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Consumer Financial Protection Bureau.
Final rule; request for public comment.
The Consumer Financial Protection Bureau (CFPB or Bureau) is updating the CFPB's procedures for designating nonbank covered persons for supervision, to conform to a recent organizational change and to further ensure that proceedings are fair, effective, and efficient for all parties.
This rule is effective on April 23, 2024. Comments must be received on or before May 23, 2024.
You may submit comments, identified by Docket No. CFPB-2024-0006, by any of the following methods:
•
•
•
All submissions, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Submissions will not be edited to remove any identifying or contact information.
George Karithanom, Regulatory Implementation & Guidance Program Analyst, Office of Regulations, at 202-435-7700 or
The Consumer Financial Protection Act of 2010 (CFPA) establishes the CFPB as an independent bureau in the Federal Reserve System and assigns the CFPB a range of rulemaking, enforcement, supervision, and other authorities.
One of the supervisory authorities under the CFPA is section 1024(a)(1)(C). It authorizes the CFPB to supervise a nonbank covered person that the CFPB “has reasonable cause to determine, by order, after notice to the covered person and a reasonable opportunity for such covered person to respond . . . is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services.”
The CFPB has initiated a number of supervisory designation proceedings since the 2022 rule. On February 23, 2024, the CFPB publicly released the first decision and order in a contested proceeding, which discusses the CFPB's view of the section 1024(a)(1)(C) authority.
In late February 2024, the CFPB began a transition to a new organizational structure for its supervision and enforcement work. The functions of the Associate Director of the Division of Supervision, Enforcement, and Fair Lending are being transferred to the Supervision Director as head of a Division of Supervision and the Enforcement Director as head of a Division of Enforcement. This rule is in part intended to implement that change in the context of supervisory designation proceedings.
Section 1024(b)(7) of the CFPA authorizes the CFPB to “prescribe rules to facilitate supervision” of the nonbank covered persons described in section 1024(a), as well as to facilitate “assessment and detection of risks to consumers.”
The rule makes technical changes to definitions.
The initiating official and respondents have resolved the large majority of proceedings by consent. Under the 2013 rule, there were two provisions that established separate procedural avenues for entering into a consent agreements. One provision (former § 1091.103(b)) required the initiating official to enclose a proposed consent agreement with the Notice of Reasonable Cause (Notice), and the other provision (former § 1091.110) authorized consent agreements to be agreed at any time. There were small differences between the two provisions.
Under this rule, a proposed consent agreement will continue to be enclosed with the Notice, and consent agreements can also be agreed at any other time. However, the Bureau is combining the two previous provisions into one provision (§ 1091.201) and harmonizing their differences, in order to reduce complexity and risk of confusion. One of the two previous provisions stated that the consent agreement does not constitute an admission by the respondent, while the other did not address that point expressly; new § 1091.201 clarifies that a consent agreement does not constitute an admission. One of the two previous provisions contemplated a two-year period for supervision while the other allowed duration to be addressed on a case-by-case basis; new § 1091.201 takes the latter course. All consent agreements under both previous provisions were for two years, and the CFPB anticipates that will continue to be the typical duration. But addressing duration on a case-by-case basis rather than by rule will provide flexibility if a longer or shorter period were hypothetically warranted.
The Supervision Director as initiating official commences a contested proceeding by serving the respondent with a Notice of Reasonable Cause (Notice). The Notice is the ordinary means by which the CFPB provides notice under section 1024(a)(1)(C) of the CFPA, although there may sometimes be proceedings in which additional notice is provided at later points in the proceeding, for example through supplemental briefing.
Paragraph (c) simplifies certain general background information about the section 1024(a)(1)(C) process that was included in the Notice under the 2013 rule.
Paragraph (d) includes an update to the method for serving the Notice. The 2013 rule included methods of service that were patterned on how a notice of charges is served under the Rules of Practice for Adjudication Proceedings.
Paragraph (e) codifies that the initiating official may withdraw a Notice. The 2013 rule did not expressly address this subject.
This provision governs the response, which is the respondent's opportunity to respond to the Notice. The rule makes minor technical changes to the provision.
This new provision provides the initiating official with the option of filing a written reply to the response. Under the 2013 rule, there was no such reply. Because of the initiating official's role in formulating the Notice, the initiating official will likely have observations that are useful to the Director in considering the response.
This provision governs a supplemental oral response before the Director, which a respondent can request in its response under § 1091.203. Under the 2013 rule, a respondent presented the supplemental oral response to the Associate Director for Supervision, Enforcement, and Fair Lending. However, as discussed in connection with § 1091.206 below, in light of the elimination of the Associate Director position, the rule merges the Associate Director's and Director's adjudicative roles.
After the Notice, response, reply (if any), and supplemental oral response (if any), the rule provides for the Director to make a final determination in a proceeding.
Under the 2013 rule, the Associate Director of the Division of Supervision, Enforcement, and Fair Lending submitted a recommended determination to the Director, and then the Director issued a final determination. But as noted above, the role of Associate Director will no longer exist under the new organizational structure. The Associate Director's supervision-related functions are being transferred to the Supervision Director, who serves as initiating official in the context of supervisory designation proceedings. Accordingly, this rule merges the adjudicative roles of the Associate Director and Director in these proceedings. This change, in addition to aligning with the new organizational structure, will make proceedings more efficient. The former two-stage process resulted in a more complex and resource-intensive process and a longer timeline for resolving proceedings. Merging the adjudicative roles of Associate Director and Director does not diminish any of the respondent's opportunities to express its views to the Bureau, but merely streamlines the Bureau's internal decision-making process after those views are expressed.
Paragraph (b) codifies the fact that the Director may sometimes request supplemental briefing before making a final determination, which is consistent with the 2013 rule but was not expressly discussed in the 2013 rule.
Paragraph (d) requires a separation of functions between Bureau employees who advise the Director in the Director's adjudicative role on the one hand and Bureau employees who advise the initiating official on the other. This separation is not required by the Administrative Procedure Act, but the Bureau maintains it as a matter of policy. The 2013 rule included a similar separation of functions at the Director level, although at the Associate Director level it did not mandate a separation between the Associate Director's advisers and initiating official's advisers.
This provision governs petitions by respondents to terminate an existing order. The rule makes technical changes to conform to changes elsewhere in the procedures. It also codifies the fact that the Director might sometimes request supplemental briefing, similar to § 1091.206(b).
The rule clarifies the method of filing and serving documents, which will generally be by email. The service of the Notice at the start of a proceeding, when a respondent's email address may not be known, is governed by a specific rule under § 1091.202(d).
The rule simplifies the former method for calculating time limits under the 2013 rule, which varied by delivery channel to allow additional time for mail or delivery services to arrive. This complexity has generated confusion for some respondents and is no longer warranted because email is generally instantaneous.
The rule introduces a word limit for the Notice, response, and certain other key filings, based on Federal Rules of Appellate Procedure 32(a)(7)(B) and 32(f). Relatedly, it introduces a certification of word count based on Federal Rule of Appellate Procedure 32(g). In past proceedings, some parties' outside counsel submitted very lengthy filings in the absence of any page or word limit. Like any word limit, the CFPB intends the new limit to help focus arguments and mitigate expense for all participants.
This provision governs changes to the methods set out in §§ 1091.401 to 1091.403. In the case of changes to time limits or word limits, the provision notes that they are disfavored. Under the provision, a change can be approved in one of three ways: by consent of the initiating official and the respondent, with notice to the Director; by written request to the Director; or upon the Director's own motion. The possibility of changes by consent is intended to avoid the need for the Director to become involved in minor issues that are not controversial between the initiating official and the respondent. However, the provision states that the Director can direct otherwise. There may also be circumstances where the initiating official believes that a potential change warrants a decision by the Director through a written request and so withholds consent, even if the initiating official does not oppose the change.
The 2022 rule created a process for the CFPB to publicly release final decisions and orders. This rule maintains the 2022 rule's approach, although it clarifies that consent agreements entered into by the initiating official and respondent under § 1091.201 are not subject to the public release process. These agreements are generally short formal documents without reasoning that is significant or could form the basis for precedent. Relatedly, the CFPB notes that an order entered as provided in § 1091.206(a)(1), because a respondent has failed to file a response and so has defaulted under § 1091.203(c), would typically not have content that warrants public release. However, such orders are subject to the process under § 1091.405 for considering public release, because of the possibility that some may include reasoning that warrants public release.
The rule clarifies that multiple respondents might be named in a Notice, as well as clarifying the process for adding an additional respondent or respondents to a pending proceeding. Including multiple respondents in one proceeding—for example, business partners—may, in appropriate cases, avoid the delay and inefficiency of serial proceedings and also would allow the Bureau to consider related issues at once.
The Supreme Court has explained that: “Administrative review schemes commonly require parties to give the agency an opportunity to address an issue before seeking judicial review of that question.”
This rule is effective upon
In developing this rule, the Bureau has considered its benefits, costs, and impacts in a manner consistent with section 1022(b)(2)(A) of the CFPA.
Among other sources of supervisory authority, the Bureau can supervise a nonbank covered person that the Bureau “has a reasonable cause to determine, by order, after notice to the covered person and a reasonable opportunity for such covered person to respond . . . is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services.”
The data are generally limited with which to quantify potential costs, benefits, and impacts of the rule's provisions. The CFPB has conducted a limited number of supervisory designation proceedings under the prior 2013 and 2022 rules, but the CFPB does not have quantitative data regarding the costs to respondents or other impacts of those proceedings. The CFPB also does not have quantitative data to predict the impacts of the changes made by this rule relative to the prior legal and procedural framework, which is the comparison that is relevant for this analysis.
In light of these data limitations, the analysis below generally provides a qualitative discussion of the benefits, costs and impacts of the rule. General economic principles and the Bureau's experience and expertise in consumer financial markets, together with the limited data that are available, provide insight into these benefits, costs, and impacts.
In evaluating the rule's benefits, costs, and impacts of the rule, the CFPB considers the impacts against a baseline that includes the legal and procedural framework regarding supervisory designation proceedings for nonbank covered persons that existed before the issuance of the rule. Therefore, the baseline for the analysis of the rule includes separate adjudicative roles for the Director and the Associate Director for Supervision, Enforcement, and Fair Lending—that is, the statutory baseline implemented by the 2013 rule as amended by the 2022 rule.
The rule would apply to covered persons as defined in the CFPA, which are generally persons that engage in offering or providing a consumer financial product or service.
The rule eliminates the role of the Associate Director in making a recommendation to the Director. This reflects a broader organizational structural change at the CFPB that eliminates the position of Associate Director of Supervision, Enforcement, and Fair Lending. Relative to the baseline, the rule makes no changes to the rights to respond by nonbank covered entities, maintains separation of roles between the initiating official and decisional employees in the determination process, maintains the requirement that the Director include the basis for their decision in their final determination, and should reduce the amount of time on net between service of the Notice and the final determination.
The rule allows for the initiating official to reply to the respondent's response to the Notice. The Bureau believes this may benefit respondents by allowing for more transparency in the determination process. The 2013 rule did not allow for the initiating official to respond to the written reply but did allow for the initiating official to participate in the optional supplementary oral response. Moreover, the 2013 rule did not preclude the initiating official from advising the Associate Director in drafting their recommendation. By allowing for a reply by the initiating official to the respondent's written response, the Bureau believes respondents could gain more insight into the decisional process which could then be incorporated into an optional supplementary oral response.
The rule also sets out changes in the process by which a person may voluntarily consent to the Bureau's supervisory authority. Specifically, the rule consolidates two previous provisions regarding consent agreements. Under one provision of the 2013 rule, a respondent could respond to a Notice by signing an enclosed consent agreement that led to the respondent being supervised for two years. Under a separate provision, the respondent and the Bureau could enter into a consent agreement at any time, with a duration to be determined by case-by-case negotiation. Under the new rule, a proposed consent agreement will continue to be enclosed with the Notice and an agreement can also be reached at any other time, but the rule will no longer mandate a two-year period in the former case.
Relative to the baseline, the removal of the default option of a two-year consent agreement, to be replaced with the option for a consent agreement with a negotiated length of time, may impose additional costs on covered entities subject to this rule. However, the Bureau believes several factors limit the expected realized costs of this change. First, as mentioned above, the Bureau has conducted a limited number of supervisory designation proceedings under this authority. The Bureau anticipates it will continue to conduct a limited number of proceedings relative to the size of the market of covered entities subject to this rule. Second, based on prior experience and expertise, the Bureau anticipates that the majority of consent agreements will continue to last for a period of two years. Third, in a case where the complexity or severity of potential consumer risks merits a supervisory relationship longer than two years in the initiating official's assessment, there are other features of the rule that limit any additional realized costs relative to baseline on the covered entity, notably the option to contest the Notice and the ability for the Bureau to issue a new Notice at the end
There is a large population of firms potentially subject to this rule.
The majority of cases initiated under the 2013 rule have been settled by consent agreement and all past consent agreements have been for two years. The Bureau expects similar outcomes under this rule. However, the initiating official may assess that a longer period of time is necessary to maintain an effective supervisory relationship if a particular case is complex or poses severe risks to consumers.
An order lasting longer than two years may pose additional costs relative to the baseline for the covered entity via additional supervisory activity. The Bureau has previously estimated the cost of compliance with supervisory activity based on reported average exam length and labor costs incurred by firms to participate in supervisory exams.
The Bureau anticipates that the majority of consent agreements under this rule will continue to be for two years, posing no significant additional costs on covered entities. The Bureau recognizes that for some entities undergoing supervisory activity under this rule, the complexity of the entity or the severity of consumer risk may result in a consent agreement lasting longer than two years, with each additional year imposing additional costs relative to baseline of approximately $27,000. In principle, it is possible that entities undergoing supervisory activity under this rule may enter into a consent agreement longer than three years; however, the Bureau anticipates this to be unlikely.
Finally, the Bureau notes that there are features of this rule and the statutory baseline that further limit any expected realized costs posed by the proposed rule. First, by their nature, consent agreements necessitate both parties' agreement to the order. A respondent may negotiate with the initiating official over the parameters of a consent agreement or may enter contested proceedings.
In summary, while the elimination of the two-year default option for consent agreement, to be replaced with the option for a consent agreement with negotiated length of time, may impose additional costs relative to baseline, the Bureau assesses these additional costs to be negligible. First, that the Bureau would be authorized to undertake supervisory activities with respect to a nonbank under this rule would not necessarily mean that the Bureau would in fact undertake such activities regarding that covered person in the near future. Rather, the supervision of any particular covered person as a result of this rule would be probabilistic in nature. Second, for a covered person undergoing supervisory activity under this rule, the Bureau anticipates the majority of cases will be settled by consent agreements lasting two years, imposing no additional costs. Third, for those entities where supervisory activity results in a proposed consent agreements lasting longer than two years, these potential realized costs are further mitigated by other features of the rule.
The rule also makes certain other procedural changes to the processes for making and terminating designations, including: codifying the Director's authority to request supplemental briefing; imposing a word limit on key filings; clarifying procedures for filing and serving documents, with documents being generally filed and served by email; clarifying applicable procedures when there are multiple respondents; and codifying an issue exhaustion requirement that is generally similar to existing law. The rule further clarifies that the process for publicly releasing decisions and orders does not apply to consent agreements, because they lack sufficient content to serve as a precedent for future proceedings. The Bureau does not believe these changes impose significant additional costs onto nonbank covered persons relative to the baseline.
The rule will not have an impact on insured depository institutions or insured credit unions with $10 billion or less in assets as described in section 1026(a) of the CFPA.
As a rule of agency organization, procedure, or practice, this rule is exempt from the notice-and-comment rulemaking requirements of the Administrative Procedure Act.
Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.
The Bureau has also determined that this rule does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the Office of Management and Budget under the Paperwork Reduction Act.
If any provision of part 1091, or any application of a provision, is stayed or determined to be invalid, the remaining provisions or applications are severable and shall continue in effect.
Administrative practice and procedure, Consumer protection, Credit, Trade practices.
12 U.S.C. 5512(b)(1), 5514(a)(1)(C), 5514(b)(7).
This part sets forth procedures to implement section 1024(a)(1)(C) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5514(a)(1)(C)) and establishes rules to facilitate the Bureau's supervisory authority over certain nonbank covered persons pursuant to section 1024(b)(7) of the Act (12 U.S.C. 5514(b)(7)).
For the purposes of this part, the following definitions apply:
(a) At any time, a person and the initiating official may enter into a consent agreement by which the person voluntarily consents to the Bureau's supervisory authority under 12 U.S.C. 5514. The consent agreement shall constitute an order authorized by 12 U.S.C. 5514(a)(1)(C).
(b) A consent agreement under this section does not constitute an admission that a person is a nonbank covered person that is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services.
(c) A consent agreement may specify a period of time that the person will be subject to the Bureau's authority under 12 U.S.C. 5514. If the consent agreement specifies a period of time, it shall not be eligible for a petition for termination pursuant to § 1091.301. If the consent agreement does not specify a period of time, the consent agreement will continue until terminated pursuant to § 1091.301.
(d) A consent agreement under this section shall state that the person waives any right to judicial review of the consent agreement.
(e) The initiating official encloses a proposed consent agreement with the Notice of Reasonable Cause in accordance with § 1091.202(c)(6).
(a)
(b)
(1) Complaints collected through the system under 12 U.S.C. 5493(b)(3); and/or
(2) Information from other sources.
(c)
(1) A description of the basis for the assertion that the Bureau may have reasonable cause to determine that a respondent is a nonbank covered person that is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services, including a summary of the documents, records, or other items relied on by the initiating official to issue a Notice. Such summary will be consistent with the protection of sensitive information, including compliance with Federal privacy law and whistleblower protections;
(2) A statement that this proceeding is governed by 12 U.S.C. 5514(a)(1)(C) and 12 CFR part 1091;
(3) A statement that failure to respond within 30 days, in the manner specified by § 1091.203, will constitute a waiver of the right to respond and may result in a default determination by the Director;
(4) Instructions for filing documents with the Director;
(5) Instructions for serving documents on the initiating official; and
(6) In an appendix, a proposed consent agreement under § 1091.201.
(d)
(e)
(a)
(b)
(2) The response shall be accompanied by appendices that include (and are limited to) all documents, records, or other evidence a respondent wishes to use to support the arguments or assertions set forth in the response.
(3) If the respondent wishes to present a supplemental oral response, the
(4) The response shall include an email address for serving documents on the respondent, which may be its attorney's email address.
(5) The response shall be accompanied, as an appendix, by an affidavit or declaration, made by the individual respondent if a natural person, or, if a corporate or other entity that is not a natural person, by an officer, managing or general member, or partner authorized to represent the respondent, affirming that the response is true and accurate and does not contain any omissions that would cause the response to be materially misleading.
(c)
(d)
If the respondent files and serves a response, within 21 days the initiating official may file a reply with the Director and serve it on the respondent. The reply is subject to the word limit in § 1091.403.
(a) If the respondent makes a timely request in a response under § 1091.203 for the opportunity to present a supplemental oral response, the Director shall issue an order setting forth the date, time, and general information relating to the conduct of a supplemental oral response.
(b) There shall be no discovery permitted or witnesses called in connection with a supplemental oral response.
(c) If a respondent is a corporate or other entity, and not a natural person, the respondent shall be represented in any supplemental oral response by:
(1) An officer, managing or general member, or partner authorized to represent the respondent; or
(2) An attorney in good standing of the bar of the highest court of any State.
(d) If a respondent is a natural person, the respondent shall be represented in any supplemental oral response by:
(1) The respondent personally; or
(2) An attorney in good standing of the bar of the highest court of any State.
(e) The Director shall cause an audio recording of a supplemental oral response to be made by a court reporter or other designated person. A respondent may purchase a copy or transcript of the recording at the respondent's own expense.
(f) The initiating official may participate in any supplemental oral response conducted under this section.
(g) A respondent's failure to participate in a supplemental oral response scheduled by the Director shall constitute the respondent's waiver of the opportunity to present a supplemental oral response.
(a) Within 60 days after the supplemental oral response, or, if there is no supplemental oral response, the deadline for the reply, the Director shall issue either:
(1) A decision and order subjecting the respondent to the Bureau's supervisory authority pursuant to 12 U.S.C. 5514(a)(1)(C); or
(2) A notification that the Director is terminating the proceeding. Such notification shall have no precedential effect and shall not prevent the initiation of another proceeding under this part.
(b) The Director may, on the Director's own motion at any time before making a determination under paragraph (a) of this section, request that the respondent, initiating official, or both provide any supplemental briefing that Director considers appropriate.
(c) Any decision and order issued by the Director pursuant to paragraph (a)(1) of this section shall include the basis for the decision and an effective date for the order.
(d) Only decisional employees may advise and assist the Director in the consideration and disposition of a proceeding under this part.
(e) A decision and order issued pursuant to paragraph (a)(1) of this section shall constitute final agency action under 5 U.S.C. 704.
(a) Any person subject to an order under 1091.206(a)(1) may, no sooner than two years after issuance of such an order and no more frequently than annually thereafter, petition for termination of the order. The same applies to an order under § 1091.201, subject to the limitations in § 1091.201(c).
(b) A petition for termination submitted pursuant to paragraph (a) of this section shall set forth the reasons supporting termination of the order, including any actions taken by a respondent since issuance of the order to address the conduct that led to issuance of the order, and may include any supporting information or evidence that the petitioner believes is relevant to the Director's determination of the matter. A petition for termination must be filed with the Director and served on the initiating official and is subject to the word limit in § 1091.403.
(c) The initiating official shall, within 30 days of receipt of a petition for termination, file a recommendation with the Director and serve it on the respondent. The initiating official's recommendation shall state whether the initiating official recommends that the order be terminated, or modified, or that the petition for termination be denied and the basis for such recommendation. The recommendation is subject to the word limit in § 1091.403.
(d) Not later than 90 days after submission of a petition under paragraph (a) of this section, the Director shall issue a written decision either terminating or modifying the order, or denying the petition. If the Director modifies the order or denies the petition, the Director shall explain the basis for his or her decision with respect to the petition. At any time before issuing a decision, the Director may, on the Director's own motion, request that the respondent and initiating official provide any supplemental briefing that Director considers appropriate.
(e) The decision of the Director made pursuant to paragraph (d) of this section shall constitute final agency action under 5 U.S.C. 704.
(a)
(b)
(c)
(d)
In computing any period of time prescribed by this part, or by order of the Director, the date of the act or event that commences the designated period of time is not included. The last day so computed is included unless it is a Saturday, Sunday, or Federal holiday as set forth in 5 U.S.C. 6103(a). When the last day is a Saturday, Sunday, or Federal holiday, the period runs until the end of the next day that is not a Saturday, Sunday, or Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays are included in the computation of time, except when the time period within which an act is to be performed is ten days or less. Changes to time limits are addressed in § 1091.404.
(a)
(b)
(a)
(b)
(c)
(c)
(e)
(a)
(b)
(a)
(b)
(a) The Bureau may, in its discretion, provide the notice and opportunity to respond required by 12 U.S.C. 5514(a)(1)(C) in a notice of charges otherwise brought by the Bureau pursuant to 12 CFR 1081.200 and the adjudication proceedings pursuant to part 1081. Also, a person may agree to submit to the Bureau's supervisory authority under 12 U.S.C. 5514(a)(1)(C) as part of a consent order entered into in connection with an adjudication proceeding or civil action.
(b) If the Bureau chooses to proceed in the manner described in paragraph (a) of this section, it shall so indicate in the notice of charges, and any order of the Director resulting from the notice of charges shall constitute the order referred to in 12 U.S.C. 5514(a)(1)(C).
(c) If the Bureau proceeds pursuant to paragraph (a) of this section, the provisions of §§ 1091.201 to 1091.206 and 1091.401 to 1091.406 will be inapplicable to such proceeding.
(a)
(b)
(c)
(d)
Nothing in this part shall be construed to limit the relief the Bureau may seek in any civil action or administrative adjudication, including but not limited to, seeking an order to have a person deemed subject to the Bureau's supervisory authority under 12 U.S.C. 5514, including for the reasons set forth in 12 U.S.C. 5514(a)(1)(C).
U.S. Department of State.
Final rule.
On March 28, 2023, the U.S. Department of State (Department of State) published in the
This rule is effective on May 23, 2024.
Rebecca Pasini, Deputy Assistant Secretary of the Office of Private Sector Exchange at SA-5, 2200 C Street NW, Washington, DC 20522 or via email at
The 2023 Interim Final Rule, effective April 27, 2023 (88 FR 18249), allows sponsors to sign Forms DS-2019 using digital signatures and to transmit Forms DS-2019 electronically to a specified list of recipients. In this final rule, the Department of State addresses the comments that parties submitted in response to the 2023 Interim Final Rule and makes minor revisions to the regulatory language. Most of the 64 commenting parties addressed two topics: sponsor preference for electronic signatures rather than digital signatures, and the need for sponsors to electronically transmit Forms DS-2019 directly to third parties acting on their behalf. After consideration, the Department of State has retained the requirement for digital signatures for signing Forms DS-2019, and it makes no changes to the list of entities to which sponsors may transmit Forms DS-2019 electronically. However, this rule will modify the regulations at 22 CFR 62.12(c)(3) to allow third parties to retrieve Forms DS-2019 directly from sponsors' password-protected computer network systems and/or databases. This modification allows third parties to retrieve copies of digital Forms DS-2019 directly from sponsors that wish to give them such access.
The Department of State also continues to permit sponsors to wet sign and physically mail Forms DS-2019 to exchange visitors and/or third parties. Sponsors that find the functionality of digital signatures too burdensome or costly or wish to continue to send Forms DS-2019 in bulk to third parties are not required to adopt the new procedures.
In addition to commenting on the proposed regulations, many parties submitted questions and/or requests for clarification. To the extent such inquiries relate to this rulemaking, the Department of State will address them herein. Otherwise, the Department of State recommends that interested parties refer to
Seventeen of the parties submitting comments on the 2023 Interim Final Rule addressed the Department of State's decision to allow Responsible Officers and Alternate Responsible Officers (collectively, Officers) to sign Forms DS-2019 with “digital” signature software as opposed to the broader category of “electronic” signature software, of which digital is a subset. These parties offered the following reasons in support of their requests that the Department of State allow electronic signatures: (1) the definition of “digital software” in the 2023 Interim Final Rule is too vague for sponsors to know whether their software selections meet regulatory requirements; (2) the cryptographical requirements of digital software increase costs and burdens; (3) the vetting of Officers and their limited access to the Student and Exchange Visitor Information System (SEVIS) already provide a high level of security; (4) wet-signed, printed, scanned, and converted-to-portable document format (pdf) Forms DS-2019 are no more or less secure than those signed with electronic signature software and electronically transmitted; (5) it is cumbersome and costly for sponsors with J and F programs to have two operating procedures; (6) the Department of State already accepts electronic signatures on the U.S. Department of Homeland Security's (DHS's) Forms I-20 (Certificate of Eligibility for Nonimmigrant Student Status); and (7) the variety of printed Forms DS-2019 (given different signature, printing, and paper options) may confuse U.S. Government authorities who grant J visas, determine admissibility and entry into the United States, or otherwise review Forms DS-2019. The Department of State considered many of these factors when it originally decided to require the higher level of security that digital signatures offer, and it continues to believe that the benefits of such security overcome the concerns of commenting parties. It addresses each issue individually as follows:
Visual review of forms signed with most electronic software, however, would not offer any clues as to their legitimacy since most electronic signatures lack both the personalization of wet signatures and the encrypted traceability of digital signatures. For example, electronic signatures may be typed names, typed names in italics, or a signature made with a computer mouse, representations that are difficult to verify as to their source. Further, the volume of forms some Officers process would reduce the likelihood that they could recognize a form as one that they, a coworker, or former employee signed electronically.
In their comments, many sponsors sought the capability to transmit Forms DS-2019 electronically to third parties acting on their behalf, citing the important role third parties play in their exchange programs. Although the Department of State continues to prohibit this activity, it has modified the regulations at 22 CFR 62.12(c)(3) to allow sponsors to permit third parties to retrieve copies of digital Forms DS-2019 directly from sponsors' password-protected computer networks and databases, at the sponsors' discretion. It is the Department of State's understanding that the SEVP model does not similarly engage foreign third parties, thereby significantly reducing the need to ensure protection and authenticity of their forms.
Another difference between SEVP activities (for F or M visa classifications) and the Exchange Visitor Program involves the locations at which students and exchange visitors are placed. For example, except for F-1 students placed off-campus,
The Department of State has promulgated specific regulations for the Exchange Visitor Program based on its assessment of the risks associated with the Program that may not apply to SEVP activities. For example, after the implementation of SEVIS in 2002, the Department of State required Officers to wet-sign Forms DS-2019 in blue ink to differentiate original documents from forgers. The Department of State, therefore, confirms its decision to permit the more secure digital software,
The second most frequently raised concern with the 2023 Interim Final Rule is the limitation on the third parties to which sponsors may electronically transmit Forms DS-2019. Ten parties objected to the exclusion of third parties (as defined in 22 CFR 62.2) of sponsors from the enumerated list of authorized recipients of electronically transmitted forms. Parties generally indicated that the visa interview process is facilitated by providing Forms DS-2019 directly to foreign third parties who perform the critical functions of checking forms for accuracy, helping schedule group interviews, and forwarding batches of Forms DS-2019 to consular sections at posts.
First, the Department of State clarifies that only individuals who are employees of a sponsor are considered “staff” for purposes of 22 CFR 62.12(c)(1). Staff at institutions that are designated sponsors are not third parties, and third parties are not considered sponsor staff. Two parties also questioned whether they could copy third parties when they transmit Forms DS-2019 electronically to members of the Department of State's list of acceptable recipients. Since parties receive electronic transmissions regardless of whether they are listed in the “to” line or the “cc” line of an email message, sponsors may not copy any entities that are not enumerated in 22 CFR 62.12(c)(1).
Five commenting parties asked whether sponsors could provide third parties with password-protected access to their computer network systems and/or databases to allow them to log on to access electronic Forms DS-2019. The Department of State believes that such credentialed access provides a degree of security not available through emailing electronic Forms DS-2019. There are millions of email accounts world-wide as opposed to the small number of third parties to which sponsors would opt to grant network access. The risk of someone gaining inappropriate access to Forms DS-2019 is significantly minimized by restricting access in this way. Accordingly, the Department of State has modified the regulations at 22 CFR 62.12(c)(3) to permit this functionality. As a point of clarification, it notes that for purposes of these regulations, electronic transmission is limited to sponsor-initiated sending of files to individuals or entities, including exchange visitors. Prior to making Forms DS-2019 available for third parties to retrieve, sponsors must either wet sign and convert forms to electronic files or sign the forms with digital signatures since 22 CFR 62.12(b)(2)(i) continues to allow only Officers present in the United States or a U.S. territory to sign Forms DS-2019. The Department of State further reminds sponsors that even in a digital environment, there is only one “original” Form DS-2019. If sponsors allow third parties to retrieve Forms DS-2019 from sponsor network systems and/or databases, they must not also mail or electronically transmit the same forms to individuals or entities listed in § 62.12(c)(1). The Department of State has added regulatory language at 22 CFR 62.12(c)(4) to prohibit sponsors from issuing multiple copies of original Forms DS-2019.
For those sponsors that lack the capacity to give third parties password-protected access to their computer network systems and/or databases or do not wish to provide such access, the Department of State reminds them that they may continue to wet-sign Forms DS-2019 and send paper forms to third parties pursuant to 22 CFR 62.12(c)(2).
Other parties expressed concern that Exchange Visitor Program applicants may not have access to email and/or printing facilities. For applicants without email access, sponsors may continue to mail paper forms to applicants and/or to third parties. For applicants without printers at home, the Department of State notes that schools, libraries, and businesses often have printing capabilities that third parties may access for a minimal fee. Nothing in the regulations prohibits exchange visitors from,
Five parties asked for clarification on how the 2023 Interim Final Rule changes the process of providing travel signatures on Forms DS-2019. The new regulations provide flexibility for signing and transmitting Forms DS-2019 to approve travel. First, sponsors may either reprint Forms DS-2019, sign the travel signature space with any color of ink, and send them to exchange visitors using a delivery service; or convert Forms DS-2019 to electronic files and transmit them electronically. Alternatively, Officers may sign the travel signature space of Forms DS-2019 using a digital signature and either transmit them electronically or print them and send them via delivery service. Sponsors that approve travel should advise exchange visitors to carry both Forms DS-2019 when they leave the United States,
Several parties asked how the new regulations impact use of the “reprint” function in SEVIS, noting that sponsors cannot prohibit exchange visitors from reprinting the Forms DS-2019 their sponsors provide. Although the Department of State agrees that sponsors cannot effectively monitor whether exchange visitors reprint or copy Forms DS-2019, the Department of State urges sponsors to advise exchange visitors whose Forms DS-2019 are lost, stolen, or damaged to contact their sponsors and ask for new forms. Sponsors must not electronically transmit or print previously issued Forms DS-2019, but rather, they must use the reprint function in SEVIS and send the new forms (electronically or via mail) to the exchange visitor and/or their accompanying spouse or dependents, if any. On a related matter, two sponsors sought clarification on what sponsors should do if former exchange visitors request copies of their Forms DS-2019 after their programs are over. Since the reprint function is available only for SEVIS records in “initial” and “active” status, sponsors should inform current exchange visitors of this limitation and encourage them to safeguard their original paperwork.
