[Federal Register Volume 72, Number 230 (Friday, November 30, 2007)]
[Rules and Regulations]
[Pages 67653-67656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-23217]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 455
[CMS-2264-F]
RIN 0938-AO88
Medicaid Integrity Program; Limitation on Contractor Liability
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: The Medicaid Integrity Program (the Program) provides that the
Secretary promote the integrity of the Medicaid program by entering
into contracts with contractors that will review the actions of
individuals or entities furnishing items or services (whether fee-for-
service, risk, or other basis) for which payment may be made under an
approved State plan and/or any waiver of the plan approved under
section 1115 of the Social Security Act; audit claims for payment of
items or services furnished, or administrative services furnished,
under a State plan; identify overpayments of individuals or entities
receiving Federal funds; and educate providers of services, managed
care entities, beneficiaries, and other individuals with respect to
payment integrity and quality of care. This final rule will provide for
limitations on a contractor's liability while performing these services
under the Program.
The final rule will, to the extent possible, employ the same or
comparable standards and other substantive and procedural provisions as
are contained in section 1157 (Limitation on Liability) of the Social
Security Act.
DATES: Effective Date: These regulations are effective on December 31,
2007.
FOR FURTHER INFORMATION CONTACT: Barbara Rufo, 410-786-5589 or Crystal
High, 410-786-8366.
SUPPLEMENTARY INFORMATION:
I. Background
A. Current Law
States and the Federal Government share in the responsibility for
safeguarding Medicaid program integrity. States must comply with
Federal requirements designed to ensure that Medicaid funds are
properly spent (or recovered, when necessary). The Centers for Medicare
& Medicaid Services (CMS) is the primary Federal agency responsible for
providing oversight of States' activities and facilitating their
program integrity efforts.
B. Medicaid Integrity Program
Section 6034 of the Deficit Reduction Act (DRA) of 2005 (Pub. L.
109-171, enacted on February 8, 2006) amended title XIX of the Social
Security Act (the Act), (42 U.S.C. 1396 et seq.) by redesignating the
old section 1936 as section 1937; and inserting the new section 1936 to
combat Medicaid fraud and abuse. For the first time, the Program
authorizes the Federal Government to directly identify, recover, and
prevent inappropriate Medicaid payments. It will also support the
efforts of the State Medicaid agencies through a combination of
oversight and technical assistance.
Although individual States work to ensure the integrity of their
respective Medicaid programs, the Program represents CMS' first
comprehensive national strategy to detect and prevent Medicaid fraud
and abuse. The Program will provide CMS with the ability to more
directly ensure the accuracy of Medicaid payments and to deter those
who would exploit the program.
The new section 1936 of the Act states that the Secretary shall
promote the integrity of the Medicaid program by entering into
contracts with eligible entities to carry out the following activities:
1. Review of the actions of individuals or entities furnishing
items or services (whether on a fee-for-service, risk or other basis)
for which payment may be made under a State plan approved under title
XIX (or under any waiver of this plan approved under section 1115 of
the Act) to determine whether fraud, waste, and/or abuse has occurred,
or is likely to occur, or whether these actions have any potential for
resulting in an expenditure of funds under title XIX in a manner that
is not intended under the provisions of title XIX.
2. Audit of claims for payment for items or services furnished, or
administrative services rendered, under a State plan under title XIX,
including cost reports, consulting contracts; and risk contracts under
section 1903(m) of the Act.
3. Identification of overpayments to individuals or entities
receiving Federal funds under title XIX.
4. Education of providers of services, managed care entities,
beneficiaries, and other individuals with respect to payment integrity
and quality of care.
Section 1936 of the Act also provides that the Secretary will, by
regulation, provide for the limitation of a contractor's liability for
actions taken to carry out a contract under the Medicaid Integrity
Program.
II. Provisions of the Proposed Regulation and Response to Comments
Limitations on Contractor Liability
Section 6034 of the Deficit Reduction Act of 2005 amended title XIX
of the Act by establishing, under the new section 1936, the Medicaid
Integrity Program to promote the integrity of the Medicaid program by
authorizing the Centers for Medicare & Medicaid Services (CMS) (on
behalf of the Secretary) to enter into contracts with contractors that
will (1) review the actions of individuals or entities
[[Page 67654]]
furnishing items or services (whether fee-for-service, risk, or other
basis) for which payment may be made under an approved State plan and/
or any waiver of the plan approved under section 1115 of the Social
Security Act; (2) audit claims for payment of items or services
furnished, or administrative services rendered, under a State plan; (3)
identify overpayments to individuals or entities receiving Federal
funds under title XIX; and (4) educate providers of services, managed
care entities, beneficiaries, and other individuals with respect to
payment integrity and quality of care. This final rule will set forth
limitations on a contractor's liability while performing these services
under the Program.
