[Federal Register Volume 71, Number 199 (Monday, October 16, 2006)]
[Rules and Regulations]
[Pages 60663-60670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17033]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 433

[CMS-2231-F]
RIN 0938-A031


Medicaid Program; State Allotments for Payment of Medicare Part B 
Premiums for Qualifying Individuals: Federal Fiscal Year 2006 and 
Fiscal Year 2007

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

ACTION: Final rule.

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SUMMARY: This final rule sets forth the methodology and process used to 
compute and issue each State's allotments for fiscal years (FY) 2006 
and FY 2007 that are available to pay Medicare Part B premiums for 
qualifying individuals. It also provides the final FY 2006 allotments 
and the preliminary FY 2007 allotments determined under this 
methodology.
    We are also confirming the April 28, 2006 interim final rule as 
final.

DATES: Effective November 15, 2006, the interim rule amending 42 CFR 
part 433, which was published on April 28, 2006 (71 FR 25085), is 
adopted as final.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Allotments Prior to FY 2005

    Section 1902 of the Social Security Act (the Act) sets forth the 
requirements for State plans for medical assistance. Before August 5, 
1997, section 1902(a)(10)(E) of the Act specified that the State 
Medicaid plan must provide for some or all types of Medicare cost 
sharing for three eligibility groups of low-income Medicare 
beneficiaries. These three groups included qualified Medicare 
beneficiaries (QMBs), specified low-income Medicare beneficiaries 
(SLMBs), and qualified disabled and working individuals (QDWIs).
    A QMB is an individual entitled to Medicare Part A with income at 
or below the Federal poverty line (FPL) and resources below $4,000 for 
an individual and $6,000 for a couple. A SLMB is an individual who 
meets the QMB criteria, except that his or her income is above 100 
percent of the FPL and does not exceed 120 percent of the FPL. A QDWI 
is a disabled individual who is entitled to enroll in Medicare Part A 
under section 1818A of the Act, whose income does not exceed 200 
percent of the FPL for a family of the size involved, whose resources 
do not exceed twice the amount allowed under the Supplementary Security 
Income (SSI) program, and who is not otherwise eligible for Medicaid. 
The definition of Medicare cost-sharing at section 1905(p)(3) of the 
Act includes payment for premiums for Medicare Part B.
    Section 4732 of the Balanced Budget Act of 1997 (BBA), enacted on 
August 5, 1997, amended section 1902(a)(10)(E) of the Act to require 
States to provide for Medicaid payment of the Medicare Part B premiums 
for two additional eligibility groups of low-income Medicare 
beneficiaries, referred to as qualifying individuals (QIs).
    Specifically, a new section 1902(a)(10)(E)(iv)(I) of the Act was 
added, under which States must pay the full amount of the Medicare Part 
B premium for qualifying individuals who are eligible QMBs but for the 
fact that their income level is at least 120 percent of the FPL but 
less than 135 percent of the FPL for a family of the size involved. 
These individuals cannot otherwise be eligible for medical assistance 
under the approved State Medicaid plan. The second group of QIs added 
under section 1902(a)(10)(E)(iv)(II) of the Act includes Medicare 
beneficiaries who would be QMBs except that their income is at least 
135 percent but less than 175 percent of the FPL for a family of the 
size involved, who are not otherwise eligible for Medicaid under the 
approved State plan. These QIs were eligible for only a portion of 
Medicare cost sharing consisting of a percentage of the increase in the 
Medicare Part B premium attributable to the shift of Medicare home 
health coverage from Part A to Part B (as provided in section 4611 of 
the BBA).
    Coverage of the second group of QIs ended on December 31, 2002, and 
in 2003, section 401 of the Welfare Reform Bill (Pub. L. 108-89), 
enacted on October 1, 2003, eliminated reference to the QI-2 benefit. 
In each of the years 2002 and 2003, continuing resolutions extended the 
coverage of the first group of QIs (whose income is at least 120 
percent but less than 135 percent of the Federal poverty line) through 
the following fiscal year, but maintained the annual funding at the FY 
2002 level.
    In 2004, Public Law 108-448 was enacted, which continued coverage 
of this group through September 30, 2005, again with no change in 
funding.
    The BBA also added a new section 1933 to the Act to provide for 
Medicaid payment of Medicare Part B premiums