In the supplemental section of the 2023 Interim Final Rule, the Department of State indicated that it would eliminate the phrase “or a change in actual and current U.S. address” from 22 CFR 62.12(a)(3)(vii) because this example was not a valid reason to issue Forms DS-2019. In response to one party's comment that the Department of State did not make this change in the regulatory text, the Department of State now corrects this oversight by deleting the phrase in this final rule.
The 2023 Interim Final Rule eliminated the requirement that Officers who wish to continue to wet-sign paper Forms DS-2019 use only blue ink. In response to one commenting party's request for clarification, the Department of State confirms that it has eliminated the requirement that Officers sign Forms DS-2019 in any specific color of ink.
The introduction of electronic Forms DS-2019 and the potential for the varying physical appearance of printed forms raised questions about exchange visitor signature requirements and signature requirements on other official Department of State forms. Four parties questioned whether the 2023 Interim Final Rule had any impact on signature requirements for,
The addition of electronic Forms DS-2019 has raised other similar issues. Four parties sought clarification with respect to whether the requirement at 22 CFR 62.10(g) that sponsors retain copies of records related to their exchange visitor programs for three years referred to paper or electronic files. Regulations governing the retention of records do not specify the format in which sponsors are required to retain records, leaving it up to sponsors to determine whether they wish to retain paper, electronic, or both paper and electronic records. Electronic records should reflect any changes during the program and be consistent with the information in SEVIS,
This final rule responds to public comments received on the 2023 Interim Final Rule and makes minor revisions to the provisions on the control of DS-2019 forms in 22 CFR 62.12. For the reasons set forth in the 2023 Interim Final Rule, the Department of State does not believe 5 U.S.C. 553(b) or (c) apply to this rulemaking.
This regulation is not a major rule as defined by 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based companies to compete with U.S.-based companies in domestic and export markets.
This regulation will not result in the expenditure by State, local or Tribal governments, in the aggregate, or by the private sector, of $100 million in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501
The Department of State has determined that this regulation will not have Tribal implications; will not impose substantial direct compliance costs on Indian Tribal governments; and will not preempt Tribal law. Accordingly, the requirements of Executive Order 13175 do not apply to this rulemaking.
Since this rule is exempt from section 553 (Rulemaking) and section 554 (Adjudications) of the Administrative Procedure Act, this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601
The Department of State has reviewed this rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866, as amended by Executive Order 14094, and Executive Order 13563, and affirms that this regulation is consistent with the guidance therein. The Office of Management and Budget (OMB) has designated this rule as not significant under E.O. 12866.
The Department of State has reviewed this rulemaking considering sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burdens.
The Department of State finds that this regulation does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement.
This rulemaking relates to OMB Control No. 1405-0119, Certificate of Eligibility for Exchange Visitor Status (J-Nonimmigrant). The Department of State does not anticipate a reportable change in burden for this information collection as a result of this rulemaking.
Cultural exchange programs, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Department of State amends 22 CFR part 62 as follows:
8 U.S.C. 1101(a)(15)(J), 1182, 1184, 1258; 22 U.S.C. 1431
(a)
(1) Grant access to SEVIS only to Responsible Officers and Alternate Responsible Officers and ensure that they have access to and use SEVIS to update required information;
(2) Ensure that Responsible Officers and Alternate Responsible Officers input into SEVIS accurate, current, and updated information in accordance with these regulations; and
(3) Issue Forms DS-2019 only for the following purposes if permitted by the regulations and, as necessary, authorized by the Department of State:
(i) To facilitate the initial entry of exchange visitors and accompanying spouses and dependents, if any, into the United States;
(ii) To extend the duration of participation of exchange visitors;
(iii) To facilitate program transfers;
(iv) To replace lost, stolen, or damaged Forms DS-2019;
(v) To facilitate the re-entry into the United States of exchange visitors and accompanying spouses and dependents, if any, who travel outside the United States during exchange visitors' programs;
(vi) To facilitate changes of category;
(vii) To update information when significant changes take place in regard to exchange visitors' programs (
(viii) To facilitate the correction of minor or technical infractions; and
(ix) To facilitate a reinstatement or reinstatement update SEVIS status.
(b)
(i) Are eligible for, qualified for, and accepted into the programs in which they will participate;
(ii) Possess adequate financial resources to participate in and complete their exchange visitor programs; and
(iii) Possess adequate financial resources to support accompanying spouses and dependents, if any.
(2) Sponsors must ensure that:
(i) Only Responsible Officers or Alternate Responsible Officers who are physically present in the United States or in a U.S. territory may sign Forms DS-2019 or print original Forms DS-2019;
(ii) Only Responsible Officers or Alternate Responsible Officers whose names are printed on Forms DS-2019 are permitted to sign the forms; and
(iii) Responsible Officers or Alternate Responsible Officers sign paper Forms DS-2019 in ink or sign Forms DS-2019 using digital signature software.
(c)
(2) Sponsors may mail signed paper Forms DS-2019 via postal or delivery service to third parties acting on their behalf for distribution to prospective exchange visitors.
(3) Sponsors may provide third parties acting on their behalf with password-protected access to the sponsors' computer network systems and/or databases to retrieve Forms DS-2019.
(4) Sponsors that allow third parties to retrieve Forms DS-2019 from their computer networks and/or databases may not electronically transmit or physically mail the same Forms DS-2019 to individuals or entities identified in paragraph (c)(1) of this section.
(d)
(2)
(e)
(1) Responsible Officers and Alternate Responsible Officers must always secure their SEVIS User Names and passwords (
(2) Sponsors may transmit Forms DS-2019 only to the parties listed in paragraph (c) of this section. However, sponsors must transmit Forms DS-2019 to the Department of State or the Department of Homeland Security upon request.
(3) Sponsors must use the reprint function in SEVIS when exchange visitors' Forms DS-2019 are lost, stolen, or damaged, regardless of whether they are transmitting forms electronically or mailing them.
(4) Sponsors must destroy any damaged and/or unusable Forms DS-2019 (
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development (HUD).
Final rule.
This rule amends the requirements for investing lenders and investing mortgagees to gain or maintain their status as a Federal Housing Administration (FHA) approved lender or mortgagee. This revision makes FHA's approval requirements consistent with investing mortgagees' and investing lenders' risk, reduces barriers to FHA approval for new investing mortgagees and investing lenders, and increases access to capital for all FHA-approved mortgagees and lenders. HUD is clarifying that the general annual certification requirement for lenders and mortgagees is applicable to investing lenders and investing mortgagees. HUD is also defining Government-Sponsored Enterprises (GSEs) separately from other governmental-type entities to ensure that FHA requirements specific to loan origination do not apply to GSEs. Finally, HUD is eliminating obsolete language related to lender and mortgagee net worth requirements. This final rule adopts HUD's July 18, 2023, proposed rule with minor revisions.
Volky Garcia, Division Director, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410, telephone 202-402-8229 (this is not a toll-free number), email
Current HUD regulations at 24 CFR part 202, subpart A, establish minimum standards and requirements for the
In 2010, HUD amended 24 CFR part 202, subpart A, to include investing lenders and investing mortgagees as a class of lenders and mortgagees subject to HUD's net worth requirements currently found at § 202.5(n). At the time the investing lender and investing mortgagee net worth requirement change was made in 2010, HUD also incorporated new financial reporting, audit, and quality control plan requirements for investing lenders and investing mortgagees into various HUD handbooks; however, no corresponding updates were made to 24 CFR part 202, subpart B, to reflect the investing lender and investing mortgagee requirements. Additionally, FHA increased the minimum net worth requirements applicable to certain classes of lenders and mortgagees in 24 CFR part 202 in 2010. These new net worth requirements were phased in over a period of three years, beginning on May 20, 2010, and becoming fully phased in by May 20, 2013. The net worth requirements during that three-year transition period are now obsolete, but the phased-in net worth requirements language remains in HUD's regulations.
Current HUD regulations at § 202.10 also define the classes of lenders and mortgagees that qualify as governmental institutions, Government-Sponsored Enterprises, public housing agencies, and State housing agencies. Currently, various GSEs
On July 18, 2023, HUD published for public comment a proposed rule (88 FR 45863) to amend 24 CFR parts 5 and 202, which govern numerous administrative requirements for investing lenders and investing mortgagees. The proposed rule sought to add investing lenders and investing mortgagees to the list of entities that must comply with the uniform financial reporting standards found in 24 CFR 5.801(a)(5). The rule proposed to adjust audit and certification requirements for investing lenders and investing mortgagees, as well as to delete obsolete language regarding phased-in net worth requirements currently found at § 202.5(n)(2). In addition, the proposed rule aimed to clarify that investing lenders and investing mortgagees without servicing authority do not have to implement a written quality control plan under § 202.5(h).
The final rule adopts the proposed rule with three changes. First, it makes a clarifying edit to the language of § 202.5(h). In the proposed rule, HUD sought to clarify existing regulatory language and exempt investing lenders and investing mortgagees from the § 202.5(h) requirement that they implement a quality control plan. Public comments stated that the proposed language was unclear. In response, HUD is amending the proposed text of § 202.5(h) to clarify the exception for investing lenders and investing mortgagees.
The second change adds the word “investing” before the phrase “lender or mortgagee” throughout § 202.9(b)(4) to ensure uniformity in § 202.9(b). This change is not substantive because the section is limited to investing lenders and investing mortgagees by the existing regulatory text and does not change any auditing, compliance, or reporting requirements. In addition, this change will serve to clarify who must submit audit reports under § 202.9(b)(4).
The third change is a non-substantive change that revises the first sentence of § 202.9(a) to clarify the definition of investing lender or investing mortgagee. Specifically, the change adds specific cross-references that more clearly identify when an organization is not an investing lender or investing mortgagee.
The public comment period closed on September 18, 2023, and HUD received four distinct comments related to the proposed rule. The comments were from Housing Finance Authorities (HFAs), a nonprofit that works with HFAs, and an interested individual. A detailed breakdown of the comments and HUD responses is provided below.
Two commenters supported the proposed amendment to § 202.5(m), which would require investing lenders and investing mortgagees to certify that they have not been refused a license and have not been sanctioned by any State(s) in which it will purchase, hold, sell, or service FHA-approved loans or mortgages.
One commenter stated that they have no concerns with the proposed capital standards that would require investing lenders and investing mortgagees to maintain a certain net worth based on the size of their portfolios, as detailed by the proposed language for § 202.5(n).
One commenter stated that the proposed rule would reduce the incentives for investing lenders and investing mortgagees to originate or purchase FHA-insured mortgages because GSEs or other entities that are eligible to purchase or securitize FHA-insured mortgages would face “lower requirements and fees” compared to investing lenders and investing mortgagees. The commenter stated that the decrease in demand by investing lenders and investing mortgagees could hurt the viability of FHA's programs and increase the financial risk to FHA's portfolio by centralizing lower quality loans within one institution. The commenter suggested that HUD monitor the impact of the rule on the availability of FHA-supported mortgages or loans after implementation and enact adjustments as needed.
One commenter stated that the investing requirements and redefinition of the GSEs under the proposed rule, when taken together, could shift many of the loans and mortgages under Title I and Title II to GSEs like Fannie Mae and Freddie Mac. According to the commenter, this centralization could increase the risk to FHA's portfolio as well as reduce the stability and liquidity in the secondary housing market. The commenter recommended that HUD analyze and more thoroughly consider the impact of the proposed rule on the stability and resilience of the secondary mortgage market, as well as on consumer protection.
The commenter said the proposed rule would lead to HFAs, that are approved as investing lenders and investing mortgagees, drawing from resources dedicated to substantive projects to ensure compliance with the proposed audit requirement. According to the commenter, this would occur because many programs that HFAs administer do not provide administrative funds while others provide insufficient administrative funds or only enough to barely cover the costs of administering the programs. The commenter also said that these requirements are unnecessary because HFAs, as well as other State and local programs, are subject to substantial public oversight by State auditors, State executives, and State legislatures. The commenter stated that this oversight renders the information sought by HUD duplicative of existing, publicly available information.
One commenter requested that HUD consider excluding from some or all of the proposed rules HFAs which may technically own FHA mortgages but have a diminishing portfolio that is serviced by an FHA approved mortgagee. The commenter stated the proposed § 202.9(b)(4)(i) requirement that investing lenders and investing mortgagees provide an analysis of escrow funds would be difficult because HFAs do not have access to the required knowledge or information, which is a problem that is amplified when the portfolio is small. The commenter stated that the information is instead possessed by the original or underlying FHA-approved mortgage and should be provided to HUD under current regulations.
Two commenters stated support for exempting investing lenders and investing mortgagees from the requirement that they implement a quality control plan to ensure compliance with the regulation. However, both commenters said the proposed language was “difficult to parse” because the clause containing the phrase “unless approved under § 202.9 without servicing authority” does not clearly identify that investing lenders and investing mortgagees are exempt from the quality control plan requirement. The commenters suggested the lack of clarity could be addressed by moving the phrase “without servicing authority” from its original clause and placing it after the opening phrase of “lenders or mortgagees.” One commenter provided a second solution, stating the proposed rule could implement the “eminently clear” language from the preamble.
A commenter said that the proposed rule would expand the definition of GSEs to include any entity that is chartered by Congress to provide secondary market liquidity regardless of whether it is owned or controlled by the Federal Government. Specifically, the commenter stated that the proposed expansion to the definition of GSEs “could include entities such as Ginnie Mae or Farmer Mac” that currently have different levels of Federal support than Fannie Mae and Freddie Mac. The commenter also stated that “the proposed rule does not specify how these entities would be regulated under a single definition of GSEs, or whether there would be a single regulator for all of them.” The commenter said that this is a problem because the rule does not specify how these entities would be regulated by HUD in a uniform manner or whether there would be a single regulator for all of them. According to the commenter, these issues might create confusion or inconsistency in the
A commenter stated that the proposed definition of GSEs could reduce the accountability and transparency of Ginnie Mae and Farmer Mac, as well as their access to Federal subsidies and support. The commenter said that this could happen because “Ginnie Mae has an explicit guarantee from the Federal Government that its securities will be paid, while Farmer Mac has no explicit guarantee from the Federal Government but has some tax exemptions and borrowing privileges.” This concern led the commenter to suggest that HUD ensure that these entities are subject to adequate oversight, supervision, and disclosure by their regulators, Congress, and the public.
One commenter stated that the proposed rule would affect the role and function of Fannie Mae and Freddie Mac in the housing finance system, which is currently undergoing a major reform process. The commenter said the reform process aims to end the conservatorship of Fannie Mae and Freddie Mac, which has been in place since 2008, and to establish a more competitive and efficient secondary mortgage market. The commenter warned the proposed rule could have implications for the timing and outcome of the reform process, as well as for the future structure and governance of Fannie Mae and Freddie Mac.” The commenter suggested that HUD coordinate with other Federal agencies to ensure consistency and alignment of policies and standards related to housing finance reform.
One commenter stated that the reasoning provided in the proposed rule for excluding GSEs from FHA requirements specific to loan or mortgage origination, which is that GSEs cannot originate loans, is applicable to many HFAs. The commenter recommended that these similarly situated HFAs be treated like GSEs and be exempted from the loan or mortgage origination requirements as appropriate.
Pursuant to Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The order also directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 further directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. Executive Order 14094 entitled “Modernizing Regulatory Review” (hereinafter referred to as the “Modernizing E.O.”) amends section 3(f) of Executive Order 12866, among other things.
As discussed above, this rule defines GSEs under a separate definition within § 202.10. It clarifies the audit, financial statement, and certification requirements of investing lenders and investing mortgagees. It eliminates obsolete net worth requirements for investing lenders and investing mortgagees. This rule was determined not to be a “significant regulatory action” as defined in section 3(f) of Executive Order 12866 as amended by Executive Order 14094.
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 under 24 CFR 50.19(c)(1) because it does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, rehabilitation, alteration, demolition, or new construction, or establish, revise or provide for standards for construction or construction materials, manufactured housing, or occupancy.
Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either: (i) imposes substantial direct compliance costs on State and local governments and is not required by statute, or (ii) preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, and on the private sector. This rule does not impose any Federal mandates on any State, local, or Tribal governments, or on the private sector, within the meaning of the UMRA.
Administrative practice and procedure, Aged, Claims, Crime, Government contracts, Grant programs—housing and community development, Individuals with disabilities, Intergovernmental relations, Loan programs—housing and community development, Low and moderate income housing, Mortgage insurance, Penalties, Pets, Public housing, Rent subsidies, Reporting and recordkeeping requirements, Social security, Unemployment compensation, Wages.
Administrative practice and procedure, Home improvement, Manufactured homes, Mortgage insurance, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, HUD amends 24 CFR parts 5 and 202 as follows:
12 U.S.C. 1701x; 42 U.S.C. 1437a, 1437c, 1437f, 1437n, 3535(d); 42 U.S.C. 2000bb
(a) * * *
(5) HUD-approved Title I and Title II supervised, nonsupervised, and investing lenders and investing mortgagees.
12 U.S.C. 1703, 1709, and 1715b; 42 U.S.C. 3535(d).
(h)
(m)
(n) * * *
(1)
(2)
(ii)
(iii)
The revisions and addition read as follows:
(a)
(b) * * *
(3)
(4)
(i) A financial statement in a form acceptable to the Secretary, including a balance sheet and a statement of operations and retained earnings, a statement of cash flows, an analysis of the investing lender's or mortgagee's net worth adjusted to reflect only assets acceptable to the Secretary, and an analysis of escrow funds; and
(ii) Such other financial information as the Secretary may require to determine the accuracy and validity of the audit report.
The revision and additions read as follows:
(a)
(b)
(d)
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes a tolerance for residues of cyclaniliprole in or on Vegetable, cucurbit, group 9. Interregional Research Project Number 4 (IR-4) requested this tolerance under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective April 23, 2024. Objections and requests for hearings must be received on or before June 24, 2024, and must be filed in
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2023-0077, is available at
Charles Smith, Director, Registration Division (7505T), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; main telephone number: (202) 566-1030; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Office of the Federal Register's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a(g), any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2023-0077 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before June 24, 2024. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2023-0077, by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
In the
Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Consistent with FFDCA section 408(b)(2)(D), and the factors specified therein, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for cyclaniliprole, including exposure resulting from the tolerance established by this action. EPA's assessment of exposures and risks associated with cyclaniliprole follows.
No single or repeated dose study performed by any route of exposure produced an adverse effect following cyclaniliprole exposure at dose levels below, at, or above the limit dose (1,000 milligrams/kilogram/day (mg/kg/day)). Although the oral toxicity studies in dogs were conducted at approximately a third of the limit dose, no adverse effects were seen. While adaptive liver effects were seen in these studies, it is unlikely that cyclaniliprole would produce adverse liver effects if tested at higher doses in dogs as a structurally related chemical, chlorantraniliprole,
Specific information on the studies received for cyclaniliprole as well as the no-observed-adverse-effect-level (NOAEL) from the toxicity studies can be found at
Based on the review of the available cyclaniliprole toxicological studies, no toxicity endpoints or points of departure were selected for risk assessment. Based on the toxicological profile of cyclaniliprole, EPA has concluded that the FFDCA requirements to retain an additional safety factor for protection of infants and children and to consider cumulative effects do not apply. Section 408(b)(2)(C) requires an additional tenfold margin of safety in the case of threshold risks, which cyclaniliprole does not present. Section 408(b)(2)(D)(v) requires consideration of information concerning cumulative effects of substances that have a common mechanism of toxicity. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to cyclaniliprole and any other substances, and cyclaniliprole does not appear to produce a toxic metabolite produced by other substances. For the purposes of this action, therefore, EPA has not assumed that cyclaniliprole has a common mechanism of toxicity with other substances.
Cyclaniliprole has been grouped with the pyridyl pyrazoles. As part of the ongoing process to review registered pesticides, the Agency intends to apply this framework to determine if the available toxicological data for cyclaniliprole suggests a candidate common mechanism group (CMG) may be established with other pesticides. If a CMG is established, a screening-level toxicology and exposure analysis may be conducted to provide an initial screen for multiple pesticide exposure.
There is a potential for exposure to cyclaniliprole residues via food and drinking water based on existing uses and the proposed uses for cyclaniliprole application directly to growing crops. These applications can also result in cyclaniliprole reaching surface and ground water, both of which can serve as sources of drinking water. There are no proposed uses in residential settings and therefore no anticipated residential exposures, although exposures resulting from spray drift from agricultural applications onto residential areas may occur. However, no quantitative risk assessment was conducted because no toxicity endpoints or points of departure were selected for risk assessment.
Adequate enforcement methodology (liquid chromatography with tandem mass spectrometry (LC-MS/MS)) is available to enforce the tolerance expression for plant and livestock commodities. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Mead, MD 20755-5350; telephone number: (410) 305-2905; email address:
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4).
There are Codex MRLs established for residues of cyclaniliprole on cucumber and squash (summer) at 0.05 ppm; and melons, pumpkin, squash (winter) at 0.1 ppm which are different than the U.S. tolerance for the cucurbit vegetable group 9 established in this action (0.3 ppm). For cucurbit vegetable group 9, no harmonization is possible for these commodities because decreasing the tolerance level to harmonize with the Codex MRL could put U.S. growers at risk of violative residues despite legal use of cyclaniliprole.
Although the lack of toxicity supports a safety finding for an exemption from the requirement of tolerance for all crops, EPA is revising the tolerance for residues resulting from direct applications to the cucurbit vegetable group 9 because the petitioner requested it for international trade purposes. Therefore, the tolerance for residues of cyclaniliprole in or on Vegetable, cucurbit, group 9 is revised from 0.15 ppm to 0.3 ppm.
This action establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), or to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal Governments, on the relationship between the National Government and the States or Tribal Governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides, and pests, Reporting and recordkeeping requirements.
Therefore, for the reasons stated in the preamble, EPA is amending 40 CFR chapter 1 as follows:
21 U.S.C. 321(q), 346a and 371.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2022-13-11, which applies to all Airbus SAS Model A350-941 and -1041 airplanes. AD 2022-13-11 requires revising the existing airplane flight manual (AFM) for airplanes equipped with affected flight control units (FCUs) and replacing any affected FCU with a serviceable FCU. Since the FAA issued AD 2022-13-11, the FAA has determined that it is necessary to expand the applicability of the AFM revision requirement to all Model A350-941 and -1041 airplanes, including those equipped with serviceable FCUs. This proposed AD would continue to require certain actions in AD 2022-13-11, including replacing any affected FCU with a serviceable FCU, expand the requirement to revise the existing AFM for all airplanes, and prohibit the installation of affected parts, as specified in a European Union Aviation Safety Agency (EASA) AD, which is proposed for incorporation by reference (IBR). The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by June 7, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For material, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
• You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
Dat Le, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 562-627-5357; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Dat Le, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 562-627-5357; email:
The FAA issued AD 2022-13-11, Amendment 39-22097 (87 FR 39741, July 5, 2022) (AD 2022-13-11), for all Airbus SAS Model A350-941 and -1041 airplanes. AD 2022-13-11 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued AD 2021-0260, dated November 18, 2021, to correct an unsafe condition.
AD 2022-13-11 requires revising the existing AFM to include a procedure on the use of the AFS control panel ALT knob. AD 2022-13-11 also requires replacing any affected FCU with a serviceable FCU, which would terminate the AFM revision following that replacement. The FAA issued AD
Since the FAA issued AD 2022-13-11, EASA superseded 2021-0260 and issued EASA AD 2023-0215, dated December 11, 2023; corrected December 13, 2023 (EASA AD 2023-0215) (also referred to as the MCAI), to correct an unsafe condition for all Airbus SAS Model A350-941 and -1041 airplanes. EASA AD 2023-0215 states that since EASA AD 2021-0260 was issued, several operators reported uncommanded altitude changes on airplanes equipped with serviceable FCUs. Airbus is investigating the cause of these reported events and, as a precautionary measure, expanded the applicability of the AFM Temporary Revision (TR) 121, issue 1.0, to all airplanes, including those equipped with serviceable FCUs. For the reasons described above, EASA AD 2023-0215 partially retains the requirements of the EASA AD 2021-0260, which is superseded, and requires amendment of the applicable AFM by incorporating the AFM TR 121, issue 1.0, for airplanes equipped with serviceable FCUs. EASA AD 2023-0215 is still considered to be an interim action, and further EASA AD action may follow.
The FAA is proposing this AD to address erroneous target altitude during descent, climb, or go-around, which could result in an unexpected vertical trajectory deviation and loss of correct situational awareness that could potentially result in uncontrolled impact with the ground. You may examine the MCAI in the AD docket at
Although this proposed AD does not explicitly restate the requirements of AD 2022-13-11, this proposed AD would retain certain requirements of AD 2022-13-11. Those requirements are referenced in EASA AD 2023-0215, which, in turn, is referenced in paragraph (g) of this proposed AD.
EASA AD 2023-0215 specifies procedures for revising the existing AFM to include a procedure on the use of the AFS control panel ALT knob for all Airbus SAS Model A350-941 and -1041 airplanes, including the airplanes equipped with serviceable FCUs part number (P/N) C31006AD01; and replacing any affected FCU having P/N C31006AC01 or C31006AB01 with a serviceable FCU having P/N C31006AD01. EASA AD 2023-0215 also prohibits the installation of affected parts. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would retain certain requirements of AD 2022-13-11. This proposed AD would require accomplishing the actions specified in EASA AD 2023-0215 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.
EASA AD 2023-0215 requires operators to “inform all flight crews” of revisions to the AFM, and thereafter to “operate the aeroplane accordingly.” However, this proposed AD would not specifically require those actions as those actions are already required by FAA regulations. FAA regulations require operators furnish to pilots any changes to the AFM (for example, 14 CFR 121.137), and to ensure the pilots are familiar with the AFM (for example, 14 CFR 91.505). As with any other flightcrew training requirement, training on the updated AFM content is tracked by the operators and recorded in each pilot's training record, which is available for the FAA to review. FAA regulations also require pilots to follow the procedures in the existing AFM including all updates. 14 CFR 91.9 requires that any person operating a civil aircraft must comply with the operating limitations specified in the AFM. Therefore, including a requirement in this proposed AD to operate the airplane according to the revised AFM would be redundant and unnecessary.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2023-0215 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2023-0215 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2023-0215 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2023-0215. Service information required by EASA AD 2023-0215 for compliance will be available at
The FAA considers that this proposed AD would be an interim action. The FAA anticipates that further AD action will follow.
The FAA estimates that this AD, if adopted as proposed, would affect 27 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by June 7, 2024.
This AD replaces AD 2022-13-11, Amendment 39-22097 (87 FR 39741, July 5, 2022) (AD 2022-13-11).
This AD applies to all Airbus SAS Model A350-941 and -1041 airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 22, Auto Flight.
This AD was prompted by a report of inadvertent auto flight system (AFS) altitude changes on the flight control unit (FCU); an investigation revealed that, depending on the ring selection, failure of the ALT knob on the FCU could change the target altitude. The FAA is issuing this AD to address erroneous target altitude during descent, climb, or go-around, which could result in an unexpected vertical trajectory deviation and loss of correct situational awareness that could potentially result in uncontrolled impact with the ground.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2023-0215, dated December 11, 2023; corrected December 13, 2023 (EASA AD 2023-0215).
(1) Where EASA AD 2023-0215 refers to “02 December 2021 [the effective date of EASA AD 2021-0260],” this AD requires using August 9, 2022 (the effective date of AD 2022-13-11).
(2) Where EASA AD 2023-0215 refers to its effective date, this AD requires using the effective date of this AD.
(3) Where paragraphs (1) and (2) of EASA AD 2023-0215 specify to “inform all flight crews, and thereafter, operate the aeroplane accordingly,” this AD does not require those actions as those actions are already required by existing FAA operating regulations.
(4) The “Remarks” section of EASA AD 2023-0215 does not apply to this AD.
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Dat Le, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: 562-627-5357; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2023-0215, dated December 11, 2023; corrected dated December 13, 2023.
(ii) [Reserved]
(3) For EASA AD 2021-0260 and EASA AD 2023-0215, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(4) You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 767-300 series airplanes. This proposed AD was prompted by a report that some Model 767-300 series airplanes that had been converted into a freighter configuration are missing an electrical bracket for a wire bundle in the main equipment center. This proposed AD would require installing an electrical support bracket and re-installing wire bundles. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by June 7, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd, MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; website
• You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St, Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195. It is also available at
Samuel Dorsey, Aviation Safety Engineer, FAA, 2200 South 216th St, Des Moines, WA 98198; phone: 206-231-3415; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Samuel Dorsey, Aviation Safety Engineer, FAA, 2200 South 216th St, Des Moines, WA 98198; phone: 206-231-3415; email:
The FAA has received a report that certain Model 767-300 series airplanes that have been modified to operate in a freighter configuration by the manufacturer (also referred to as a “767-300 Boeing Converted Freighter” or “767-300BCF”) do not have the correct airplane configuration necessary to comply with the requirements of AD 2020-18-16, Amendment 39-21237 (85 FR 62993, October 6, 2020) (AD 2020-18-16). Specifically, these Model 767-300 series airplanes are missing an electrical support bracket in the main equipment center, leading to inadequate separation of a wire bundle that includes fuel quantity indicating system (FQIS) wiring.
During the design of the replacement cargo floor beams for the freighter conversion, although the bracket and attached wire support clamps were a required design feature to protect the FQIS wiring, the bracket and clamps were omitted from the design of the cargo floor beams. When the passenger configuration floor beams were replaced with the cargo configuration floor beams during modification, the bracket was therefore removed but not replaced. In addition, on some airplanes, clamps were installed around the relevant wire bundles but were not attached to the missing bracket.
In either case, the wire bundles that were previously attached to the bracket were left unsecured, affecting the wire separation configuration requirements for the FQIS wiring as defined in the airworthiness limitations (Critical
This condition, if not addressed, could result in an electrical fault condition in the FQIS wiring, possibly creating an ignition source in the center wing fuel tank. A failure to prevent possible ignition sources in the fuel tank, in combination with flammable fuel vapors, could result in an explosion and consequent loss of the airplane.
AD 2020-18-16 applies to certain Model 767-200, -300, -300F, and -400ER series airplanes and requires modification of the FQIS to prevent ignition sources inside the center fuel tank. Paragraph (h) of AD 2020-18-16 contains optional alternative requirements for cargo airplanes. The electrical support bracket required by this proposed AD is needed for some Model 767-300 cargo airplanes to accomplish the service bulletin required by the alternative actions in paragraph (h)(2)(ii) of AD 2020-18-16. This proposed AD would restore the airplane to a configuration where paragraph (h)(2)(ii) of AD 2020-18-16 may be accomplished.
The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.
The FAA reviewed Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022. This service information specifies procedures for installing an electrical support bracket in the main equipment center and re-installing wire bundles. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This proposed AD would require accomplishing the actions identified as “RC” (required for compliance) in the Accomplishment Instructions of Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022, already described, except for any differences identified as exceptions in the regulatory text of this proposed AD. For information on the procedures and compliance times, see this service information at
The FAA estimates that this AD, if adopted as proposed, would affect 18 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by June 7, 2024.
None.
This AD applies to The Boeing Company Model 767-300 series airplanes, certificated in any category, as identified in Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022.
Air Transport Association (ATA) of America Code 24, Electrical Power.
This AD was prompted by a report that some Model 767-300 series airplanes that have been modified to operate in a freighter configuration are missing an electrical bracket for a wire bundle in the main equipment center, which affects wire separation configuration requirements for fuel quantity indicating system wiring and could result in an electrical fault condition. The FAA is issuing this AD to prevent possible ignition sources in the fuel tank due to an electrical fault, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: At the applicable times specified in the “Compliance” paragraph of Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022, do all applicable actions identified as “RC” (required for compliance) in, and in accordance with, the Accomplishment Instructions of Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022.
Where the “Compliance” paragraph of Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022, refers to the Revision 1 date of this service bulletin, this AD requires using the effective date of this AD.
This paragraph provides credit for the actions specified in paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Boeing Service Bulletin 767-24-0261, dated May 19, 2021.
(1) The Manager, AIR-520, Continued Operational Safety Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or responsible Flight Standards Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (k)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the responsible Flight Standards Office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by The Boeing Company Organization Designation Authorization (ODA) that has been authorized by the Manager, AIR-520, Continued Operational Safety Branch, FAA, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(4) Except as specified by paragraph (h) of this AD: For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (j)(4)(i) and (ii) of this AD apply.
(i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. If a step or substep is labeled “RC Exempt,” then the RC requirement is removed from that step or substep. An AMOC is required for any deviations to RC steps, including substeps and identified figures.
(ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.
(1) For more information about this AD, contact Samuel Dorsey, Aviation Safety Engineer, FAA, 2200 South 216th St., Des Moines, WA 98198; phone: 206-231-3415; email:
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (l)(3) and (4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) Boeing Alert Service Bulletin 767-24A0261, Revision 1, dated August 17, 2022.
