[Federal Register Volume 70, Number 37 (Friday, February 25, 2005)]
[Notices]
[Pages 9358-9360]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-3729]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1219-N]
RIN 0938-AL76


Medicare Program; Changes in Geographical Boundaries of Durable 
Medical Equipment Regional Service Areas

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

ACTION: Notice.

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SUMMARY: This notice announces changes to the geographical boundaries 
of the four Durable Medical Equipment (DME) service areas applicable to 
future awards of the Medicare Administrative Contracts (MACs). We 
identify which States and territories are assigned to each of the four 
DME service areas, and include the factors and criteria that we used to 
change the geographical boundaries.

DATES: Effective Date: This notice is effective on March 28, 2005.
    Applicability Date: On March 28, 2005, the new geographical 
boundaries will apply to DME MACs and not current DME regional carrier 
contracts.

FOR FURTHER INFORMATION CONTACT: Pat Williams, (410) 786-6139.

SUPPLEMENTARY INFORMATION:

I. Background

    Medicare has covered medically necessary items of durable medical 
equipment, prosthetics, orthotics, and supplies (DMEPOS) under Part B 
since the inception of the program in 1966. In

[[Page 9359]]

the original authorizing legislation for the Medicare program, coverage 
was provided under sections 1832 and 1861(s) of the Social Security Act 
(the Act) (Pub. L. 89-97). Since that time, the coverage and payment 
rules for DMEPOS, which are now in sections 1832, 1834, and 1861 of the 
Act and their implementing regulations in 42 CFR 421.210 have changed 
significantly.
    From 1986 to 1992, the number of complaints about fraud and abuse 
in the DMEPOS benefit began to increase markedly, and a variety of 
government investigations identified specific weaknesses in the 
program. We sought solutions to known claims processing problems, 
including the increasing level of fraud and abuse in billing. 
Subsequently, the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) 
(Pub. L. 100-203) enacted on December 22, 1987, authorized the 
Secretary to designate, by regulation, regional carriers to process 
DMEPOS claims. (See sections 1834(a)(12) and 1834(h)(3) of the Act.)
    To address the problem of fraud and abuse in the supplier 
community, we initiated an effort to reform the administration of the 
DMEPOS benefit category. On June 18, 1992, we published a final rule 
with comment period entitled ``Medicare Program; Carrier Jurisdiction 
for Claims for Durable Medical Equipment, Prosthetics, Orthotics and 
Supplies (DMEPOS) and Other Issues Involving Suppliers, and Criteria 
and Standards for Evaluating Regional DMEPOS Carriers'' (57 FR 27290) 
to implement this revised statutory authority. Additional changes were 
made by the final rule published on November 18, 1993 (58 FR 60789). 
The final rule established, among other requirements, four regional 
carriers (known as DME Regional Carriers or DMERCs) to standardize the 
coverage and payment of DMEPOS and designated the States and 
territories to be served by each DMERC.
    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA) was enacted on December 8, 2003. Section 911 of the MMA 
amended title XVIII of the Social Security Act by adding a new section 
1874A to permit us to contract for Medicare functions in a more open 
marketplace using the Federal Acquisition Regulation (FAR). Using 
competitive procedures, we will replace our current claims payment 
contractors--fiscal intermediaries (FIs), carriers, DMERCs, and 
regional home health intermediaries (RHHIs) with new contract entities 
that we will refer to as Medicare Administrative Contractors (MACs). 
The MMA requires that we recompete and transition all work to MACs by 
2011.
    MACs will assume the claims payment work that is now performed by 
FIs, carriers, RHHIs, and DMERCs. We plan to compete and award 23 MACs 
during the initial implementation phase (2005 through 2011). We will 
award 15 primary MACs servicing the majority of all types of providers, 
4 specialty MACs serving the majority of home health and hospice (HH) 
providers, and 4 specialty MACs servicing DME suppliers.
    The primary MACs will operate in 15 distinct, non-overlapping 
geographic jurisdictions, which will form the basis of the Medicare 
fee-for-service claims processing operation. The arrangements for the 8 
specialty MACs (for DME and HH services) will reflect a realignment of 
the existing jurisdictions for the RHHIs and DMERCs to fit the 
boundaries of the 15 primary jurisdictions.

