[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Notices]
[Pages 44155-44159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15250]


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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) Centers 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 system titled, ``Healthcare 
Common Procedure Coding System (HCPCS) Level II, System No. 09-70-
0576.'' In October 2003, the Secretary of HHS delegated authority under 
the Health Insurance Portability and Accountability Act of 1996 (HIPAA) 
to CMS to maintain and distribute HCPCS Level II Codes. Level II of the 
HCPCS is a standardized coding system that is used primarily to 
identify products and services not included in the HCPCS Level I 
Current Procedural Terminology (CPT) codes, such as: Injectable drugs 
administered in a physician office; durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) when used outside a 
physician's office; and ambulance services. HCPCS Level II codes were 
established to identify these products on insurance claims. There are 
about 4000 HCPCS Level II codes available for assignment by insurers in 
accordance with their policies.
    The primary purpose of this system is to facilitate the management 
and maintenance of the HCPCS Level II code set. Information in this 
system will also be used to: (1) Support regulatory and policy 
functions performed within the Agency or by a contractor, consultant, 
or grantee; (2) assist another Federal or state agency; (3) support 
litigation involving the Agency related to this system; and (4) combat 
fraud, waste, and abuse in certain health benefits programs. We have 
provided background information about the proposed system in the 
Supplementary Information section below. Although the Privacy Act 
requires only that the ``routine use'' portion of the system be 
published for comment, CMS invites comments on all portions of this 
notice. See Effective Dates section for comment period.

DATES: Effective Dates: CMS filed a new SOR report with the Chair of 
the House Committee on Oversight and Government Reform, 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 August 1, 2007. 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: CMS Privacy Officer, 
Division of Privacy Compliance, Enterprise Architecture and Strategy 
Group, CMS, 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: Trish Brooks, Division of Home Health, 
Hospice, and HCPCS, Chronic Care

[[Page 44156]]

Policy Group, Center for Medicare Management, CMS, Mail Stop C5-09-16, 
7500 Security Boulevard, Baltimore, Maryland 21244-1850. Her telephone 
number is 410-786-4561, or email at [email protected].

SUPPLEMENTARY INFORMATION: Each year, in the United States, health care 
insurers process over 5 billion claims for payment. For Medicare and 
other health insurance programs to ensure that these claims are 
processed in an orderly and consistent manner, standardized coding 
systems are essential. The HCPCS Level II Code Set is one of the 
standard code sets adopted under the HIPAA, used for this purpose.
    The HCPCS Level II coding system is a comprehensive and 
standardized system that classifies similar products that are medical 
in nature into categories for the purpose of efficient claims 
processing. For each alphanumeric HCPCS code, there is descriptive 
terminology that identifies a category of like items. These codes are 
used primarily for billing purposes. For example, suppliers use HCPCS 
Level II codes to identify items on claim forms that are being billed 
to a private or public health insurer.
    HCPCS is a system for identifying items and services. While these 
codes are used for billing purposes, decisions regarding the addition, 
deletion, or revision of HCPCS codes are made independent of the 
process for making determinations regarding coverage and payment. 
Currently, there are national HCPCS codes representing approximately 
4,000 separate categories of like items or services that encompass 
millions of products from different manufacturers. When submitting 
claims, suppliers are required to use one of these codes to identify 
the items they are billing. The descriptor that is assigned to a code 
represents a category of similar items.
    Anyone can submit a request for modifications to the HCPCS Level II 
National Code Set and/or provide comments regarding pending requests. 
The HCPCS coding review process is an ongoing continuous process; 
requests and other correspondence may be submitted at any time 
throughout the year. However, for a consideration of coding action with 
an effective date of January 1, a completed application must be 
received by January 3rd, or the first business day of the year prior. 
Applications received after January 3rd will be considered in the 
subsequent cycle.

I. Description of the Proposed System of Records

A. Statutory and Regulatory Basis for the System

    Authority for this system is given under the Health Insurance 
Portability and Accountability Act (HIPAA) of 1996, Public Law 104-191, 
its implementing regulation on ``Code Sets'' (45 Code of Federal 
Regulations Part 162, Subpart J) and 65 Federal Register 50312 (8-17-
00).

B. Collection and Maintenance of Data in the System

    Information is collected for this system on individuals who 
voluntarily submit information regarding any modification and/or 
applications to modify the HCPCS Level II Code Set. Information 
collected for this system will include, but is not limited to, 
applicant name, company name, product's generic or trade name, company 
mailing address, email address, telephone number, and fax number.

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 HCPCS 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 management of HCPCS. 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 facilitate the 
management and maintenance of the HCPCS Level II code set.
    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, consultants, or grantees who have been 
contracted by the Agency to assist in accomplishment of a CMS function 
relating to the purposes for this system and who need to have access to 
the records in order to assist CMS.
    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 functions 
relating to purposes for this system.
    CMS occasionally contracts out certain of its functions when this 
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 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 to return or destroy all information at the completion of the 
contract.

