[Federal Register Volume 70, Number 135 (Friday, July 15, 2005)]
[Notices]
[Pages 41035-41039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14079]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


Privacy Act of 1974; Report of a New System of Records

AGENCY: Department of Health and Human Services (HHS), Center for 
Medicare & Medicaid Services (CMS).

ACTION: Notice of a new System of Records (SOR).

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SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, we are proposing to establish a new SOR titled, ``Medicare 
Retiree Drug Subsidy Program (RDSP), System No. 09-70-0550.'' Under 
section 1860D-22 of the Social Security Act (the Act), employers and 
unions who continue to offer prescription drug coverage to their 
qualifying covered retirees are eligible to receive a tax-free subsidy 
for allowable drug costs. This amended provision of the Act is mandated 
by section 101 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173). A qualifying covered 
retiree is a Part D eligible individual who is a participant or the 
spouse or dependent of a participant; covered under employment-based 
retiree health coverage that qualifies as a qualified retiree 
prescription drug plan; and not enrolled in a Part D plan. Employment-
Based Retiree Health Coverage is defined as coverage of health care 
costs under a group health plan based on an individual's status as a 
retired participant in the plan, or as the spouse or dependent of a 
retired participant. The term includes coverage provided by voluntary 
insurance coverage as a result of a statutory or contractual 
obligation. The Medicare prescription drug benefit and retiree drug 
subsidy represent additional funding sources that can help employers 
and unions continue to provide high quality drug coverage for their 
retirees.
    The purpose of this system is to collect and maintain information 
on individuals who are qualifying covered retirees so that accurate and 
timely subsidy payments may be made to plan sponsors who continue to 
offer actuarially equivalent prescription drug coverage to the 
qualifying covered retirees. Information retrieved from this system 
will also be disclosed to: (1) Support regulatory, reimbursement, and 
policy functions performed within the agency, or by a contractor or 
consultant; (2) support constituent requests made to a congressional 
representative; (3) support litigation involving the agency; and (4) 
combat fraud and abuse in certain health benefits programs. We have 
provided background information about the modified system in the 
``Supplementary Information'' section below. Although the Privacy Act 
requires only that CMS provide an opportunity for interested persons to 
comment on the proposed routine uses, CMS invites comments on all 
portions of this notice. See ``Effective Dates'' section for comment 
period.

EFFECTIVE DATE: CMS filed a new SOR report with the Chair of the House 
Committee on Government Reform and Oversight, the Chair of the Senate 
Committee on Governmental Affairs, and the Administrator, Office of 
Information and Regulatory Affairs, Office of Management and Budget 
(OMB) on 07/13/2005. We will not disclose any information under a 
routine use until 30 days after publication. We may defer 
implementation of this SOR or one or more of the routine use statements 
listed below if we receive comments that persuade us to defer 
implementation.

ADDRESSES: The public should address comment to the CMS Privacy 
Officer, Mail Stop N2-04-27, 7500 Security Boulevard, Baltimore, 
Maryland 21244-1850. Comments received will be available for review at 
this location, by appointment, during regular business hours, Monday 
through Friday from 9 a.m.-3 p.m., eastern daylight time.

FOR FURTHER INFORMATION CONTACT: Brian Maloney, Health Insurance 
Specialist, Employer Policy & Operations Group, Centers for Beneficiary 
Choices, CMS, Mail Stop C1-22-06, 7500 Security Boulevard, Baltimore, 
Maryland 21244-1849. He can be reached at (410) 786-0226, or contact 
via e-mail at [email protected].

SUPPLEMENTARY INFORMATION: The intent of the Medicare Retiree Drug 
Subsidy Program is to offer qualified retiree prescription drug plans 
financial assistance with a portion of their prescription drug costs 
and thereby ``help employers retain and enhance their prescription drug 
coverage so that the current erosion in coverage would plateau or even 
improve.'' By making a tax-free subsidy for 28 percent of allowable 
prescription drug costs available to qualified retiree prescription 
drug plans, the Medicare Retiree Drug Subsidy Program significantly 
reduces financial liabilities associated with employers' retiree drug 
coverage and encourages employers to continue assisting their retirees 
with prescription drug coverage.