[[Page 60664]]

for QIs. (The previous section 1933 was re-designated as section 1934.)
    Section 1933(a) of the Act specifies that a State plan must 
provide, through a State plan amendment, for medical assistance to pay 
for the cost of Medicare cost-sharing on behalf of QIs who are selected 
to receive assistance. Section 1933(b) of the Act sets forth the rules 
that States must follow in selecting QIs and providing payment for 
Medicare Part B premiums. Specifically, the State must permit all 
qualifying individuals to apply for assistance and must select 
individuals on a first-come, first-served basis (that is, the State 
must select QIs in the order in which they apply). Under section 
1933(b)(2)(B) of the Act, in selecting persons who will receive 
assistance in years after 1998, States must give preference to those 
individuals who received assistance as QIs, QMBs, SLMBs, or QDWIs in 
the last month of the previous year and who continue to be (or become) 
QIs.
    Under section 1933(b)(4) of the Act, persons selected to receive 
assistance in a calendar year are entitled to receive assistance for 
the remainder of the year, but not beyond, as long as they continue to 
qualify. The fact that an individual is selected to receive assistance 
at any time during the year does not entitle the individual to 
continued assistance for any succeeding year. Because the State's 
allotment is limited by law, section 1933(b)(3) of the Act provides 
that the State must limit the number of QIs so that the amount of 
assistance provided during the year is approximately equal to the 
allotment for that year.
    Section 1933(c) of the Act limits the total amount of Federal funds 
available for payment of Part B premiums for QIs each fiscal year and 
specifies the formula that is to be used to determine an allotment for 
each State from this total amount. For States that executed a State 
plan amendment in accordance with section 1933(a) of the Act, a total 
of $1.5 billion was allocated over 5 years as follows: $200 million in 
FY 1998; $250 million in FY 1999; $300 million in FY 2000; $350 million 
in FY 2001; and $400 million in FY 2002. In 1999, the Department 
published a notice (64 FR 14931, March 29, 1999) to advise States of 
the methodology used to calculate allotments and each State's specific 
allotment for that year. Following that notice, there was no change in 
methodology and States have been notified annually of their allotments. 
We did not include the methodology for computing the allocation in our 
regulations. Although the BBA originally provided coverage of QIs 
through FY 2002, through several continuing resolutions, coverage has 
been continued through the current fiscal year, but without any 
increase in total allocation over the FY 2002 level.
    The Federal medical assistance percentage for Medicaid payment of 
Medicare Part B premiums for qualifying individuals is 100 percent for 
expenditures up to the amount of the State's allotment. No Federal 
funds are available for expenditures in excess of the State allotment 
amount. The Federal matching rate for administrative expenses 
associated with the payment of Medicare Part B premiums for QIs remains 
at the 50 percent matching level. Federal financial participation in 
the administrative expenses is not counted against the State's 
allotment.
    The amount available for each fiscal year is to be allocated among 
States according to the formula set forth in section 1933(c)(2) of the 
Act. The formula provides for an amount to each State that is to be 
based on each State's share of the Secretary's estimate of the ratio 
of: (a) An amount equal to the total number of individuals in the State 
who meet all but the income requirements for QMBs, whose incomes are at 
least 120 percent but less than 135 percent of the Federal poverty 
line, and who are not otherwise eligible for Medicaid, to (b) the sum 
of all those individuals for all eligible States.