(ii) [Reserved]
(3) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; website
(4) You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain MHI RJ Aviation ULC Model CL-600-2D15 (Regional Jet Series 705) and CL-600-2D24 (Regional Jet Series 900) airplanes. This proposed AD was prompted by a notice from a supplier reporting that torque wrenches used to install the air driven generator (ADG) downlock cam nut were out of calibration, which resulted in a higher torque level setting than required during the initial production installation of the affected cam nut. This proposed AD would require replacement of the affected ADG locking cam screw and cam nut, as specified in a Transport Canada AD, which is proposed for incorporation by reference (IBR). The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by June 7, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For Transport Canada material that is proposed for IBR in this AD, contact Transport Canada, Transport Canada National Aircraft Certification, 159 Cleopatra Drive, Nepean, Ontario K1A 0N5, Canada; telephone 888-663-3639; email
• You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
Fatin Saumik, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Fatin Saumik, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; email
Transport Canada, which is the aviation authority for Canada, has issued Transport Canada AD CF-2023-76, dated November 28, 2023 (Transport Canada AD CF-2023-76) (also referred to as the MCAI), to correct an unsafe condition for certain MHI RJ Aviation ULC Model CL-600-2D15 (Regional Jet Series 705) and CL-600-2D24 (Regional Jet Series 900) airplanes. The MCAI states MHI RJ Aviation received a supplier quality escape notice, reporting that torque wrenches used to install the ADG downlock cam nut were out of calibration, which resulted in a higher torque level setting than required during the initial production installation of the affected cam nut. This over-torque condition could cause the screw and cam to fail, which, if not corrected, could result in the loss of the ADG downlock mechanism functionality upon airplane touchdown which eliminates a critical power source for the aircraft, leaving the flight crew with the minimum flightdeck displays and difficulty controlling the aircraft.
The FAA is proposing this AD to address the unsafe condition on these products.
You may examine the MCAI in the AD docket at
Transport Canada AD CF-2023-76 specifies procedures for replacing the affected ADG locking cam screw and cam nut. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in Transport Canada AD CF-2023-76 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate Transport Canada AD CF-2023-76 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with Transport Canada AD CF-2023-76 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Service information required by Transport Canada AD CF-2023-76 for compliance will be available at
The FAA estimates that this AD, if adopted as proposed, would affect 24 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, part A, subpart III, section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by June 7, 2024.
None.
This AD applies to MHI RJ Aviation ULC (Type Certificate previously held by Bombardier, Inc.) Model CL-600-2D15 (Regional Jet Series 705) and Model CL-600-2D24 (Regional Jet Series 900) airplanes, certificated in any category, as identified in Transport Canada AD CF-2023-76, dated November 28, 2023 (Transport Canada AD CF-2023-76).
Air Transport Association (ATA) of America Code 24, Electrical power.
This AD was prompted by a notice from a supplier reporting that torque wrenches used to install the air driven generator (ADG) downlock cam nut were out of calibration, which resulted in a higher torque level setting than required during the initial production installation of the affected cam nut. The FAA is issuing this AD to address this over-torque condition that could cause the screw and cam to fail. The unsafe condition, if not addressed, could result in the loss of the ADG downlock mechanism functionality on aircraft touchdown which eliminates a critical power source for the aircraft, leaving the flight crew with the minimum flightdeck displays and difficulty controlling the aircraft.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, Transport Canada AD CF-2023-76.
(1) Where Transport Canada AD CF-2023-76 refers to its effective date, this AD requires using the effective date of this AD.
(2) Where Transport Canada AD CF-2023-76 refers to hours air time, this AD requires using flight hours.
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Fatin Saumik, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; email
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Transport Canada AD CF-2023-76, dated November 28, 2023.
(ii) [Reserved]
(3) For Transport Canada AD CF-2023-76, contact Transport Canada, Transport Canada National Aircraft Certification, 159 Cleopatra Drive, Nepean, Ontario K1A 0N5, Canada; telephone 888-663-3639; email
(4) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2023-02-13, which applies to certain Dassault Aviation Model FALCON 900EX airplanes. AD 2023-02-13 requires revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. Since the FAA issued AD 2023-02-13, the FAA has determined that new or more restrictive airworthiness limitations are necessary. This proposed AD would continue to require certain actions in AD 2023-02-13 and would require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, as specified in a European Union Aviation Safety Agency (EASA) AD, which is proposed for incorporation by reference (IBR). The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by June 7, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For material, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
• You may view this service information at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th Street, Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195. It is also available at
Tom Rodriguez, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 206-231-3226; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Tom Rodriguez, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 206-231-3226; email:
The FAA issued AD 2023-02-13, Amendment 39-22320 (88 FR 8740, February 10, 2023) (AD 2023-02-13), for certain Dassault Aviation Model FALCON 900EX airplanes. AD 2023-02-13 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued AD 2022-0144, dated July 11, 2022 (EASA AD 2022-0144) (which corresponds to FAA AD 2023-02-13), to correct an unsafe condition.
AD 2023-02-13 requires revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. The FAA issued AD 2023-02-13 to address reduced structural integrity of the airplane.
Since the FAA issued AD 2023-02-13, EASA superseded AD 2022-0144
The FAA is proposing this AD to address reduced structural integrity of the airplane. You may examine the MCAI in the AD docket at
The FAA reviewed EASA AD 2024-0035, which specifies new or more restrictive airworthiness limitations for airplane structures and safe life limits.
This proposed AD would also require EASA AD 2022-0144, which the Director of the Federal Register approved for incorporation by reference as of March 17, 2023 (88 FR 8740, February 10, 2023).
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would retain certain requirements of AD 2023-02-13. This proposed AD would also require revising the existing maintenance or inspection program, as applicable, to incorporate additional new or more restrictive airworthiness limitations, which are specified in EASA AD 2024-0035 already described, as proposed for incorporation by reference. Any differences with EASA AD 2024-0035 are identified as exceptions in the regulatory text of this AD.
This proposed AD would require revisions to certain operator maintenance documents to include new actions (
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to retain the IBR of EASA AD 2022-0144 and incorporate EASA AD 2024-0035 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2022-0144 and EASA AD 2024-0035 through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2022-0144 or EASA AD 2024-0035 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2022-0144 or EASA AD 2024-0035. Service information required by EASA AD2022-0144 and EASA AD 2024-0035 for compliance will be available at
The FAA's process of incorporating by reference MCAI ADs as the primary source of information for compliance with corresponding FAA ADs has been limited to certain MCAI ADs (primarily those with service bulletins as the primary source of information for accomplishing the actions required by the FAA AD). However, the FAA is now expanding the process to include MCAI ADs that require a change to airworthiness limitation documents, such as airworthiness limitation sections.
For these ADs that incorporate by reference an MCAI AD that changes airworthiness limitations, the FAA requirements are unchanged. Operators must revise the existing maintenance or inspection program, as applicable, to incorporate the information specified in the new airworthiness limitation document. The airworthiness limitations must be followed according to 14 CFR 91.403(c) and 91.409(e).
The previous format of the airworthiness limitation ADs included a paragraph that specified that no alternative actions (
The FAA estimates that this AD, if adopted as proposed, would affect 88 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the total cost per operator for the retained actions from AD 2023-02-13 to be $7,650 (90 work-hours × $85 per work-hour).
The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate.
The FAA estimates the total cost per operator for the new proposed actions to be $7,650 (90 work-hours × $85 per work-hour).
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this airworthiness directive (AD) by June 7, 2024.
This AD replaces AD 2023-02-13, Amendment 39-22320 (88 FR 8740, February 10, 2023) (AD 2023-02-13).
This AD applies to Dassault Aviation Model FALCON 900EX airplanes, certificated in any category, as identified in European Union Aviation Safety Agency (EASA) AD 2024-0035, dated January 31, 2024 (EASA AD 2024-0035).
Air Transport Association (ATA) of America Code 05, Time Limits/Maintenance Checks.
This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is issuing this AD to address reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
This paragraph restates the requirements of paragraph (j) of AD 2023-02-13, with a new terminating action. Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2022-0144, dated July 11, 2022 (EASA AD 2022-0144). Accomplishing the revision of the existing maintenance or inspection program required by paragraph (j) of this AD terminates the requirements of this paragraph.
This paragraph restates the exceptions specified in paragraph (k) of AD 2023-02-13, with no changes.
(1) The requirements specified in paragraphs (1) and (2) of EASA AD 2022-0144 do not apply to this AD.
(2) Paragraph (3) of EASA AD 2022-0144 specifies revising “the approved AMP” within 12 months after its effective date, but this AD requires revising the existing maintenance or inspection program, as applicable, to incorporate the “limitations, tasks and associated thresholds and intervals” specified in paragraph (3) of EASA AD 2022-0144 within 90 days after March 17, 2023 (the effective date of AD 2023-02-13).
(3) The initial compliance time for doing the tasks specified in paragraph (3) of EASA AD 2022-0144 is at the applicable “associated thresholds” specified in paragraph (3) of EASA AD 2022-0144, or within 90 days after March 17, 2023 (the effective date of AD 2023-02-13), whichever occurs later.
(4) The provisions specified in paragraphs (4) and (5) of EASA AD 2022-0144 do not apply to this AD.
(5) The “Remarks” section of EASA AD 2020-0144 does not apply to this AD.
This paragraph restates the requirements of paragraph (l) of AD 2023-02-13, with a new exception. Except as required by paragraph (j) of this AD, after the maintenance or inspection program has been revised as required by paragraph (g) of this AD, no alternative actions (
Except as specified in paragraph (k) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, EASA AD 2024-0035. Accomplishing the revision of the existing maintenance or inspection program required by this paragraph terminates the requirements of paragraph (g) of this AD.
(1) This AD does not adopt the requirements specified in paragraphs (1) and (2) of EASA AD 2024-0035.
(2) Paragraph (3) of EASA AD 2024-0035 specifies revising “the approved AMP,” within 12 months after its effective date, but this AD requires revising the existing maintenance or inspection program, as applicable, within 90 days after the effective date of this AD.
(3) The initial compliance time for doing the tasks specified in paragraph (3) of EASA AD 2024-0035 is at the applicable “limitations” and “associated thresholds” as incorporated by the requirements of paragraph (3) of EASA AD 2024-0035, or within 90 days after the effective date of this AD, whichever occurs later.
(4) This AD does not adopt the provisions specified in paragraphs (4) and (5) of EASA AD 2024-0035.
(5) This AD does not adopt the “Remarks” section of EASA AD 2024-0035.
After the existing maintenance or inspection program has been revised as required by paragraph (j) of this AD, no alternative actions (
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Tom Rodriguez, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 206-231-3226; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(3) The following service information was approved for IBR on [DATE 35 DAYS AFTER PUBLICATION OF THE FINAL RULE].
(i) European Union Aviation Safety Agency (EASA) AD 2024-0035, dated January 31, 2024.
(ii) [Reserved]
(4) The following service information was approved for IBR on March 17, 2023 (88 FR 8740, February 10, 2023).
(i) European Union Aviation Safety Agency (EASA) AD 2022-0144, dated July 11, 2022.
(ii) [Reserved]
(5) For EASA AD 2024-0035 and EASA AD 2022-0144, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(6) You may view this material at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th Street, Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(7) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend the Class E airspace at Dallas-Fort Worth, TX. The FAA is proposing this action as the result of an airspace review conducted due to the amendment of the instrument procedures at Bourland Field, Fort Worth, TX—contained within the Dallas-Fort Worth, TX, Class E airspace legal description. This action will bring the airspace into compliance with FAA orders to support instrument flight rule (IFR) procedures.
Comments must be received on or before June 7, 2024.
Send comments identified by FAA Docket No. FAA-2024-0948 and Airspace Docket No. 24-ASW-9 using any of the following methods:
*
*
*
*
FAA Order JO 7400.11H, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Jeffrey Claypool, Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5711.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend the Class E airspace extending upward from 700 feet above the surface at Bourland Field, Fort Worth, TX—contained within the Dallas-Fort Worth, TX, airspace legal description—to support IFR operations at these airports.
The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.
The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it received on or before the closing date for comments. The FAA
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
Class E airspace is published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023, and effective September 15, 2023. These updates would be published subsequently in the next update to FAA Order JO 7400.11. That order is publicly available as listed in the
FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
The FAA is proposing an amendment to 14 CFR part 71 by modifying the Class E airspace extending upward from 700 feet above the surface to within a 6.9-mile (increased from a 6.5-mile) radius of Bourland Field, Fort Worth, TX.
This action is the result of an airspace review conducted due to the amendment of the instrument procedures at Bourland Field to supports the IFR operations at this airport.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
(Lat 32°34′55″ N, long 97°35′27″ W)
That airspace extending upward from 700 feet above the surface within a 30-mile radius of Dallas-Fort Worth International Airport; and within a 6.6-mile radius of McKinney National Airport; and within 1.8 miles each side of the 002° bearing from McKinney National Airport extending from the 6.6-mile radius to 9.2 miles north of the airport; and within a 6.3-mile radius of Ralph M. Hall/Rockwall Municipal Airport; and within 1.6 miles each side of the 010° bearing from Ralph M. Hall/Rockwall Municipal Airport extending from the 6.3-mile radius to 10.8 miles north of the airport; and within a 7-mile radius of Mesquite Metro Airport; and within a 6.6-mile radius of Lancaster Regional Airport; and within 1.9 miles each side of the 140° bearing from Lancaster Regional Airport extending from the 6.6-mile radius to 9.2 miles southeast of the airport; and within 8 miles northeast and 4 miles southwest of the 144° bearing from the Point of Origin extending from the 30-mile radius of Dallas-Fort Worth International Airport to 35 miles southeast of the Point of Origin; and within a 6.5-mile radius of Fort Worth Spinks Airport; and within 8 miles east and 4 miles west of the 178° bearing from Fort Worth Spinks Airport extending from the 6.5-mile radius to 21 miles south of the airport; and within a 6.9-mile radius of Cleburne Regional Airport; and within 3.6 miles each side of the 292° bearing from the Cleburne Regional Airport extending from the 6.9-mile radius to 12.2 miles northwest of airport; and within a 6.9-mile radius of Bourland Field; and within a 8.8-mile radius of Granbury Regional Airport; and within a 6.3-mile radius of Parker County Airport; and within 8 miles east and 4 miles west of the 177° bearing from Parker County Airport extending from the 6.3-mile radius to 21.4
Consumer Product Safety Commission.
Proposed rule; availability of supplemental information; request for comment.
The U.S. Consumer Product Safety Commission (Commission or CPSC) published a notice of proposed rulemaking (NPR) in September 2023 to address the risk of death and injury associated with infant suffocations, entrapments, falls, and other hazards associated with nursing pillows. CPSC is announcing the availability of, and seeking comment on, details about incident data relevant to the rulemaking that are associated with infants and the use of nursing pillows. The Commission is also seeking comments on how a final rule should address nursing pillow covers.
Submit comments by May 23, 2024.
Submit comments, identified by Docket No. CPSC-2023-0037, by any of the following methods:
Timothy Smith, Project Manager, Directorate for Engineering Sciences, U.S. Consumer Product Safety Commission, 5 Research Place, Rockville, MD 20850; email:
Section 104 of the Consumer Product Safety Improvement Act of 2008 (CPSIA) requires the Commission to promulgate consumer product safety standards for durable infant or toddler products. Under this statutory direction, in September 2023, the Commission published an NPR, Safety Standard for Nursing Pillows, to reduce the risk of death and injury associated with nursing pillows. 88 FR 65865 (Sept. 26, 2023).
A nursing pillow is any product intended, marketed, or designed to position and support an infant close to a caregiver's body while breastfeeding or bottle feeding. These products rest upon, wrap around, or are worn by a caregiver in a seated or reclined position. The Commission is considering how slipcovers (
In addition, the Commission is now making available incident reports underlying the data discussed in the NPR.
The NPR contains information about incidents from two databases: the Consumer Product Safety Risk Management System (CPSRMS)
Relevant data from CPSRMS include incident reports from medical examiners, consumers, death certificates, and manufacturers. Some of the incident data are obtained from 124 in-depth investigations (IDIs) conducted by CPSC. Among these IDIs, 122 involved fatal incidents, and two involved nonfatal incidents. Other incident data was reported by firms to CPSC under section 15(b) of the CPSA, 15 U.S.C. 2064(b), which included 13 non-fatal incidents. CPSC also relied on incidents received from the public and state and local government agencies as well as medical examiner/coroner reports, which included 24 fatal incidents and one nonfatal incident. In addition, the data includes information obtained from eight death certificates.
Data from NEISS contain incidents and injuries treated in U.S. hospital emergency departments. CPSC staff performed multiple searches consisting of a combination of product codes and narrative keyword searches to find nursing pillow incidents in NEISS. The first data search included all reports with the product code that includes nursing pillows (code 4050 Pillows excl. water pillows). The second data search looked for specific keywords
The Commission invites comments on the incident data and analysis of this data in the NPR. CPSC is making available for review and comment the incident reports relied upon and discussed in the NPR, to the extent allowed by applicable law, along with the associated IDIs. To obtain access to the data, submit a request to:
Consumer Product Safety Commission.
Proposed rule; availability of supplemental information; request for comment.
The U.S. Consumer Product Safety Commission (Commission or CPSC) published a notice of proposed rulemaking (NPR) in January 2024 regarding a rulemaking to address suffocation, entrapment, fall, and other hazards associated with infant support cushions. CPSC is announcing the availability of, and seeking comment on, details about incident data relevant to the rulemaking that are associated with infants and the use of infant support cushions.
Submit comments by May 23, 2024.
Submit comments, identified by Docket No. CPSC-2023-0047, by any of the following methods:
Ashley Johnson, Project Manager, Directorate for Health Sciences, U.S.
Section 104 of the Consumer Product Safety Improvement Act of 2008 (CPSIA) requires the Commission to promulgate consumer product safety standards for durable infant or toddler products. Under this statutory direction, in January 2024 the Commission published an NPR, Safety Standard for Infant Support Cushions, to reduce the risk of death and injury associated with infant support cushions. 89 FR 2530 (Jan. 16, 2024).
An infant support cushion is defined in the NPR as “an infant product that is filled with or comprised of resilient material such as foam, fibrous batting, or granular material or with a gel, liquid, or gas, and which is marketed, designed, or intended to support an infant's weight or any portion of an infant while reclining or in a supine, prone, or recumbent position.” 89 FR 2544. This definition includes infant pillows, infant loungers, nursing pillows with a lounging function, infant props or cushions used to support an infant for activities such as “tummy time,” and other similar products. 89 FR 2530.
The Commission is now making available incident reports underlying the data discussed in the NPR, as described below.
The NPR discussed information about incidents from two databases: the Consumer Product Safety Risk Management System (CPSRMS)
Relevant data from CPSRMS include incident reports from medical examiners, consumers, death certificates, and manufacturers. Some of the incident data relied on for the rulemaking were obtained from 83 in-depth investigations (IDIs) conducted by CPSC. Among these IDIs, 73 were fatal incidents and 10 were nonfatal incidents. The Commission also obtained information from reports submitted by consumers, medical examiners, and the Food and Drug Administration concerning five other fatal incidents and 58 nonfatal incidents involving falls (29 incidents), threatened asphyxiation (26 incidents), and one incident report each of limb entrapment, choking and near strangulation. 89 FR 2533.
The Commission also relied on data from NEISS that contains incidents and injuries treated in U.S. hospital emergency departments. One of these incidents resulted in a fatality. The Commission relied on 26 NEISS records associated with infant support cushions, as summarized in a spreadsheet of these NEISS incidents.
The Commission invites comments on the incident data and analysis of this data in the NPR. CPSC is making available for review and comment the incident reports relied upon and discussed in the NPR, to the extent allowed by applicable law, along with the associated IDIs. To obtain access to the data, submit a request to:
Assistant to the Secretary of Defense for Public Affairs, Department of Defense (DoD).
Proposed rule.
This rulemaking proposes to update authorities and responsibilities for the Stars and Stripes Media Organization (often abbreviated as Stripes) to reaffirm its editorial independence in providing media products not only to military service members and DoD civilian employees, but to U.S. veterans, families of veterans and current service members, and contractor personnel, particularly those serving overseas, based on changes in the consumption of news and information in a digital age. It additionally proposes to remove internal operational procedures of the Stars and Stripes Media Organization that do not require rulemaking under the Administrative Procedure Act.
Comments must be received by June 24, 2024.
You may submit comments, identified by docket number and/or Regulation Identifier Number (RIN) number and title, by any of the following methods:
•
•
Kyle Combs, 703-695-6290.
This rulemaking update will clarify and reaffirm Stripes' authorities and responsibilities as the only DoD-authorized organization to provide First Amendment-type reporting and editorially independent media products for the benefit of the U.S. military community, including veterans, families of veterans and current service members, and contractor personnel, as well as current service members and DoD civilian employees, and remove those elements from the CFR that do not require rulemaking because they constitute internal management procedures. This update will also reflect the shift of Stripes from a print-first to digital-first media organization, as consumption of information has evolved in a digital age and media competition has increased. Stripes provides a reliable source of commercially available U.S. and world news and original news stories developed through first-hand reporting by Stripes staff from bases around the world that is accurate, fair, impartial, credible, and editorially independent of the military chain of command and military public affairs activities. By keeping its audience informed, Stripes provides news of interest to the U.S. military community that enables them to exercise their responsibilities of citizenship.
This rulemaking reaffirms Stripes operating as a nonappropriated fund instrumentality, a government entity established for military morale, welfare, and recreation of the U.S. military community that may both generate revenue and receive appropriated fund support consistent with its mission and applicable policy. Stripes is to be funded to the maximum extent possible through the sale and distribution of the newspapers, other products, authorized advertising, and other sources of revenue, as approved by the DoD and the Congress.
This rulemaking also reaffirms the Stripes Ombudsman position and purpose, in accordance with the Fiscal Years 1990-91 National Defense Authorization Act House Committee on Armed Services Report, which requested the establishment of the Ombudsman position and that the Ombudsman report to the DoD and annually to the House Armed Services Committee on the state of the free flow of information to the Armed Forces via Stripes. The ombudsman position defends the independence of Stripes on behalf of its readers by ensuring that the Stripes newsroom is free from command interference or censorship. The position ensures that the newsroom upholds accuracy, fairness, and independence.
Section 113 of Title 10, U.S.C., provides the Secretary of Defense, subject to the direction of the President, authority, direction, and control over the DoD. 10 U.S.C. 191 and 192 provide authority to the Secretary of Defense to establish Defense Agencies and Field Activities to provide common services to the Military Departments and provide for their supervision when such action would be more effective, economical, or efficient. The Defense Media Activity is presently the Defense Field Activity to which Stripes belongs. Stripes is a DoD organization providing First Amendment-type reporting that allows for a free flow of news information so that service members in all Military Departments and Services may stay informed of current events and issues to support exercise of their responsibilities of citizenship, especially where commercial news sources have limited incentives to report or distribute. Funded partly with appropriated funds and partly with nonappropriated funds, Stripes operates as a nonappropriated fund instrumentality and supports the morale, welfare, and readiness of the U.S. military community by providing a reliable source of accurate, fair impartial, and credible news to its audience, consistent with 10 U.S.C. 136, Under Secretary of Defense for Personnel and Readiness, and DoD Instructions 1015.08, “DoD Civilian Employee Morale, Welfare, and Recreation (MWR) Activities and Supporting Nonappropriated Fund Instrumentalities (NAFI)” (available at
This regulation, 32 CFR part 246, was previously published in the
DoD is now proposing revising this regulation to reflect current policies concerning those portions of the Stripes mission discussed in this preamble. This revision also removes information that is not necessary for inclusion in the CFR, consistent with the Administrative Procedure Act. Internal policies and procedures will remain in DoD Directive (DoDD) 5122.11, “Stars and Stripes (S&S) Newspapers and Business Operations (available at
The updates to this rule are administrative in nature with no requirements of the public; therefore, the costs are nominal. Stripes content is to be provided at reasonable cost to the U.S. military community, comparable to the retail sales price of similar commercial newspapers throughout the United States, to ensure greatest access for its audience. Some advertiser-supported information is distributed to all readers at no cost. Stripes partially funds its mission in support of DoD through revenue-generating activities as a nonappropriated fund instrumentality. Stripes is also authorized appropriated funding, but Stripes is to be funded to the maximum extent possible through the sale and distribution of the newspapers, other products, authorized advertising, and other sources of revenue, as approved by the DoD and the Congress.
These Executive Orders direct agencies to assess all costs, benefits and available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, safety effects, distributive impacts, and equity). These Executive Orders emphasize the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated not significant, under section 3(f) of Executive Order 12866, as amended by Executive Order 14094. This rule revision highlights areas of public interest regarding Stripes' editorial independence, but it removes internal procedures that do not have external burden or implications. This rule does not have direct economic, environmental, public health, safety, distributive, or equity impacts.
Pursuant to the Congressional Review Act, this rule has not been designated a major rule, as defined by 5 U.S.C. 804(2). This rule does not have an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export market.
The Assistant to the Secretary of Defense for Public Affairs certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601
Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532) requires agencies to 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. This rule will not mandate any requirements for state, local, or tribal governments, and will not affect private sector costs.
It has been determined that this rule does not impose reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that has Federalism implications, imposes substantial direct requirement costs on State and local governments, and is not required by statute, or has Federalism implications and preempts State law. This rule will not have a substantial effect on State and local governments.
Executive Order 13175 establishes certain requirements that an agency must meet when it promulgates a proposed rule that imposes substantial direct compliance costs on one or more Indian tribes, preempts tribal law, or affects the distribution of power and responsibilities between the Federal government and Indian tribes. This rule will not have a substantial effect on Indian tribal governments.
10 U.S.C. 113, 136, 191-192.
This part clarifies and reaffirms the Stars and Stripes (Stripes) Media Organization authorities and responsibilities to provide editorially independent media products and services.
These terms and their definitions are for the purposes of this part.
(a)
(b)
(c)
(d)
It is DoD policy that:
(a) The Stars and Stripes Media Organization publishes accurate, fair, impartial, and credible news and
(b) Stripes' content is to be provided at reasonable cost to the U.S. military community, comparable to the retail sales price of similar commercial news and information content throughout the United States, to ensure the greatest access for its audience.
(c) Stripes' editorial operations are independent of the military chain of command, military public affairs activities, or other external influences, and without censorship, inappropriate news management, or propaganda, but they fully comply with the policies and procedures that prevent the disclosure of information that is classified national security information or controlled unclassified information, would adversely affect national security, or clearly endanger the lives of U.S. personnel in accordance with the DoD authorities in paragraphs (a) through (e) of appendix A of this part and applicable laws, regulations, and Government-wide policies.
(d) Stripes' editorial policies and practices will be in keeping with journalistic standards of U.S. commercial news organizations of the highest quality, such as the Code of Ethics of the Society of Professional Journalists (available at
(e) Stripes' products and services may not advance a specific editorial position, point of view or particular interest, but will present a wide range of news and views, including coverage of U.S. political campaigns in an impartial, objective, and nonpartisan manner that does not imply endorsement of any candidate or political party.
(f) Stripes' products and services are unofficial and do not reflect the official views of, or endorsement by, the U.S. Government, the DoD, or subordinate command authorities.
(g) Stripes' reporters and editorial staff are DoD personnel authorized to gather and report news, good and bad, about the DoD and the U.S. military community. They may ask questions of DoD officials, gain help, have access, and attend gatherings or events available to reporters from the commercial media. Stripes reporters with access to DoD installations (because of their status as DoD personnel) may cover events or activities open to those with installation access even though commercial media may not have the same unescorted access; information published about or resulting from such events or activities is still subject to the requirements of paragraph (c) of this section.
(h) Although newsgathering is investigative by nature, Stripes is not an authorized investigative agency, such as a military criminal investigative organization, other DoD investigative body, or an office of Inspector General, and does not conduct official investigations on behalf of DoD. It may, however, report on such official DoD investigations, as well as investigations by outside organizations or commercial media in the public domain (
(i) As DoD employees, the Stripes' news staff members must adhere to the DoD personnel policies that may not usually apply to journalists employed by commercial newspapers, including 5 CFR parts 2635 and 3601 and paragraphs (f) and (g) of appendix A of this part, as applicable, and all other applicable DoD policies and Federal laws and regulations as well as any applicable Status of Forces Agreements.
(j) Stripes partially funds its mission in support of DoD through revenue-generating activities as a nonappropriated fund instrumentality, a government entity established for morale, welfare, and recreation that may generate revenue and minimize the need for congressionally appropriated fund support. Stripes is to be funded to the maximum extent possible through the sale and distribution of news and information products, authorized advertising, printing services, and other sources of revenue, as approved by the DoD or Congress. While Stripes is authorized nonappropriated and appropriated funding, appropriated fund support is to be kept to a minimum level consistent with its mission but at levels provided for in paragraph (h) of appendix A of this part. Stripes also may be authorized appropriated funding for news and information production and free distribution to support members of the U.S military community deployed during armed conflict, exercises, or in contingency environments.
The Stars and Stripes Media Organization is supported by the following policies:
(a) DoD Instruction 5200.01, “DoD Information Security Program and Protection of Sensitive Compartmented Information (SCI)” (available at
(b) DoD Instruction 5200.48, “Controlled Unclassified Information (CUI)” (available at
(c) DoD Manual 5200.01, Volume 1, “DoD Information Security Program: Overview, Classification, and Declassification” (available at
(d) DoD Manual 5200.01, Volume 2, “DoD Information Security Program: Marking of Information” (available at
(e) DoD Manual 5200.01, Volume 3, “DoD Information Security Program: Protection of Classified Information” (available at
(f) DoD Directive 5500.07, “Standards of Conduct” (available at
(g) Manual for Courts-Martial United States (2019 Edition) (available at
(h) DoD Instruction 1015.15, “Establishment, Management, and Control of Nonappropriated Fund Instrumentalities and Financial Management of Supporting Resources” (available at
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard is proposing to amend the regulations for Los Angeles and Long Beach Harbors. This action would amend Anchorages F and G, and update anchorage usage and communication requirements. The purpose of this proposed rule is to improve navigation safety by modifying Anchorage F and G to accommodate an increased volume of vessel traffic and larger vessels calling on the Ports of Los Angeles and Long Beach and alleviate vessels anchoring near a subsea pipeline. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before July 22, 2024.
You may submit comments identified by docket number USCG-2023-0868 using the Federal Decision Making Portal at
For information about this document call or email Rubymar Sebastian-Echevarria at D11 Waterways, Coast Guard; telephone (571) 613-2930 or (206) 820-5620, email
The Coast Guard views public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
The Coast Guard proposes to amend Anchorages F and G in Los Angeles and Long Beach Harbors to improve navigation safety and update anchorage usage and communication requirements. The legal basis and authorities for this notice of proposed rulemaking are found in 46 U.S.C. 70006, 33 CFR 109.05, 33 CFR 1.05-1, and DHS Delegation No. 00170.1 Revision 01.3, which collectively authorize the Coast Guard to propose, establish, and define regulatory anchorage grounds. Under Title 33 of the Code of Federal Regulation (CFR) § 109.05, U.S. Coast Guard District Commanders are delegated the authority to establish anchorage grounds by the Commandant of the U.S. Coast Guard. The Coast Guard established Anchorage Grounds under Title 33 CFR CGFR 67-46, 32 FR 17728, Dec. 12, 1967, as amended by CGD11-04-005, 71 FR 15036, Mar. 27, 2006.
The Coast Guard proposes to amend the boundaries and anchorage requirements for Anchorages F and G in Los Angeles and Long Beach Harbors. Changes in global demand patterns and supply chain disruptions have contributed to port congestion and increased usage of Anchorages F and G. Due to economies of scale, vessels calling on the Ports of Los Angeles and Long Beach have increased in size and require more surface area for anchoring and maneuvering. Additionally, a subsea pipeline is located approximately less than one nautical mile from the anchorages. For these reasons, the Coast Guard proposes expanding the distance between anchorages and requiring vessels greater than 1600 gross tons to place their propulsion plants in standby and have a second anchor ready to let go when forecasted and/or observed wind speeds and gusts are 35 knots or greater. This proposed requirement is needed to prevent vessels from dragging anchor and to prevent harm to vessels, the port, and the environment. The proposed regulation would update port, pilot, and communication information to maintain proactive anchorage management.
The specific anchorage boundaries and amendments are described in detail in the proposed regulatory text at the end of the document.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. A summary of our analyses based on these statutes or Executive orders follows.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This NPRM has not been designated a “significant regulatory action” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, the NPRM has not been
This proposed regulatory action determination is based on the need to maintain navigation safety within the port by amending the boundaries of Anchorages F and G and updating anchorage usage and communication requirements. The proposed action would not negatively impact navigation. Vessels would still be able to maneuver in, around and through anchorages.
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. While some owners or operators of vessels intending to transit the anchorage grounds may be small entities, for the reasons stated in section V.A. above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment to the docket at the address listed in the
This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.