[[Page 41036]]

    A Qualified Retiree Prescription Drug Plan is defined as an 
employment-based retiree health coverage of a Part D eligible 
individual who is a participant or beneficiary under such coverage. The 
sponsor of the plan must provide to the Secretary, annually, an 
attestation that the actuarial value of the prescription drug coverage 
under the plan is at least equal to the actuarial value of standard 
prescription drug coverage.
    The term Sponsor is defined as a plan sponsor in relation to a 
group health plan, except that, in the case of a plan maintained 
jointly by one employer and an employee organization and with respect 
to which the employer is the primary source of financing. A Group 
Health Plan include the following: (1) Federal and State Governmental 
Plans, a plan established or maintained for its employees by the 
Government of the United States, by the government of any State or 
political subdivision thereof, or by any agency or instrumentality; (2) 
Collectively Bargained Plans, a plan established or maintained under or 
pursuant to one or more collective bargaining agreement; (3) Church 
Plan, a plan established and maintained for its employees, or their 
beneficiaries, by a church or by a convention or association of 
churches which is exempt from tax under section 501 of the Internal 
Revenue Code of 1986; or (4) Health Reimbursement Arrangement (HRA), a 
health Flexible Spending Arrangement (FSA), a health savings account 
(HSA), or an Archer MSA.

I. Description of the Proposed System of Records

A. Statutory and Regulatory Basis for SOR

    Authority for maintenance of this system is given under section 
1860D-22 of the Act (Title 42 United States Code (U.S.C.) 1302, 1395w-
101 through 1395w-152, and 1395hh.) These provisions of the Act are 
amended by section 101 of the MMA and its implementing regulations 
codified at Title 42 Code of Federal Regulations (CFR) Part 423, 
Subpart R.

B. Collection and Maintenance of Data in the System

    Information in this system is maintained on qualifying covered 
retirees who are Part D eligible individuals covered under a qualified 
retiree prescription drug plan. Information maintained in this system 
include, but are not limited to, standard data for identification such 
as Plan Sponsor Identification Number, Application Identification 
Number, Benefit Option Identifier, Coverage Effective Date, Coverage 
Termination Date, Health Insurance Claim Number (HICN), Social Security 
Number (SSN), gender, first name, last name, middle initial, date of 
birth, relationship to member and Medicare eligibility and enrollment 
status.

II. Agency Policies, Procedures, and Restrictions on the Routine Use

A. Agency Policies, Procedures, and Restrictions on the Routine Use

    The Privacy Act permits us to disclose information without an 
individual's consent if the information is to be used for a purpose 
that is compatible with the purpose(s) for which the information was 
collected. Any such disclosure of data is known as a ``routine use.'' 
The government will only release RDSP information that can be 
associated with an individual as provided for under ``Section III. 
Proposed Routine Use Disclosures of Data in the System.'' Both 
identifiable and non-identifiable data may be disclosed under a routine 
use.
    We will only collect the minimum personal data necessary to achieve 
the purpose of RDSP. CMS has the following policies and procedures 
concerning disclosures of information that will be maintained in the 
system. Disclosure of information from the SOR will be approved only to 
the extent necessary to accomplish the purpose of the disclosure and 
only after CMS:
    1. Determines that the use or disclosure is consistent with the 
reason that the data is being collected, e.g., to assist in the proper 
subsidy payments to sponsors of a qualifying covered retiree 
prescription drug plan;
    2. Determines that:
    a. The purpose for which the disclosure is to be made can only be 
accomplished if the record is provided in individually identifiable 
form,
    b. The purpose for which the disclosure is to be made is of 
sufficient importance to warrant the effect and/or risk on the privacy 
of the individual that additional exposure of the record might bring, 
and
    c. There is a strong probability that the proposed use of the data 
would in fact accomplish the stated purpose(s);
    3. Requires the information recipient to:
    a. Establish administrative, technical, and physical safeguards to 
prevent unauthorized use of disclosure of the record,
    b. Remove or destroy at the earliest time all patient-identifiable 
information, and
    c. Agree to not use or disclose the information for any purpose 
other than the stated purpose under which the information was 
disclosed;
    4. Determines that the data are valid and reliable.

