this extension, HHS fully expects to issue the 
final rule that will result from the forthcoming rulemaking as soon as 
possible rather than at or near the new September 16, 2005 expiration 
date. However, a one-year extension should provide HHS with a period 
sufficient to avoid another extension, should unexpected circumstances 
delay the regulatory development process.
    The Administrative Procedure Act generally requires agencies to 
provide advance notice and an opportunity to comment on agency 
rulemakings. However, there are certain exceptions to this requirement. 
As the preamble to the April 17, 2003 interim final rule explained, 
subpart E sets out--

the procedures for provision by the agency of the statutorily 
required notice and hearing and procedures for issuing 
administrative subpoenas. Such provisions are exempted from the 
requirement for notice-and-comment rulemaking under the ``rules of 
agency * * * procedure, or practice'' exemption at 5 U.S.C. 
553(b)(3)(A).

68 FR 18897. Since this regulatory action does no more than extend the 
effectiveness of a rule that itself was not required to be issued 
through notice-and-comment rulemaking, the extension of the rule 
likewise comes within the exemption of 5 U.S.C. 553(b)(3)(A). 
Accordingly, we do not request comment on the extension.
    We have also determined that good cause exists to waive the 
requirement of publication 30 days in advance of the rule's effective 
date under 5 U.S.C. 553(d)(3). Since subpart E is already in effect, no 
useful purpose would be served in delaying the effective date of this 
action, as those entities who are subject to subpart E are already on 
notice of its terms. Making this extension effective on less than 30 
days notice accordingly will not impose a burden upon anyone. In 
addition, to the extent that a delayed effective date occasioned a 
hiatus in the effectiveness of subpart E, it could cause the confusion 
that the extension seeks to avoid. Accordingly, we find good cause 
under 5 U.S.C. 553(d)(3) for not delaying the effective date of this 
action.

B. Review Under Procedural Statutes and Executive Orders

    We have reviewed this final rule under the following statutes and 
executive orders governing rulemaking procedures: the Unfunded Mandates 
Reform Act of 1995, 2 U.S.C. 1501 et seq.; the Regulatory Flexibility 
Act, 5 U.S.C. 601 et seq.; the Small Business Regulatory Enforcement 
Fairness Act of 1996, 5 U.S.C. 801 et seq.; the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq.; Executive Order 12866 (Regulatory Planning 
and Review), as amended by Executive Order 13258; and Executive Order 
13132 (Federalism). Since this rule merely extends the expiration date 
of subpart E, the information in the compliance statements that we 
published on April 17, 2003 with the existing rule continues to apply.

List of Subjects in 45 CFR Part 160

    Administrative practice and procedure, Computer technology, 
Electronic transactions, Employer benefit plan, Health, Health care, 
Health facilities, Health insurance, Health records, Hospitals, 
Investigations, Medicaid, Medical research, Medicare, Penalties, 
Privacy, Reporting and record keeping requirements, Security.

    Dated: August 6, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-20842 Filed 9-13-04; 10:15 am]
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