[Federal Register Volume 71, Number 199 (Monday, October 16, 2006)]
[Notices]
[Pages 60713-60717]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-17052]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services


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

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

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

-----------------------------------------------------------------------

SUMMARY: In accordance with the requirements of the Privacy Act of 
1974, we are proposing to establish a new system titled, ``Competitive 
Bidding for Clinical Laboratory Services (CBCLS), System No. 09-70-
0589.'' The demonstration project is mandated by section 302(b) of the 
Medicare Prescription Drug Improvement, and Modernization Act of 2003 
(MMA) (Public Law (Pub. L.) 108-173), which was enacted into law on 
December 8, 2003, and amended Title XVIII of the Social Security Act 
(the Act). The CBCLS demonstration and evaluation seek to determine 
whether competitive bidding can be used to provide quality laboratory 
services at prices below current Medicare reimbursement rates. 
Independent, hospital, and physician office laboratories providing non-
patient Medicare Part B laboratory services will be required to 
participate in the demonstration.
    The purpose of this system is to collect and maintain demographic 
and health related data on the target population of Medicare 
beneficiaries who reside in the demonstration area and providers and/or 
suppliers that are potential participants in the demonstration who 
provide Medicare Part B clinical laboratory services to such 
beneficiaries. Information retrieved from this system may be disclosed 
to: (1) Support regulatory, reimbursement, and policy functions 
performed within

[[Page 60714]]

the agency or by a contractor, grantee, or consultant; (2) assist 
another Federal or state agency with information to contribute to the 
accuracy of CMS's proper payment of Medicare benefits, enable such 
agency to administer a Federal health benefits program, or to enable 
such agency to fulfill a requirement of Federal statute or regulation 
that implements a health benefits program funded in whole or in part 
with Federal funds; (3) support an individual or organization for a 
research project or in support of an evaluation project related to the 
prevention of disease or disability, the restoration or maintenance of 
health, or payment related projects; (4) support litigation involving 
the agency; and (5) combat fraud, waste, and abuse in certain 
Federally-funded health benefits programs. We have provided background 
information about the new 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.

DATES: 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 Homeland Security & Governmental Affairs, and the 
Administrator, Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB) on October 6, 2006. To ensure that all 
parties have adequate time in which to comment, the new system will 
become effective 30 days from the publication of the notice, or 40 days 
from the date it was submitted to OMB and the Congress, whichever is 
later. We may defer implementation of this system 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 comments to the CMS Privacy 
Officer, Division of Privacy Compliance, Enterprise Architecture and 
Strategy Group, 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 time.

FOR FURTHER INFORMATION CONTACT: Linda Lebovic, Division Payment Policy 
Demonstrations, Medicare Demonstrations Program Group, Office of 
Research, Development & Information, Mail Stop C4-17-27, Centers for 
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 
21244-1849. She can be reached by telephone at 410-786-3402, or via e-
mail at [email protected].

SUPPLEMENTARY INFORMATION: The demonstration is mandated by section 
302(b) of the MMA (Pub. L. 108-173), which was enacted into law on 
December 8, 2003, and amended Title XVIII of the Act. The CBCLS 
demonstration and evaluation seek to determine whether competitive 
bidding can be used to provide quality laboratory services at prices 
below current Medicare reimbursement rates. Independent, hospital, and 
physician office laboratories providing Medicare Part B clinical 
laboratory services to non-patient beneficiaries will be required to 
participate.
    The demonstration and its evaluation include all clinical 
laboratory services paid under the Clinical Laboratory Fee Schedule 
(except pap smears and colorectal cancer screening tests) for Medicare 
Part B fee-for-service beneficiaries who live in the demonstration 
area. The payment basis determined for each competitive acquisition 
area will be substituted for payment under the existing Clinical 
Laboratory Fee Schedule. The MMA requires laboratories to comply with 
the regulations under the Clinical Laboratory Improvement Amendments as 
mandated under section 353 of the Public Health Service Act. 
Beneficiary access to laboratory services and laboratory quality will 
be monitored throughout the demonstration.

I. Description of the Proposed System of Records

A. Statutory and Regulatory Basis for SOR

    The statutory authority for this system is given under the 
provisions of section 302(b) of the Medicare Prescription Drug 
Improvement, and Modernization Act of 2003 (Pub. L. 108-173).