III. Proposed Routine Use Disclosures of Data in the System

    A. The Privacy Act allows us to disclose information without an 
individual's consent if the information is to be used for a purpose 
that is compatible with the purpose(s) for which the information was 
collected. Any such compatible use of data is known as a ``routine 
use.'' The proposed routine uses in this system meet the compatibility 
requirement of the Privacy Act. We are proposing to establish the 
following routine use disclosures of information maintained in the 
system:
    1. To agency contractors or consultants who have been engaged by 
the agency to assist in the performance of an activity related to this 
system and who need to have access to the records in order to perform 
the activity.
    We contemplate disclosing information under this routine use only 
in situations in which CMS may enter into a contractual or similar 
agreement with a third party to assist in accomplishing CMS function 
relating to purposes for this system.
    CMS occasionally contracts out certain of its functions when doing 
so would contribute to effective and efficient operations. CMS must be 
able to give a contractor or consultant whatever information is 
necessary for the contractor or consultant to fulfill its duties. In 
these situations, safeguards are provided in the contract prohibiting 
the contractor or consultant from using or disclosing the information 
for any purpose other than that described in the contract and requires 
the contractor or consultant to return or destroy all information at 
the completion of the contract.
    2. To a member of congress or to a congressional staff member in 
response to an inquiry of the congressional office made at the written 
request of the constituent about whom the record is maintained.
    Beneficiaries sometimes request the help of a member of congress in 
resolving an issue relating to a matter before CMS. The member of 
congress then writes CMS, and CMS must be able to give sufficient 
information to be responsive to the inquiry.
    3. To the Department of Justice (DOJ), court or adjudicatory body 
when:
    a. The agency or any component thereof, or
    b. Any employee of the agency in his or her official capacity, or
    c. Any employee of the agency in his or her individual capacity 
where the

[[Page 41037]]

DOJ has agreed to represent the employee, or
    d. The United States Government is a party to litigation or has an 
interest in such litigation, and by careful review, CMS determines that 
the records are both relevant and necessary to the litigation and that 
the use of such records by the DOJ, court or adjudicatory body is 
compatible with the purpose for which the agency collected the records.
    Whenever CMS is involved in litigation, and occasionally when 
another party is involved in litigation and CMS' policies or operations 
could be affected by the outcome of the litigation, CMS would be able 
to disclose information to the DOJ, court or adjudicatory body 
involved.
    4. To a CMS contractor (including, but not necessarily limited to 
fiscal intermediaries and carriers) that assists in the administration 
of a CMS-administered health benefits program, or to a grantee of a 
CMS-administered grant program, when disclosure is deemed reasonably 
necessary by CMS to prevent, deter, discover, detect, investigate, 
examine, prosecute, sue with respect to, defend against, correct, 
remedy, or otherwise combat fraud or abuse in such program.
    We contemplate disclosing information under this routine use only 
in situations in which CMS may enter into a contractual relationship or 
grant with a third party to assist in accomplishing CMS functions 
relating to the purpose of combating fraud and abuse.
    CMS occasionally contracts out certain of its functions and makes 
grants when doing so would contribute to effective and efficient 
operations. CMS must be able to give a contractor or grantee whatever 
information is necessary for the contractor or grantee to fulfill its 
duties. In these situations, safeguards are provided in the contract 
prohibiting the contractor or grantee from using or disclosing the 
information for any purpose other than that described in the contract 
and requiring the contractor or grantee to return or destroy all 
information.
    5. To another Federal agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States (including any State or local governmental agency), that 
administers, or that has the authority to investigate potential fraud 
or abuse in, a health benefits program funded in whole or in part by 
Federal funds, when disclosure is deemed reasonably necessary by CMS to 
prevent, deter, discover, detect, investigate, examine, prosecute, sue 
with respect to, defend against, correct, remedy, or otherwise combat 
fraud or abuse in such programs.
    Other agencies may require RDSP information for the purpose of 
combating fraud and abuse in such Federally-funded programs.