A rule has implications for federalism under Executive Order 13132 (Federalism) if it has a substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under Executive Order 13132 and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132. Our analysis follows.
The legal basis and authorities for this notice of proposed rulemaking are found in 46 U.S.C. 70006, 33 CFR 109.05, 33 CFR 1.05-1, and DHS Delegation No. 00170.1, which collectively authorize the Coast Guard to propose, establish, and define regulatory anchorage grounds. Therefore, this proposed rule is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100 million (adjusted for inflation) or more in any one year. Although this proposed rule would not result in such an expenditure, we do discuss the potential effects of this proposed rule elsewhere in this preamble.
This proposed rule would not cause a taking of private property or otherwise have taking implications under Executive Order 12630 (Governmental Actions and Interference with Constitutionally Protected Property Rights).
This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, (Civil Justice Reform), to minimize litigation, eliminate ambiguity, and reduce burden.
We have analyzed this proposed rule under Executive Order 13045 (Protection of Children from Environmental Health Risks and Safety Risks). This proposed rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.
This proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments), because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for Indian Tribes, please call or email the person listed in the
We have analyzed this proposed rule under Executive Order 13211 (Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use). We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
The National Technology Transfer and Advancement Act, codified as a note to 15 U.S.C. 272, directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (for example, specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.
This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.
We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves the amendment of anchorages. This proposed rule would be categorically excluded under paragraph L59(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 110 as follows:
33 U.S.C. 2071, 46 U.S.C. 70006, 70034; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a) * * *
(1) * * *
(i) Unless otherwise directed by the Captain of the Port Los Angeles—Long Beach, the Long Beach Port Pilots will assign all anchorages inside the federal breakwater. All anchorages outside (seaward) of the federal breakwater will be assigned by Vessel Traffic Service Los Angeles-Long Beach (VTS LA-LB). The master, pilot, or person in charge of a vessel must notify the Long Beach Pilots (for anchorages inside the federal breakwater) or VTS LA-LB (for anchorages outside the federal breakwater) of their intention to anchor, upon anchoring, and at least fifteen minutes prior to departing an anchorage. All anchorage assignments will be made as described in this part unless modified by the Captain of the Port.
(ii) Radio communications for port entities governing anchorages are as follows: VTS LA-LB, call sign “San Pedro Traffic”, Channel 14 VHF-FM; Long Beach Port Pilots, call sign “Long Beach Pilots”, Channel 12 VHF-FM.
(2) * * *
(i) * * *
(B) No vessel may anchor anywhere else within Los Angeles or Long Beach harbors (inside the federal breakwater) for more than 10 consecutive days unless extended anchorage permission is obtained from the Captain of the Port. In determining whether extended anchorage permission will be granted, consideration will be given, but not necessarily limited to: The current and anticipated demands for anchorage space within the harbor, the requested duration, the condition of the vessel, and the reason for the request.
(3) Other General Requirements.
(i) When at anchor, all commercial vessels greater than 1600 gross tons shall, at all times, have a licensed or credentialed deck officer on watch and maintain a continuous radio listening watch unless subject to one of the exemptions in this paragraph. The radio watch must be on CH-12 VHF-FM when anchored inside the federal breakwater, and on CH-14 VHF-FM when anchored outside the federal breakwater, except for unmanned barges; vessels which have less than 100 gallons of oil or fuel onboard regardless of how the fuel is carried; and other vessels receiving advance approval from the Captain of the Port.
(ii) When winds are forecasted and/or observed at 35 knots or greater (including wind gusts) vessels shall ensure their propulsion plant is placed in immediate standby and a second anchor, if installed, is made ready to let go. Vessels unable to comply with this requirement must immediately notify the Captain of the Port. In such case, the Captain of the Port may require additional precautionary measures, including but not limited to one or more tugs standing by to render immediate assistance.
(b) * * *
(6) Commercial Anchorage F (outside of Long Beach Breakwater). The waters southeast of the Long Beach Breakwater bounded by a line connecting the following coordinates:
And thence north/northwest to the beginning point.
(7) Commercial Anchorage G (outside of the Middle Breakwater). The waters south of the Middle Breakwater bounded by a line connecting the following coordinates:
And thence north/northeast to the beginning point.
(c) * * *
(2) The geographic boundaries of each anchorage are contained in paragraph (b) of this section.
Federal Communications Commission.
Proposed rule.
In this document, the Federal Communications Commission (“Commission”) seeks comment on additional action it can take to help survivors of domestic violence access safe and affordable connectivity, particularly in the context of connected car services which may be used to stalk, harass, and revictimize survivors of domestic violence.
Interested parties may file comments on or before May 23, 2024, and reply comments on or before June 24, 2024. Written comments on the Paperwork Reduction Act proposed information collection requirements must be submitted by the public, the Office of Management and Budget (OMB), and other interested parties on or before June 24, 2024. Written comments on the Initial Regulatory Flexibility Analysis (IRFA) in this document must have a separate and distinct heading designating them as responses to the IRFA and must be submitted by the public on or before May 23, 2024.
You may submit comments, identified by WC Docket No. 22-238, by any of the following methods:
•
•
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street NE, Washington, DC 20554.
• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19.
For further information on this proceeding, contact Thomas Hastings,
This is a summary of the Commission's Further Notice of Proposed Rulemaking (
1. In this
2. We seek comment on solutions to help ensure that domestic violence survivors need not choose between access to personal transportation or exposing themselves to threatening, stalking, or other harmful behavior by those who can access the car's data and connectivity. We seek comment on the types, as well as the frequency of use, of connected car services in the marketplace today. In addition, we ask whether changes to the Commission's rules implementing the Safe Connections Act (SCA) are needed to address the impact of connected car services on domestic violence survivors. Safe Connections Act of 2022, Public Law 117-223, 116 Stat. 2280 (Safe Connections Act or SCA). In November 2023, the Commission adopted a Report and Order implementing the Safe Connections Act. Supporting Survivors of Domestic and Sexual Violence et al., WC Docket No. 22-238, Report and Order, FCC 23-96 (Nov. 16, 2023) (
3. Domestic violence and abusive relationships are a significant safety and public health issue that result in individual harm and societal costs that extend beyond the survivor. Domestic violence affects more than 12 million people every year, and an average of 24 people per minute are subject to physical violence or stalking by an intimate partner. Almost half of all women and men in the United States have experienced psychological aggression by an intimate partner in their lifetime (48.4% and 48.8%, respectively). The effects of domestic violence disproportionately impact women. In addition, domestic violence disproportionately impacts people of color, LGBTQ+ individuals, and other individuals who identify with historically marginalized demographics. Estimates of economic costs due to domestic violence are vast and encompass disruptions to education and work, among other aspects.
4.
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7.
8. In their responses, as discussed further below, the wireless service providers noted their shared concerns about safeguarding survivors of domestic violence and affirmed that they are taking steps to implement the SCA. The auto manufacturers provided an overview of the functions and privacy features of their connected car services.
9. We seek comment generally on the ways that connected car services are used and steps the Commission can take to help protect survivors of domestic violence from misuse of such services. First, based on the responses to the information requests sent by the Chairwoman, we describe and seek comment on our understanding of wireless service providers' and auto manufacturers' connected car service offerings. We also seek additional information on any other connected car services that are available. Next, we seek comment on whether changes to the Commission's rules implementing the SCA are necessary to address the impact of connected car services on domestic violence survivors. Finally, we seek comment on other actions we can take to help protect survivors using connected car services. In that regard, we seek comment on other potential sources of authority for Commission action and on how to encourage connected car service providers to take proactive steps to protect survivors against misuse of these services.
10.
11. One method for offering connected car services is through a wireless service provider. The wireless service providers' responses to the Chairwoman's information requests suggest that their offerings generally consist either of (1) services offered directly to consumers or (2) wholesale connectivity services offered to auto manufacturers or to the manufacturer's contracted third-party telematics service provider. For services offered directly to consumers, wireless service providers may enter into an agreement with a subscriber to add a line with an associated phone number to their wireless service contract for the connected car service. Subscribers typically access these services using an app and, in some cases, a separate device that plugs into their vehicle's control panel. The direct-to-subscriber services offer a range of features such as roadside assistance, navigation, and notification of required vehicle maintenance. Wireless service provider responses to the information requests suggest that some of these services also include the ability to track the vehicle's location remotely. Some wireless service providers also offer in-vehicle Wi-Fi services to consumers. When wireless service providers offer wholesale connectivity services, the providers may not have a direct contractual relationship with individual vehicle owners or lessees. Rather, they may contract directly with auto manufacturers via wholesale agreements or with other third parties to provide connectivity for a fleet of vehicles. We seek comment on our understanding of the connected car services offered by wireless service providers, and we seek additional information on any other features and capabilities not covered in this paragraph.
12. With respect to auto manufacturers' connected car services, the responses suggest that, when purchasing service from an auto manufacturer, the owner or lessee of a car typically enters into a service agreement with the auto manufacturer
13. It appears that consumers—including domestic violence survivors—have varying levels of control of the data that connected car services generate, including remote vehicle location data. Responses to the information requests suggest that while some of the wireless service providers and auto manufacturers enable a survivor to turn off remote location tracking if the survivor becomes aware of being tracked by an abuser, not all companies currently provide that ability. For some connected car services, it appears that only a vehicle owner or lessee may disable tracking features on the connected car app absent a court order or other legal process. Some of the responses to the information requests indicate that the provider's connected car service gives notice to a driver that the car's location is being tracked. Other responses do not indicate whether the service offers this function. The responses to the information requests further indicate that information collected through connected car services may be shared with third parties in accordance with connected car service agreements. We seek further information on whether and how users, including both owners or lessees and nonowners or lessees, control access to their data for connected car services that are available today and on what information users receive about the tracking features of these services. To what extent do auto manufacturers and wireless service providers enable—or plan to enable—access controls for data associated with connected car services for owners and lessees and other vehicle users?
14.
15. Line separation requirements apply, under the SCA rules, to “covered providers.” “Covered providers” are defined as providers of “a private mobile service or commercial mobile service, as those terms are defined in 47 U.S.C. 332(d).” “Covered provider” includes providers of mobile broadband-only or mobile text service that do not also offer mobile voice service, if such provider assigns a telephone number to a device. “Covered provider” also includes facilities-based mobile network operators and resellers/mobile virtual network operators (MVNOs).
16. Where the defined elements in the Commission's SCA rules are present, the obligations associated with line separations apply. The FCC's rules implementing the SCA thus could apply to connected car services that involve a “shared mobile service contract” offered by a “covered provider” as defined under the rules and would require a provider to respond to a valid request for a line separation. We seek comment on this position and the extent to which the FCC's existing SCA rules do not fully address concerns regarding the impact of connected car services on domestic violence survivors and whether changes to these rules would enable the Commission to better address these concerns.
17. As stated above, the definition of “covered provider” under the SCA rules includes providers both of commercial mobile service and private mobile service and also includes facilities-based mobile network operators and resellers/MVNOs. In the context of connected cars, wireless providers offer services directly to consumers and may enter into an agreement with a subscriber to add a line to their mobile service contract for the connected car service. Wireless providers also provide wholesale service to auto manufacturers, which in turn provide connectivity for consumers as a value-added service. Auto manufacturers enter into service agreements with owners and lessees of vehicles to provide them connected car services using, in many cases, the connectivity from the networks of wireless service providers. We view the broad scope of the “covered provider” definition as potentially including the connected car services that wireless service providers offer directly to consumers, and we highlight this view to assist efforts to implement the Commission's recently adopted rules under the SCA. Does the definition also include the service that auto manufacturers purchase wholesale and in turn offer to consumers? Does the definition of “covered provider” in the SCA rules need to be modified to account for additional use cases in order to better protect survivors, and if so, what revisions do commenters recommend? Would doing so be consistent with the policy objectives and authority of the SCA?
18. To what extent are auto manufacturers reselling mobile connectivity when providing connected car services? In clarifying that the SCA rules extend to MVNOs, the Commission noted in the SCA Report and Order that, for some MVNOs, “the underlying facilities-based provider may have control over some parts of, or all of, the systems and infrastructure necessary to effectuate line separations.” The Commission clarified that, in those cases, “the MVNO should fulfill its obligations under the SCA and our rules through its contractual relationship with the underlying facilities-based provider, and may satisfy its obligations by utilizing the same procedures and processes the facilities-based provider makes available to its own customers.” To the extent an MVNO controls any facilities or systems, such as customer care or billing, the Commission found that “the obligations imposed by the SCA fall entirely upon the MVNO and not the underlying facilities-based provider.” We seek comment on how these findings may apply in the context of connected car services offered by auto manufacturers. Do auto manufacturers have control over any systems or infrastructure necessary to effectuate a line separation under the SCA rules? Are these systems entirely controlled by the wireless service providers who
19. Under the SCA, “shared mobile service contract” is defined to mean “a mobile service contract for an account that includes not less than 2 consumers.” The rules implementing the SCA provide that a “shared mobile service contract” means “a mobile service contract for an account that includes not less than two lines of service” and define “lines of service” to mean those lines associated with a telephone number. Connected car services generally involve a “shared mobile service contract” when the service is offered by a wireless service provider as an add-on to an existing wireless service agreement. Do connected car services offered by auto manufacturers also involve multiple lines of service? For example, if someone owns multiple cars from the same manufacturer and each of those cars has connected car service, would there be a “shared mobile service contract” for those services? Do connected car services use “lines of service” as contemplated under the SCA framework? The responses to the information requests suggest that some connected car services associate phone numbers with specific vehicles. Is that association typical for the majority of connected car services? If there are some connected car services that do not involve “shared mobile service contracts” and “lines of service” as currently defined by the Commission, are there ways that the Commission can revise these definitions, consistent with our authority under the SCA, to expand their scope and apply to connected car services? Would doing so be consistent with the policy objectives of and authority granted by the SCA? For example, to the extent connected car services are not currently encompassed in the Commission's definition of “shared mobile service contract” under our rules, does the language in the SCA definition that refers to “an account that includes not less than 2 consumers” suggest that we could extend the definition to a shared account (
20. To the extent that connected car services are—or could be—covered by the SCA, how would line separation requirements apply? Are there operational or technical issues that would affect implementation, including any unique challenges for small entities? For example, how would vehicle ownership affect implementation? Are vehicles typically owned on a shared basis by both members of a couple? We expect that, if a vehicle is under the sole ownership of an abuser, but is used by a survivor, the SCA rules would require separation of the connected car service line that is associated with that vehicle through the abuser's account. In these cases, what evidence and standards of proof would be needed from a survivor to separate the connected car service line? Currently, under the Commission's SCA rules, survivors seeking a line separation are required to submit documentation that verifies that an individual who uses a line under the shared mobile service contract has committed or allegedly committed a covered act against the survivor or an individual in the survivor's care. Would there be any reason to modify these evidentiary requirements for connected car services?
21.
22. Outside of formal Commission action, what steps can providers of connected car services take to prevent the misuse of connected car services in domestic violence situations? How can the Commission encourage providers to take such steps? What changes to the design and functionality of these services are needed to help protect survivors of domestic violence? In particular, we seek comment on what steps providers of connected car services could take to make it easier for survivors to turn off remote location tracking and other services that might enable abusers to track, control, or revictimize survivors. For example, for some connected car services it appears that only a vehicle owner or lessee may disable tracking features on the connected car app absent a court order. Should manufacturers permit their apps to allow multiple account holders so that survivors using a co-owned vehicle may access the app to turn off tracking features? How could companies change their policies to better respond to domestic violence situations? What other users or sets of users should be permitted to disable such features? Are there any risks that would arise if companies were to allow users other than the owner or lessee to disable any connected car services?
23. What are companies' policies, and how can they best ensure that survivors are protected in instances when survivors request, and companies make, changes to location tracking or other connected services? Where companies do permit survivors who are not the primary account holder to request changes (such as turning off location data for a connected car service), do companies automatically send notices to primary account holders? If so, do companies need to notify a primary account holder (who may be an abuser) about such changes? Should companies set a uniform waiting period between when the company receives a request from a survivor and when the company notifies a primary account holder? Could companies delay notice to primary account holders until the company has approved and processed such requests, or do the companies need to communicate with primary account holders prior to making changes?
24. Are there other ways to allow vehicle tracking for legitimate safety reasons (
25.
26. As required by the Regulatory Flexibility Act of 1980, as amended, (RFA), the Federal Communications Commission (Commission) has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the Further Notice of Proposed Rulemaking (
27. Connectivity services in modern vehicles such as hands-free communication or find-your-car are intended to function as convenient tools for passengers and drivers. However, in the hands of an abuser, those same services can be used to stalk, harass, and intimidate survivors of domestic violence. In the
28. The proposed action is authorized pursuant to sections 1, 4(i), 4(j), 254, 345, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 154(j), 254, 345, and 403; section 5(b) of the Safe Connections Act of 2022, Public Law 117-223, 136 Stat 2280; and section 904 of Division N, Title IX of the Consolidated Appropriations Act, 2021, Public Law 116-260, 134 Stat. 1182, as amended by the Infrastructure Investment and Jobs Act, Public Law 117-58, 135 Stat. 429.
29. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.
30.
31. Next, the type of small entity described as a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 or less to delineate its annual electronic filing requirements for small exempt organizations. Nationwide, for tax year 2020, there were approximately 447,689 small exempt organizations in the U.S. reporting revenues of $50,000 or less according to the registration and tax data for exempt organizations available from the IRS.
32. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” U.S. Census Bureau data from the 2017 Census of Governments indicate there were 90,075 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number, there were 36,931 general purpose governments (county, municipal, and town or township) with populations of less than 50,000 and 12,040 special purpose governments—independent school districts with enrollment populations of less than 50,000. Accordingly, based on the 2017 U.S. Census of Governments data, we estimate that at least 48,971 entities fall into the category of “small governmental jurisdictions.”
33.
34.
35.
36. Additionally, according to Commission data on internet access services as of June 30, 2019, nationwide there were approximately 1,237 fixed wireless and 70 mobile wireless providers of connections over 200 kbps in at least one direction. The Commission does not collect data on the number of employees for providers of these services, therefore, at this time we are not able to estimate the number of providers that would qualify as small under the SBA's small business size standard. However, based on data in the Commission's
37.
38.
39.
40.
41. The
42. While the
43. At present, the record does not include a detailed cost/benefit analysis that would allow us to quantify the costs of compliance for small entities, including whether it will be necessary for small entities to hire professionals to comply with any rules that may be adopted. Small and other entities are encouraged to quantify the costs and benefits of any reporting, recordkeeping, or compliance requirement that may be established in this proceeding. The Commission expects the comments it receives on its proposals, and the matters discussed in the
44. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rules for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.
45. The
46. Additionally, to assist with the Commission's evaluation of the economic impact on small entities that may result from the actions and alternatives that have been proposed in this proceeding, the
47. None.
48. Accordingly,
49.
50.
Fish and Wildlife Service, Interior.
Notification of petition finding.
We, the U.S. Fish and Wildlife Service (Service), announce a 12-month finding on a petition to list the lake sturgeon (
The finding in this document was made April 23, 2024.
A detailed description of the basis for this finding is available on the internet at
Barbara Hosler, Regional Listing Coordinator, Midwest Regional Office, 517-351-6326,
Under section 4(b)(3)(B) of the Act (16 U.S.C. 1531
Section 4 of the Act (16 U.S.C. 1533) and the implementing regulations at part 424 of title 50 of the Code of Federal Regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Lists of Endangered and Threatened Wildlife and Plants (Lists). The Act defines “species” as including any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature. The Act defines “endangered species” as any species that is in danger of extinction throughout all or a significant portion of its range (16 U.S.C. 1532(6)), and “threatened species” as any species that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range (16 U.S.C. 1532(20)). Under section 4(a)(1) of the Act, a species may be determined to be an endangered species or a threatened species because of any of the following five factors:
(A) The present or threatened destruction, modification, or curtailment of its habitat or range;
(B) Overutilization for commercial, recreational, scientific, or educational purposes;
(C) Disease or predation;
(D) The inadequacy of existing regulatory mechanisms; or
(E) Other natural or manmade factors affecting its continued existence.
These factors represent broad categories of natural or human-caused actions or conditions that could have an effect on a species' continued existence. In evaluating these actions and conditions, we look for those that may have a negative effect on individuals of the species, as well as other actions or conditions that may ameliorate any negative effects or may have positive effects.
We use the term “threat” to refer in general to actions or conditions that are known to or are reasonably likely to negatively affect individuals of a species. The term “threat” includes actions or conditions that have a direct impact on individuals (direct impacts), as well as those that affect individuals through alteration of their habitat or required resources (stressors). The term “threat” may encompass—either together or separately—the source of the action or condition or the action or condition itself. However, the mere identification of any threat(s) does not necessarily mean that the species meets the statutory definition of an “endangered species” or a “threatened species.” In determining whether a species meets either definition, we must evaluate all identified threats by considering the expected response by the species, and the effects of the threats—in light of those actions and conditions that will ameliorate the threats—on an individual, population, and species level. We evaluate each threat and its expected effects on the species, then analyze the cumulative effect of all of the threats on the species as a whole. We also consider the cumulative effect of the threats in light of those actions and conditions that will have positive effects on the species, such as any existing regulatory mechanisms or conservation efforts. The Secretary of the Interior determines whether the species meets the Act's definition of an “endangered species” or a “threatened species” only after conducting this cumulative analysis and describing the expected effect on the species now and in the foreseeable future.
The Act does not define the term “foreseeable future,” which appears in the statutory definition of “threatened species.” Our implementing regulations at 50 CFR 424.11(d) set forth a framework for evaluating the foreseeable future on a case-by-case basis. The term “foreseeable future” extends only so far into the future as the Service can reasonably determine that both the future threats and the species' responses to those threats are likely. In other words, the foreseeable future is the period of time in which we can make reliable predictions. “Reliable” does not mean “certain;” it means sufficient to provide a reasonable degree of confidence in the prediction. Thus, a prediction is reliable if it is reasonable to depend on it when making decisions.
It is not always possible or necessary to define foreseeable future as a particular number of years. Analysis of the foreseeable future uses the best scientific and commercial data available and should consider the timeframes applicable to the relevant threats and to the species' likely responses to those threats in view of its life-history characteristics. Data that are typically relevant to assessing the species' biological response include species-specific factors such as lifespan, reproductive rates or productivity, certain behaviors, and other demographic factors.
In conducting our evaluation of the five factors provided in section 4(a)(1) of the Act to determine whether lake sturgeon meets the Act's definition of an “endangered species” or “threatened species,” we considered and thoroughly evaluated the best scientific and commercial information available regarding the past, present, and future stressors and threats. We reviewed the petition, information available in our files, and other available published and unpublished information for the species. Our evaluation may include information from recognized experts; Federal, State, and Tribal governments; academic institutions; foreign governments; private entities; and other members of the public.
The species assessment form for the lake sturgeon contains more detailed biological information, a thorough analysis of the listing factors, a list of literature cited, and an explanation of why we determined that the species does not meet the Act's definition of an “endangered species” or a “threatened species.” To inform our status reviews, we completed a species status assessment (SSA) report for the lake sturgeon. The SSA report contains a thorough review of the taxonomy, life history, ecology, current status, and projected future status for the lake sturgeon. This supporting information can be found on the internet at
Our analysis for this decision applied our current regulations, portions of which were last revised in 2019. Given that we proposed further revisions to these regulations on June 22, 2023 (88 FR 40764), we have also analyzed whether the decision would be different if we were to apply those proposed revisions. We concluded that the decision would have been the same if we had applied the proposed 2023 regulations. The analyses under both the regulations currently in effect and the regulations after incorporating the June 22, 2023, proposed revisions are included in our decision file for this action.
On May 23, 2018, we received a petition from the Center for Biological Diversity requesting that the lake sturgeon (
The petition also included nine potential distinct population segments (DPSs): Lake Superior, western Lake Michigan, Red River, Rainy Lake/Rainy River/Lake of the Woods, upper Mississippi River, Missouri River, Ohio River, Arkansas-White River, and the lower Mississippi River. After evaluating these populations under our 1996 Policy Regarding the Recognition of Distinct Vertebrate Population Segments Under the Endangered Species Act (DPS policy; 61 FR 4722, February 7, 1996), we found that each population is not discrete because it is not markedly separated from other populations of lake sturgeon, with evidence of migration and movement between each petitioned DPS and a population of lake sturgeon outside of the petitioned DPS. In addition, the Red River and Rainy Lake/Rainy River/Lake of the Woods petitioned DPSs are not discrete because they do not have significant differences in the control of exploitation, management of habitat, conservation status, or regulatory mechanisms from the connected lake sturgeon populations in Canada. For a more detailed discussion of our DPS analysis, please see the species assessment form.
Using the best available information, we determined that none of the petitioned DPSs meets the criteria for discreteness in our DPS policy. Because we did not find any of the petitioned DPSs to be discrete, we did not evaluate significance under the DPS policy. Therefore, we proceed with determining whether the lake sturgeon meets the Act's definition of an endangered or threatened species throughout all or a significant portion of its range.
Historically, lake sturgeon were widely distributed across the eastern and central United States and Canada. In Canada, the species was found within the Hudson Bay and Great Lakes watersheds and in rivers and lakes in Alberta, Saskatchewan, Manitoba, Ontario, and Quebec. In U.S. waters, they were distributed throughout the Great Lakes and their tributaries, the Mississippi River basin, as well as an isolated population in the Mobile River Basin in Alabama and Georgia. Although lake sturgeon occupy a reduced area today, they remain distributed in the four major North American drainages they occupied historically, including the Mississippi River basin, the Great Lakes, Hudson Bay, and the Mobile River Basin.
Sturgeon have a prehistoric appearance because of their large size, shark-like tails, and bony plate-armored covering. Lake sturgeon possess a torpedo-shaped body that is protected by five lateral rows of scutes (bony, diamond-shaped scales). Lake sturgeon are a long-lived fish, living to 150 years of age, and are late maturing, with males taking 12-20 years to mature and females taking 15-30 years. Two key habitat needs for lake sturgeon are access to suitable spawning and nursery habitat, and connectivity between all habitat types (Service 2023, pp. 12-13). Lake sturgeon travel from lakes and large rivers (foraging habitat) to tributaries (spawning habitat) to spawn, then the resulting lake sturgeon larvae will drift downstream to the mouth of
For lake sturgeon populations to be resilient, they need a healthy demography (
We have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to lake sturgeon, and we evaluated all relevant factors under the five listing factors, including any regulatory mechanisms and conservation measures addressing these threats. The primary threats affecting the lake sturgeon's biological status are dams, barriers, and climate change (Service 2023, pp. 14-15, 17-22). Dams and barriers occur across the lake sturgeon's range and can block access to spawning and nursery habitat, stopping lake sturgeon from completing their life cycle, thus making this the most significant threat to the species.
We focused on the potential effects that warming water temperatures, as a result of climate change, could have on the lake sturgeon (Service 2023, pp. 24-25, 121-125). Warming water temperatures could have negative effects on the species by changing the timing of spawning runs and decreasing available habitat if waters get too warm. Warming water temperatures could also have a positive effect by increasing growth rate and creating habitat out of areas that were previously too cold. Other threats we considered in our analysis, but did not find to rise to a major species-level impact, include water quality degredation and pollution, disease and predation, recreational fishing, illegal harvest, effects of lamprey control, invasive species, loss of genetic diversity, and genetic risks from stocking. For more information on our analysis of these threats, see the SSA report (Service 2023, pp. 13-44).
The primary conservation measure for the lake sturgeon is stocking of captive-reared lake sturgeon. Stocking efforts occur across much of the lake sturgeon's range and have brought areas back from extirpation and bolstered the resiliency of existing populations (Service 2023, pp. 44-110). Other conservation measures we considered in our analysis include restoring connectivity of habitat through dam removal, creation of fish passages, habitat restoration, and invasive and non-native species eradication and control programs. Restoration of connectivity and habitat can have significant positive effects on lake sturgeon, but these benefits are more localized or benefit certain populations.
During the late 1800s and early 1900s, commercial harvest severely reduced the abundance of lake sturgeon while the construction of dams and channelization and dredging reduced the amount and accessibility of spawning and nursery habitat. By the late 1900s, lake sturgeon harvest was, and remains, heavily regulated and monitored by State agencies, effectively removing the threat of overharvest (Service 2023, pp. 30-42). While the threat dams pose to the species remains across the species' range, reducing access to spawning and nursery habitat, there have been significant efforts to recover the lake sturgeon. Stocking programs have helped to reintroduce or supplement populations of the lake sturgeon across much of its range, including six of eight representation units in the United States and three of four designatable units in Canada, providing increased resiliency for populations that are stocked (Service 2023, pp. 44-110). Along with stocking, restoration of connectivity has improved the ability of populations to recover naturally, such as in the Red River of the North (Service 2023, pp. 79-84). Due to the significant ongoing conservation and management efforts across the range of the species, areas that are being managed are trending positively and have increased resiliency compared to past decades (Service 2023, pp. 44-110). In addition, although abundance has been drastically reduced, highly and moderately resilient populations are still widely distributed, providing sufficient redundancy for the species rangewide (Service 2023, pp. 110-113).
Overall, lake sturgeon representation has been reduced from historical levels, but the species still maintains a moderate to high level of representation in multiple ways (Service 2023, pp. 113-116). While genetic diversity has been lost in the southernmost part of the range due to extirpations, the species has generally maintained a high level of genetic diversity. In addition, lake sturgeon may have some inherent phenotypic plasticity to respond to stressors. Lake sturgeon may have the ability to adapt to warming climates and can thrive in many different ecological settings. The primary reason representation has been reduced from historical levels is because the widescale construction of dams has reduced the ability of lake sturgeon to move up tributaries to spawn. However, lake sturgeon have a high level of adaptability to local changes and environmental conditions. Therefore, although dams have reduced representation from historical levels, the lake sturgeon currently has a sufficient level of representation to adapt to environmental changes (Service 2023, pp. 113-116).
In summary, the lake sturgeon has many highly and moderately resilient populations distributed throughout its range that provide sufficient redundancy for the species and the adaptive capacity to withstand near-term and long-term changes to the environment. Thus, after assessing the best available information, we conclude that the lake sturgeon is not in danger of extinction throughout all of its range.
Therefore, we proceed with determining whether the lake sturgeon is likely to become endangered within the foreseeable future throughout all of its range. We carried three major influences into our future condition analysis: dams, stocking, and climate change. We considered other influences and conservation efforts described in the SSA report, but we identified these three influences as having the highest likelihood of a potentially significant, species-wide impact into the future.
We do not anticipate the number of dams to change significantly across the range of the species in the future, meaning the effects of dams on the lake
There is much uncertainty regarding how the lake sturgeon will respond to changes in habitat due to climate change. However, because of the species' relatively wide thermal tolerance, ability to move, and ability to adjust spawning phenology, the lake sturgeon shows a high degree of adaptability to climate change, although that adaptability will likely be limited by its ability to access suitable habitats. Overall, we expect representation in the future to remain similar to the current condition and remain sufficient to adapt to environmental changes.
In summary, the lake sturgeon is projected to have: (1) increased resiliency in populations with ongoing conservation efforts, (2) highly and moderately resilient populations distributed throughout its range that provide sufficient redundancy for the species, and (3) the adaptive capacity to withstand near-term and long-term changes to the environment. After assessing the best available information, we conclude that the lake sturgeon is not likely to become endangered within the foreseeable future throughout all of its range.
We also evaluated whether the lake sturgeon is endangered or threatened in a significant portion of its range. We evaluated four portions (
After assessing the best available information, we concluded that the lake sturgeon is not in danger of extinction or likely to become in danger of extinction within the foreseeable future throughout all of its range or in any significant portion of its range. Therefore, we find that listing the lake sturgeon as an endangered species or threatened species under the Act is not warranted. A detailed discussion of the basis for this finding can be found in the lake sturgeon species assessment form and other supporting documents on
In accordance with our July 1, 1994, peer review policy (59 FR 34270; July 1, 1994) and the Service's August 22, 2016, Director's Memo on the Peer Review Process, we solicited independent scientific reviews of the information contained in the lake sturgeon SSA report. The Service sent the SSA report to nine independent peer reviewers and received three responses. Results of this structured peer review process can be found at
We request that you submit any new information concerning the taxonomy of, biology of, ecology of, status of, or stressors to the lake sturgeon to the person listed above under
A list of the references cited in this document is available on the internet at
The primary authors of this document are the staff members of the Species Assessment Team, Ecological Services Program.
Martha Williams, Director of the U.S. Fish and Wildlife Service, approved this action on March 12, 2024, for publication. On April 16, 2024, Martha Williams authorized the undersigned to sign the document electronically and submit it to the Office of the Federal Register for publication as an official document of the U.S. Fish and Wildlife Service.
The authority for this action is section 4 of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
National Marine Fisheries Service (NMFS), National Oceanic and
Proposed rule; request for comments.