B. Allotments for FY 2005

    In FY 2005, some States exhausted their FY 2005 allotments before 
the end of the fiscal year, which caused them to deny benefits to 
eligible persons under section 1933(b)(3) of the Act, while other 
States projected a surplus in their allotments. We asked those States 
that exhausted or expected to exhaust their FY 2005 allotments before 
the end of the fiscal year to project the amount of funds that would be 
required to grant eligibility to all eligible persons in their State, 
that is, their need. We also asked those States that did not expect to 
use their full allotments in FY 2005 to project the difference between 
the amount they expected to spend and their allotment, that is, their 
surplus. After all States reported these figures, it was evident that 
the total surplus exceeded the total need. In spite of there being 
adequate overall funding for the QI benefit, some eligible individuals 
would have been denied benefits due to the allocation methodology 
initially used to determine the FY 2005 allotments.
    We believed that it was the clear intent of the statute to provide 
benefits to eligible persons up to the full amount of funds made 
available for the program. We attributed the difference between the 
surplus in available QI allotments for some States and the need in 
other States in FY 2005 as due to the imprecision in the data that we 
used to provide States with their initial allocations under section 
1933 of the Act. Therefore, on August 26, 2005 we published an interim 
final rule in the Federal Register (70 FR 50214) under which we 
compensated for this imprecision in order to enable States to enroll 
those QIs whom they would have been able to enroll had the data been 
more precise.
    The interim final rule amended 42 CFR 433.10(c) to specify the 
formula and the data to be used to determine States' allotments and to 
revise, under certain circumstances, individual State allotments for a 
Federal fiscal year for the Medicaid payment of Medicare Part B 
premiums for qualifying individuals identified under section 
1902(a)(10)(E)(iv) of the Act.
    The FY 2005 allotments were determined by applying the U.S. Census 
Bureau data to the formula set forth in section 1933(c)(2) of the Act. 
However, the statute requires that the allocation of the fiscal year 
allotment be based upon a ratio of the amount of ``total number of 
individuals described in section 1902(a)(10)(E)(iv) in the State'' to 
the sum of these amounts for all States. Because this formula requires 
an estimate of an unknown number, that is, the number of individuals 
who could be QIs (rather than the number of individuals who were QIs in 
a previous period), our use of the Census Bureau data in the formula 
represented a rough proxy to attain the statutory number. Actual 
expenditure data, however, revealed that the Census Bureau data yielded 
an inappropriate distribution of the total appropriated fund as 
evidenced by the fact that several States projected significant 
shortfalls in their allotments, while many other States projected a 
significant surplus by the end of the fiscal year 2005. Census Bureau 
data were not accurate for the purpose of projecting States' needs 
because the data could not take into consideration all variables that 
contribute to QI eligibility and enrollment, such as resource levels 
and the application process itself.
    While section 1933 of the Act requires the Secretary to estimate 
the allocation of the allotments among the States, it did not preclude 
a subsequent readjustment of that allocation, when it became clear that 
the data used for that estimate did not effectuate the statutory 
objective. The interim final rule published in the Federal Register on 
August 26, 2005 permitted in this specific circumstance a 
redistribution of surplus funds, as it was demonstrated that the 
States' projections and

[[Page 60665]]

estimates resulted in an inequitable initial allocation for FY 2005, 
such that some States were granted an allocation in excess of their 
total projected need, while the allocation granted to other States 
proved insufficient to meet their projected QI expenditures.
    In the August 26, 2005 interim final rule, we codified the 
methodology we have been using to approximate the statutory formula for 
determining State allotments. However, since certain States projected a 
deficit in their allotment before the end of fiscal year 2005, the rule 
permitted fiscal year 2005 funds to be reallocated from the surplus 
States to the need States. The regulation specified the methodology for 
computing the annual allotments, and for reallocating funds in this 
circumstance. The formula used to reallocate funds was intended to 
minimize the impact on surplus States, to equitably distribute the 
total needed amount among those surplus States, and to meet the 
immediate needs for those States projecting deficits. At the time of 
the publication of the interim final rule on August 26, 2005, the 
authorization for the QI benefit expired at the end of calendar year 
2005, and no additional funds were appropriated for the QI benefit 
beyond September 30, 2005; therefore, the regulation specified a sunset 
at the end of calendar year 2005.