B. Additional Provisions Affecting Routine Use Disclosures

    This system contains Protected Health Information (PHI) as defined 
by HHS regulation ``Standards for Privacy of Individually Identifiable 
Health Information'' (45 CFR parts 160 and 164, 65 FR 82462 (12-28-00), 
subparts A and E. Disclosures of PHI authorized by these routine uses 
may only be made if, and as, permitted or required by the ``Standards 
for Privacy of Individually Identifiable Health Information.''
    In addition, our policy will be to prohibit release even of not 
directly identifiable, except pursuant to one of the routine uses or if 
required by law, if we determine there is a possibility that an 
individual can be identified through implicit deduction based on small 
cell sizes (instances where the patient population is so small that 
individuals who are familiar with the enrollees could, because of the 
small size, use this information to deduce the identity of the 
beneficiary).

IV. Safeguards

    CMS has safeguards in place for authorized users and monitors such 
users to ensure against excessive or unauthorized use. Personnel having 
access to the system have been trained in the Privacy Act and 
information security requirements. Employees who maintain records in 
this system are instructed not to release data until the intended 
recipient agrees to implement appropriate management, operational and 
technical safeguards sufficient to protect the confidentiality, 
integrity and availability of the information and information systems 
and to prevent unauthorized access.
    This system will conform to all applicable Federal laws and 
regulations and Federal, HHS, and CMS policies and standards as they 
relate to information security and data privacy. These laws and 
regulations include but are not limited to: The Privacy Act of 1974; 
the Federal Information Security Management Act of 2002; the Computer 
Fraud and Abuse Act of 1986; the Health Insurance Portability and 
Accountability Act of 1996; the E-Government Act of 2002, the Clinger-
Cohen Act of 1996; the Medicare Modernization Act of 2003, and the 
corresponding implementing regulations. OMB Circular A-130, Management 
of Federal Resources, Appendix III, Security of Federal Automated 
Information Resources also applies. Federal, HHS, and CMS policies and 
standards include but are not limited to: all pertinent National 
Institute of Standards and Technology publications; HHS Information 
Systems Program Handbook and the CMS Information Security Handbook.

V. Effects of the Proposed System of Records on Individual Rights

    CMS proposes to establish this system in accordance with the 
principles and requirements of the Privacy Act and will collect, use, 
and disseminate information only as prescribed therein. Data in this 
system will be subject to the authorized releases in accordance with 
the routine uses identified in this system of records.
    CMS will take precautionary measures (see item IV above) to 
minimize the risks of unauthorized access to the records and the 
potential harm to individual privacy or other personal or property 
rights of patients whose data are maintained in the system. CMS will 
collect only that information necessary to perform the system's 
functions. In addition, CMS will make disclosure from the proposed 
system only with consent of the subject individual, or his/her legal 
representative, or in accordance with an applicable exception provision 
of the Privacy Act. CMS, therefore, does not anticipate an unfavorable 
effect on individual privacy as a result of information relating to 
individuals.

    Dated: July 11, 2005.
John R. Dyer,
Chief Operating Officer, Centers for Medicare & Medicaid Services.
System No. 09-70-0550.

System Name:
    ``Medicare Retiree Drug Subsidy Program (RDSP), HHS/CMS/CBC.''

Security Classification:
    Level Three Privacy Act Sensitive Data.

System Location:
    Group Health Incorporated, 441 Ninth Avenue, New York, NY 10001-
1681, and Centers for Medicare & Medicaid Services (CMS) Data Center, 
7500 Security Boulevard, North Building, First Floor, Baltimore, 
Maryland 21244-1850.