This proposed rule would implement a set of management measures recommended by the Pacific Fishery Management Council (Council) to ensure fishery impacts on California Coastal (CC) Chinook salmon, which are listed as threatened under the Endangered Species Act, remain within the conservation objective in the Council's Pacific Coast Salmon Fishery Management Plan (Salmon FMP). Under the proposed rule, management tools (
Comments on this proposed rule must be received on or before May 23, 2024.
A plain language summary of this proposed rule is available at
•
Shannon Penna, Fishery Management Specialist, at 562-980-4239 or
The ocean salmon fisheries in the exclusive economic zone (EEZ) (3-200 nautical miles; 5.6-370.4 kilometers) off Washington, Oregon, and California are managed under the Salmon FMP. The Salmon FMP and implementing regulations govern the development at the spring (March and April) Council meetings each year of annual management measures. Management measures for the salmon fisheries are developed annually because the abundance of the salmon stocks in the fishery can fluctuate significantly from one year to the next and information about annual stock abundance does not become available until early in each year (January-early March).
The commercial and recreational salmon fisheries off northern California and southern Oregon target healthy or abundant stocks of Chinook and coho salmon, but may incidentally encounter Endangered Species Act (ESA)-listed CC Chinook salmon and other ESA-listed species. The Salmon FMP includes harvest controls that are used to manage salmon stocks sustainably. The Salmon FMP also requires that the Council manage fisheries consistent with “consultation standards” for stocks listed as endangered or threatened under the ESA for which NMFS has issued biological opinions. NMFS has issued biological opinions for every ESA-listed salmon species impacted by the fisheries governed by the Salmon FMP and reminds the Council of requirements (
The CC Chinook salmon Evolutionarily Significant Unit (ESU) has been listed as threatened under the ESA since 1999. The conservation objective for CC Chinook salmon is described in the Salmon FMP. Management of the fishery that avoids exceedance of the conservation objective has been analyzed in a series of biological opinions (most recently, an opinion issued in 2023), and has been determined to avoid jeopardizing the ESU (NMFS 2000; McInnis 2005; NMFS 2023; NMFS 2024). As described in these consultations, the data are insufficient for developing an ESU-specific conservation objective for CC Chinook salmon. Thus, NMFS has relied on a surrogate, Klamath River fall-run Chinook Salmon (KRFC), to evaluate and limit impacts on CC Chinook salmon in ocean salmon fisheries. The conservation objective is an ocean harvest rate (HR) on age-4 KRFC of 0.16. In its 2024 biological opinion, NMFS confirmed that managing fisheries to avoid exceeding this conservation objective would avoid jeopardy to CC Chinook.
From 2018 to 2022, the fishery HR on age-4 KRFC significantly exceeded 0.16 with an average of 0.28. Actions (
For 2023, the Council considered additional measures to avoid another exceedance of the CC Chinook conservation objective. However, in response to record low forecasts for KRFC and Sacramento fall-run Chinook salmon, the Council ultimately recommended the closure of commercial and recreational salmon fisheries off the coast of California for 2023, and NMFS approved this closure. The management measures for the 2023-2024 ocean salmon fishing season include the potential use of landing and possession limits in the commercial salmon troll fishery and bag limits in the recreational salmon fishery for the March and April 2024 fisheries, should salmon abundance forecasts for 2024 and Council discussion support use of those measures. The projected KRFC age-4 ocean HR of 0.003 for the 2023-24 management measures, with the fishery closures off California, resulted from a low number of encounters of KRFC salmon in fisheries north of California.
The Council continued to explore measures that could be taken to manage the commercial salmon troll fishery to address the source of the high catch rates of KRFC and stay within the conservation objective, thereby not exceeding the conservation objective for CC Chinook salmon. At the November 2023 Council meeting, the Council adopted a set of management measures to ensure that the CC Chinook salmon conservation objective is not exceeded. The management measures are intended to ensure the fishery does not exceed the conservation objective for CC
The proposed fishery management measures are designed to ensure that the post-season ocean HR for age-4 KRFC does not exceed the conservation objective of 0.16. These measures would apply to the ocean salmon fisheries between the Oregon/California border and Pigeon Point, California.
The management measures included in this rule are focused on the ocean salmon fisheries off the coast of California (
1. The majority of the KRFC harvest (and assumed impacts on CC Chinook salmon) in the ocean occurs in this area;
2. The age-4 ocean HR for KRFC in this area has consistently exceeded pre-season projections in recent years;
3. Contact-rate-per-unit-effort in this area has exceeded projections in recent years;
4. The fisheries in this area have been managed primarily through season controls such as time and area restrictions (as opposed to use of landing and possession limits and/or quota management);
5. Time and area restrictions in this area have not been effective in controlling harvest of KRFC (and assumed impacts on CC Chinook salmon) in recent years; and,
6. Ocean fisheries in other areas that impact KRFC routinely implement the same or similar management measures as described in these measures for a similar purpose.
The rule would require implementation of measures used in salmon fisheries elsewhere on the West Coast to ensure fisheries in the affected area do not exceed the conservation objective for CC Chinook salmon. Historically, fisheries in the area described above have been managed by setting seasons and bag limits. In addition, for this fishery there was no overall limit on harvest or inseason management. The Salmon FMP contemplates that the Council and NMFS will use a range of management tools to ensure the fisheries are managed to avoid exceeding all limits for stocks caught in the various management areas along the West Coast (FMP Chapter 6). These management tools (
Under the proposed set of management measures, annual management measures for the fisheries in the area described above will both be designed pre-season and managed inseason to stay within the objective. NMFS may apply, and the Council may recommend, a buffer to the conservation objective to account for management error and reduce the potential for exceeding the conservation objective, this buffer would be developed based on the percent error of the pre-season projected HR (as compared to the post-season HR) occurring over the most recent 5 years and other relevant factors. Fishery managers will compute an allowable harvest level of Chinook salmon for the year consistent with the conservation objective (including the buffer described above, if applicable). Using the allowable harvest level and projected effort, managers will determine landing and possession limits pre-season to ensure that the fishery does not exceed the allowable harvest level. The fishery will be monitored inseason and actions will be taken as needed to prevent the fisheries from exceeding the annual harvest level. We expect that this multilayered conservative approach (
This proposed rule will also update regulations to 50 CFR 660.405 and 660.410. In § 660.405, the term “possess” was added to provide consistency to other prohibitions throughout the regulations. With the new regulation requiring submission of fish tickets within 24 hours of landing, the addition of the term “possess” will ensure that fishers are not confused about the requirements related to the timing of catch and retention, possession, or landings. Also, in addition to the new management measures at § 660.410, this proposed rule would revise paragraph (c) by adding the abbreviation KRFC to address several new occurrences of KRFC that did not exist before.
Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the Salmon FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.
This proposed rule has been determined to be not significant for purposes of Executive Order 12866.
There are no relevant Federal rules that may duplicate, overlap, or conflict with this action.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Council for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant adverse economic impact on a substantial number of small entities.
For purposes of the Regulatory Flexibility Act (5 U.S.C. 601
This proposed rule would directly affect the West Coast commercial troll salmon fishery. Using the Socioeconomic Assessment of the 2022 Ocean Salmon Fisheries (chapter IV) of the Review of 2022 Ocean Salmon Fisheries Stock Assessment and Fishery Evaluation Document for the Pacific Coast Salmon FMP the most recent year of complete fishing data (2022), had 563 distinct commercial vessels land fish caught in Washington, Oregon, and California. The total coastwide ex-vessel value was $22.2 million with California achieving $17.1 million, Oregon $3.2 million, and Washington $1.8 million. No vessel met the threshold to be considered a large entity as defined above. The preliminary number of vessel-based ocean salmon recreational
Because businesses have been harvesting over the conservation objective for over 5 years (table 1), this regulation which is intended to bring catch levels back down to the conservation objective (0.16 HR on age-4 KRFC), is expected to impose negative economic effects on small businesses relative to the last 5 years. The proposed action does not change the management objectives for CC Chinook, it is designed to ensure that the fisheries do not exceed the objective using management and tools that are allowed under the Salmon FMP. The effects are not quantifiable with available resources on the timeline needed to implement this rule to achieve conservation objectives. However, NMFS invites comments on this proposed rule with information about costs to small entities.
NMFS believes that this proposed rule would not have a significant adverse economic impact on a substantial number of small entities. As a result, an initial regulatory flexibility analysis is not required and none has been prepared. This proposed rule contains revisions to a collection-of-information requirement subject to review and approval by the Office of Management and Budget under the Paperwork Reduction Act. This rule revises the existing requirements for the collection of information 0648-0433 by adding a requirement for submission of fish tickets within 24 hours of landing. Public reporting burden for fish ticket submission is estimated to average 0 hours because the submission will already be required by the California Code of Regulations.
A formal section 7 consultation under the ESA was initiated for the Salmon FMP. In a biological opinion dated February 29, 2024, NMFS determined that fishing activities conducted under the Salmon FMP and its implementing regulations are not likely to jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS or result in the destruction or adverse modification of critical habitat.
This proposed rule was developed after meaningful consultation and collaboration with the tribal representative on the Council.
16 U.S.C. 1801
Fisheries, Fishing, Indians—lands, Recreation and recreation areas, Reporting and recordkeeping requirements, Treaties.
For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 660 as follows:
16 U.S.C. 1801
(a) * * *
(1) Take and retain, or possess, or land salmon caught with a net in the fishery management area, except that a hand-held net may be used to bring hooked salmon on board a vessel.
(2) Fish for, or take and retain, or possess, any species of salmon:
(i) During closed seasons or in closed areas;
(ii) While possessing on board any species not allowed to be taken in the area at the time;
(iii) Once any catch limit is attained;
(iv) By means of gear or methods other than recreational fishing gear or troll fishing gear, or gear authorized under § 660.408(k) for treaty Indian fishing;
(v) In violation of any action issued under this subpart; or,
(vi) In violation of any applicable area, season, species, zone, gear, daily bag limit, or length restriction.
(c)
(1) The potential for critically low natural spawner abundance, including considerations for substocks that may fall below crucial genetic thresholds;
(2) Spawner abundance levels in recent years;
(3) The status of co-mingled stocks;
(4) Indicators of marine and freshwater environmental conditions;
(5) Minimal needs for tribal fisheries;
(6) Whether the stock is currently in an approaching overfished condition;
(7) Whether the stock is currently overfished;
(8) Other considerations, as appropriate; and
(9) Exploitation rates, including
(d)
(1) The annual specifications and management measures will include an allowable harvest level expressed in numbers of fish for these fisheries that is projected, using the Klamath Ocean Harvest Model and Sacramento Harvest Model, to ensure fisheries do not exceed the conservation objective. To determine the allowable harvest level, the Council and NMFS may use a harvest rate that is lower than the conservation objective (
(i) In the first step, NMFS and the Council will calculate the average percent error for the previous 5 years, and apply the average percent error to the conservation objective. Only positive percent error will be applied because the intent is to keep the post-season harvest rate below 0.16.
(ii) In the second step, other relevant factors affecting the preseason assessment of the age-4 KRFC harvest rate will be considered, such as revisions to the fishery management models used to estimate the preseason Chinook catch, environmental indicators relevant to the status of KRFC, constraints on fisheries under consideration for the areas and months with greatest impacts to KRFC Chinook, and the lower harvest rate may be modified based on these factors.
(2) The annual specifications and management measures will include the following management measures to ensure fisheries affecting California Coastal Chinook do not exceed the allowable harvest level.
(i) Landing and possession limits will be used in the commercial troll fisheries to keep fishery catch within the allowable harvest level. Landing and possession limits will be set for periods not to exceed 1 week. Landing and possession limits may vary from one calendar month to the next but will be the same for periods within the same calendar month.
(ii) A percentage of the allowable harvest level (
(iii) For the first 2 years after the promulgation of this rule in which salmon fishery occur in the EEZ off the California coast, inseason actions will only be used to further restrict harvest (
(3) Electronic fish tickets must be submitted within 24 hours of landing to the California Department of Fish and Wildlife. Fish tickets must be submitted in accordance with the requirements of the applicable state regulations.
(4) NMFS will implement inseason actions as described in § 660.409, following processes described in that section, as needed to ensure catch in the fishery does not exceed the allowable harvest level and will close areas and seasons upon reaching the allowable harvest limit.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notification of availability of fishery management plan amendments; request for comments.
The North Pacific Fishery Management Council (Council) submitted amendment 127 to the Fishery Management Plan (FMP) for Groundfish of the Bering Sea and Aleutian Islands Management Area (BSAI), amendment 115 to the FMP for Groundfish of the Gulf of Alaska (GOA), amendment 56 to the FMP for BSAI King and Tanner Crabs, amendment 17 to the FMP for the Salmon Fisheries in the exclusive economic zone (EEZ) Off Alaska, and amendment 3 to the FMP for Fish Resources of the Arctic Management Area (amendments) to the Secretary of Commerce for review. If approved, these amendments would revise the FMPs by updating the description and identification of essential fish habitat (EFH) and updating information on adverse impacts to EFH based on the best scientific information available. These amendments are intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), the FMPs, and other applicable laws.
Comments on the amendments must be received no later than June 24, 2024.
You may submit comments on this document, identified by NOAA-NMFS-2023-0160, by any of the following methods:
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Electronic copies of the amendments, maps of the EFH areas, and the Environmental Assessment (the analysis) prepared for this action may be obtained from
Megan Mackey, 907-586-7228.
The Magnuson-Stevens Act requires that each regional fishery management council submit any FMP amendment it
The Council prepared the FMPs under the authority of the Magnuson-Stevens Act. Regulations governing U.S. fisheries and implementing the FMPs appear at 50 CFR parts 600, 679, and 680. Section 303(a)(7) of the Magnuson-Stevens Act requires that each FMP describe and identify EFH, minimize to the extent practicable the adverse effects of fishing on EFH, and identify other measures to encourage the conservation and enhancement of EFH. Section 3(10) of the Magnuson-Stevens Act defines EFH as “those waters and substrate necessary to fish for spawning, breeding, feeding, or growth to maturity.” Implementing regulations at 50 CFR 600.815 list the EFH contents required in each FMP and direct councils to conduct a complete review of all EFH information at least once every 5 years (referred to here as “the 5-year review”).
The Council developed the amendments as a result of new scientific information made available through the 5-year review that began in 2019 (2023 5-year review) and adopted the amendments in December 2023. The 2023 5-year review is the Council's fourth review of EFH in the FMPs. Prior 5-year reviews were completed in 2005, 2012, and 2018. The Council recommended amendments to the description and identification of EFH in the FMPs with new information and improved mapping as described in the draft EFH 5-year Summary Report for the 2023 5-year review. The Council also recommended updates to EFH information based on the best available information in the Summary Report. The Council recommended updates to EFH for all FMPs except for the Scallop FMP because no new information is available to update EFH descriptions for scallops.
The amendments would make the following changes to the FMPs:
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○ 41 species or complexes in the BSAI Groundfish FMP;
○ 46 species or complexes in the GOA Groundfish FMP;
○ all five species in the Crab FMP; and
○ all three species in the Arctic FMP.
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NMFS is soliciting public comments on the proposed amendments through the end of the comment period (see
16 U.S.C. 1801
Food Safety and Inspection Service (FSIS), U.S. Department of Agriculture (USDA).
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995 and Office of Management and Budget (OMB) regulations, FSIS is announcing its intention to renew an approved information collection regarding requirements for official establishments to notify FSIS of adulterated or misbranded product, prepare and maintain written recall procedures, and document certain Hazard Analysis and Critical Control Point (HACCP) plan reassessments. There are no changes to the existing information collection. The approval for this information collection will expire on September 30, 2024.
Submit comments on or before June 24, 2024.
FSIS invites interested persons to submit comments on this
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• Hand- or courier-delivered submittals: Deliver to 1400 Independence Avenue SW, Jamie L. Whitten Building, Room 350-E, Washington, DC 20250-3700.
Gina Kouba, Office of Policy and Program Development, Food Safety and Inspection Service, USDA, 1400 Independence Avenue SW, Mailstop 3758, South Building, Washington, DC 20250-3700; 202-720-5046.
FSIS is requesting renewal of an approved information collection regarding requirements for official establishments to notify FSIS of adulterated or misbranded product, prepare and maintain written recall procedures, and document certain HACCP plan reassessments. There are no changes to the existing information collection. The approval for this information collection will expire on September 30, 2024.
The regulations at 9 CFR 418.2, 418.3 and 417.4(a)(3) require establishments to notify FSIS that they have shipped or received adulterated or misbranded product in commerce, prepare and maintain written recall procedures, and document HACCP plan reassessments. Accordingly, FSIS requires three information collection activities under these regulations.
First, FSIS requires that official establishments notify the appropriate District Office that an adulterated or misbranded product received by or originating from the establishment has entered commerce, if the establishment believes or has reason to believe that this has happened. Industry representatives of official establishments may notify the District Office directly, notify local FSIS inspection personnel in receiving establishments, or may use FSIS Form 5720-16,
Second, FSIS requires that establishments prepare and maintain written procedures for the recall of meat and poultry products produced and shipped by the establishment for use should it become necessary for the establishment to remove product from commerce. These written recall procedures have to specify how the establishment will decide whether to conduct a product recall, and how the establishment will affect the recall should it decide that one is necessary.
Finally, FSIS requires that establishments document each reassessment of the establishment's HACCP plans. FSIS requires establishments to reassess their HACCP plans annually and whenever any changes occur that could affect the hazard analysis or alter the HACCP plan. For annual reassessments, if the establishment determines that no changes are necessary, documentation of this determination is not necessary.
FSIS has made the following estimates as part of an information collection assessment.
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record. Copies of this information collection assessment can be obtained from Gina Kouba, Office of Policy and Program Development, Food Safety and Inspection Service, USDA, 1400 Independence Avenue SW, Mailstop 3758, South Building, Washington, DC 20250-3700; 202-720-5046.
Comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of FSIS' functions, including whether the information will have practical utility; (b) the accuracy of FSIS' estimate of the burden of the proposed collection of information, including the validity of the method and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques, or other forms of information technology. Comments may be sent to both FSIS, at the addresses provided above, and the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Washington, DC 20253.
Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this
FSIS will also announce and provide a link to this
In accordance with Federal civil rights law and USDA civil rights regulations and policies, USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (
To file a program discrimination complaint, a complainant should complete a Form AD-3027,
(1)
(2)
(3)
USDA is an equal opportunity provider, employer, and lender.
On December 19, 2023, Grand Design RV, LLC submitted a notification of proposed production activity to the FTZ Board for its facility within Subzone 125H in Middlebury, Indiana.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meetings.
The Western Pacific Fishery Management Council (Council) will
The meetings will be held on May 7, 2024. For specific times and agendas, see
The Western Pacific Fishery Management Council (Council) will hold its Main Hawaiian Islands (MHI) Deep 7 Bottomfish (BF) Risk of Overfishing (P*) Working Group (WG), MHI Social, Economic, Ecological, and Management (SEEM) WG meetings will be held in a hybrid format with in-person and remote participation (Google Meets) options available for the members and the public. In person attendance for members and public will be hosted at the Council office, 1164 Bishop Street, Suite 1400, Honolulu, HI 96813. Instructions for connecting to the web conference and providing oral public comments will be posted on the Council website at
Contact Kitty M. Simonds, Executive Director, Western Pacific Fishery Management Council; phone: (808) 522-8220.
The MHI Deep 7 P* WG will meet on Tuesday, May 7, from 9 a.m. to 12 p.m., MHI Deep 7 SEEM WG will meet on Tuesday, from 1 p.m. to 4 p.m. All times listed in HST.
Public Comment periods will be provided in the agendas. The order in which agenda items are addressed may change. The meetings will run as late as necessary to complete scheduled business.
These meetings are accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Kitty M. Simonds, (808) 522-8220 (voice) or (808) 522-8226 (fax), at least 5 days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The MAFMC will hold a public meeting (webinar) of its Spiny Dogfish Advisory Panel. See
The meeting will be held on Thursday, May 9, 2024, from 5 p.m. to 7:30 p.m.
Webinar connection information will be posted to the calendar prior to the meeting at
Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.
The main purpose of the meeting is for the Advisory Panel (AP) to create a Fishery Performance Report that includes advisor input on specifications and management measures for spiny dogfish. While a management track assessment was used in 2023 to set 2024-2026 specifications, multi-year specifications are reviewed each year. The MAFMC will consider the Fishery Performance Report later in 2024 when 2025 spiny dogfish specifications are reviewed. Public comments will also be taken.
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to Shelley Spedden, (302) 526-5251, at least 5 days prior to the meeting date.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of incidental harassment authorization.
NMFS has received a request from the U.S. Army Corps of Engineers (USACE) for the reissuance of a previously issued incidental harassment authorization (IHA) with the only
This authorization is effective from May 1, 2025 through April 30, 2026.
An electronic copy of the final 2023 IHA previously issued to USACE, the USACE's application, and the
Leah Davis, Office of Protected Resources, NMFS, (301) 427-8401.
Sections 101(a)(5)(A) and (D) of the Marine Mammal Protection Act (MMPA; 16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth.
NMFS has defined “negligible impact” in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.
The MMPA states that the term “take” means to harass, hunt, capture, kill or attempt to harass, hunt, capture, or kill any marine mammal.
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
On September 7, 2023, NMFS published final notice of our issuance of an IHA authorizing take of marine mammals incidental to the Port of Nome Modification Project in Nome, Alaska (88 FR 61806). The effective dates of that IHA were May 1, 2024 through April 30, 2025. On March 4, 2024, USACE informed NMFS that the project would be delayed by one year. None of the work identified in the initial IHA (
The planned activities (including mitigation, monitoring, and reporting), authorized incidental take, and anticipated impacts on the affected stocks are the same as those analyzed and authorized through the previously issued IHA.
The City of Nome and USACE are proposing to expand the Port of Nome to provide much-needed additional capacity to serve the Arctic as well as to alleviate congestion at the existing port facilities. This IHA would authorize take associated with Year 1 of Phase 1 of the project only. The location, timing, and nature of the activities, including the types of equipment planned for use, are identical to those described in the initial IHA. The mitigation and monitoring are also as prescribed in the initial IHA.
Species that are expected to be taken by the planned activity include bowhead whale (
We refer to the documents related to the previously issued IHA, which include the
The USACE will conduct activities as analyzed in the initial 2023 IHA. As described above, the number of authorized takes of the same species and stocks of marine mammals are identical to the numbers that were found to meet the negligible impact small numbers standards and authorized under the initial IHA and no new information has emerged that would change those findings. The reissued 2024 IHA includes identical required mitigation, monitoring, and reporting measures as the initial IHA, and there is no new information suggesting that our analysis or findings should change.
Based on the information contained here and in the referenced documents, NMFS has determined the following: (1) the required mitigation measures will
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
Accordingly, NMFS determined that the issuance of the initial IHA qualified to be categorically excluded from further NEPA review. NMFS has determined that the application of this categorical exclusion remains appropriate for this reissued IHA.
Section 7(a)(2) of the Endangered Species Act of 1973 (ESA: 16 U.S.C. 1531
The effects of this proposed Federal action were adequately analyzed in NMFS' Biological Opinion for the Port of Nome Modification Project, dated July 27, 2023, which concluded that the take NMFS proposed to authorize through this IHA would not jeopardize the continued existence of any endangered or threatened species or destroy or adversely modify any designated critical habitat.
NMFS has issued an IHA to the USACE for in-water construction activities associated with the specified activity from May 1, 2025 through April 30, 2026. All previously described mitigation, monitoring, and reporting requirements from the initial 2021 IHA are incorporated.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meetings and request for comments.
The Mid-Atlantic Fishery Management Council (Council) will hold three public hearings (one as a webinar) and accept written comments regarding an action intended to revise the species separation requirements in the Atlantic surfclam and ocean quahog fisheries.
The hearings will be held between May 9, 2024 and May 16, 2024. Written comments must be received by May 30, 2024. See
See
Written comments may be submitted to:
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Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.
The Council will hold three public hearings and accept written comments regarding an action intended to modify the current species separation requirements in the Atlantic surfclam and ocean quahog fisheries. Additional details, including the public hearing document can be found at:
Written comments are accepted at the hearings or via the submission methods described above, from May 1, 2024-May 30, 2024.
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to Shelley Spedden, (302) 526-5251, at least 5 days prior to the meeting date.
United States Patent and Trademark Office, Department of Commerce.
Notice of information collection; request for comment.
The United States Patent and Trademark Office (USPTO), as required by the Paperwork Reduction Act of 1995, invites comments on the extension and revision of an existing information collection: 0651-0028 Fastener Quality Act Insignia Recordal
To ensure consideration, comments regarding this information collection must be received on or before June 24, 2024.
Interested persons are invited to submit written comments by any of the following methods. Do not submit Confidential Business Information or otherwise sensitive or protected information.
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Requests for additional information should be directed to Catherine Cain, Attorney Advisor, Office of the Commissioner for Trademarks, United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450; by telephone at 571-272-8946; or by email at
Under section 5 of the Fastener Quality Act (FQA) of 1999,
The procedures for the recordal of fastener insignia under the FQA are set forth in 15 CFR 280.300
The insignia may be a unique alphanumeric designation that the USPTO will issue upon request or a trademark that is registered at the USPTO or is the subject of an application to obtain a registration. After a manufacturer submits a complete application for recordal, the USPTO issues a Certificate of Recordal. These certificates remain active for five years. Applications to renew the certificates must be filed within six months of the expiration date or, upon payment of an additional surcharge, within six months following the expiration date.
If a recorded alphanumeric designation is assigned by the manufacturer to a new owner, the designation becomes “inactive” and the new owner must submit an application to reactivate the designation within six months of the date of assignment. If the recordal is based on a trademark application or registration and the registration is assigned to a new owner, the recordal becomes “inactive” and cannot be reassigned. Instead, the new owner of the trademark application or registration must apply for a new recordal. Manufacturers who record insignia must notify the USPTO of any changes of address.
This information collection includes one form, the Application for Recordal of Insignia or Renewal/Reactivation of Recordal Under the Fastener Quality Act (PTO-1611), which provides manufacturers with a convenient way to submit a request for the recordal of a fastener insignia or to renew or reactivate an existing Certificate of Renewal.
The public uses this information collection to comply with the insignia recordal provisions of the FQA. The USPTO uses the information in this collection to record or renew insignias under the FQA and to maintain the Fastener Insignia Register, which is open for public inspection and is updated quarterly. The public may download the Fastener Insignia Register from the USPTO website.
The items in this information collection can be submitted by mail, email, or hand delivery to the USPTO.
• PTO-1611 (Application for Recordal of Insignia or Renewal/Reactivation of Recordal Under the Fastener Quality Act).
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U.S. Consumer Product Safety Commission.
Notice of availability.
The Consumer Product Safety Commission (Commission or CPSC) is announcing the availability of final supplemental guidance for its Chronic Hazard Guidelines. This supplemental guidance contains two guidance documents, one for the use of benchmark dose methodology in risk assessment and the other for the analysis of uncertainty and variability in risk assessment.
Eric Hooker, Directorate for Health Sciences, U.S. Consumer Product Safety Commission, 5 Research Place, Rockville, MD 20850; telephone: (301) 987-2516; email:
In 1992, the Commission issued guidelines for assessing chronic hazards (Chronic Hazard Guidelines or Guidelines) under the Federal Hazardous Substances Act (FHSA), 15 U.S.C. 1261-78, including carcinogenicity, neurotoxicity, reproductive/developmental toxicity, exposure, bioavailability, risk assessment, and acceptable risk. 57 FR 46626. In August 2023, the Commission issued a Notice of Availability containing Proposed Supplemental Guidance for CPSC Chronic Hazard Guidelines and asked for comments on the proposed guidance. 88 FR 57947. After reviewing those comments, the Commission is now issuing the final supplemental guidance contained below in sections III and IV.
Determining whether a product is or contains a hazardous substance involves scientific analysis, legal interpretation, and the application of policy judgment. The Guidelines are intended to assist firms in identifying products that present chronic hazards, to meet their labeling obligations under the FHSA and the Labeling of Hazardous Art Materials Act (LHAMA). 15 U.S.C. 1277. They are not binding on industry or the Commission. Indeed, chronic toxicity may be established in various ways. The Commission may determine that a product is a hazardous substance due to a chronic hazard based on any evidence that is relevant and material to such a determination.
For example, peer-reviewed scientific studies by third parties and toxicity assessments from CPSC's peer agencies may be relevant and material evidence to establish chronic toxicity and that a substance is a “hazardous substance” under the FHSA. Likewise, evidence from third parties may be useful to determine chronic toxicity. For instance, third party studies may indicate that chronic adverse health effects are associated with foreseeable levels of consumer exposure, allowing the Commission to conclude that the FHSA's criteria for a “hazardous substance” are satisfied. Other cases, however, may require original research to fill gaps in knowledge.
In addition, while the Guidelines describe certain toxic endpoints, they do not limit the toxic endpoints the Commission may consider. The Commission may consider all forms of personal injury or illness as potential toxic endpoints.
The Chronic Hazard Guidelines, which should be understood as a set of best practices, are not mandatory for the Commission or for stakeholders. The guidelines describe methods that CPSC staff may use to assess chronic hazards under the FHSA. Furthermore, the guidelines are intended to be sufficiently flexible to incorporate the latest scientific information, such as advances in risk assessment methodology. Risk assessors may deviate from the default assumptions described in the guidelines, provided that their methods and assumptions are documented, scientifically defensible, and supported by appropriate data as indicated in section VI.A.2 of the preamble of the guidelines. 57 FR 46633. However, given that the guidelines represent an available set of best practices, risk assessors are encouraged to use the information and approaches outlined therein where appropriate.
In the years since the guidelines were issued, there have been numerous advances in the basic science underlying the guidelines, such as the use of transgenic animals to elucidate mechanisms of carcinogenicity and toxicity. There also have been several changes in the practice of risk assessment, including wider acceptance and use of risk assessment methods such as the benchmark dose approach and probabilistic exposure assessment. Therefore, CPSC is finalizing two guidance documents to supplement the 1992 guidelines.
The first supplement provides guidance for the application of benchmark dose methodology (BMD) to risk assessment. This supplement discusses an alternative to the traditional approach described in the original guidelines for estimating acceptable daily intakes (ADIs) for carcinogenic and other hazards, such as neurotoxicological or reproductive/developmental hazards. The second supplement is guidance for the analysis of uncertainty and variability, including use of probabilistic risk assessment methodology, which is most relevant to exposure assessment.
Like the 1992 guidelines, the supplemental guidance documents are not mandatory. Rather, they describe methods that CPSC staff and manufacturers may use to evaluate chronic hazards. The guidelines are intended to assist manufacturers in complying with the requirements of the FHSA and to facilitate the use of reliable risk assessment methodologies by both manufacturers and CPSC staff.
In response to the Commission's August 2023 Notice of Availability of the proposed supplemental guidance, the Commission received two comments. The commenters were the National Center for Health Research (NCHR) and one individual, Albert Donnay. They had questions about the timing of the release of the guidance, technical details of benchmark dose modeling, how to determine risk assessment approaches in the context of the guidance, and the citation of references after the 2008 peer review of the supplemental guidance.
Having considered the comments, the Commission is finalizing the guidance as proposed, without changes. The Final Supplemental Guidance for the Use of Benchmark Dose Methodology in Risk Assessment and Final Supplemental Guidance for the Analysis of Uncertainty and Variability in Risk Assessment are stated in sections III and IV.
In 1992, the U.S. Consumer Product Safety Commission (CPSC) issued guidelines for assessing chronic hazards under the Federal Hazardous Substances Act (FHSA) and the Labeling of Hazardous Art Materials Act (LHAMA), including carcinogenicity, neurotoxicity, reproductive/developmental toxicity, exposure, bioavailability, risk assessment, and acceptable risk (CPSC 1992). 57 FR 46626. The chronic hazard guidelines, which are not mandatory for CPSC or stakeholders, are intended as an aid to manufacturers in making their determination of whether a product is a hazardous substance due to chronic toxicity, and thus would require labeling under the FHSA. The guidelines describe methods that CPSC staff use to assess chronic hazards under the FHSA. Furthermore, the guidelines are intended to be sufficiently flexible to incorporate the latest scientific information, such as advances in risk assessment methodology. Risk assessors may deviate from the default assumptions described in the guidelines, provided that their methods and assumptions are documented, scientifically defensible, and supported by appropriate data. However, given that the guidelines represent an available set of best practices, risk assessors are encouraged to use the information and approaches outlined therein where appropriate, and other methods will be reviewed by staff to determine acceptability.
In the years since the guidelines were issued, there have been numerous advances in the basic science underlying the guidelines, such as the use of alternative methods to elucidate mechanisms of carcinogenicity and toxicity. There also have been several changes in the practice of risk assessment, such as in the assessment of risks to children, as well as wider acceptance and use of risk assessment methods such as the benchmark dose approach and probabilistic exposure assessment. Therefore, CPSC staff-initiated reviews of the existing chronic hazard guidelines and is recommending additions or changes, as appropriate. The purpose of this document is to describe supplemental guidance for the application of the benchmark dose approach in risk assessment.