C. Allotments for FY 2006 and FY 2007

    On October 20, 2005 the ``QI, TMA, and Abstinence Programs 
Extension and Hurricane Katrina Unemployment Relief Act of 2005'' was 
enacted by the Congress (Pub. L. 109-91). In particular, section 101 of 
Public Law 109-91 extended the QI program through September 30, 2007 
with no change in funding; that is, under this legislation $400 million 
per fiscal year is appropriated for each of FY 2006 and FY 2007. Under 
section 101(c), the provisions of section 101 of Public Law 109-91 were 
effective as of September 30, 2005.
    On April 28, 2006 we published an interim final rule with comment 
period in the Federal Register (71 FR 25085) which implemented the 
provisions of section 101 of Public Law 109-91 relating the QI program 
and QI allotments for FY 2006 and FY 2007. As indicated in that interim 
final rule, we believe that the clear intent of the statute is to 
provide benefits to eligible persons up to the full amount of funds 
made available for the program in each fiscal year. We recognized that 
because of the imprecision in data for computing the States' QI 
allotments for a fiscal year, some States may experience either 
surpluses or shortages in their FY 2006 and FY 2007 allotments. These 
FY 2006 and FY 2007 QI allotments attempt to compensate for the 
imprecision in data to permit shortage States to enroll more QIs than 
otherwise would have been possible.

II. Provisions of the Final Rule

    We received no public comments on the April 28, 2006 interim final 
rule (71 FR 25085-25092).
    This final rule amends Sec.  433.10(c) to specify the formula, 
data, and process to be used for determining and issuing States' QI 
allotments. This methodology and process provides for an adjustment in 
the amounts of the QI allotments preliminarily determined for the 
Medicaid payment of Medicare Part B premiums for qualifying individuals 
identified under section 1902(a)(10)(E)(iv) of the Act.
    Under the methodology and process described in this final rule for 
determining States' FY 2006 and FY 2007 QI allotments, ``initial'' FY 
2006 and FY 2007 allotments are determined by applying U.S. Census 
Bureau data to the formula set forth in section 1933(c)(2) of the Act. 
The statute requires that the allocation of the fiscal year allotment 
be based upon a ratio of the amount of ``total number of individuals 
described in section 1902(a)(10)(E)(iv) in the State'' to the sum of 
these amounts for all States. Because this formula requires an estimate 
of an unknown number, that is, the number of individuals who could be 
QIs (rather than the number of individuals who were QIs in a previous 
period), our use of the Census Bureau data in the formula represents a 
proxy to attain the statutory number. Use of the Census Bureau data may 
yield an inappropriate distribution of the total appropriated funds 
resulting in significant shortfalls in the projected allotments for 
some States and significant surpluses by the end of the fiscal year for 
other States. Census Bureau data may not be sufficiently accurate for 
the purpose of projecting States' needs because the data cannot take 
into consideration all variables that contribute to QI eligibility and 
enrollment, such as resource levels and the application process itself. 
While section 1933 of the Act requires the Secretary to estimate the 
allocation of the allotments among the States, it does not preclude a 
subsequent readjustment of that allocation, when it becomes clear that 
the data used for that estimate did not effectuate the statutory 
objective.
    This final rule sets out the methodology and process we use for 
determining States' QI allotments for FY 2006 and FY 2007 that permits 
a redistribution of surplus funds to States whose allotments, 
determined based only on the formula in section 1933 of the Act, would 
be insufficient to meet their projected QI expenditures for the fiscal 
year. In this final rule, we are codifying the methodology and process 
we will use to approximate the statutory formula for determining State 
allotments and making adjustments in such allotment, as appropriate.
    In this final rule, we set forth a two step/two phase methodology/
process for determining States' QI allotments for FY 2006 and FY 2007. 
Under the first step of phase one, an ``initial'' allocation is 
determined for each State under the formula specified in section 1933 
of the Act and based only on the data obtained from the Census Bureau 
(the 3-year average of the number of Medicare beneficiaries in the 
State who are not enrolled in the Medicaid program but whose incomes 
are at least 120 percent of the FPL and less than 135 percent of the 
FPL). However, we further obtain States' projected QI expenditures for 
the fiscal year. We then compare the initial allocations for the fiscal 
year to the States' projected QI expenditures for the fiscal year to 
determine those States with a projected need (that is, those States 
whose initial allocation is less than their projected expenditures) or 
a projected surplus (that is, those States whose initial allocation is 
greater than the projected expenditures) for the fiscal year.
    Under the second step of the process, we adjust the States' initial 
allocations by considering the States' projected QI expenditures for 
the fiscal year. This would be done by proportionately reducing the QI 
allotments of States with surpluses for the fiscal year by the amount 
of the total need for States that do not have sufficient QI allotments 
for the fiscal year.
    In this final rule, we apply this methodology/process in two phases 
in each fiscal year. At the beginning of each fiscal year, we would 
determine the initial allocations based on the Census Bureau data, 
obtain States' projections of QI expenditures for the fiscal year, and 
make any adjustments based on the projected surpluses/needs for the 
fiscal year. The amount of the States' QI allotments determined under 
this first phase at the beginning of the fiscal year are considered the 
States' ``preliminary'' QI allotments for the fiscal year. Then, under 
phase two of the process during the fourth quarter of the fiscal year 
we obtain States' updated projected QI expenditures for the fiscal 
year. We then establish the ``final'' QI allotments for the fiscal year 
based on these updated projections.