Categories of Individuals Covered By the System:
    Information in this system is maintained on qualifying covered 
retirees who are Medicare Part D eligible

[[Page 41038]]

individuals covered under a qualified retiree prescription drug plan.

Categories of Records in the System:
    Information maintained in this system include, but are not limited 
to, standard data for identification such as Plan Sponsor 
Identification Number, Application Identification Number, Benefit 
Option Identifier, Coverage Effective Date, Coverage Termination Date, 
Health Insurance Claim Number (HICN), Social Security Number (SSN), 
gender, first name, last name, middle initial, date of birth, 
relationship to member and Medicare eligibility and enrollment status.

Authority for Maintenance of the System:
    Authority for maintenance of this system is given under section 
1860D-22 of the Act (Title 42 United States Code (U.S.C.) 1302, 1395w-
101 through 1395w-152, and 1395hh.) These provisions of the Act are 
amended by section 101 of the MMA and its implementing regulations 
codified at Title 42 Code of Federal Regulations (CFR) Part 423, 
Subpart R.

Purpose(s) of the System:
    The purpose of this system is to collect and maintain information 
on individuals who are qualifying covered retirees so that accurate and 
timely subsidy payments may be made to plan sponsors who continue to 
offer actuarially equivalent prescription drug coverage to the 
qualifying covered retirees. Information retrieved from this system 
will also be disclosed to: (1) Support regulatory, reimbursement, and 
policy functions performed within the agency, or by a contractor or 
consultant; (2) support constituent requests made to a congressional 
representative; (3) support litigation involving the agency; and (4) 
combat fraud and abuse in certain health benefits programs.

Routine Uses of Records Maintained in the System, Including Categories 
or Users and the Purposes of Such Uses:
    A. The Privacy Act allows us to disclose information without an 
individual's consent if the information is to be used for a purpose 
that is compatible with the purpose(s) for which the information was 
collected. Any such compatible use of data is known as a ``routine 
use.'' We are proposing to establish the following routine use 
disclosures of information maintained in the system. Information will 
be disclosed:
    1. To agency contractors or consultants who have been engaged by 
the agency to assist in the performance of a service related to this 
system and who need to have access to the records in order to perform 
the activity.
    2. To a member of congress or to a congressional staff member in 
response to an inquiry of the congressional office made at the written 
request of the constituent about whom the record is maintained.
    3. To the Department of Justice (DOJ), court or adjudicatory body 
when:
    a. The agency or any component thereof, or
    b. Any employee of the agency in his or her official capacity, or
    c. Any employee of the agency in his or her individual capacity 
where the DOJ has agreed to represent the employee, or
    d. The United States Government is a party to litigation or has an 
interest in such litigation, and by careful review, CMS determines that 
the records are both relevant and necessary to the litigation and that 
the use of such records by the DOJ, court or adjudicatory body is 
compatible with the purpose for which the agency collected the records.
    4. To a CMS contractor (including, but not necessarily limited to 
fiscal intermediaries and carriers) that assists in the administration 
of a CMS-administered health benefits program, or to a grantee of a 
CMS-administered grant program, when disclosure is deemed reasonably 
necessary by CMS to prevent, deter, discover, detect, investigate, 
examine, prosecute, sue with respect to, defend against, correct, 
remedy, or otherwise combat fraud or abuse in such program.
    5. To another Federal agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States (including any State or local governmental agency), that 
administers, or that has the authority to investigate potential fraud 
or abuse in, a health benefits program funded in whole or in part by 
Federal funds, when disclosure is deemed reasonably necessary by CMS to 
prevent, deter, discover, detect, investigate, examine, prosecute, sue 
with respect to, defend against, correct, remedy, or otherwise combat 
fraud or abuse in such programs.
    B. Additional Provisions Affecting Routine Use Disclosures. This 
system contains Protected Health Information as defined by Department 
of Health and Human Services (HHS) regulation ``Standards for Privacy 
of Individually Identifiable Health Information'' (45 CFR Parts 160 and 
164, 65 Fed. Reg. 82462 (12-28-00), Subparts A and E). Disclosures of 
Protected Health Information authorized by these routine uses may only 
be made if, and as, permitted or required by the ``Standards for 
Privacy of Individually Identifiable Health Information.''
    In addition, our policy will be to prohibit release even of not 
directly identifiable, except pursuant to one of the routine uses or if 
required by law, if we determine there is a possibility that an 
individual can be identified through implicit deduction based on small 
cell sizes (instances where the complaint population is so small that 
individuals who are familiar with the complainants could, because of 
the small size, use this information to deduce the identity of the 
complainant).