The current scientific knowledge regarding the risk assessment of chronic hazards is such that the guidelines cannot be applied mechanically (CPSC 1992, section VI.A.2, page 46633). Rather, considerable expertise and professional judgment are required to apply the guidelines properly. Furthermore, the volume of scientific literature on chronic hazard risk assessment, in general, and the benchmark dose, in particular, is extensive. Therefore, the discussion and guidance described below are not intended to explain how to perform chronic hazard risk assessments using the methods described. The guidelines assume that the reader has the necessary expertise. In addition, the discussion presented here is necessarily brief. The risk assessor is referred to the literature on benchmark dose, only a portion of which is cited here.
The benchmark dose (BMD) approach (Crump 1984a; Crump et al. 1995) is an alternative to the traditional method of deriving acceptable daily intake (ADI)
The advantages of the BMD approach have been described in detail elsewhere (Barnes et al. 1995; Crump 1984a; Crump et al. 1995; Gaylor et al. 1998; EPA, 2012; Filipsson et al. 2003). For example, the NOAEL and LOAEL are limited to the doses tested in the bioassay. In contrast, the BMD is not limited to the doses tested in the bioassay. Thus, the BMD provides a more consistent basis for comparisons between studies that did not use the same dose levels.
The true (parametric) value of the BMD is independent of the study design, such as the number of animals per dose group,
The BMD approach may account for variability in the bioassay. If the BMDL is used, larger studies tend to have smaller confidence intervals. Thus, larger studies are generally rewarded, because a smaller confidence interval leads to a higher BMDL. In contrast, poorly designed studies with inadequate sample size are penalized by having larger confidence intervals, leading to a lower BMDL.
The BMD accounts for the slope and shape of the dose response curve and uses all of the dose response data from the study. In contrast, the NOAEL or LOAEL relies on the response at only one dose level. Thus, information on the slope and shape of the dose response curve is ignored.
With the BMD approach, the methodology is the same regardless of whether a NOAEL is established. An additional uncertainty factor that is generally applied when using the LOAEL is not required in a BMD analysis, because the BMD can still be estimated even if a NOAEL has not been established.
While there are several advantages to the BMD approach, the principal disadvantage is the added complexity of the methodology. BMD methods require expertise in statistics, as well as toxicology. The additional steps involved in the analysis also increases the number of decision points, such as the choice of BMD and mathematical model, which require professional judgment. This, in turn, increases the number and possibly the range of possible ADI values from a given data set and may lead to areas of disagreement among risk assessors.
While the overall BMD approach is straightforward, there are many factors that must be considered in applying BMD methods in risk assessment, including the selection of the most appropriate endpoint and data set, dose response model, statistical methods, and selection of the BMD. Each of these factors requires knowledge of toxicology and risk assessment, as well as professional judgment.
Initially, the selection of the critical study and endpoint to model is similar to the traditional approach. The study should be well-designed and executed, with an adequate number of animals and doses, and a statistically significant effect (CPSC 1992, sections VI.C.3.a, p. 46639; VIC.3.b, p. 46640; VI.D.2.a, p. 46642; and VI.D.3.b, p. 46643). There should be a dose where there are no observed adverse effects,
It should be noted that the study with the lowest NOAEL will not necessarily lead to the lowest BMD, because the BMD also depends on the slope of the dose-response curve. Therefore, all relevant endpoints and studies should be modeled (Filipsson et al. 2005) to ensure that the lowest BMD is identified.
Additionally, the data set must be amenable to modeling. That is, there should be a steadily increasing dose response that is not saturated at the high doses. If none of the available dose response models can adequately fit the data (see below), the BMD approach cannot be used.
The BMD approach is essentially a curve-fitting exercise. The choice of the dose-response model does not require any knowledge of the mode of action. Thus, the form of the model is not necessarily prescribed or dictated by any specific information about the studied activity, provided that it adequately describes the data. In some instances, however, mechanistic information may suggest a particular model, such as the Hill model when cooperative binding is observed.
A variety of dose-response models have been used to estimate the BMD (Crump 1984a; Crump et al. 1995; EPA 2022; Filipsson et al. 2003; Gaylor et al. 1998). The BMD approach may be applied to either quantal (dichotomous) or continuous data. Incidence data, such as the number of animals with a certain adverse effect, are quantal. Serum enzyme or hormone levels are examples of continuous data. Generally, quantal and continuous data require different, though related, dose response models. Nested quantal models may be used with developmental studies to evaluate effects within and between litters.
Dose response models for quantal data include linear (one-hit), quadratic, gamma multi-hit, Weibull, polynomial (multistage), logistic, log-logistic, probit, and log-probit models. These are slightly modified versions of the dose response models that have been used for cancer risk assessment (compare Crump 1984b; Zeise et al. 1987). The linear, quadratic, and Weibull models are essentially subsets of the polynomial model. Therefore, some or all of these models may yield similar results for certain data sets, such as when the dose response is linear. Dose response models for continuous data include linear, quadratic, linear-quadratic, polynomial, power, and Hill models. In addition, nested models are available for developmental studies. The mathematical forms of the models are described in detail elsewhere (Crump 1984a; Crump et al. 1995; EPA 2022; Filipsson et al. 2003; Gaylor et al. 1998).
In applying the BMD approach to non-cancer endpoints, the dose response models are not used for low-dose extrapolation. Thus, in contrast to cancer risk assessment, there is no need to consider the shape of the curve at low doses. Therefore, the choice of dose response model depends, in large part, on the goodness of fit. That is, the model (or models) selected must adequately describe the data. A model is generally rejected if the probability based on chi-square is less than 0.05. In other words, if the probability that the deviation of the data from the model is due to random variability is less than 0.05, the model does not adequately describe the data. Depending on the data set, multiple models may provide a similar global fit to the data. In this case, the local fit in the low-dose range, that is, the doses nearest the BMR, may be considered. In practice, different models often result in roughly similar BMDs, provided that they adequately describe the data. In any case, the results from different models and the choice of model should be discussed.
In some cases, it may be necessary to exclude high dose data from the model fitting procedure, to improve the goodness of fit. Data at the highest doses of a multiple dose bioassay may be considered to be less informative for the purpose of low dose extrapolation, especially in cases where the responses plateau at the high doses. Therefore, high dose groups may be systematically eliminated until the fit is acceptable (Anderson 1983).
In other cases, such as when a non-monotonic dose response is observed, none of the dose response models may be able to fit the data adequately. When this occurs, the BMD approach should not be used. While the NOAEL/LOAEL approach could still be applied, the quality of the study should be given careful consideration. It may not be appropriate to derive an ADI by any method from such a data set.
The steps for estimating the BMD may be summarized as follows:
• Select the bioassay(s) and endpoint(s) to model.
• Determine whether the data are quantal or continuous.
• Fit the bioassay data set(s) to several dose response models and determine the goodness of fit. Calculate multiple BMDs, including maximum likelihood estimates (MLEs) of risk and confidence limits. Graph the results.
• Select which model to use for determining the ADI. Generally, the model giving the best fit is used. If multiple models fit the data well, the local fit near the BMR may be considered. In some cases, the choice of model may be based on mechanistic considerations. If no model fits the data adequately, the BMD approach should not be used.
• If multiple endpoints or bioassays are modeled, select which to use for determining the ADI. The most sensitive dose response is generally used (CPSC 1992, section F.4.b.ii, page 46656). Other factors, such as severity of the effect may also be considered.
• Select which BMD (BMR) to use for deriving the ADI.
• Discuss and explain all of the decision points in the preceding steps.
Various types of software may be used to estimate the BMD/BMDL. The U.S. Environmental Protection Agency (EPA) has developed Benchmark Dose Software (BMDS) specifically for this purpose (EPA 2022). The BMDS and associated documentation are in the public domain and may be downloaded from the EPA website. Software is also available from the Netherlands Ministry of the Environment (RIVM 2021) and Shao and Shapiro (2018). Various other statistical software packages (
As with cancer risk assessment, CPSC staff prefers to use extra risk, rather than additional risk, as a measure of the risk over background. Extra risk applies Abbott's correction, so that animals which already have a given lesion from background processes are not considered at risk for an exposure-induced lesion of the same type. The numerical difference between extra risk and additional risk is small, provided that the background risk is sufficiently low (<0.25). Extra risk (Crump and Howe 1985) is defined by:
Additional risk is defined by:
The ADI is the dose at which the risk of an adverse effect is considered negligible. Because such risks cannot be directly measured, this requires assumptions about the shape of the dose response curve in the low dose region. For cancer, there are theoretical reasons for assuming a linear response at low dose, such as the probability that a given chemical will interact with background processes or other chemicals (CPSC 1992, VI.F.3.b.ii, page 46654). For non-cancer endpoints, a non-linear dose response is generally presumed, although the shape and slope of this curve outside of the observable range is unknown.
The selection of the BMD has been based on the following considerations: (i) The BMD should be within or near the observable range of the bioassay. (ii) It is roughly the dose at which a statistically significant effect may be observed in the bioassay (Crump et al. 1995). Thus, BMD's of 5% to 10% over background are typically used for quantal data, assuming that there is an adequate number of animals and the background level is not exceptionally high. (iii) The BMD approach is an alternative to deriving the ADI from a NOAEL. The BMD has generally been selected to approximate the NOAEL (Crump et al. 1995). Thus, the study selected for estimating the BMD should include a dose at or near the NOAEL. Other factors, such as the shape of the dose response curve or the study design (
It is important to keep in mind that the selection of a BMD is part of the overall risk assessment process, which includes the selection of the critical endpoint and uncertainty factors, among other things. The overall process is equally as important as the individual steps. For example, the risk assessor might consider applying different uncertainty factors, depending on the BMD selected. That is, consideration could be given to larger or additional uncertainty factors if the BMD is higher than is typical, or to smaller uncertainty factors if the BMD is exceptionally low.
Numerous authors (Barnes et al. 1995; Crump 1984a; Filipsson et al. 2003) and the EPA (EPA 2005) generally recommend using the 95% lower confidence limit (LCL) of the benchmark, typically the BMDL
While the choice of the BMD should be made on a case-by-case basis, it is desirable to have a default value for the purpose of consistency across different chemicals, endpoints, and risk assessors. However, even if the default value is used, the risk assessor must evaluate whether the default is appropriate in a given case, using the criteria described above. Risk assessors have most frequently used BMDL
For cancer risk assessment, CPSC prefers to use the MLE risk (see below). However, as currently applied, the ADI is not regarded as a numerical estimate of risk, as is the case for cancer risk. Rather, it is regarded as a regulatory threshold, that is, a “negligible risk level” or “virtually safe dose.” Therefore, the reasons for using the MLE to estimate cancer risk do not necessarily apply to ADIs. This conclusion may change in the future, if true risk-based approaches are applied to non-cancer endpoints.
At the present time it seems reasonable to use the BMD
For continuous data, the BMD value is generally a level that is considered “adverse.” This is a matter of professional judgment by health scientists, such as toxicologists and pathologists, and must be determined on a case-by-case basis. As discussed in the previous section on “Selection of the Benchmark Dose (BMD)—Quantal Data,”, the MLE value is preferred for risk assessment. In instances where there is no consensus on what constitutes an adverse effect, some risk assessors have used a relative change in the endpoint, such as a change of one standard deviation.
The multistage model (Crump 1984b) has been preferred by most federal agencies for cancer risk assessment. The multistage model is defined by:
The EPA has preferred to use the upper confidence limit (UCL) of the estimated risk, while CPSC staff uses the MLE risk, unless the linear term (q
EPA began to use the BMD approach for cancer risk assessment in place of the multistage model in 2005 (EPA 2005). BMD is the preferred method for dose response assessment at EPA and other agencies (Allen et al. 2011). The default procedure is to use the BMR as a point of departure (PoD) for linear extrapolation to the background level. Uncertainty factors may be applied if there is sufficient reason to rule out a linear dose response at low doses. This procedure is analogous to the Mantel-Bryan procedure (Mantel & Bryan 1961; see also Gaylor & Kodell 1980) that was commonly used before the multistage model became available.
The BMD approach described by EPA is consistent with the default procedures used by CPSC staff under the guidelines. The primary concern of CPSC staff is that linear extrapolation should remain the default procedure for guidelines purposes. The results from using the BMD methodology and the multistage model are not substantially different when linear extrapolation is assumed. In general, a non-linear dose response with use of uncertainty factors should be used only if there is convincing evidence that the dose response is non-linear at low doses. In addition, the BMD approach offers certain advantages over the multistage model as applied by CPSC staff. While staff prefers to use the MLE estimate of cancer risk, it is necessary to use the UCL risk in cases where the linear term (q
The practice of the CPSC Directorate for Health Sciences (HS) is to present the best estimate of risk, rather than the upper bound, to risk managers. Thus, HS prefers the MLE of risk in cancer risk assessments (CPSC 1992, section VI.F.3.b.iii). Presenting the best estimate of risk depends on a number of considerations: (i) CPSC does not routinely define “safe” levels, as is frequently done by other agencies such as the Food and Drug Administration (FDA) and EPA. Rather, the need for CPSC actions based on unsafe levels are typically determined on a case-by-case basis. (ii) For typical cancer bioassays in animals, the difference between the MLE and 95% upper confidence limit (UCL)
Therefore, the BMD approach with linear extrapolation and based on the MLE risk generally will be the default procedure for cancer risk assessments performed by CPSC staff. To further simplify the process, the multistage (polynomial) model generally will be the default model for cancer risk. However, other models that adequately describe the data may be used, as described above for non-cancer endpoints. While the choice of a PoD is not critical, the default will be the BMD
The following practices are recommended when applying benchmark dose methodology:
• The BMD approach is generally the preferred method for setting ADI levels for non-cancer endpoints, provided that adequate dose response data are available.
• Appropriate dose response models and statistical methods have been described in detail elsewhere (Crump 1984a; Crump et al. 1995). Public domain software is available from EPA (EPA 2022).
• The BMD response level (BMR) used to calculate the ADI will be determined on a case-by-case basis. A range of BMR's, including best estimates and lower confidence limits, should be considered.
• As a default, CPSC staff will use the maximum likelihood estimate of the dose at which the extra risk is 5% (BMD
• Several dose response models should be considered. Generally, the model that best describes the observed dose response data will be selected to derive the ADI. In addition, the ADI will generally be based on the combination of dose response model, endpoint, and study that lead to the lowest ADI.
• Risk assessors may deviate from the default assumptions described in the guidelines, provided that their methods and assumptions are documented, scientifically defensible, and supported by appropriate data (CPSC 1992, section VI.A.2). While the BMD approach is typically preferred, the traditional method based on NOAELs/LOAELs may still be used.
In addition, the BMD approach with linear extrapolation and based on the MLE risk will be the default procedure for cancer risk assessments performed by CPSC staff. The multistage (polynomial) model will be the default model for cancer risk. However, other models that adequately describe the data may be used, as described above for non-cancer endpoints. While the choice of a PoD is not critical, the default will be the BMD
The following supplements the guidance on estimating acceptable daily intakes (ADIs) in the CPSC Chronic Hazard Guidelines at 57 FR 46656 (Oct. 9, 1992) in section VI.F.4.b.1.ii. This does not supersede the 1992 guidance; rather, it provides guidance on the use of newer methods for estimating ADIs.
Traditionally, CPSC staff derived acceptable daily intake (ADI) levels for non-cancer endpoints by applying safety factors (uncertainty factors) to the no-observed-effect level (NOAEL) or lowest-observed-effect-level (LOAEL). However, the benchmark dose (BMD) approach is now generally preferred over the traditional method. The benchmark dose is an estimate of the dose at a certain risk level. The BMD is estimated from a dose-response model. The advantages of the BMD approach and methods for estimating the BMD are described elsewhere (Barnes et al. 1995; Crump 1984; Crump et al. 1995; EPA 2012; Filipsson et al. 2003; Gaylor et al. 1998). Software for estimating the BMD is available from the U.S. EPA (EPA 2022) and other sources. In estimating the BMD, the risk assessor should consider the following points: (a) The dose-response model must provide an adequate fit to the data; the BMD approach may not be appropriate for all data sets. (b) Alternative dose response models should be considered, and the choice of model to derive the ADI explained. (c) Alternative endpoints and studies should also be considered, as appropriate. (d) A range of BMD response levels, including best estimates and confidence intervals should be evaluated. (e) Generally, different methods are required for dichotomous and continuous data.
The BMD selected to derive the ADI (BMD response level) is determined on a case-by-case basis. The BMD response level (BMR) must be within or near the range of experimental dose levels. As a default, for dichotomous (
The following is a supplement to the CPSC Chronic Hazard Guidelines at 57 FR 46654 (Oct. 9, 1992), section VI.F.3.b.ii.
Traditionally, CPSC staff estimated cancer unit risks (slope factors) using the multistage model (Global83). The maximum likelihood estimate (MLE) of risk was used unless the linear term (q
In 1992, the U.S. Consumer Product Safety Commission (CPSC) issued guidelines for assessing chronic hazards under the Federal Hazardous Substances Act (FHSA), including carcinogenicity, neurotoxicity, reproductive/developmental toxicity, exposure, bioavailability, risk assessment, and acceptable risk. The guidelines are detailed in a
The chronic hazard guidelines are intended as an aid to manufacturers in making their determination of whether a product is a hazardous substance due to chronic toxicity, and thus would require labeling under the FHSA. The guidelines are not mandatory. The guidelines describe standard methods CPSC staff may use to assess chronic hazards under the FHSA. The guidelines are intended to be sufficiently flexible to incorporate the latest scientific information, such as advances in risk assessment methodology. Therefore, CPSC staff initiated reviews of the existing guidelines and is recommending additions or changes, as appropriate. The purpose of this document is to describe supplemental guidance for the analysis of uncertainty and variability in risk assessment, including the use of probabilistic techniques.
In toxicological risk assessment, uncertainty is the term used to describe the lack of knowledge in the underlying science, such as when few measurements of the particular subject have been made. Uncertainty may also be associated with the choice of mathematical model used to estimate exposure or risk. Variability refers to inherent differences due to heterogeneity or diversity in the population or exposure variable, such as body weight of people in the exposed population. Variability is generally not reducible by improved measurement or further study (EPA 1997, 2014).
The theory and techniques of exposure assessment have been discussed in detail elsewhere (CPSC 1992; EPA 2014, 2019; Paustenbach 2002). Exposure may be measured directly, but, in general, an exposure assessment is often based on a mathematical model that combines several variables describing the factors that influence exposure. For example, an assessment of exposure to a chemical released into the air during use of a product will include information about the emission rate into the air, the resulting concentration of the chemical in the air, the amount of time a person using the product or spent living, working, or playing in the area, and the amount of air a person breathes during the exposure. For a given exposure scenario, the output of an exposure assessment is typically an estimate of the amount of chemical that comes into contact with the body, usually expressed per unit of body weight per day during a defined period of time or over a lifetime, although exposure may be defined in other terms.
For carcinogens, “risk” is the product of the exposure estimate and the dose-response value,
There is no single, correct way to conduct an exposure or risk assessment for purposes of evaluating chronic hazards under the Federal Hazardous Substances Act (FHSA) or the Labeling of Hazardous Art Materials Act
In most cases, the risk assessor will consider uncertainty and variability in the assessment and, at a minimum, include a discussion of the effect of uncertainty and variability on the final risk estimates. The discussion may be qualitative or it may include quantitative estimates of uncertainty and variability. Variability and uncertainty are distinct issues and should be considered separately in each analysis using appropriate statistical techniques, such as two-dimensional probabilistic analyses (Cullen and Frey 1999). In practice, however, increasingly complex analyses may not be warranted for every situation, as discussed below. In addition, the available data may not be sufficient to distinguish between variability and uncertainty or to allow statistical consideration of both issues.
Risk assessors may take one of two general approaches to conduct risk assessments: deterministic or probabilistic (stochastic) modeling. Of these, probabilistic techniques explicitly include quantification of uncertainty and variability.
Risk analyses have long been grounded on deterministic approaches. Probabilistic risk assessments have been used for many years in predicting accidents and systems failures, and in weather forecasting. Over time, probabilistic approaches have been applied to ecological and human health risk assessments (Kendall et al., 2001).
Deterministic and probabilistic modeling are both valid mathematical approaches for estimating risk. The key difference between these approaches is that deterministic modeling enters point estimates (
Exposure and risk assessments are conducted for many different reasons, such as to answer specific questions about exposure scenarios, inform decision-making, and explore options. The ultimate application of the assessment will help determine the methodological approaches and techniques to be used. The choice of approach may be based on considerations of the available scientific information, institutional policies, time and resources available, or social implications.
Risk assessments may be iterative,
In many cases, deterministic techniques may be more desirable than probabilistic methods, particularly for such early analyses that are often under time and resource constraints, because probabilistic methods can be more complex, time-consuming, and costly. On the other hand, risk managers may find that more sophisticated techniques, including probabilistic methods, are valuable in providing certain detailed information about the risks in the exposed population, to explore the uncertainty in the true, but unknown risk to an individual, or for systematically analyzing variability, uncertainty, pathways of exposure, or alternative models. The risk assessor and risk manager must consider the utility of the risk assessment result and determine the value added by each assessment choice that increases the time, cost, and complexity of the assessment.
Ultimately, a risk assessment is conducted to gain insight into the exposures and risks associated with a given scenario. See section VI.F. of the guidelines (CPSC 1992). Each assessment should be approached on a case-by-case basis, consistent with the requirements of the risk assessor and risk manager. Regardless of the risk analysis approach, the quality of the assessment depends on the quality and availability of relevant data.
In general, for a given body of knowledge, a deterministic assessment that is based predominantly on central tendency values for each of the input variables (
The primary advantage of a probabilistic approach is the generation of information on the distribution of exposure and risk in a population, in addition to estimates of the average exposure and risk. This provides information on the range of exposures, including highly exposed individuals. However, the risk analyst must consider that sparse data or a poorly fitting distribution to the data for one or more model inputs could lead to inappropriate conclusions about the resulting distribution, particularly at the tails of the distribution, which may be most sensitive to deficiencies in the data. Further, a probabilistic model may be sensitive to correlations between input variables (
Another advantage of probabilistic techniques is the ability to derive confidence intervals for exposure estimates. Thus, in addition to estimating the mean, median, and 95th percentiles of exposure, one may also estimate confidence intervals for these
Currently, probabilistic techniques are used primarily in estimating exposure, while single point estimates are derived to describe the dose-response (
A distinct issue, but related to analysis of uncertainty, is sensitivity analysis. Sensitivity analysis is used to identify variables that have the largest effect on the assessment output, and general approaches and statistical techniques have been developed for both deterministic and probabilistic analyses. It is often useful to know if small changes in the values for some variables result in relatively large changes in the output. For example, such an analysis may be used to identify areas of research that could improve future risk assessments. Sensitivity analysis may also be used to focus on specific subpopulations or exposure scenarios or to identify the most important routes of exposure.
Such techniques also are useful for providing additional information in a deterministic assessment. That is, a separate sensitivity analysis can be used in conjunction with a deterministic approach to characterize the range of the most likely estimates of exposure and risk (
Recent exposure and risk assessments conducted by CPSC staff have used both deterministic and probabilistic methods based on the factors discussed above. For example, staff used probabilistic techniques to estimate the exposure and risk from oral intake of diisononyl phthalate by children from mouthing soft plastic toys and other objects, based on the strength of the available data (Babich 2002; Babich et al. 2004; Babich et al. 2020; Greene 2002). Yet staff used a deterministic approach with a separate uncertainty analysis to assess children's exposure to arsenic from wooden playground equipment treated with chromated copper arsenate (Hatlelid 2003), because staff concluded that the data for several key input variables were insufficient to support a probabilistic analysis. In this case, mainly central tendency values were used to estimate the exposure, and a separate uncertainty analysis provided additional information about the likely range of exposure.
Section VI.F.4.b.i. of the guidelines (CPSC 1992) states that a carcinogenic risk of one per million or less is the appropriate level for defining acceptable risk;
Probabilistic analyses, however, result in distributions of exposure and risk. While there are no generally accepted guidelines for interpretation of results from probabilistic analyses for carcinogens, this topic has received attention (Burmaster 1996; Thompson 2002; NRC 2009). Thompson cautioned against setting “bright-line” criteria for use in any context, and Burmaster also argued that the risk manager must consider all the characteristics of the distribution resulting from the probabilistic assessment and not just a single point or summary statistic. As an example of how one might evaluate probabilistic results, Burmaster suggested that one might consider the skewness of the resulting risk distribution; whether the median of the distribution exceeds the one per million acceptable risk level; whether the mean exceeds one per one hundred thousand; and whether the 95th percentile exceeds one per ten thousand.
CPSC staff agrees that it generally is appropriate to consider all of the characteristics of the risk distribution (
Section VI.F.4.b.ii. (CPSC 1992) specifies a process for evaluating the acceptable daily intake (ADI) for neurotoxicological and developmental/reproductive agents. Staff uses these guidelines for other non-cancer effects, as well. The use of the ADI in a deterministic assessment is straightforward—the estimated exposure is compared with the ADI. As is the case with cancer risk assessment, there are no standard guidelines for interpretation of results from probabilistic analyses of non-cancer effects. Following the reasoning for cancer assessments given above, staff recommends that interpretation of probabilistic results for non-cancer effects should be based in part on comparing the central tendency estimate of the outcome to the acceptable daily intake, similar to the case for deterministic assessments. However, upper bound estimates of exposure (
Because the guidelines are not binding rules, they are meant to be flexible and amenable to expert judgment, as well as continuing scientific advances. The guidance for interpretation of both cancer and non-cancer exposure and risk are intended to facilitate the assessment process, but in practice, risk assessors and risk managers will consider the specific information in each case in defining acceptable exposure and risk.
The following supplements the guidance on exposure assessment in the CPSC Chronic Hazard Guidelines at 57 FR 46644 (Oct. 9, 1992) in section VI.F.1. It does not supersede the 1992 guidance; rather, it provides guidance on the use of probabilistic methods as an alternative method for exposure assessment.
Risk assessments may incorporate uncertainty (the lack of knowledge in the underlying science or in the choice
Risk assessments may be based on deterministic or probabilistic modeling. Probabilistic modeling uses probability distributions for some or all inputs in conjunction with statistical techniques such as Monte Carlo analysis, and results in a distribution of exposure or risk estimates, providing quantification of uncertainty and variability. Deterministic modeling enters point estimates for the model's inputs and results in a point estimate of the exposure or risk. Separate uncertainty analysis may be used with a deterministic approach to characterize the range of the most likely exposure and risk.
Because exposure and risk assessments are conducted for different reasons, the ultimate use of the assessment results will help determine the methodological approaches and techniques to be used. The choice of approach may be based on considerations of the available scientific information, institutional policies, available time and resources, and limitations of the methods. For example, deterministic techniques may be appropriate for initial analyses that are often under time and resource constraints; however, the use of multiple protective values in a deterministic analysis may lead to unintentionally protective results,
A carcinogenic risk of one per million or less is the guidelines' default level for defining acceptable risk (16 CFR 1500.135(d)(4)(i)). In a deterministic analysis, one per million is compared directly with the risk value that results from the analysis. Interpretation of probabilistic results should be based in part on the relationship of the central tendency estimate (
For assessment of non-carcinogens in a deterministic assessment, the exposure estimate is compared directly with the ADI, or the hazard index (HI) is calculated as the ratio of the estimated exposure to the ADI (HI greater than one means that the exposure may be hazardous; HI less than one represents negligible risk). Probabilistic results should be interpreted in part by comparing the central tendency estimate to the acceptable daily intake, but all characteristics of the resulting distribution should be considered.
The guidance for interpretation of both cancer and non-cancer exposure and risk are intended to facilitate the assessment process, but in practice, risk assessors and risk managers will consider the specific information in each case in defining acceptable exposure and risk.
Office of the Deputy Secretary of Defense, Department of Defense (DoD).
Notice of Federal advisory committee meeting.
The DoD is publishing this notice to announce that the following Federal advisory committee meeting of the Defense Business Board (“the Board”) will take place.
Closed to the public May 7, 2024 from 9:00 a.m. to 7:05 p.m. and closed to the public May 8, 2024 from 8:30 a.m. to 11:50 a.m. All Eastern time.
The closed meeting will be held in room B7 of the Pentagon Library Conference Center, Room 4D728 in the Pentagon, and the U.S. Naval Research Laboratory, Washington, DC.
Ms. Cara Allison Marshall, Designated Federal Officer (DFO) of the Board in writing at Defense Business Board, 1155 Defense Pentagon, Room 5B1088A, Washington, DC 20301-1155; or by email at
This meeting is being held under the provisions of chapter 10 of title 5, United States Code (U.S.C.) (commonly known as the “Federal Advisory Committee Act” or “FACA”), section 552b of title 5, U.S.C. (commonly known as the “Government in the Sunshine Act”), and 41 Code of Federal Regulations (CFR) section 102-3.140 and 102-3.150.
Dr. Simpson will elaborate on the obstacles confronting the DoD in building resilient supply chains. Next, the Board will receive a classified discussion on Emerging Global Threats, including the Supply Chain, and their Potential Implications for the NDS from MG Joseph “JP” McGee, U.S. Army, Director for Strategy, Plans & Policy, J5. This discussion will focus on strategic proactiveness to ensure adaptability, resilience, and continued effectiveness in an ever-evolving security landscape and on how the DoD can partner with industry before and during crises. After a short break, the Board will receive their final classified discussion on Making DoD Work Attractive to Non-Traditional Companies from Hon. Kathleen Hicks. The Deputy Secretary will share successes the DoD has realized in becoming a better partner for non-traditional defense companies, along with how combinations of traditional and non-traditional companies are working together to accelerate capability development and delivery. The DFO will adjourn the closed session. The latest version of the agenda will be available on the Board's website at:
Ms. Cara Allison Marshall, the DFO, via electronic mail (the preferred mode of submission) at the address listed in the
Office of Elementary and Secondary Education, Department of Education.
Notice.
The Department of Education (Department) is issuing a notice inviting applications for new awards for fiscal year (FY) 2024 for the Comprehensive Literacy State Development (CLSD) program, Assistance Listing Number 84.371C. This notice relates to the approved information collection under OMB control number 1894-0006.
For the addresses for obtaining and submitting an application, please refer to our Common Instructions for Applicants to Department of Education Discretionary Grant Programs, published in the
Michael Berry, U.S. Department of Education, 400 Maryland Avenue SW, Room 4C128, Washington, DC 20202-6450. Telephone: (202) 453-7088. Email:
If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.
Specifically, the Department is focused on improving student achievement, including in math and reading, as highlighted across Administration and Department efforts for the past several years. Building on the Administration's previous efforts, in January 2024, the Administration announced its Improving Student Achievement Agenda,
Through the FY 2024 CLSD competition, the Department encourages State educational agencies (SEAs) to focus on evidence-based activities that provide explicit intervention and support in reading and writing for children from birth to grade 12, including activities that have been implemented in response to identified literacy gaps and that have positive outcome data. SEAs should take into consideration the resources of the What Works Clearinghouse,
This competition includes four competitive preference priorities that highlight key policies on which States may focus their proposed projects. First, the Department gives competitive preference to projects that incorporate SEA partnerships with institutions of higher education (IHEs). Strong partnerships with IHEs strengthen educator (as defined in this notice) preparation programs and high-quality professional development (as defined in this notice) for educators, resulting in more effective comprehensive State literacy programs. Second, the Department gives competitive preference to applications that propose projects that are designed to address the impacts of the COVID-19 pandemic using evidence-based instructional approaches and supports to successfully meet challenging academic content standards without contributing to tracking or remedial courses.
Third, the Department gives competitive preference to applications that propose projects designed to promote education equity and adequacy in resources and opportunity for underserved students (as defined in this notice). In responding to this priority, SEAs are encouraged to consider how projects can assess the literacy needs of underserved students, including multilingual learners, to support the screening and identification of reading disabilities (
Through an invitational priority, the Department encourages projects that support effective transition practices, continuity of services and supports, and aligned instruction for students as they transition from preschool and other early childhood settings into kindergarten and from kindergarten into the early grades, which includes supporting efforts that promote strong foundational literacy skills that undergird early literacy and early math success. The Department also encourages projects that support acceleration strategies for improving literacy for secondary school students who are reading at least 1-2 years below grade level. Additionally, the Department would like to highlight practices that have yielded positive results so that they may be shared with the wider literacy field.
These priorities are:
Under this priority, an applicant must demonstrate how it will use the State-level reservation under section 2222(f)(2) of the ESEA to carry out one or more of the following activities:
(a) Coordinate with IHEs in the State to provide recommendations to strengthen and enhance pre-service courses for students preparing to teach children from birth through grade 12 in explicit, systematic, and intensive instruction in evidence-based literacy methods. (2 points)
(b) Review and update, in collaboration with teachers and IHEs, State licensure or certification standards in the area of literacy instruction in early education through grade 12. (2 points)
Projects that are designed to address the impacts of the COVID-19 pandemic, including impacts that extend beyond the duration of the pandemic itself, on the students most impacted by the pandemic, with a focus on underserved students and the educators who serve them, through using evidence-based instructional approaches and supports, such as professional development, coaching, ongoing support for educators, high-quality tutoring, expanded access to rigorous coursework and content across K-12, and expanded learning time to accelerate learning for students in ways that ensure all students have the opportunity to successfully meet challenging academic content standards without contributing to tracking or remedial courses.