[[Page 60666]]

    As indicated in this final rule, the States' final QI allotments 
for a fiscal year are determined by comparing the initial QI allotments 
for the fiscal year (again which are calculated based on the Census 
Bureau data) to the States' updated projections of QI expenditures for 
the fiscal year; this establishes those States with a ``final'' 
projected need (the initial allocation is less than the updated 
projected expenditures) or a surplus (initial allocation is greater 
than the updated projected expenditures) for the fiscal year. Using the 
updated projected QI expenditures, we adjust the States' initial 
allocations by reducing the surplus States' initial allotments 
proportionately to meet the need States' deficits. This is the same 
methodology we used for determining the FY 2005 allotments as published 
in the interim final rule published on August 26, 2005 in the Federal 
Register; the only change was that in computing the FY 2006 and FY 2007 
allotments, we are determining the preliminary allotments at the 
beginning of the fiscal year using States' preliminary projected QI 
expenditures, and then determining the final QI allotments later in the 
fiscal year using States' updated projected QI expenditures.
    The formula used to reallocate the available funds to need States 
is intended to minimize the impact on surplus States, to equitably 
distribute the total needed amount among those surplus States, and to 
meet the needs for those States projecting deficits. Since under Public 
Law 109-91, the authorization for the QI benefit expires at the end of 
calendar year 2007, and currently no funds have been appropriated for 
the QI benefit beyond September 30, 2007, this regulation will sunset 
at the end of calendar year 2007. Should the Congress authorize an 
extension of the QI benefit and appropriate additional funds for 
allocation among the States, we will amend the sunset date in this 
regulation to take into account any extension.
    The resulting initial allotments for FY 2006 are shown by State in 
the table below. In this table each column contains data defined as 
follows:

Chart--Final FY 2006 Qualified Individuals Allotments

    Column A--State. Column A shows the name of each State.
    Columns B through D show the determination of the States' Initial 
FY 2006 QI Allotments, based only on Census Bureau data.
    Column B--Number of Individuals. Column B contains the estimated 
average number of Medicare beneficiaries for the years 2003 through 
2005 who are not covered by Medicaid whose family income is between 120 
and 135 percent of the poverty level for each State, in thousands, as 
obtained from the Census Bureau's Annual Social and Economic Supplement 
to the Current Population Survey through March of 2005.
    Column C--Percentage of Total. Column C provides the percentage of 
total number of individuals for each State, determined as the Number of 
Individuals for the State in Column B divided by the sum of the Number 
of Individuals for all States in Column B.
    Column D--Initial QI Allotment. Column D contains each State's 
Initial FY 2006 QI allotment, calculated as the State's Percentage of 
Total in Column C multiplied by $400,000,000, the total amount 
available for FY 2006 for all States.
    Columns E through J show the determination of the States' Final FY 
2006 QI Allotments.
    Column E--FY 2006 Estimated QI Expenditures. Column E contains the 
States' most recent estimates of their total QI expenditures for FY 
2006 requested from States in August 2006.
    Column F--Need (Difference). Column F contains the additional 
amount of QI allotment needed for those States whose estimated 
expenditures in Column E exceed their Initial FY 2006 QI allotments in 
Column D; for those States, Column E shows the amount in Column E minus 
the amount in Column D. For other States, Column F shows ``NA.''
    Column G--Reduction Pool for Non-Need States. Column G contains the 
amount of the pool of surplus FY 2006 QI allotments for those States 
that project they will not need all of their FY 2006 QI allotments 
(referred to as non-need States). For States whose estimates of QI 
expenditures for FY 2006 in Column E are equal to or less than their 
Initial FY 2006 QI allotments in Column D, Column G shows the amount in 
Column D minus the amount in Column E. For the States with a need, 
Column G shows ``Need.'' The pool of excess QI allotments is equal to 
the sum of the amounts in Column G.
    Column H--Percent of Total Non-Need States. Column H shows the 
percentage of the total excess FY 2006 allotments for each Non-Need 
State, determined as the amount for each Non-Need State in Column G 
divided by the sum of the amounts for all States in Column G.
    Column I--Reduction for Non-Need States. Column I shows the amount 
of reduction to Non-Need States' Initial FY 2006 QI allotments in 
Column D in order to provide for the total need shown in Column F. The 
amount in Column I is determined as the percentage in Column H for Non-
Need States multiplied by the sum of the need for all States from 
Column F.
    Column J--Final FY 2006 QI Allotment. Column J contains the 
Preliminary FY 2006 QI allotment for each State. For States that need 
additional amounts based on their FY 2006 Estimated QI Expenditures in 
Column E, Column J is equal to the Initial FY 2006 QI Allotment in 
Column D plus the amount of Need in Column F. For Non-Need States, 
Column J is equal to the Initial FY 2006 QI Allotment in Column D minus 
the amount in Column I.

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[[Page 60667]]

[GRAPHIC] [TIFF OMITTED] TR16OC06.007

Chart--Preliminary FY 2007 Qualified Individuals Allotments

    Column A--State. Column A shows the name of each State.
    Columns B through D show the determination of the States' Initial 
FY 2007 QI Allotments, based only on Census Bureau data.
    Column B--Number of Individuals. Column B contains the estimated 
average number of Medicare beneficiaries for the years 2004 through 
2006 who are not covered by Medicaid whose family income is between 120 
and 135 percent of the poverty level for each State, in thousands, as 
obtained from the Census Bureau's Annual Social and Economic Supplement 
to the

[[Page 60668]]