Contractors that perform activities under the Program will be
reviewing activities of providers and others seeking Medicaid payment
for providing services to Medicaid beneficiaries. In an effort to
reduce or eliminate the Program contractors' exposure to possible legal
action from entities they review, section 1936 of the Act requires that
we, by regulation, limit the Program contractor's liability for actions
taken in carrying out its contract. We must establish, to the extent we
find appropriate, standards and other substantive and procedural
provisions that are the same as, or comparable to, those contained in
section 1157 of the Act.
Section 1157 of the Act provides that any organization having a
contract (under Title XI, Part B of the Act) with the Secretary, as
well as its employees, fiduciaries, and anyone who furnishes
professional services to such an organization, is/are protected from
civil and criminal liability in performing its duties under the Act or
its contract, provided these duties are performed with due care.
In the July 20, 2007 Federal Register (72 FR 39766), we published
the proposed rule entitled, ``Medicaid Integrity Program; Limitation on
Contractor Liability,'' and provided for a 30-day public comment
period. We received a total of 1 timely comment from a health care
association. The comment questioned the proposed provisions and we
responded with further clarification in our response. Brief summaries
for each proposed provision, a summary of the public comments we
received, and our responses to comments, are set forth below.
General Comments
Comment: A commenter expressed concern that CMS has not provided
the health care community or the public any information about the
federal government's discussions on the Program's contractors, termed
Medicaid Integrity Contractor's, (MIC) roles, responsibilities, and
qualifications. The commenter also stated the MICs may not understand
state-specific payment methodologies, resulting in a significant
learning curve. The commenter also expressed concern that a lack of
public information about the capabilities of the contractors prevents
the transparency which all federal government programs should strive to
achieve.
Response: We appreciate the commenter's concerns regarding
information sharing and transparency, as well as the concern that the
MICs may face a significant learning curve in developing a knowledge
base and experience regarding state-specific practices. To address
these concerns, we have been working aggressively with our state and
federal partners and stakeholders (State Medicaid Directors, State
Program Integrity Directors, Medicaid Fraud Control Unit Directors, the
Federal Bureau of Investigation, and HHS' Office of Inspector General)
to share information and to obtain their input on our planning efforts.
We have also presented information regarding both the Program and MICs
at conferences of national and regional associations, including the
National Association of State Medicaid Directors and the National
Association for Medicaid Program Integrity. To address the MICs'
potential learning curve, we have engaged strategic development
contractors to help us build upon the tools and expertise we already
have. These strategic contractors are assisting by developing state
program integrity profiles, and developing audit protocols,
methodologies, and standards for the MICs to use. These tools will
establish a solid knowledge baseline for the MICs, enabling them to get
off to an aggressive, well-informed start. Moreover, we strive to
inform the public about our mission and accomplishments, and encourage
interested parties to utilize CMS' internet site to learn more about
Medicaid program integrity generally at: http://www.cms.hhs.gov/MCAIDFraudAbuseGenInfo/, and more specific information about the CMS'
Medicaid integrity implementation plan and efforts at: http://www.cms.hhs.gov/DeficitReductionAct/Downloads/CMIPupdateaugust2007final.pdf.
Section 455.1 Basis and Scope
The proposed rule, in Sec. 455.1, Basis and scope, added a new
paragraph (c) stating that subpart C implements section 1936 of the
Act. Section 1936 of the Act establishes the Medicaid Integrity Program
under which the Secretary will promote the integrity of the program by
entering into contracts with eligible entities to carry out the
activities under subpart C. We did not receive public comments on this
provision, therefore we adopt the provision as final.
Subpart C--Medicaid Integrity Program
Section 455.200 Basis and Scope
In Sec. 455.200(a), we set forth the proposed statutory basis
which would implement section 1936 of the Act, which states that the
Secretary will promote the integrity of the Medicaid program by
entering into contracts with eligible entities to carry out the
activities under subpart C. In Sec. 455.200(b) we proposed the scope
for the limitation on a contractor's liability to carry out a contract
under the Medicaid Integrity Program as proposed under new Sec.
455.202. We did not receive public comments on this provision;
therefore we adopt the provision as final.
Section 455.202 Limitation on Contractor Liability
We proposed in Sec. 455.202 to protect Program contractors from
liability in the performance of their contracts provided they carry out
their contractual duties with due care.
Comment: A commenter questioned the proposed standard for the MICs
which states they will be protected from civil and criminal liability
in performing their duties so long as they perform these duties with
``due care.'' The commenter expressed that under such a standard, the
Federal Government cannot sufficiently ensure that the MICs will be
held adequately accountable for their actions.