Projects that are designed to promote educational equity and adequacy in resources and opportunity for underserved students—
(1) In one or more of the following educational settings:
(i) Early learning programs.
(ii) Elementary school.
(iii) Middle school.
(iv) High school.
(v) Out-of-school-time settings.
(vi) Alternative schools and programs.
(vii) Juvenile justice system or correctional facilities.
(viii) Adult learning.
(2) That examines the sources of inequity and inadequacy and implement responses, and that may include one or more of the following:
(i) Establishing, expanding, or improving learning environments for multilingual learners, and increasing public awareness about the benefits of fluency in more than one language and
(ii) Expanding access to high-quality early learning, including in school-based and community-based settings, by removing barriers through implementation of programs that are inclusive with regard to race, ethnicity, culture, language, and disability status.
Projects that are designed to increase the proportion of well-prepared, diverse, and effective educators serving students, with a focus on underserved students, through supporting effective instruction and building educator capacity by providing high-quality job-embedded professional development opportunities focused on supporting students and their families at key transitional stages in their education as they enter into one or more of the following:
(a) Early learning programs.
(b) Elementary school.
(c) Middle school.
(d) High school.
This priority is:
Projects that—
(a) Include developmentally appropriate practices that support cross-sector collaboration and family engagement across early learning and early elementary grades to support continuity of relationships and services from preschool through grade three, including practices that promote strong foundational literacy skills that undergird early literacy and early math success;
(b) Increase and improve educational opportunities for students and promote academic recovery through aligning the instruction between preschool and grade three and supporting educators and school leaders; and
(c) Increase and improve educational opportunities and outcomes for secondary school students who are reading below or significantly below grade level and promote their increased literacy through developmentally appropriate practices, including practices that support accelerated growth in literacy skills.
(a)
An SEA must include a needs assessment that analyzes literacy needs across the State and in high-need schools (as defined in this notice) and LEAs that serve high-need schools, including identifying the most significant gaps in literacy proficiency and inequities in student access to effective teachers of literacy, considering each of the subgroups of students, as defined in section 1111(c)(2) of the ESEA.
(b)
An SEA must include a description of how, in collaboration with its State literacy team, if applicable, it will develop a State comprehensive literacy instruction (as defined in this notice) plan or will revise and update an already existing State comprehensive literacy instruction plan.
(c)
An SEA must include an implementation plan that includes a description of how it will carry out the State activities described in section 2222(f) of the ESEA.
(d)
An SEA must collaborate with the State agency responsible for administering early childhood education programs and the State agency responsible for administering child-care programs in the State in writing and implementing the early childhood education portion of the grant application submitted for the CLSD program.
(e)
An SEA must include in its application the following assurances:
(1)
(a) An SEA must assure that it will subgrant not less than 95 percent of grant funds to eligible entities (as defined in this notice), based on their needs assessment and a competitive application process, for comprehensive literacy instruction programs according to the funding allocations in Program Requirement (a).
(b) An SEA must assure it will use grant funds described in section 2222(f)(1) for comprehensive literacy instruction programs as follows:
(i) Not less than 15 percent of such grant funds must be used for State and local programs and activities pertaining to children from birth through kindergarten entry.
(ii) Not less than 40 percent of such grant funds must be used for State and local programs and activities, allocated equitably among the grades of kindergarten through grade 5.
(iii) Not less than 40 percent of such grant funds must be used for State and local programs and activities, allocated equitably among grades 6 through 12.
(2)
An SEA must assure that it will give priority in awarding subgrants to eligible entities that—
(i) Serve children from birth through age 5 who are from families with income levels at or below 200 percent of the Federal poverty line (as defined in this notice); or
(ii) Are LEAs serving a high number or percentage of high-need schools.
(3)
An SEA must assure that it will provide subgrants to eligible entities serving a diversity of geographic areas, giving priority to entities serving greater numbers or percentages of children from low-income families.
(a)
(1) Grantees must use not less than 95 percent of grant funds to award subgrants to eligible entities, based on their needs assessment and a competitive application process;
(2) Grantees must subgrant funds as follows:
(i) Not less than 15 percent of the funds awarded to subgrantees must be used for State and local programs and activities pertaining to children from birth through kindergarten entry;
(ii) Not less than 40 percent of the funds awarded to subgrantees must be used for State and local programs and activities, allocated equitably among the grades of kindergarten through grade 5; and
(iii) Not less than 40 percent of the funds awarded to subgrantees must be
(b)
(1) A grantee may reserve not more than 5 percent of the CLSD funds it receives for activities identified through the needs assessment and comprehensive literacy plan, including, at a minimum, the following activities:
(i) Providing technical assistance, or engaging qualified providers to provide technical assistance, to eligible entities to enable the eligible entities to design and implement literacy programs.
(ii) Coordinating with IHEs in the State to provide recommendations to strengthen and enhance pre-service courses for students preparing to teach children from birth through grade 12 in explicit, systematic, and intensive instruction in evidence-based literacy methods.
(iii) Reviewing and updating, in collaboration with teachers and IHEs, State licensure or certification standards in the area of literacy instruction in early education through grade 12.
(iv) Making publicly available, including on the SEA's website, information on promising instructional practices to improve child literacy achievement.
(v) Administering and monitoring the implementation of subgrants by eligible entities.
(2) After making awards to subgrantees and carrying out the State-level activities described in this notice, an SEA may use any remaining amount to carry out one or more of the following activities:
(i) Developing literacy coach training programs and training literacy coaches.
(ii) Administration and evaluation of CLSD activities.
(3) Collaboration requirement.
A grantee must collaborate with the State agency responsible for administering early childhood education programs, the State agency responsible for administering child care programs, and, if applicable, the State Advisory Council on Early Childhood Education and Care designated or established pursuant to section 642(b(1)(A)(i) of the Head Start Act, in making and implementing subgrants under the early childhood education portion of the CLSD program, described in section 2222(d)(2)(D)(i).
(c)
(1) Subgrantee application requirements.
An eligible entity desiring to receive a subgrant under CLSD must submit an application to the SEA, at such time, in such manner, and containing such information as the SEA may require. Such application must include a description of—
(i) How the CLSD funds will be used to enhance the language and literacy development and school readiness of children, from birth through kindergarten entry, in early childhood education programs, which must include an analysis of data that support the proposed use of CLSD funds;
(ii) How the CLSD funds will be used to prepare and provide ongoing assistance to staff in the programs, including through high-quality professional development;
(iii) How the activities assisted with the CLSD funds will be coordinated with comprehensive literacy instruction at the kindergarten through grade 12 levels; and
(iv) How the CLSD funds will be used to evaluate the success of the activities assisted under the subgrant in enhancing the early language and literacy development of children from birth through kindergarten entry.
(2) Priority.
In awarding subgrants to eligible entities in support of birth through kindergarten entry, sections 2222(d)(2)(E) and 2223(c) of the ESEA require that an SEA must provide an assurance that it will—
(i) Give priority to an eligible entity that will use CLSD funds to implement evidence-based activities;
(ii) Give priority to an eligible entity that will use CLSD funds to serve children from birth through age 5 who are from families with income levels at or below 200 percent of the Federal poverty line or is a local educational agency (LEA) serving a high number or percentage of high-need schools.
(3) Duration.
The term of a subgrant must be determined by the grantee and must not exceed five years.
(4) Sufficient size and scope.
Each subgrant must be of sufficient size and scope to allow the eligible entity to carry out high-quality early literacy initiatives for children from birth through kindergarten entry.
(5) Local uses of funds.
An eligible entity that receives a subgrant from the SEA must use the CLSD funds, consistent with the entity's approved application, to—
(i) Carry out high-quality professional development opportunities for early childhood educators, teachers, principals, other school leaders (as defined in this notice), paraprofessionals, specialized instructional support personnel, and instructional leaders;
(ii) Train providers and personnel to develop and administer evidence-based early childhood education literacy initiatives; and
(iii) Coordinate the involvement of families, early childhood education program staff, principals, other school leaders, specialized instructional support personnel (as appropriate), and teachers in literacy development of children served under CLSD.
(d)
(1) Subgrantee application requirements.
An eligible entity desiring to receive a subgrant from the SEA under the CLSD program must submit an application to the SEA at such time, in such manner, and containing such information as the SEA may require. Such application must include, for each school that the eligible entity identifies as participating in a CLSD program, the following information:
(i) A description of the eligible entity's needs assessment conducted to identify how CLSD funds will be used to inform and improve comprehensive literacy instruction at the school.
(ii) How the school, the LEA, or a provider of high-quality professional development will provide ongoing high-quality professional development to all teachers, principals, other school leaders, specialized instructional support personnel (as appropriate), and other instructional leaders served by the school.
(iii) How the school will identify children in need of literacy interventions or other support services.
(iv) An explanation of how the school will integrate comprehensive literacy instruction into a well-rounded education (as defined in this notice).
(v) A description of how the school will coordinate comprehensive literacy instruction with early childhood education programs and activities and after-school programs and activities in the area served by the LEA.
(2) Priority.
In awarding subgrants to eligible entities, sections 2222(d)(2)(E) and 2223(c) of the ESEA require that an SEA must provide an assurance that it will—
(i) Give priority to an LEA that will use CLSD funds to implement evidence-based activities; and
(ii) Give priority to an LEA serving a high number or percentage of high-need schools.
(3) Duration.
The term of a subgrant must be determined by the grantee and must not exceed five years.
(4) Sufficient size and scope.
Each subgrant must be of sufficient size and scope to allow the eligible entity to carry out high-quality comprehensive literacy instruction in each grade level for which the CLSD funds are provided.
(5) Local uses of funds for kindergarten through grade 5.
An eligible entity that receives a subgrant from the SEA under the CLSD program must use the CLSD funds to carry out the following activities pertaining to children in kindergarten through grade 5:
(i) Developing and implementing a comprehensive literacy instruction plan across content areas for such children that—
(A) Serves the needs of all children, including children with disabilities and English learners, especially children who are reading or writing below grade level;
(B) Provides intensive, supplemental, accelerated, and explicit intervention and support in reading and writing for children whose literacy skills are below grade level; and
(C) Supports activities that are provided primarily during the regular school day but that may be augmented by after-school and out-of-school time instruction.
(ii) Providing high-quality professional development opportunities for teachers, literacy coaches, literacy specialists, English as a second language specialists (as appropriate), principals, other school leaders, specialized instructional support personnel, school librarians, paraprofessionals, and other program staff.
(iii) Training principals, specialized instructional support personnel, and other LEA personnel to support, develop, administer, and evaluate high-quality kindergarten through grade 5 literacy initiatives.
(iv) Coordinating the involvement of early childhood education program staff, principals, other instructional leaders, teachers, teacher literacy teams, English as a second language specialists (as appropriate), special educators, school personnel, and specialized instructional support personnel (as appropriate) in the literacy development of children served.
(v) Engaging families and encouraging family literacy experiences and practices to support literacy development.
(6) Local uses of funds for grades 6 through 12.
An eligible entity that receives a subgrant from the SEA under CLSD must use CLSD funds to carry out the following activities pertaining to children in grades 6 through 12:
(i) Developing and implementing a comprehensive literacy instruction plan across content areas for such children that—
(A) Serves the needs of all children, including children with disabilities and English learners, especially children who are reading or writing below grade level;
(B) Provides intensive, supplemental, accelerated, and explicit intervention and support in reading and writing for children whose literacy skills are below grade level; and
(C) Supports activities that are provided primarily during the regular school day but that may be augmented by after-school and out-of-school time instruction.
(ii) Training principals, specialized instructional support personnel, school librarians, and other LEA personnel to support, develop, administer, and evaluate high-quality comprehensive literacy instruction initiatives for grades 6 through 12.
(iii) Assessing the quality of adolescent comprehensive literacy instruction as part of a well-rounded education.
(iv) Providing time for teachers to meet to plan evidence-based adolescent comprehensive literacy instruction to be delivered as part of a well-rounded education.
(v) Coordinating the involvement of principals, other instructional leaders, teachers, teacher literacy teams, English as a second language specialists (as appropriate), paraprofessionals, special educators, specialized instructional support personnel (as appropriate), and school personnel in the literacy development of children served.
(7) Additional local allowable uses of funds for kindergarten through grade 12.
An eligible entity that receives a subgrant from an SEA under CLSD may, in addition to carrying out the activities described in paragraphs 5 and 6 of this requirement, use subgrant funds to carry out the following activities pertaining to children in kindergarten through grade 12:
(i) Recruiting, placing, training, and compensating literacy coaches.
(ii) Connecting out-of-school learning opportunities to in-school learning in order to improve children's literacy achievement.
(iii) Training families and caregivers to support the improvement of adolescent literacy.
(iv) Providing for a multi-tier system of supports (as defined in this notice) for literacy services.
(v) Forming a school literacy leadership team to help implement, assess, and identify necessary changes to the literacy initiatives in 1 or more schools to ensure success.
(vi) Providing time for teachers (and other literacy staff, as appropriate, such as school librarians or specialized instructional support personnel) to meet to plan comprehensive literacy instruction.
(e)
Grantees must use CLSD funds to supplement, and not supplant, non-Federal funds that would otherwise be used for activities authorized under the CLSD program.
(f)
Grantees must cooperate with a national evaluation of the CLSD program (34 CFR 75.591). The evaluation will include high-quality research that applies rigorous and systematic procedures to obtain valid knowledge relevant to the implementation and effect of the CLSD program. The evaluation will directly coordinate with individual State evaluations of the CLSD program implementation.
(a) Includes developmentally appropriate, contextually explicit, and systematic instruction, and frequent practice, in reading and writing across content areas;
(b) Includes age-appropriate, explicit, systematic, and intentional instruction in phonological awareness, phonic decoding, vocabulary, language structure, reading fluency, and reading comprehension;
(c) Includes age-appropriate, explicit instruction in writing, including opportunities for children to write with clear purposes, with critical reasoning appropriate to the topic and purpose, and with specific instruction and feedback from instructional staff;
(d) Makes available and uses diverse, high-quality print materials that reflect the reading and development levels, and interests, of children;
(e) Uses differentiated instructional approaches, including individual and small group instruction and discussion;
(f) Provides opportunities for children to use language with peers and adults in order to develop language skills, including developing vocabulary;
(g) Includes frequent practice of reading and writing strategies;
(h) Uses age-appropriate, valid, and reliable screening assessments, diagnostic assessments, formative assessment processes, and summative assessments to identify a child's learning needs, to inform instruction, and to monitor the child's progress and the effects of instruction;
(i) Uses strategies to enhance children's motivation to read and write and children's engagement in self-directed learning;
(j) Incorporates the principles of universal design for learning;
(k) Depends on teachers' collaboration in planning, instruction, and assessing a child's progress and on continuous professional learning; and
(l) Links literacy instruction to the challenging State academic standards, including the ability to navigate, understand, and write about complex print and digital subject matter.
(a) One or more LEAs that serve a high percentage of high-need schools and—
(1) Have the highest number or proportion of children who are counted under section 1124(c) of the ESEA, in comparison to other LEAs in the State;
(2) Are among the LEAs in the State with the highest number or percentages of children reading or writing below grade level, based on the most currently available State academic assessment data under section 1111(b)(2) of the ESEA; or
(3) Serve a significant number or percentage of schools that are implementing comprehensive support and improvement activities and targeted support and improvement activities under section 1111(d) of the ESEA;
(b) One or more early childhood education programs serving low-income or otherwise disadvantaged children, which may include home-based literacy programs for pre-school-aged children, that have a demonstrated record of providing comprehensive literacy instruction for the age group such program proposes to serve; or
(c) An LEA, described in paragraph (a), or consortium of such LEAs, or an early childhood education program, which may include home-based literacy programs for preschool-aged children, acting in partnership with one or more public or private nonprofit organizations or agencies (which may include early childhood education programs) that have a demonstrated record of effectiveness in—
(1) Improving literacy achievement of children, consistent with the purposes of participation under the CLSD program, from birth through grade 12; and
(2) Providing professional development in comprehensive literacy instruction.
(a) Who is aged 3 through 21;
(b) Who is enrolled or preparing to enroll in an elementary school or secondary school;
(c)(i) Who was not born in the United States or whose native language is a language other than English;
(ii)(I) Who is a Native American or Alaska Native, or a native resident of the outlying areas; and (II) Who comes from an environment where a language other than English has had a significant impact on the individual's level of English language proficiency; or
(iii) Who is migratory, whose native language is a language other than English, and who comes from an environment where a language other than English is dominant; and
(d) Whose difficulties in speaking, reading, writing, or understanding the English language may be sufficient to deny the individual—
(i) The ability to meet the challenging State academic standards;
(ii) The ability to successfully achieve in classrooms where the language of instruction is English; or
(iii) The opportunity to participate fully in society.
(a) Strong evidence from at least one-well designed and well-implemented experimental study;
(b) Moderate evidence from at least one well-designed and well-implemented quasi-experimental study; or
(c) Promising evidence from at least one well-designed and well-implemented correlational study with statistical controls for selection bias.
(a)(i) An elementary school or middle school in which not less than 50 percent of the enrolled students are children from low-income families; or
(ii) A high school in which not less than 40 percent of the enrolled students are children from low-income families, which may be calculated using comparable data from the schools that feed into the high school.
(b) For the purposes of paragraph (a) of this definition, the term “low-income family” means a family—
(i) In which the children are eligible for a free or reduced-price lunch under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751
(ii) Receiving assistance under the program of block grants to States for temporary assistance for needy families established under part A of title IV of the Social Security Act (42 U.S.C. 601
(iii) In which the children are eligible to receive medical assistance under the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396
(a) A child participating in an early learning program, a student enrolled in preschool through grade 12, or a student enrolled in career and technical education or postsecondary education who has a parent or guardian who is a member of the uniformed services (as defined by 37 U.S.C. 101), in the Army, Navy, Air Force, Marine Corps, Coast Guard, Space Force, National Guard, Reserves, National Oceanic and Atmospheric Administration, or Public Health Service or is a veteran of the uniformed services with an honorable discharge (as defined by 38 U.S.C. 3311).
(b) A student who is a member of the uniformed services, a veteran of the uniformed services, or the spouse of a service member or veteran.
(c) A child participating in an early learning program, a student enrolled in preschool through grade 12, or a student enrolled in career and technical education or postsecondary education who has a parent or guardian who is a veteran of the uniformed services (as defined by 37 U.S.C. 101).
(a) Are an integral part of school and LEA strategies for providing educators (including teachers, principals, other school leaders, specialized instructional support personnel, paraprofessionals, and as applicable, early childhood educators) with the knowledge and skills necessary to enable students to succeed in a well-rounded education and to meet the challenging State academic standards; and
(b) Are sustained (not stand-alone, one-day, or short-term workshops), intensive, collaborative, job-embedded, data-driven, and classroom-focused, and may include activities that—
(1) Improve and increase teachers'—
(i) Knowledge of the academic subjects the teachers teach;
(ii) Understanding of how students learn; and
(iii) Ability to analyze student work and achievement from multiple sources, including how to adjust instructional strategies, assessments, and materials based on such analysis;
(2) Are an integral part of broad schoolwide and districtwide educational improvement plans;
(3) Allow personalized plans for each educator to address the educator's specific needs identified in observation or other feedback;
(4) Improve classroom management skills;
(5) Support the recruitment, hiring, and training of effective teachers, including teachers who became certified through State and local alternative routes to certification;
(6) Advance teacher understanding of—
(i) Effective instructional strategies that are evidence-based; and
(ii) Strategies for improving student academic achievement or substantially increasing the knowledge and teaching skills of teachers;
(7) Are aligned with, and directly related to, academic goals of the school or LEA;
(8) Are developed with extensive participation of teachers, principals, other school leaders, parents, representatives of Indian tribes (as applicable), and administrators of schools to be served under this program;
(9) Are designed to give teachers of English learners, and other teachers and instructional staff, the knowledge and skills to provide instruction and appropriate language and academic support services to those children, including the appropriate use of curricula and assessments;
(10) To the extent appropriate, provide training for teachers, principals, and other school and community-based early childhood program leaders in the use of technology (including education about the harms of copyright piracy), so that technology and technology applications are effectively used in the classroom to improve teaching and learning in the curricula and academic subjects in which the teachers teach;
(11) As a whole, are regularly evaluated for their impact on teacher effectiveness and student academic achievement, with the findings of the evaluations used to improve the quality of professional development;
(12) Are designed to give teachers of children with disabilities or children with developmental delays, and other teachers and instructional staff, the knowledge and skills to provide instruction and academic support services to those children, including positive behavioral interventions and supports, multi-tier system of supports, and use of accommodations;
(13) Include instruction in the use of data and assessments to inform classroom practice;
(14) Include instruction in ways that teachers, principals, other school leaders, specialized instructional support personnel, and school administrators may work more effectively with parents and families;
(15) Involve the forming of partnerships with institutions of higher education, including, as applicable, Tribal Colleges and Universities as defined in section 316(b) of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1059c(b)), to establish school-based teacher, principal, and other school leader training programs that provide prospective teachers, novice teachers, principals, and other school leaders with an opportunity to work under the guidance of experienced teachers, principals, other school leaders, and faculty of such institutions;
(16) Create programs to enable paraprofessionals (assisting teachers employed by an LEA receiving assistance under part A of title I of the ESEA) to obtain the education necessary for those paraprofessionals to become certified and licensed teachers;
(17) Provide follow-up training to teachers who have participated in activities described in this paragraph that are designed to ensure that the knowledge and skills learned by the teachers are implemented in the classroom; and
(18) Where practicable, provide jointly for school staff and other early childhood education program providers, to address the transition to elementary school, including issues related to school readiness.
(a) An employee or officer of an elementary school or secondary school, LEA, or other entity operating an elementary school or secondary school; and
(b) Responsible for the daily instructional leadership and managerial operations in the elementary school or secondary school building.
(a) A student who is living in poverty or is served by schools with high concentrations of students living in poverty.
(b) A student of color.
(c) A student who is a member of a federally recognized Indian Tribe.
(d) An English learner.
(e) A child or student with a disability.
(f) A disconnected youth.
(g) A migrant student.
(h) A student experiencing homelessness or housing insecurity.
(i) A student who is in foster care.
(j) A student without documentation of immigration status.
(k) A pregnant, parenting, or caregiving student.
(l) A student impacted by the justice system, including a formerly incarcerated student.
(m) A student performing significantly below grade level.
(n) A military- or veteran- connected student. For the purpose of this definition only—
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2025 from the list of unfunded applications from this competition.
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2. a.
b.
c.
d.
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The grantee must award subgrants to entities it selects through a competition under procedures established by the grantee and consistent with sections 2222-2224 of the ESEA.
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Because we plan to make successful applications available to the public, you may wish to request confidentiality of business information.
Consistent with Executive Order 12600, please designate in your application any information that you believe is exempt from disclosure under Exemption 4. In the appropriate Appendix section of your application,
3.
4.
5.
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double-space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
• Use a font that is either 12 point or larger or no smaller than 10 pitch (characters per inch).
• Use one of the following fonts: Times New Roman, Courier, Courier New, or Arial.
The recommended page limit does not apply to the cover sheet; the budget section, including the narrative budget justification; the assurances and certifications; or the one-page abstract, resumes, bibliography, logic model, or letters of support. However, the recommended page limit does apply to all of the application narrative.
6.
1.
(a)
The Secretary considers the need for the proposed project. In determining the need for the proposed project, the Secretary considers the extent to which specific gaps or weaknesses in services, infrastructure, or opportunities have been identified and will be addressed by the proposed project, including the nature and magnitude of those gaps or weaknesses.
(b)
The Secretary considers the quality of the design of the proposed project. In determining the quality of the design of the proposed project, the Secretary considers:
(1) The extent to which the goals, objectives, and outcomes to be achieved by the proposed project are clearly specified and measurable. (10 points)
(2) The extent to which the design of the proposed project includes a thorough, high-quality review of the relevant literature, a high-quality plan for project implementation, and the use of appropriate methodological tools to ensure successful achievement of project objectives. (10 points).
(3) The extent to which the proposed project is supported by promising evidence (as defined in 34 CFR 77.1(c)). (10 points).
(c)
The Secretary considers the quality of the management plan for the proposed project. In determining the quality of the management plan for the proposed project, the Secretary considers:
(1) The adequacy of the management plan to achieve the objectives of the proposed project on time and within budget, including clearly defined responsibilities, timelines, and milestones for accomplishing project tasks. (10 points).
(2) The adequacy of procedures for ensuring feedback and continuous improvement in the operation of the proposed project. (10 points).
(3) The extent to which the time commitments of the project director and principal investigator and other key project personnel are appropriate and adequate to meet the objectives of the proposed project. (10 points).
(4) The adequacy of mechanisms for ensuring high-quality products and services from the proposed project.
(d)
The Secretary considers the quality of the project services to be provided by the proposed project. In determining the quality of project services to be provided by the proposed project, the Secretary considers the quality and sufficiency of strategies for ensuring equal access and treatment for eligible project participants who are members of groups that have traditionally been underrepresented based on race, color, national origin, gender, age, or disability. In addition, the Secretary considers:
(1) The likely impact of the services to be provided by the proposed project on the intended recipients of those services; (5 points) and
(2) The extent to which the training or professional development services to be provided by the proposed project are of sufficient quality, intensity, and duration to lead to improvements in practice among the recipients of those services. (5 points).
(3) The extent to which the services to be provided by the proposed project reflect up-to-date knowledge from research and effective practice. (5 points).
(e)
The Secretary considers the quality of the evaluation to be conducted of the proposed project. In determining the quality of the evaluation, the Secretary considers:
(1) The extent to which the methods of evaluation are thorough, feasible, and appropriate to the goals, objectives, and outcomes of the proposed project. (5 points).
(2) The extent to which the methods of evaluation will provide performance feedback and permit periodic assessment of progress toward achieving intended outcomes. (5 points).
2.
In addition, in making a competitive grant award, the Secretary requires various assurances, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
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Please note that, if the total value of your currently active grants, cooperative agreements, and procurement contracts from the Federal Government exceeds $10,000,000, the reporting requirements in 2 CFR part 200, Appendix XII, require you to report certain integrity information to FAPIIS semiannually. Please review the requirements in 2 CFR part 200, Appendix XII, if this grant plus all the other Federal funds you receive exceed $10,000,000.
5.
(a) Selecting recipients most likely to be successful in delivering results based on the program objectives through an objective process of evaluating Federal award applications (2 CFR 200.205);
(b) Prohibiting the purchase of certain telecommunication and video surveillance services or equipment in alignment with section 889 of the National Defense Authorization Act of 2019 (Pub. L. 115-232) (2 CFR 200.216);
(c) Providing a preference, to the extent permitted by law, to maximize use of goods, products, and materials produced in the United States (2 CFR 200.322); and
(d) Terminating agreements in whole or in part to the greatest extent authorized by law if an award no longer effectuates the program goals or agency priorities (2 CFR 200.340).
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If your application is not evaluated or not selected for funding, we notify you.
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We reference the regulations outlining the terms and conditions of an award in the
3.
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(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
5.
(1) The percentage of participating four-year-old children who achieve significant gains in oral language skills, as determined by a State-approved measure.
(2) The percentage of participating fifth-grade students who meet or exceed proficiency on State reading/language arts assessments under section 1111(b)(2)(B)(v)(I) of the ESEA.
(3) The percentage of participating eighth-grade students who meet or exceed proficiency on State reading/language arts assessments under section 1111(b)(2)(B)(v)(I) of the ESEA.
(4) The percentage of participating high school students who meet or exceed proficiency on State reading/language arts assessments under section 1111(b)(2)(B)(v)(I) of the ESEA.
All grantees will be expected to submit an annual performance report that includes data addressing these performance measures to the extent that they apply to the grantee's project. Performance targets will be established by each grantee and must be made for each year of the performance period, not to exceed five years.
6.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
7.
You may also access documents of the Department published in the
Institute of Education Sciences (IES), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing a new information collection request (ICR).
Interested persons are invited to submit comments on or before June 24, 2024.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Anousheh Shayestehpour, (202)-987-1148.
The Department, in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. The Department is soliciting comments on the proposed information collection request (ICR) that is described below. The Department is especially interested in public comment addressing the following issues: (1) is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
This proposed study will examine the implementation of the Effective Advising Framework across school districts participating in the pilot program. Because it is expected that districts are applying the framework in a variety of ways, the study will examine the variation in implementation across districts, including an analysis of the factors that support or hinder implementation. To do this, the research team will collect data from public education staff at the school, district, and regional levels. Surveys will be administered to gather information on how and what is being implemented at each level and what factors may act as barriers to successful implementation. One-on-one interviews and focus group interviews will be conducted with a subsample of respondents from each level to gather more in-depth information on the successes and challenges they faced in applying the framework. The results of this study will inform the continued development of the framework and the associated resources and supports that will be provided to districts and schools when the initiative is implemented statewide.
Grid Deployment Office, Department of Energy.
Notice of application.
NextEra Energy Marketing, LLC (Applicant or NEM) has applied for renewed authorization to transmit electric energy from the United States to Canada pursuant to the Federal Power Act.
Comments, protests, or motions to intervene must be submitted on or before May 23, 2024.
Comments, protests, motions to intervene, or requests for more information should be addressed by electronic mail to
Janessa Zucchetto, (240) 474-8226,
The United States Department of Energy (DOE) regulates electricity exports from the United States to foreign countries in accordance with section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)) and regulations thereunder (10 CFR 205.300
Section 202(e) of the FPA provides that an entity which seeks to export electricity must obtain an order from DOE authorizing that export (16 U.S.C. 824a(e)). On April 10, 2023, the authority to issue such orders was delegated to the DOE's Grid Deployment Office (GDO) by Delegation Order No. S1-DEL-S3-2023 and Redelegation Order No. S3-DEL-GD1-2023.
On February 11, 2009, DOE issued Order No. EA-348 to FPL Energy Power Marketing, Inc. to transmit electric energy from the United States to Canada as a power marketer for a period of five years. This authority was amended in March 2009 to effectuate a name change to NextEra Energy Power Marketing, LLC (Order No. EA-348-A). This authority was renewed in 2014 (Order No. EA-348-B) and 2019 (Order No. EA-348-C). On March 21, 2024, NEM filed an application with DOE (Application or App.) for renewal of its export authority for a five-year term. App. at 1.
According to the Application, NEM is a Delaware corporation that is a wholly owned direct subsidiary of NextEra Energy Resources, LLC. App. at 1-2. NEM states it does not own any transmission facilities.
The existing international transmission facilities to be utilized by the Applicant have been previously authorized by Presidential permits issued pursuant to Executive Order 10485, as amended, and are appropriate for open access transmission by third parties.
Comments and other filings concerning NEM's Application should be clearly marked with GDO Docket No. EA-348-D. Additional copies are to be provided directly to William Lavarco, NextEra Energy Resources, LLC, 801 Pennsylvania Ave. NW, Suite 220, Washington, DC 20004,
A final decision will be made on the requested authorization after the environmental impacts have been evaluated pursuant to DOE's National Environmental Policy Act Implementing Procedures (10 CFR part 1021) and after DOE evaluates whether the proposed action will have an adverse impact on the sufficiency of supply or reliability of the United States electric power supply system.
Copies of this Application will be made available, upon request, by accessing the program website at
Office of Environmental Management, Department of Energy.
Notice of open meeting.
This notice announces a meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Paducah. The Federal Advisory Committee Act requires that public notice of this meeting be announced in the
Thursday, May 16, 2024; 5:30-7:00 p.m. CDT.
West Kentucky Community and Technical College, Emerging Technology Center, Room 215, 5100 Alben Barkley Drive, Paducah, Kentucky 42001.
Robert “Buz” Smith, Federal Coordinator, by Phone: (270) 441-6821 or Email:
• Administrative Activities.
• Public Comment Period.
Grid Deployment Office, Department of Energy.
Notice of application.
Emera Energy U.S. Subsidiary No. 2, Inc. (the Applicant or EE US No. 2) has applied for renewed authorization to transmit electric energy from the United States to Canada pursuant to the Federal Power Act.
Comments, protests, or motions to intervene must be submitted on or before May 23, 2024.
Comments, protests, motions to intervene, or requests for more information should be addressed by electronic mail to
Janessa Zucchetto, (240) 474-8226,
The United States Department of Energy (DOE) regulates electricity exports from the United States to foreign countries in accordance with section 202(e) of the Federal Power Act (FPA) (16 U.S.C. 824a(e)) and regulations thereunder (10 CFR 205.300
Section 202(e) of the FPA provides that an entity which seeks to export electricity must obtain an order from DOE authorizing that export (16 U.S.C. 824a(e)). On April 10, 2023, the authority to issue such orders was delegated to the DOE's Grid Deployment Office (GDO) under Delegation Order No. S1-DEL-S3-2023 and Redelegation Order No. S3-DEL-GD1-2023.