B. Collection and Maintenance of Data in the System

    This system will collect and maintain individually identifiable and 
other data collected on Medicare beneficiaries who reside in the 
demonstration area and providers and/or suppliers that are potential 
participants in the demonstration who provide Medicare Part B clinical 
laboratory services to such beneficiaries. Data will be collected from 
Medicare administrative and claims records, patient medical charts, and 
physician records. The collected information will include, but is not 
limited to: Medicare claims and eligibility data, name, address, 
telephone number, health insurance claims number, race/ethnicity, 
gender, date of birth, provider name, unique provider identification 
number, medical record number, as well as clinical, demographic, 
background information relating to Medicare issues, and research 
information needed to evaluate the program and develop research reports 
on findings.

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

    A. 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 CBCLS 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 CBCLS.
    CMS has the following policies and procedures concerning 
disclosures of information that will be maintained in the system. 
Disclosure of information from the system 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 collect and maintain 
demographic and health related data on the target population of 
Medicare beneficiaries who are potential participants in the CBCLS 
program. We will also collect certain identifying information on 
Medicare providers who provide services to such beneficiaries.
    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:

[[Page 60715]]

    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, consultants or grantees, who have been 
engaged by the agency to assist in the performance of a service related 
to this collection 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, consultant or grantee whatever information 
is necessary for the contractor, consultant, or grantee to fulfill its 
duties. In these situations, safeguards are provided in the contract 
prohibiting the contractor, consultant or grantee from using or 
disclosing the information for any purpose other than that described in 
the contract and requires the contractor, consultant or grantee to 
return or destroy all information at the completion of the contract.
    2. To another Federal or state agency to:
    a. Contribute to the accuracy of CMS's proper payment of Medicare 
benefits;
    b. Enable such agency to administer a Federal health benefits 
program, or, as necessary, to enable such agency to fulfill a 
requirement of a Federal statute or regulation that implements a health 
benefits program funded in whole or in part with Federal funds; and/or
    c. Assist Federal/state Medicaid programs within the state.
    Other Federal or state agencies, in their administration of a 
Federal health program, may require CBCLS information in order to 
support evaluations and monitoring of Medicare claims information of 
beneficiaries, including proper reimbursement for services provided.
    3. To an individual or organization for a research project or in 
support of an evaluation project related to the prevention of disease 
or disability, the restoration or maintenance of health, or payment 
related projects.
    The CBCLS data will provide for research or support of evaluation 
projects and a broader, longitudinal, national perspective of the 
status of Medicare beneficiaries. CMS anticipates that many researchers 
will have legitimate requests to use these data in projects that could 
ultimately improve the care provided to Medicare beneficiaries and the 
policies that govern their care.
    4. 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.
    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.
    5. 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, waste, or abuse in such program.
    We contemplate disclosing information under this routine use only 
in situations in which CMS may enter into a contractual, grantee, 
cooperative agreement or consultant relationship with a third party to 
assist in accomplishing CMS functions relating to the purpose of 
combating fraud, waste, and abuse. CMS occasionally contracts out 
certain of its functions or makes grants or cooperative agreements when 
doing so would contribute to effective and efficient operations. CMS 
must be able to give a contractor, grantee, consultant or other legal 
agent whatever information is necessary for the agent to fulfill its 
duties. In these situations, safeguards are provided in the contract 
prohibiting the agent from using or disclosing the information for any 
purpose other than that described in the contract and requiring the 
agent to return or destroy all information.
    6. 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, waste, or abuse in such programs.
    Other agencies may require CBCLS information for the purpose of 
combating fraud, waste, and abuse in such Federally-funded programs.

B. Additional Provisions Affecting Routine Use Disclosures

    To the extent 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, subparts A and E) 65 FR 82462 (12-28-00). Disclosures of such PHI 
that are otherwise 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.'' (See 45 CFR 
164.512(a)(1)).
    In addition, our policy will be to prohibit release even of data 
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

[[Page 60716]]

patient population is so small that an individual 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 may apply 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 Prescription Drug Improvement, and 
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; the 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 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 this 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: October 4, 2006.
Charlene Frizzera,
Acting Chief Operating Officer, Centers for Medicare & Medicaid 
Services.
SYSTEM NO. 09-70-0589

System Name
    ``Competitive Bidding for Clinical Laboratory Services (CBCLS),'' 
HHS/CMS/ORDI.

Security Classification
    Level Three Privacy Act Sensitive Data.

System Location
    CMS Data Center, 7500 Security Boulevard, North Building, First 
Floor, Baltimore, Maryland 21244-1850 and at various co-locations of 
CMS agents.

Categories of Individuals Covered by the System
    This system will collect and maintain individually identifiable and 
other data collected on Medicare beneficiaries who reside in the 
demonstration area and providers and/or suppliers that are potential 
participants in the demonstration who provide Medicare Part B clinical 
laboratory services to such beneficiaries.