II. Provisions of the Notice

    In this issue of the Federal Register, we are publishing a separate 
final rule entitled ``Medicare Program; Durable Medical Equipment 
Regional Carrier (DMERC) Service Areas and Related Matters'' (CMS-1219-
F) regarding the process by which CMS may change the current 
geographical boundaries of the contractors that process claims related 
to durable medical equipment, prosthetics, orthotics, and supplies. 
Following that process, this notice announces changes to the 
geographical boundaries of the future DME service regions. It does not 
affect the jurisdictions of the existing DMERCs.
    Currently, the States and territories serviced by each of the four 
DMERC regions are as follows:
    Region A: Connecticut, Delaware, Maine, Massachusetts, New 
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and 
Vermont.
    Region B: District of Columbia, Illinois, Indiana, Maryland, 
Michigan, Minnesota, Ohio, Virginia, West Virginia, and Wisconsin.
    Region C: Alabama, Arkansas, Colorado, Florida, Georgia, Kentucky, 
Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Puerto 
Rico, South Carolina, Tennessee, Texas, and the Virgin Islands.
    Region D: Alaska, American Samoa, Arizona, California, Guam, 
Hawaii, Idaho, Iowa, Kansas, Mariana Islands, Missouri, Montana, 
Nebraska, Nevada, North Dakota, Oregon, South Dakota, Utah, Washington, 
and Wyoming.
    Effective with future awards of the DME MACs, the geographical 
boundaries of the DMERC service regions will be reconfigured as 
follows:
    Region A: Connecticut, Delaware, District of Columbia, Maine, 
Maryland, Massachusetts, New Hampshire, New Jersey, New York, 
Pennsylvania, Rhode Island, and Vermont.
    Region B: Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin, 
and Kentucky.
    Region C: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, 
Mississippi, New Mexico, North Carolina, Oklahoma, Puerto Rico, South 
Carolina, Tennessee, Texas, Virgin Islands, Virginia, and West 
Virginia.
    Region D: Alaska, Arizona, California, Guam, Hawaii, Idaho, Iowa, 
Kansas, Missouri, Montana, Nebraska, Nevada, North Dakota, Oregon, 
South Dakota, Utah, Washington, Wyoming, Mariana Islands, and American 
Samoa.
    Under the reconfiguration, the District of Columbia and the State 
of Maryland are moved from Region B to Region A; the States of Virginia 
and West Virginia are moved from Region B to Region C; and the State of 
Kentucky moves from Region C to Region B. As such, Region A gains the 
District of Columbia and one State; Region B loses three States and the 
District of Columbia; and Region C loses one State and gains two 
States. There are no changes in the geographical boundaries of Region 
D.
    We believe reconfiguring the existing geographical jurisdictions of 
the DME service regions to fit with the boundaries of the 15 MAC 
primary jurisdictions and four RHH MAC jurisdictions is necessary to 
facilitate seamless claims processing activities, and interaction with 
our other partners. Our analysis of the changes in the DME geographical 
boundaries indicates these service area changes affect a relatively 
small percentage of providers and beneficiaries in the affected areas. 
We have considered how the jurisdictional changes may impact affected 
providers and beneficiaries and have taken steps to minimize the 
impact. Through this notice, we are giving advance notice to all 
affected parties of these changes before any anticipated transition of 
workload. Additionally, we will include in any future procurements 
using the revised geographical jurisdictions a requirement that 
successful bidders must take steps to minimize any adverse impact on 
providers and beneficiaries because of the transition to the new 
jurisdictions.

III. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements.

[[Page 9360]]

Consequently, it need not be reviewed by the Office of Management and 
Budget under the authority of the Paperwork Reduction Act of 1995.

IV. Regulatory Impact Statement

    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 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 notice 
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 notice 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. 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 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this notice 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 notice will have no consequential effect 
on the governments mentioned or on the private sector.
    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 notice does not impose any costs on State or 
local governments, the requirements of Executive Order 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.


    Authority: Section 1834(a)(12) and 1842 of the Social Security 
Act

(Catalog of Federal Domestic Assistance Program No. 93.774, 
Medicare--Supplementary Medical Insurance Program.)

    Dated: December 23, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 05-3729 Filed 2-24-05; 8:45 am]
BILLING CODE 4120-01-P