[Federal Register Volume 69, Number 250 (Thursday, December 30, 2004)]
[Rules and Regulations]
[Pages 78336-78338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-28155]



[[Page 78336]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 422

[CMS-4041-IFC]
RIN 0938-AK71


Medicare Program; Modifications to Managed Care Rules

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

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with comment period corrects a 
technical error made in the August 22, 2003 final rule ``Modifications 
to Medicare Rules'' (68 FR 50840).

DATES: This interim final rule with comment period is effective January 
31, 2005.
    Comment date: To ensure consideration, comments must be received at 
one of the addresses provided below, no later than 5 p.m. on February 
28, 2005.

ADDRESSES: In commenting, please refer to file code CMS-4041-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of three ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments to http://www.cms.hhs.gov/regulations/ecomments or to www.regulations.gov 
(attachments should be in Microsoft Word, WordPerfect, or Excel; 
however, we prefer Microsoft Word).
    2. By mail. You may mail written comments (one original and two 
copies) to the following address ONLY: Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Attention: CMS-4041-
IFC, P.O. Box 8010, Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-7197 in advance to schedule your arrival 
with one of our staff members. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

(Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop 
slots located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by 
stamping in and retaining an extra copy of the comments being 
filed.)

    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Tony Hausner, (410) 786-1093.

SUPPLEMENTARY INFORMATION: 
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. You can assist us by referencing the file code 
CMS-4041-IFC and the specific ``issue identifier'' that precedes the 
section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. After the close of the 
comment period, CMS posts all electronic comments received before the 
close of the comment period on its public website. Comments received 
timely will be available for public inspection as they are received, 
generally beginning approximately 3 weeks after publication of a 
document, at the headquarters of the Centers for Medicare & Medicaid 
Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday 
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an 
appointment to view public comments, phone (410) 786-7197.

I. Background

[If you choose to comment on issues in this section, please include 
the caption ``BACKGROUND'' at the beginning of your comments.]

    On August 22, 2003, we published a final rule titled, 
``Modifications to Managed Care Rules'' (68 FR 50840), which 
implemented the Medicare, Medicaid, and SCHIP Benefits Improvement and 
Protection Act of 2000 (BIPA), which included certain changes to the 
intermediate sanctions regulations at 42 CFR 422.758.
    In that final rule, we made limited organizational changes to the 
intermediate sanctions regulations (68 FR 50841); however, when making 
those organizational changes, we made technical errors in Sec.  422.752 
and Sec.  422.758. Specifically, the $25,000 Civil Money Penalty (CMP) 
that had been described at Sec.  422.758(a) was inadvertently omitted 
in the revised version of the intermediate sanctions regulation. We 
note that these CMPs are set forth at section 1857(g)(3)(A) of the 
Social Security Act (Act) and provide authority for the Secretary to 
apply up to a $25,000 penalty for each determination under section 
1857(c)(2) that a deficiency not otherwise described in section 
1857(g)(1) of the Act exists and has directly and adversely affected 
(or has the substantial likelihood of adversely affecting) one or more 
Medicare Advantage (MA) enrollees.
    The omission of the $25,000 CMP from Sec.  422.758(a) occurred 
because we included language in Sec.  422.758(a) that was intended to 
replace the first two sentences of Sec.  422.752(a). This language 
clarifies that CMS does not have CMP authority in the case of the 
violations set forth in Sec.  422.752(a). The OIG has CMP authority in 
the case of these violations. In the preamble to our August 22, 2003 
final rule, we noted that we were changing Sec.  422.752(a) for this 
purpose (68 FR 50851). However, the regulatory text was inadvertently 
placed at Sec.  422.758(a).
    We also have determined that the reference to Sec.  422.756(f)(3) 
in existing Sec.  422.758(b) more appropriately belongs in the 
introductory text of Sec.  422.758 because our authority to impose CMPs 
in the amounts set forth in all of Sec.  422.758 is described in Sec.  
422.756(f)(3). Section Sec.  422.758(b) also contains a redundant 
reference to Sec.  422.752(b), which we are eliminating, in this 
interim final rule with comment period, to avoid confusion.
    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final regulation. Section 
902 of the MMA also states that the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final

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regulation except under exceptional circumstances.
    This interim final rule finalizes provisions set forth in the 
August 22, 2003 final rule. We will publish the final rule within the 
3-year time limit imposed by section 902 of the MMA. Therefore, we 
believe that the interim final rule is in accordance with the Congress' 
intent to ensure timely publication of final regulations.

II. Provisions of the Interim Final Rule

[If you choose to comment on issues in this section, please include 
the caption ``PROVISIONS OF THE INTERIM FINAL RULE'' at the 
beginning of your comments.]