Categories of Records in the System:
    The collected information will include, but is not limited to: 
Medicare claims and eligibility data, name, address, telephone number, 
health insurance claims number (HICN), race/ethnicity, gender, date of 
birth, provider name, unique provider identification number, medical 
record number, as well as clinical, demographic, background information 
relating to Medicare issues, and research information needed to 
evaluate the program and develop research reports on findings.

Authority for Maintenance of the System:
    The statutory authority for this system is given under the 
provisions of section 302(b) of the Medicare Prescription Drug 
Improvement, and Modernization Act of 2003 (Pub. L. 108-173).

Purpose(s) of the System:
    The purpose of this system is to collect and maintain demographic 
and health related data on the target population of Medicare 
beneficiaries who reside in the demonstration area and providers and/or 
suppliers that are potential participants in the demonstration who 
provide Medicare Part B clinical laboratory services to such 
beneficiaries. Information retrieved from this system may be disclosed 
to: (1) Support regulatory, reimbursement, and policy functions 
performed within the agency or by a contractor, grantee, or consultant; 
(2) assist another Federal or state agency with information to 
contribute to the accuracy of CMS's proper payment of Medicare 
benefits, enable such agency to administer a Federal health benefits 
program, or to enable such agency to fulfill a requirement of Federal 
statute or regulation that implements a health benefits program funded 
in whole or in part with Federal funds; (3) support an individual or 
organization for a research project or in support of an evaluation 
project related to the prevention of disease or disability, the 
restoration or maintenance of health, or payment related projects; (4) 
support litigation involving the agency; and (5) combat fraud, waste, 
and abuse in certain Federally-funded 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.'' 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, consultants or grantees, who have been 
engaged by the agency to assist in the performance of a service related 
to this collection and who need to have access to the records in order 
to perform the activity.
    2. To another Federal or state agency to:
    a. Contribute to the accuracy of CMS's proper payment of Medicare 
benefits;
    b. Enable such agency to administer a Federal health benefits 
program, or, as necessary, to enable such agency to fulfill a 
requirement of a Federal statute or regulation that implements a health 
benefits program funded in whole or in part with Federal funds; and/or
    c. Assist Federal/state Medicaid programs within the state.

[[Page 60717]]

    3. To an individual or organization for a research project or in 
support of an evaluation project related to the prevention of disease 
or disability, the restoration or maintenance of health, or payment 
related projects.
    4. 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.
    5. 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, waste, or abuse in such program.
    6. 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, waste, or abuse in such programs.

B. Additional Provisions Affecting Routine Use Disclosures:
    To the extent 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, subparts A and E) 65 FR 82462 (12-28-00). Disclosures of such PHI 
that are otherwise 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.'' (See 45 CFR 164.512(a) 
(1)).
    In addition, our policy will be to prohibit release even of data 
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 an 
individual could, because of the small size, use this information to 
deduce the identity of the beneficiary).

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

Retrievability:
    The collected data are retrieved by an individual identifier; e.g., 
beneficiary name or HICN.

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 may apply 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; the HHS Information 
Systems Program Handbook and the CMS Information Security Handbook.

Retention and Disposal:
    CMS will retain information for a total period not to exceed 10 
years. All claims-related records are encompassed by the document 
preservation order and will be retained until notification is received 
from DOJ.

System Manager and Address:
    Division Payment Policy Demonstrations, Medicare Demonstrations 
Program Group, Office of Research, Development & Information, Mail Stop 
C4-17-27, Centers for Medicare & Medicaid Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1849.

Notification Procedure:
    For purpose of access, the subject individual should write to the 
system manager who will require the system name, employee 
identification number, tax identification number, national provider 
number, and for verification purposes, the subject individual's name 
(woman's maiden name, if applicable), HICN, and/or SSN (furnishing the 
SSN is voluntary, but it may make searching for a record easier and 
prevent delay).

Record Access Procedure:
    For purpose of access, use the same procedures outlined 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(a)(2)).

Contesting Record Procedures:
    The subject individual should contact the system manager named 
above, and reasonably identify the record 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).

Records Source Categories:
    Data will be collected from Medicare administrative and claims 
records (Common Working File, Carrier Medicare Claims Record, 
Intermediary Medicare Claims Records), patient medical charts, and 
physician records.

Systems Exempted from Certain Provisions of the Act:
    None.

[FR Doc. E6-17052 Filed 10-13-06; 8:45 am]
BILLING CODE 4120-03-P