Response: As explained in the proposed rule, we believe that the
due care standard specified in Sec. 455.202 is the only standard
consistent with the statutory mandate of the Act. Section 1936 of the
Act require us to limit a contractor's liability by employing the same
or comparable standards and provisions as are contained in section 1157
of the Act. Section 1157 of the Act limits a contractor's liability
under a due care standard. We believe that applying this standard to
the MICs strikes a reasonable balance between the concerns of the
contractors and those subject to the contractors' review. We further
believe the MICs will operate with due care to avoid liability, and
those being reviewed have the assurance that they have legal recourse
if a contractor fails to abide by that standard.
[[Page 67655]]
Alternative Standards of Liability Considered
In accordance with section 1936 of the Act, we proposed to employ
the same standards for payment of legal expenses as are contained in
section 1157(d) of the Act. Therefore, in Sec. 455.202(b) we proposed
that we make payment to Program contractors, their members, employees,
and anyone who provides legal counsel or services to them, for expenses
incurred in the defense of any legal action related to the performance
of the Program contract. We also proposed that any and all payment(s)
and the amount of each payment(s) if any, will be determined
exclusively by us, and conditioned upon (1) the reasonableness of the
expense(s); (2) the amount of government funds available for
payment(s); and (3) whether the payment(s) is(are) allowable under the
terms of the contract.
In Sec. 455.202, we considered employing a standard for the
limitation of liability other than the due care standard. We considered
whether it would be appropriate to provide that a contractor would not
be civilly liable by reason of the performance of any duty, function,
or activity under its contract provided the contractor was not grossly
negligent in that performance. However, section 1936 of the Act
requires that we employ the same or comparable standards and provisions
as are contained in section 1157 of the Act. This approach is
consistent with a similar approach taken in the Medicare Integrity
Program (72 FR 48870), which has virtually identical statutory
limitations on contractor liability language. Therefore, we did not
believe that it would be appropriate to expand the scope of immunity to
a standard of gross negligence, as it would not be a comparable
standard to that set forth in section 1157(b) of the Act.
III. Provisions of the Final Rule
In this final rule we are adopting the provisions as set forth in
the July 20, 2007 proposed rule (72 FR 39776) as final.
IV. 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.
V. 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
will not reach the economic threshold and thus is not considered a
major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and 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. We are not preparing an
analysis for the RFA because we have determined that this rule will not
have a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
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 of a Metropolitan
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined that
this rule will not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $120 million. This rule will have no
consequential effect on State, local, or tribal governments 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
will 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
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 455
Fraud, Grant programs--health, Health facilities, Health
professions, Investigations, Medicaid, Reporting and recordkeeping
requirements.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 455--PROGRAM INTEGRITY; MEDICAID
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1. The authority citation for part 455 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
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2. In Sec. 455.1, add new paragraph (c) to read as follows:
Sec. 455.1 Basis and scope.
* * * * *
(c) Subpart C implements section 1936 of the Act. It establishes
the Medicaid Integrity Program under which the Secretary will promote
the integrity of the program by entering into contracts with eligible
entities to carry out the activities of subpart C.
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3. New subpart C, consisting of Sec. 455.200 and Sec. 455.202, is
added to part 455 to read as follows:
Subpart C--Medicaid Integrity Program
Sec.
455.200 Basis and scope.
455.202 Limitation on contractor liability.
Subpart C--Medicaid Integrity Program
Sec. 455.200 Basis and scope.
(a) Statutory basis. This subpart implements section 1936 of the
Act that establishes the Medicaid Integrity Program under which the
Secretary will promote the integrity of the program by entering into
contracts with eligible entities to carry out the activities under this
subpart C.
(b) Scope. This subpart provides for the limitation on a
contractor's liability to carry out a contract under the Medicaid
Integrity Program.
[[Page 67656]]
Sec. 455.202 Limitation on contractor liability.
(a) A program contractor, a person, or an entity employed by, or
having a fiduciary relationship with, or who furnishes professional
services to a program contractor will not be held to have violated any
criminal law and will not be held liable in any civil action, under any
law of the United States or of any State (or political subdivision
thereof), by reason of the performance of any duty, function, or
activity required or authorized under this subpart or under a valid
contract entered into under this subpart, provided due care was
exercised in that performance and the contractor has a contract with
CMS under this subpart.
(b) CMS pays a contractor, a person, or an entity described in
paragraph (a) of this section, or anyone who furnishes legal counsel or
services to a contractor or person, a sum equal to the reasonable
amount of the expenses, as determined by CMS, incurred in connection
with the defense of a suit, action, or proceeding, if the following
conditions are met:
(1) The suit, action, or proceeding was brought against the
contractor, person or entity by a third party and relates to the
contractor's, person's or entity's performance of any duty, function,
or activity under a contract entered into with CMS under this subpart.
(2) The funds are available.
(3) The expenses are otherwise allowable under the terms of the
contract.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: September 27, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: October 9, 2007.
Michael O. Leavitt,
Secretary.
[FR Doc. E7-23217 Filed 11-29-07; 8:45 am]
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