    To ensure that the Medicare regulations are an accurate reflection 
of our current statutory authority to impose CMPs, in this interim 
final rule with comment period, we are correcting Sec.  422.758 to 
state that if we make a determination under Sec.  422.752(b), based on 
any determination under Sec.  422.510(a) except a determination under 
Sec.  422.510(a)(4), we may impose civil money penalties, pursuant to 
Sec.  422.756(f)(3), in the following amounts:
     If the deficiency on which the determination is based has 
directly adversely affected (or has the substantial likelihood of 
adversely affecting) one or more MA enrollees--up to $25,000 for each 
determination.
     For each week that a deficiency remains uncorrected after 
the week in which the MA organization receives CMS' notice of the 
determination--up to $10,000.
     If we make a determination, based on a determination under 
Sec.  422.510(a)(1), that an MA organization has terminated its 
contract with us in a manner other than as described under Sec.  
422.512--$250 per Medicare enrollee from the terminated MA plan or 
plans at the time the MA organization terminated its contract, or 
$100,000, whichever is greater.
    In addition, we are correcting Sec.  422.752(a) to incorporate the 
changes that we intended to make in the August 22, 2003 final rule (and 
which currently appear at Sec.  422.758(a)) to provide that for the 
violations listed in Sec.  422.752(a), we may impose the sanctions 
specified in Sec.  422.750(a)(2), (a)(3), or (a)(4) on any MA 
organization that has a contract in effect. The MA organization may 
also be subject to other applicable remedies available under law.

III. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

IV. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    We find for good cause that it is unnecessary to undertake notice 
and comment procedures because this correcting amendment does not make 
any substantive policy changes. This correcting amendment sets forth 
self-implementing provisions of the Act (as described above) with 
respect to the imposition of CMPs. Because the rule directly conforms 
to the statute and does not articulate new requirements, we believe 
that pursuing notice and comment is unnecessary. Moreover, because that 
process could introduce confusion regarding our current authority to 
impose CMPs, we find that pursuing that process would be both 
impracticable and contrary to the public interest. Therefore, for good 
cause, we waive notice and comment procedures under 5 U.S.C. 553(b)(B).
    With respect to the requirement of a 60-day delay in the effective 
date of any final rule under the Congressional Review Act (CRA) (see 
U.S.C. section 801), the CRA provides that the 60-day delayed effective 
date shall not apply to any rule ``which an agency for good cause finds 
that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' (See 5 U.S.C. 
section 808(2).) For the reasons set forth above, we believe that 
additional notice and comment rulemaking on this subject would be 
impracticable, unnecessary, or contrary to the public interest. 
Therefore, we do not believe that the CRA requires a 60-day delay in 
the effective date of this final rule.

V. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

VI. Regulatory Impact

[If you choose to comment on issues in this section, please include 
the caption ``REGULATORY IMPACT'' at the beginning of your 
comments.]

    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). This rule 
does not reach the economic threshold and thus is not considered a 
major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 for final rules 
of the RFA. For purposes of section 1102(b) of the Act, we define a 
small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 100

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beds. We are not preparing an analysis for section 1102(b) of the Act 
because we have determined that this rule will not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This interim final rule with comment period 
does not have any costs associated with this requirement and will not 
approach the Unfunded Mandates Reform Act threshold.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
Maintenance Organizations (HMO), Medicare+Choice, Penalties, Privacy, 
Provider-sponsored organizations (PSO), Reporting and recordkeeping 
requirements.

0
Accordingly, 42 CFR chapter IV is corrected by making the following 
correcting amendments:

PART 422--MEDICARE ADVANTAGE PROGRAM

0
1. The authority citation for part 422 continues to read as follows:

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


0
2. Section 422.752(a) introductory text is revised to read as follows:


Sec.  422.752  Basis for imposing sanctions.

    (a) All intermediate sanctions. For the violations listed in this 
paragraph (a), we may impose the sanctions specified in Sec.  
422.750(a)(2), (a)(3), or (a)(4) on any MA organization that has a 
contract in effect. The MA organization may also be subject to other 
applicable remedies available under law.
* * * * *

0
3. Section 422.758 is revised to read as follows:


Sec.  422.758  Maximum amount of civil money penalties imposed by CMS.

    If CMS makes a determination under Sec.  422.752(b), based on any 
determination under Sec.  422.510(a) except a determination under Sec.  
422.510(a)(4), CMS may impose civil money penalties, pursuant to Sec.  
422.756(f)(3), in the following amounts:
    (a) If the deficiency on which the determination is based has 
directly adversely affected (or has the substantial likelihood of 
adversely affecting) one or more Medicare Advantage enrollees--up to 
$25,000 for each determination.
    (b) For each week that a deficiency remains uncorrected after the 
week in which the Medicare Advantage organization receives CMS' notice 
of the determination--up to $10,000.
    (c) If CMS makes a determination, based on a determination under 
Sec.  422.510(a)(1) that a Medicare Advantage organization has 
terminated its contract with CMS in a manner other than as described 
under Sec.  422.512--$250 per Medicare enrollee from the terminated 
Medicare Advantage plan or plans at the time the Medicare Advantage 
organization terminated its contract, or $100,000, whichever is 
greater.

    Dated: June 23, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: September 8, 2004.
Tommy G. Thompson,
Secretary.
[FR Doc. 04-28155 Filed 12-29-04; 8:45 am]
BILLING CODE 4120-01-P