Policies and Practices for Storing, Retrieving, Accessing, Retaining, 
and Disposing of Records in the System:
Storage:
    All records are stored electronically.

Retrievability:
    Information is retrievable by Plan Sponsor identification number, 
Benefit Option Identifier, and Health Insurance Claim Number or Social 
Security Number.

Safeguards:
    CMS has safeguards in place for authorized users and monitors such 
users to ensure against excessive or unauthorized use. Personnel having 
access to the system have been trained in the Privacy Act and 
information security requirements. Employees who maintain records in 
this system are instructed not to release data until the intended 
recipient agrees to implements appropriate management, operational and 
technical safeguards sufficient to protect the confidentiality, 
integrity and availability of the information and information systems 
and to prevent unauthorized access.
    This system will conform to all applicable Federal laws and 
regulations and Federal, HHS, and CMS policies and standards as they 
relate to information security and data privacy. These laws and 
regulations include but are not limited to: the Privacy Act of 1974; 
the Federal Information Security Management Act of 2002; the Computer 
Fraud and Abuse Act of 1986; the Health Insurance Portability and 
Accountability Act of 1996; the E-Government Act of 2002; the Clinger-
Cohen Act of 1996; the Medicare Modernization Act of 2003, and the 
corresponding implementing regulations. OMB Circular A-130, Management 
of Federal Resources, Appendix III, Security of Federal Automated 
Information Resources also applies. Federal, HHS, and CMS policies and 
standards include but are not limited to: all pertinent National

[[Page 41039]]

Institute of Standards and Technology publications; HHS Information 
Systems Program Handbook and the CMS Information Security Handbook.

Retention and Disposal:
    Records are maintained in the active files for a period of 15 
years. The records are then retired to archival files maintained at the 
Health Care Data Center. All claims-related records are encompassed by 
the document preservation order and will be retained until notification 
is received from the Department of Justice.

System Manager and Address:
    Director, Employer Policy & Operations Group, CMS, Room C1-22-06, 
7500 Security Boulevard, Baltimore, Maryland 21244-1850.

Notification Procedure:
    For purpose of access, the subject individual should write to the 
system manager who will require the system name, HICN, address, date of 
birth, and gender, and for verification purposes, the subject 
individual's name (woman's maiden name, if applicable), and SSN. 
Furnishing the SSN is voluntary, but it may make searching for a record 
easier and prevent delay.

Record Access Procedure:
    For the purpose of access, use the same procedures outlines in 
Notification Procedures above. Requestors should also reasonably 
specify the record contents being sought. (These procedures are in 
accordance with Department regulation 45 CFR 5b.5).

Contesting Records Procedures:
    The subject individual should contact the system manager named 
above and reasonably identify the records and specify the information 
to be contested. State the corrective action sought and the reasons for 
the correction with supporting justification. (These Procedures are in 
accordance with Department regulation 45 CFR 5b.7).

Record Source Categories:
    Records maintained in this system will be derived from Medicare 
Beneficiary Database system of records and from medical plans and plan 
sponsors.

Systems Exempted from Certain Provisions of the Act:
    None.

[FR Doc. 05-14079 Filed 7-14-05; 8:45 am]
BILLING CODE 4120-03-P