[[Page 44157]]

    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 HCPCS information in order to ensure 
that claims are processed in an orderly and consistent manner.
    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.
    Whenever CMS is involved in litigation, or occasionally when 
another party is involved in litigation and CMS's 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. A determination would be made in each instance that, 
under the circumstances involved, the purposes served by the use of the 
information in the particular litigation is compatible with a purpose 
for which CMS collects the information.
    4. To a CMS contractor (including, but not necessarily limited to 
Medicare administrative contractors, 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 relationship or 
grant 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 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, 
waste, 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 HCPCS 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 specified population is so small that 
an individual could, because of the small size, use this information to 
deduce the identity of the applicant).

IV. Safeguards

    CMS has safeguards in place for authorized users and monitors such 
users to ensure against 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, the Federal 
Records Act of 1950, as amended, 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, 
CMS Information Security Handbook, and the National Archives and 
Records Administration's General Record Schedules and CMS' Records 
Schedules.

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 applicants 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

[[Page 44158]]

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 the disclosure of information relating to individuals.

    Date: July 30, 2007.
Charlene Frizzera,
Chief Operating Officer, Centers for Medicare & Medicaid Services.

SYSTEM NO.: 09-70-0576.
SYSTEM NAME:
    ``Healthcare Common Procedure Coding System (HCPCS) Level II''.

SECURITY CLASSIFICATION:
    Level 3 Privacy Act Sensitive.

SYSTEM LOCATION:
    Centers for Medicare & Medicaid Services (CMS), 7500 Security 
Boulevard, Baltimore, Maryland 21244-1850.

CATEGORIES OF INDIVIDUALS COVERED BY THE SYSTEM:
    Information is collected for this system on individuals who 
voluntarily submit information regarding any modification and/or 
applications to modify the HCPCS Level II Code Set.

CATEGORIES OF RECORDS IN THE SYSTEM:
    Information collected for this system will include, but is not 
limited to, applicant name, company name, product's generic or trade 
name, company mailing address, e-mail address, telephone number, and 
fax number.

AUTHORITY FOR MAINTENANCE OF THE SYSTEM:
    Authority for this system is given under the Health Insurance 
Portability and Accountability Act (HIPAA) of 1996, Public Law 104-191, 
its implementing regulation on ``Code Sets'' (45 Code of Federal 
Regulations part 162, Subpart J) and 65 Federal Register 50312 (8-17-
00).

PURPOSE (S) OF THE SYSTEM:
    The primary purpose of this system is to facilitate the management 
and maintenance of the HCPCS Level II code set. Information in this 
system will also be used to: (1) Support regulatory and policy 
functions performed within the Agency or by a contractor, consultant, 
or grantee; (2) assist another Federal or state agency; (3) support 
litigation involving the Agency related to this system; and (4) combat 
fraud, waste, 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.'' 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 contractor, consultant, or grantee who have been 
contracted by the Agency to assist in accomplishment of a CMS function 
relating to the purposes for this system and who need to have access to 
the records in order to assist CMS.
    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.
    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.
    4. To a CMS contractor (including, but not necessarily limited to 
Medicare administrative contractors, 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.
    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, 
waste, 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 specified population is so small that 
an individual could, because of the small size, use this information to 
deduce the identity of the applicant).

POLICIES AND PRACTICES FOR STORING, RETRIEVING, ACCESSING, RETAINING, 
AND DISPOSING OF RECORDS IN THE SYSTEM:
STORAGE:
    All records are stored on electronic and hard copy media.

RETRIEVABILITY:
    Information can be retrieved by applicant name, e-mail address, 
manufacturer name, product name, generic name, or code assigned.

SAFEGUARDS:
    CMS has safeguards in place for authorized users and monitors such 
users to ensure against 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

[[Page 44159]]

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, the Federal 
Records Act of 1950, as amended, 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, 
CMS Information Security Handbook, and the National Archives and 
Records Administration's General Record Schedules and CMS' Records 
Schedules.

RETENTION AND DISPOSAL:
    CMS will retain information for a total period of 15 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:
    Director, Chronic Care Policy Group, Centers for Medicare 
Management, CMS, Mail Stop C5-09-16, 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, and for verification 
purposes, the subject individual's name (woman's maiden name, if 
applicable).

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.)

RECORD SOURCE CATEGORIES:
    Sources of information contained in this records system include 
data collected from HCPCS applications, submitted by the individuals 
who voluntarily apply for HCPCS Level II Code modifications.

SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS OF THE ACT:
    None.

[FR Doc. E7-15250 Filed 8-6-07; 8:45 am]
BILLING CODE 4120-03-P