Current Population Survey through March of 2006.
    Column C--Percentage of Total. Column C provides the percentage of 
total number of individuals for each State, determined as the Number of 
Individuals for the State in Column B divided by the sum of the Number 
of Individuals for all States in Column B.
    Column D--Initial QI Allotment. Column D contains each State's 
Initial FY 2007 QI allotment, calculated as the State's Percentage of 
Total in Column C multiplied by $400,000,000, the total amount 
available for FY 2007 for all States.
    Columns E through J show the determination of the States' 
Preliminary FY 2007 QI Allotments.
    Column E--FY 2007 Estimated QI Expenditures. Column E contains the 
States' most recent estimates of their total QI expenditures for FY 
2007 requested from States in August 2006.
    Column F--Need (Difference). Column F contains the additional 
amount of QI allotment needed for those States whose estimated 
expenditures in Column E exceed their Initial FY 2007 QI allotments in 
Column D; for such States, Column E shows the amount in Column E minus 
the amount in Column D. For other States, Column F shows ``NA.''
    Column G--Reduction Pool for Non-Need States. Column G contains the 
amount of the pool of surplus FY 2007 QI allotments for those States 
that project they will not need all of their FY 2007 QI allotments 
(referred to as non-need States). For States whose estimates of QI 
expenditures for FY 2007 in Column E are equal to or less than their 
Initial FY 2007 QI allotments in Column D, Column G shows the amount in 
Column D minus the amount in Column E. For the States with a need, 
Column G shows ``Need.'' The pool of excess QI allotments is equal to 
the sum of the amounts in Column G.
    Column H--Percent of Total Non-Need States. Column H shows the 
percentage of the total excess FY 2007 allotments for each Non-Need 
State, determined as the amount for each Non-Need State in Column G 
divided by the sum of the amounts for all States in Column G.
    Column I--Reduction for Non-Need States. Column I shows the amount 
of reduction to Non-Need States' Initial FY 2007 QI allotments in 
Column D in order to provide for the total need shown in Column F. The 
amount in Column I is determined as the percentage in Column H for Non-
Need States multiplied by the sum of the need for all States from 
Column F.
    Column J--Preliminary FY 2007 QI Allotment. Column J contains the 
Preliminary FY 2007 QI allotment for each State. For States that need 
additional amounts based on their FY 2007 Estimated QI Expenditures in 
Column E, Column J is equal to the Initial FY 2007 QI Allotment in 
Column D plus the amount of Need Column F. For Non-Need States, Column 
J is equal to the Initial FY 2007 QI Allotment in Column D minus the 
amount in Column I.

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[[Page 60669]]

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[[Page 60670]]

III. 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 (44 U.S.C. 35).

IV. Regulatory Impact Statement

    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 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 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 
for small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. 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.
    This final rule codifies our procedures for implementing provisions 
of the Balanced Budget Act of 1997 to allocate, among the States, 
Federal funds to provide Medicaid payment for Medicare Part B premiums 
for low-income Medicare beneficiaries. The total amount of Federal 
funds available during a Federal fiscal year and the formula for 
determining individual State allotments are specified in the law. We 
have applied the statutory formula for the State allotments. Because 
the data specified in the law were not initially available, we used 
comparable data from the U.S. Census Bureau on the number of possible 
qualifying individuals in the States. This rule also permits, in a 
specific circumstance, reallocation of funds to enable enrollment of 
all eligible individuals to the extent of the available funding.
    We believe that the statutory provisions implemented in this final 
rule will have a positive effect on States and individuals. Federal 
funding at the 100 percent matching rate is available for Medicare 
cost-sharing for Medicare Part B premium payments for qualifying 
individuals and, with the reallocation of the State allotments, a 
greater number of low-income Medicare beneficiaries will be eligible to 
have their Medicare Part B premiums paid under Medicaid. The changes in 
allotments will not result in fewer individuals receiving the QI 
benefit in any State. The FY 2006 and FY 2007 costs for this provision 
have been included in the FY 2007 President's Budget.
    Section 1102(b) of the Social Security Act requires us to prepare a 
regulatory impact analysis for any rule that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. The analysis must conform to the provisions of section 604 
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 a Core-Based 
Statistical Area and has fewer than 100 beds.
    We are not preparing analyses for either the RFA or section 1102(b) 
of the Act because we have determined and certify that this final rule 
will not have a significant economic impact on a substantial number of 
small entities or 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 rule 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 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 
final rule was reviewed by the Office of Management and Budget.

List of Subjects in 42 CFR Part 433

    Administrative practice and procedure, Child support, Claims, Grant 
programs--health, Medicaid, Reporting and recordkeeping requirements.

PART 433--STATE FISCAL ADMINISTRATION

0
Accordingly, the interim final rule amending 42 CFR part 433, which was 
published at 71 FR 25085 on April 28, 2006, is adopted as final.

    Authority: Sections 1902(a)(10), 1933 of the Social Security Act 
(42 U.S.C. 1396a), and Public Law 105-33.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: September 19, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: September 28, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. E6-17033 Filed 10-13-06; 8:45 am]
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