On May 17, 2006, DOE issued Order No. EA-312, authorizing EE US No. 2 to transmit electric energy from the United States to Canada as a power marketer. This authority was renewed in 2014 (Order No. EA-312-A), and 2019 (Order No. EA-312-B). On March 22, 2024, EE US No. 2 filed an application with DOE (Application or App) for renewal of its export authority for an additional five-year term. App at 1.
In its Application, EE US No. 2 states it is a Delaware corporation with its principal place of business in Kittery, Maine, and a wholly-owned subsidiary of Emera Incorporated. App. at 1. The Applicant states that it “does not own or control any electric power generation or transmission facilities and does not have a franchised electric power service area. EE US No. 2 operates as a marketing company involved in, among other things, the purchase and sale of electricity in the United States as a power marketer.”
The existing international transmission facilities to be utilized by the Applicant have been previously authorized by Presidential permits issued pursuant to Executive Order 10485, as amended, and are appropriate for open access transmission by third parties.
Comments and other filings concerning EE US No. 2's Application should be clearly marked with GDO Docket No. EA-312-C. Additional copies are to be provided directly to Keith Sutherland, Emera Energy Inc., 5151 Terminal Road, Halifax, NS B3J 1A1 Canada,
A final decision will be made on the requested authorization after the environmental impacts have been evaluated pursuant to DOE's National Environmental Policy Act Implementing Procedures (10 CFR part 1021) and after DOE evaluates whether the proposed action will have an adverse impact on the sufficiency of supply or reliability of the United States electric power supply system.
Copies of this Application will be made available, upon request, by accessing the program website at
This is a supplemental notice in the above-referenced proceeding of AMA QSE, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is May 7, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Federal Energy Regulatory Commission.
Notice of information collection and request for comments.
In compliance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the Federal Energy Regulatory Commission (Commission or FERC) is soliciting public comment on the currently approved information collection, FERC-512 (Preliminary Permit). The 60-day notice comment period ends on April 8, 2024, no comments were received.
Comments on the collection of information are due May 23, 2024.
Send written comments on FERC-512 to OMB through
Please submit copies of your comments to the Commission. You may submit copies of your comments (identified by Docket No. IC24-07-000) by one of the following methods:
Electronic filing through
•
• For those unable to file electronically, comments may be filed by USPS mail or by other delivery methods:
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Jean Sonneman may be reached by email at
Commission staff review preliminary permit applications to assess the scope of the proposed project, the technology to be used, and jurisdictional aspects of the project. The staff assessment includes a review of the proposed hydro development for conflicts with other current permits or licensed projects, and issuance of public notice of the permit application to solicit public and agency comments. An application for a preliminary permit includes the applicant's name and contact information, a description of the proposed project, the requested term of the permit, names and addresses of the affected political jurisdictions, a verification of the application's facts, and three exhibits, per 18 CFR 4.81.
The following notice of meeting is published pursuant to section 3(a) of the government in the Sunshine Act (Pub. L. 94-409), 5 U.S.C. 552b:
Federal Energy Regulatory Commission.
April 25, 2024, 10:00 a.m.
Room 2C, 888 First Street NE, Washington, DC 20426.
Open to the public.
Agenda.
* Note: Items listed on the agenda may be deleted without further notice.
Debbie-Anne A. Reese, Acting Secretary, Telephone (202) 502-8400.
For a recorded message listing items stricken from or added to the meeting, call (202) 502-8627.
This is a list of matters to be considered by the Commission. It does not include a listing of all documents relevant to the items on the agenda. All public documents, however, may be viewed online at the Commission's website at
A free webcast of this event is available through the Commission's website. Anyone with internet access who desires to view this event can do so by navigating to
Immediately following the conclusion of the Commission Meeting, a press briefing will be held in the Commission Meeting Room. Members of the public may view this briefing in the designated overflow room. This statement is intended to notify the public that the press briefings that follow Commission meetings may now be viewed remotely at Commission headquarters but will not be telecast.
The following notice of meeting is published pursuant to section 3(a) of the government in the Sunshine Act (Pub. L. 94-409), 5 U.S.C. 552b:
Federal Energy Regulatory Commission.
May 13, 2024, 11:00 a.m.
Room 2C, 888 First Street NE, Washington, DC 20426.
Open to the public.
Agenda.
*
Debbie-Anne A. Reese, Acting Secretary, Telephone (202) 502-8400.
For a recorded message listing items stricken from or added to the meeting, call (202) 502-8627.
This is a list of matters to be considered by the Commission. It does not include a listing of all documents relevant to the items on the agenda. All public documents, however, may be viewed online at the Commission's website at
A free webcast of this event is available through the Commission's website. Anyone with internet access who desires to view this event can do so by navigating to
Immediately following the conclusion of the Commission Meeting, a press briefing will be held in the Commission Meeting Room. Members of the public may view this briefing in the designated overflow room. This statement is intended to notify the public that the press briefings that follow Commission meetings may now be viewed remotely at Commission headquarters but will not be telecast.
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l. With this notice, we are designating SCE as the Commission's non-Federal representative for carrying out informal consultation, pursuant to section 7 of the Endangered Species Act and section 106 of the National Historic Preservation Act.
m. SCE filed with the Commission a Pre-Application Document (PAD), including a proposed process plan and schedule, pursuant to 18 CFR 5.6 of the Commission's regulations.
n. A copy of the PAD may be viewed on the Commission's website (
You may register online at
o. With this notice, we are soliciting comments on the PAD and Commission staff's Scoping Document 1 (SD1), as well as study requests. All comments on the PAD and SD1, and study requests should be sent to the address above in paragraph h. In addition, all comments on the PAD and SD1, study requests, requests for cooperating agency status, and all communications to and from staff related to the merits of the potential application must be filed with the Commission.
The Commission strongly encourages electronic filing. Please file all documents using the Commission's eFiling system at
All filings with the Commission must bear the appropriate heading: “Comments on Pre-Application Document,” “Study Requests,” “Comments on Scoping Document 1,” “Request for Cooperating Agency Status,” or “Communications to and from Commission Staff.” Any individual or entity interested in submitting study requests, commenting on the PAD or SD1, and any agency requesting cooperating status must do so by June 24, 2024.
p. The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
q. The Commission's scoping process will help determine the required level of analysis and satisfy the National Environmental Policy Act (NEPA) scoping requirements, irrespective of whether the Commission prepares an environmental assessment or environmental impact statement.
Commission staff will hold two scoping meetings for the project to receive input on the scope of the NEPA document. An evening meeting will be held at 6:00 p.m. on May 14, 2024, at the Lee Vining Community Center in Lee Vining, California, and will focus on receiving input from the public. A daytime meeting will be held at 2:00 p.m. on May 15, 2024, at the same location, and will focus on the concerns of resource agencies, non-governmental organizations (NGOs), and Indian Tribes. We invite all interested agencies, Indian Tribes, non-governmental organizations, and individuals to attend one or both meetings. The times and locations of these meetings are as follows:
SD1, which outlines the subject areas to be addressed in the environmental document, was mailed to the individuals and entities on the Commission's mailing list and SCE's distribution list. Copies of SD1 may be viewed on the web at
The applicant and Commission staff will conduct an environmental site review of the project. All interested individuals, agencies, Tribes, and NGOs are invited to attend. All participants are responsible for their own transportation to/from the project and during the site visit. Participants must wear sturdy, closed-toe shoes, or boots. Please RSVP via email to
Participants must meet at the Lee Vining Community Center parking lot to begin promptly at 9:00 a.m. where participants will drive in personal vehicles together to the project. At the project, participants will see recreation site(s), Lundy Dam and the Lundy Powerhouse.
At the scoping meetings, Commission staff will: (1) initiate scoping of the issues; (2) review and discuss existing conditions; (3) review and discuss existing information and identify preliminary information and study needs; (4) review and discuss the process plan and schedule for pre-filing activity that incorporates the time frames provided for in part 5 of the Commission's regulations and, to the extent possible, maximizes coordination of Federal, State, and Tribal permitting and certification processes; and (5) discuss the potential of any Federal or State agency or Indian Tribe to act as a cooperating agency for development of an environmental document.
Meeting participants should come prepared to discuss their issues and/or concerns. Please review the PAD in preparation for the scoping meetings. Directions on how to obtain a copy of the PAD and SD1 are included in item n of this document.
Commission staff are moderating the scoping meetings. The meetings are recorded by an independent stenographer and become part of the formal record of the Commission proceeding on the project. Individuals, NGOs, Indian Tribes, and agencies with environmental expertise and concerns are encouraged to attend the meeting and to assist the staff in defining and clarifying the issues to be addressed in the NEPA document.
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (PRA), this document announces the availability of and solicits public comment on the following Information Collection Request (ICR) that EPA is planning to submit to the Office of Management and Budget (OMB): “TSCA Section 8(b) Reporting Requirements for TSCA Inventory Notifications,” identified by EPA ICR No. 2565.04 and OMB Control No. 2070-0201. This ICR represents a renewal of an existing ICR that is currently approved through January 31, 2025. Before submitting the ICR to OMB for review and approval under the PRA, EPA is soliciting comments on specific aspects of the information collection that is summarized in this document. The ICR and accompanying material are available in the docket for public review and comment.
Comments must be received on or before June 24, 2024.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2020-0413, through the Federal eRulemaking Portal at
Katherine Sleasman, Mission Support Division (7602M), Office of Program Support, Office of Chemical Safety and Pollution Prevention, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 566-1206; email address:
Pursuant to PRA section 3506(c)(2)(A) (44 U.S.C. 3506(c)(2)(A)), EPA specifically solicits comments and information to enable it to:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility.
2. Evaluate the accuracy of the Agency's estimates of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
3. Enhance the quality, utility, and clarity of the information to be collected.
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology,
This ICR addresses the activities and burdens associated with the ongoing reporting (EPA Form No. 9600-06; Notice of Activity Form B), including the substantiation of CBI and related recordkeeping requirements in 40 CFR part 710, and accounts for estimates from the ICR titled “Final Rule; Procedures for Review of CBI Claims for the Identity of Chemicals on the TSCA Inventory (Notice of Activity Form As)” (OMB Control No. 2070-0210; EPA ICR No. 2594.03). EPA finalized the requirements for regulated entities to substantiate certain CBI claims made under the TSCA to protect the specific chemical identities of chemical substances on the confidential portion of the TSCA Inventory, and the Agency's plan for reviewing certain CBI claims for specific chemical identities in
The ICR, which is available in the docket along with other related materials, provides a detailed explanation of the collection activities and the burden estimate that is only briefly summarized here:
• NAICS Code 325 Chemical Manufacturers; and
• NACIS Code 324 Petroleum and Coal Products.
There is a decrease of 90 hours in the total estimated respondent burden compared with that identified in the ICR currently approved by OMB. This decrease reflects a reduction in the estimated number of chemicals reported in each submission,
EPA will consider the comments received and amend the ICR as appropriate. The final ICR package will then be submitted to OMB for review and approval pursuant to 5 CFR 1320.12. EPA will issue another
Environmental Protection Agency (EPA).
Notice of proposed settlement agreement; request for public comment.
In accordance with section 113(g) of the Clean Air Act, as amended (“CAA” or “the Act”), the Environmental Protection Agency (“EPA” or “the Agency”) is providing notice of a proposed settlement agreement in
Written comments on the proposed settlement agreement must be received by May 23, 2024.
Submit your comments, identified by Docket ID No. EPA-HQ-OGC-2024-0180 online at
Christopher Grubb, Office of Regional Counsel, U.S. Environmental Protection Agency Region 5; telephone (312) 886-7187; email address
The official public docket for this action (identified by Docket ID No. EPA-HQ-OGC-2024-0180) contains a copy of the proposed settlement agreement. The official public docket is available for public viewing at the Office of Environmental Information (OEI) Docket in the EPA Docket Center, EPA West, Room 3334, 1301 Constitution Ave. NW, Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OEI Docket is (202) 566-1752.
The electronic version of the public docket for this action contains a copy of the proposed settlement agreement, and is available through
In 2013, EPA issued a Regional Haze (RH) Federal Implementation Plan (FIP) that established nitrogen oxide (NO
The proposed settlement agreement (the “Second Settlement Agreement”) relates to U.S. Steel's Keetac facility. The Second Settlement Agreement, if finalized, provides a process for resolving U.S. Steel's challenges in
The proposed Second Settlement Agreement also includes standard language regarding resolution of costs and attorneys' fees, stipulation of extensions, lapses in appropriations, disputes in implementation, preservation of Agency discretion, and the CAA section 113(g) process.
In accordance with section 113(g) of the CAA, for a period of thirty (30) days following the date of publication of this document, the Agency will accept written comments relating to the proposed settlement agreement. EPA or the Department of Justice may withdraw or withhold consent to the proposed settlement agreement if the comments disclose facts or considerations that indicate that such consent is inappropriate, improper, inadequate, or inconsistent with the requirements of the Act.
Submit your comments, identified by Docket ID No. EPA-HQ-OGC-2024-0180, via
If you submit an electronic comment, EPA recommends that you include your name, mailing address, and an email address or other contact information in the body of your comment. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. Any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.
Use of the
Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.
Environmental Protection Agency (EPA).
Notice.
In compliance with the Paperwork Reduction Act (PRA), this document announces the availability of and solicits public comment on the following Information Collection Request (ICR) that EPA is planning to submit to the Office of Management and Budget (OMB): “Reporting and Recordkeeping for Asbestos Abatement Worker Protection,” identified by EPA ICR No. 1246.15 and OMB Control No. 2070-0072. This ICR represents a renewal of an existing ICR that is currently approved through January 31, 2025. Before submitting the ICR to OMB for review and approval under the PRA, EPA is soliciting comments on specific aspects of the information collection that is summarized in this document. The ICR and accompanying material are available in the docket for public review and comment.
Comments must be received on or before June 24, 2024.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2020-0262, through
Katherine Sleasman, Mission Support Divison (7602M), Office of Program Support, Office of Chemical Safety and Pollution Prevention, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 566-1206; email address:
Pursuant to PRA section 3506(c)(2)(A) (44 U.S.C. 3506(c)(2)(A)), EPA specifically solicits comments and information to enable it to:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility.
2. Evaluate the accuracy of the Agency's estimates of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
3. Enhance the quality, utility, and clarity of the information to be collected.
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology,
The ICR, which is available in the docket along with other related materials, provides a detailed explanation of the collection activities and the burden estimate that is only briefly summarized here:
• Public Administration (NAICS Code 92), and
• Educational Services (NAICS Code 61.
There is an increase in total burden costs of $3.066 million compared with that identified in the ICR currently approved by OMB, which reflects an increase of $10.45, or 23%, to the weighted average wage rate, and an increase of 10,701 in total respondents (state and local entities), reflecting updated numbers of governments from the Census of Governments. These increases are partially offset by a decrease of 46,824 in the total number of responses due to a decrease in the number of states subject to the rule compared with that identified in the ICR currently approved by OMB. There is a decrease in burden hours by 14,920 due to a decrease in estimated number of responses. These changes qualify as adjustments.
EPA will consider the comments received and amend the ICR as appropriate. The final ICR package will then be submitted to OMB for review and approval pursuant to 5 CFR 1320.12. EPA will issue another
Environmental Protection Agency (EPA).
Notice of proposed settlement agreement; request for public comment.
In accordance with section 113(g) of the Clean Air Act, as amended (“CAA” or “the Act”), the Environmental Protection Agency (“EPA” or “the Agency”) is providing notice of a proposed settlement agreement in
Written comments on the proposed settlement agreement must be received by May 23, 2024.
Submit your comments, identified by Docket ID No. EPA-HQ-OGC-2024-0179 online at
Christopher Grubb, Office of Regional Counsel, U.S. Environmental Protection Agency Region 5; telephone (312) 886-7187; email address
The official public docket for this action (identified by Docket ID No. EPA-HQ-OGC-2024-0179) contains a copy of the proposed settlement agreement. The official public docket is available for public viewing at the Office of Environmental Information (OEI) Docket in the EPA Docket Center, EPA West, Room 3334, 1301 Constitution Ave. NW, Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OEI Docket is (202) 566-1752.
The electronic version of the public docket for this action contains a copy of the proposed settlement agreement, and is available through
In February 2013, EPA issued a Regional Haze (RH) Federal Implementation Plan (FIP) that established nitrogen oxide (NO
The proposed settlement agreement, if finalized, provides a process for resolving all of Cliffs' and Cliffs Steel's challenges to the SIP Rule and the Revised FIP Rule. Under the proposed settlement agreement, no later than November 22, 2024, EPA would sign a proposed rulemaking proposing changes to the Revised FIP Rule that is substantially consistent with, and includes equations identical to those set forth in, Attachment A to the Settlement Agreement. If EPA timely signs a final rule that includes changes that are substantially consistent with, and includes equations identical to those set forth in, Attachment A to the Settlement Agreement, after the final rule has been published in the
The proposed Settlement Agreement also includes standard language regarding resolution of costs and attorneys' fees, stipulation of extensions, lapses in appropriations, disputes in implementation, preservation of Agency discretion, and the CAA section 113(g) process.
In accordance with section 113(g) of the CAA, for a period of thirty (30) days following the date of publication of this document, the Agency will accept written comments relating to the proposed settlement agreement. EPA or the Department of Justice may withdraw or withhold consent to the proposed settlement agreement if the comments disclose facts or considerations that indicate that such consent is
Submit your comments, identified by Docket ID No. EPA-HQ-OGC-2024-0179, via
If you submit an electronic comment, EPA recommends that you include your name, mailing address, and an email address or other contact information in the body of your comment. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. Any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.
Use of the
Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.
Environmental Protection Agency (EPA).
Notification of public meeting.
Pursuant to the Federal Advisory Committee Act (FACA), EPA herby provides notice of a meeting for the Local Government Advisory Committee (LGAC) and its Small Communities Advisory Subcommittee (SCAS) on the date and time described below. This meeting will be open to the public. For information on public attendance and participation, please see the registration information under
The SCAS will have a hybrid meeting prior to the LGAC on May 21st, 2024, from 8 a.m. to 9:30 a.m. eastern daylight time and the LGAC will have a hybrid meeting from 9:30 a.m. to 5 p.m. eastern daylight time.
Paige Lieberman, Designated Federal Officer (DFO), at
The LGAC will discuss several priority issues at EPA, including climate communication, environmental justice, and EPA's efforts to address cumulative impacts, and the reduction of plastic pollution. The SCAS will discuss a series of topics, including improving federal funding to smaller communities, and cyber security for small water systems. Agenda and meeting materials will be posted online (link below) one week prior to the meeting.
The meeting will be held virtually as well as in person. Members of the public who wish to participate should register by contacting the Designated Federal Officer (DFO) at
Online participation will be via Microsoft Teams. In person participation will be Courtyard Marriott Hotel, 140 L St. SE, Washington, DC, 20003.
Once available, the agenda and other supportive meeting materials will be available online at
Environmental Protection Agency (EPA).
Notice of proposed consent decree; request for public comment.
In accordance with the Clean Air Act, as amended (CAA or the Act), notice is given of a proposed consent decree in
Written comments on the proposed consent decree must be received by May 23, 2024.
Submit your comments, identified by Docket ID No. EPA-HQ-OGC-2024-0182, online at
Kyle Durch, Air and Radiation Law Office, Office of General Counsel, U.S. Environmental Protection Agency; telephone (202) 564-1809; email address
The official public docket for this action (identified by Docket ID No. EPA-HQ-OGC-2024-0182) contains a copy of the proposed consent decree. The official public docket is available for public viewing at the Office of Environmental Information (OEI) Docket in the EPA Docket Center, EPA West, Room 3334, 1301 Constitution Ave. NW, Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744 and the telephone number for the OEI Docket is (202) 566-1752.
The electronic version of the public docket for this action contains a copy of the proposed consent decree and is available through
The proposed consent decree would establish deadlines for EPA to take action pursuant to CAA section 110(k) on certain SIP submissions by the States of Louisiana, South Carolina, and Texas. First, by June 30, 2025, EPA would sign a final rule to approve, conditionally approve, or disapprove, in whole or in part, five SIP revisions related to minor New Source Review permitting regulations which South Carolina submitted to EPA between October 2007 and July 2016.
Second, EPA would sign a final rule to approve, conditionally approve, disapprove, in whole or in part, the following SIP submissions from Louisiana and Texas by September 30, 2025: LA 2010 SO
Third, EPA would sign a final rule to approve, conditionally approve, disapprove, in whole or in part, TX 5-Year Regional Haze Progress Report SIP Revision, Texas Project 2013-013-SIP-NR, submitted March 20, 2014, submitted on or about March 24, 2014, no later than December 15, 2026.
In accordance with section 113(g) of the CAA, for a period of thirty (30) days following the date of publication of this document, the Agency will accept written comments relating to the proposed consent decree. EPA or the Department of Justice may withdraw or withhold consent to the proposed consent decree if the comments disclose facts or considerations that indicate that such consent is inappropriate, improper, inadequate, or inconsistent with the requirements of the Act.
Submit your comments, identified by Docket ID No. EPA-HQ-OGC-2024-0182, via
If you submit an electronic comment, EPA recommends that you include your name, mailing address, and an email address or other contact information in the body of your comment. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. Any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket and made available in EPA's electronic public docket. If EPA cannot read your
Use of the
Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Pursuant to the Small Business Paperwork Relief Act of 2002, the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
The Commission may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments and recommendations for the proposed information collection should be submitted on or before May 23, 2024.
Comments should be sent to
For additional information or copies of the information collection, contact Nicole Ongele at (202) 418-2991. To view a copy of this information collection request (ICR) submitted to OMB: (1) go to the web page
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the FCC invited the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments received are subject to public disclosure. In general, comments received will be made available without change and will not be modified to remove personal or business information including confidential, contact, or other identifying information. Comments should not include any information such as confidential information that would not be appropriate for public disclosure.
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington, DC 20551-0001, not later than May 23, 2024.
1.
Board of Governors of the Federal Reserve System.
The notificants listed below have applied under the Change in Bank Control Act (Act) (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the applications are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments received are subject to public disclosure. In general, comments received will be made available without change and will not be modified to remove personal or business information including confidential, contact, or other identifying information. Comments should not include any information such as confidential information that would not be appropriate for public disclosure.
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington, DC 20551-0001, not later than May 8, 2024.
1.
Board of Governors of the Federal Reserve System.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed and/or continuing information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled REACH: Rural Re-Engagement and Care using Community Health Workers (CHWs) for Persons with HIV. This project is designed to collect standardized program evaluation data from health departments and HIV clinic partners who receive Federal funds for these activities.
CDC must receive written comments on or before June 24, 2024.
You may submit comments, identified by Docket No. CDC-2024-0028 by either of the following methods:
•
•
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS H21-8, Atlanta, Georgia 30329; Telephone: 404-639-7118; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected;
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
REACH: Rural Re-Engagement and Care using CHWs for Persons with HIV—New—National Center for HIV, Viral Hepatitis, STD, and TB Prevention (NCHHSTP), Centers for Disease Control and Prevention (CDC).
In rural communities, people with HIV (PWH) may face challenges in accessing consistent HIV care services. In these communities, PWH may also experience health care provider shortages and have fewer providers with expertise in treating HIV. Transportation challenges, where some patients have to travel long distances for care, may also exist. Previous studies have shown community-based or home-based delivery of care is an effective approach to re-engage PWH back into HIV clinical care. This strategy was studied primarily internationally with results showing that community-based delivery of anti-retroviral treatment (ART) significantly increased viral suppression. However, in the US, this model, which may include home visits, has not been implemented as part of routine treatment and care services. Community health workers (CHWs) are frontline public health workers who are trusted members of the community and have a uniquely close understanding of the community served. This trusting relationship enables the CHW to serve as a liaison between health/social services and the community. A CHW approach was assessed as part of the EHE pilot jumpstart initiative which found that CHWs were successful in East Baton Rouge, LA, by facilitating access to HIV treatment for priority populations. Additionally, the use of CHWs has been successful and cost-effective for certain chronic health conditions, particularly when working with low-income persons; people who are medically underserved, and racial/ethnic minority communities to promote disease management in these populations. This demonstration project will provide quantitative and qualitative data on the effectiveness and implementation of a CHW home-based approach to facilitate re-engagement in care and outreach to PWH. The approach aims to improve retention in care and sustained viral load suppression among PWH living in rural communities, to benefit both individual health and reduce community-level HIV transmission. In this demonstration project, recipients are funded to collaborate with HIV care providers to identify PWH in rural communities not in care or not virally suppressed and to implement a CHW-mediated model of re-engagement to care and outreach services for PWH in rural communities. CHWs facilitate re-engagement of PWH who are not in care and outreach to those who are not virally suppressed to provide services that may include ART delivery, sample collection for standard HIV laboratory testing, transfer of self-collected specimens, as well as provide transportation services, arranging and scheduling telehealth visits and/or in person visits with an HIV medical provider and other providers (mental health, primary care) and offer evidence-based medication adherence support.
This collection of deidentified data will allow CDC to assist health departments and their partner HIV clinics in monitoring and evaluating their programs and to identify best practices for provision of implementation of CHW-mediated services for re-engagement to care and outreach for PWH in rural communities. Longitudinal person-level data collection will occur through the clinic's electronic health record (EHR) and a database shared between clinic and the health department, and additional program evaluation data will be collected through client surveys. CDC requests approval for 295 annual burden hours for the recipients to collect, enter or upload, and report client demographic and behavioral characteristics, client data from the EHR, and client and provider surveys. There are no other costs to respondents other than their time.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled Evaluation of HIV Self-Testing and Clinical Testing Guidelines Implementation. This project is designed to collect data from HIV healthcare providers, working in various settings, on the awareness and uptake of HIV-related guidelines.
CDC must receive written comments on or before June 24, 2024.
You may submit comments, identified by Docket No. CDC-2024-0027 by either of the following methods:
•
•
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS H21-8, Atlanta, Georgia 30329; Telephone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected;
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
Evaluation of HIV Self-Testing and Clinical Testing Guidelines Implementation—New—National Centers for HIV, Viral Hepatitis, STD, and TB Prevention (NCHHSTP), Centers for Disease Control and Prevention (CDC).
It takes several years and a significant number of staff and resources to develop and disseminate guidelines. The Division of HIV Prevention (DHP) has been a leader in informing providers and program staff when it comes to HIV prevention through respective guidelines. Yet, DHP's understanding of the awareness and use of HIV-related guidelines has been limited. There have been few efforts and resources dedicated to assessing and evaluating guideline implementation. With DHP's impending completion and publication of the HIV self-testing and updated HIV testing guidelines in 2024, this project proposes a mixed methods approach to evaluate the awareness and uptake of these guidelines by providers using quantitative and qualitative methods. These providers include those who
The purpose of this data collection is to: (a) assess the awareness and use of the HIV self-testing and HIV testing guidelines by healthcare providers working in different health settings; (b) understand the barriers and facilitators to uptake of guidelines; and (c) inform CDC efforts to support guideline implementation through training, promotion, or technical assistance. The new HIV self-testing guideline and updated HIV testing guideline are yet to be published. This project is the first attempt to evaluate these guidelines and as such, no other Federal agency systematically collects this type of information from healthcare providers that supply HIV testing services. This data collection will allow DHP to understand how guidelines are being implemented in the early days of release and inform efforts including resource allocation for guideline development, translation, and implementation efforts.
CDC requests approval for a three-year information collection. Data are collected through surveys and virtual or phone interviews conducted with healthcare providers. There is no monetary compensation or incentives provided for participation in the interview or survey. These data may inform prevention program development and monitoring, resource allocation, and technical assistance needs at both the local and national levels. CDC estimates that this data collection will involve, 1100 surveys and 120 interviews in specific settings (community health centers, health departments, private clinics, public clinics, hospitals, and community-based organizations) over the course of three years. CDC requests OMB approval for an estimated 610 annual burden hours. Participation of respondents is voluntary and there is no cost to the respondents other than their time.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed and/or continuing information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled National Healthcare Safety Network (NHSN). NHSN provides facilities, States, regions, and the nation with data necessary to identify problem areas, measure the progress of prevention efforts, and ultimately eliminate healthcare-associated infections (HAIs) nationwide.
CDC must receive written comments on or before June 24, 2024.
You may submit comments, identified by Docket No. CDC-2024-0030 by either of the following methods:
•
•
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS H21-8, Atlanta, Georgia 30329; Telephone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected;
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
National Healthcare Safety Network (NHSN) (OMB Control No. 0920-0666, Exp. 12/31/2026)—Revision—National Center for Emerging and Zoonotic Infection Diseases (NCEZID), Centers for Disease Control and Prevention (CDC).
The Division of Healthcare Quality Promotion (DHQP), National Center for Emerging and Zoonotic Infectious Diseases (NCEZID), Centers for Disease Control and Prevention (CDC) collects data from healthcare facilities in the National Healthcare Safety Network (NHSN) under OMB Control Number 0920-0666. NHSN provides facilities, States, regions, and the nation with data necessary to identify problem areas, measure the progress of prevention efforts, and ultimately eliminate healthcare-associated infections (HAIs) nationwide. NHSN allows healthcare facilities to track blood safety errors and various healthcare-associated infection prevention practice methods such as healthcare personnel influenza vaccine status and corresponding infection control adherence rates. NHSN currently has eight components: Patient Safety (PS), Healthcare Personnel Safety (HPS), Biovigilance (BV), Long-Term Care Facility (LTCF), Outpatient Procedure (OPC), Dialysis, Neonatal, and Medication Safety Component.
Data reported under the Patient Safety Component are used to determine the magnitude of the healthcare-associated adverse events and trends in the rates of the events, in the distribution of pathogens, and in the adherence to prevention practices. Data will help detect changes in the epidemiology of adverse events resulting from new medical therapies and changing patient risks. Additionally, reported data is being used to describe the epidemiology of antimicrobial use and resistance and to better understand the relationship of antimicrobial therapy to this rising problem. Under the Healthcare Personnel Safety Component, protocols and data on events—both positive and adverse—are used to determine: (1) the magnitude of adverse events in healthcare personnel; and (2) compliance with immunization and sharps injuries safety guidelines. Under the Biovigilance Component, data on adverse reactions and incidents associated with blood transfusions are reported and analyzed to provide national estimates of adverse reactions and incidents. Under the Long-Term Care Facility Component, data is captured from skilled nursing facilities. Reporting methods under the LTCF component have been created by using forms from the PS Component as a model with modifications to specifically address the specific characteristics of LTCF residents and the unique data needs of these facilities reporting into NHSN. The Respiratory Tract Infection Form (RTI)—will not to be used by NHSN users, but as part of an EIP project with four EIP sites. The Form is titled Denominators for Healthcare Associated Infections (HAIs): Respiratory Tract Infections. The purpose of this form is to allow testing prior to introducing a new module and forms to NHSN users. The CDC's Epidemiology Research & Innovations Branch (ERIB) team will use the form to perform field testing of variables to explore the utilization, applicability, and data collection burden associated with these variables. This process will inform areas of improvement prior to incorporating the new module, including protocol, forms, and instructions into NHSN. The Dialysis Component offers a simplified user interface for dialysis users to streamline their data entry and analysis processes as well as provide options for expanding in the future to include dialysis surveillance in settings other than outpatient facilities. The Outpatient Procedure Component (OPC) gathers data on the impact of infections and outcomes related to operative procedures performed in Ambulatory Surgery Centers (ASCs). The OPC is used to monitor two event types: Same Day Outcome Measures and Surgical Site Infections (SSIs). The Neonatal Component focuses on premature neonates and the healthcare associated events that occur because of their prematurity. This component currently has one module, which includes Late Onset-Sepsis and Meningitis. The Medication Safety Component tracks medication safety and adverse drug events that are among the most common causes of iatrogenic harm in U.S. hospitals.
NHSN has increasingly served as the operating system for HAI reporting compliance through legislation established by the States. As of July 2023, 37 States, the District of Columbia and the City of Philadelphia, Pennsylvania have opted to use NHSN as their primary system for mandated reporting. Reporting compliance is completed by healthcare facilities in their respective jurisdictions, with emphasis on those States and municipalities acquiring varying consequences for failure to use NHSN. Additionally, healthcare facilities in five U.S. territories (Puerto Rico, American Samoa, the U.S. Virgin Islands, Guam, and the Northern Mariana Islands) are voluntarily reporting to NHSN. Additional territories are projected to follow with similar use of NHSN for reporting purposes. NHSN's data is used to aid in the tracking of HAIs and guide infection prevention activities/practices that protect patients. The Centers for Medicare and Medicaid Services (CMS) and other payers use these data to determine incentives for performance at healthcare facilities across the U.S. and surrounding territories, and members of the public may use some protected data to inform their selection among available providers. Each of these parties is dependent on the completeness and accuracy of the data. CDC and CMS work closely and are fully committed to ensuring complete and accurate reporting, which are critical for protecting patients and guiding national, State, and local prevention priorities. CMS collects some HAI data and healthcare personnel influenza vaccination summary data, which is done on a voluntary basis as part of its Fee-for-Service Medicare quality reporting programs, while others may report data required by a Federal mandate. Facilities that fail to report quality measure data are subject to partial payment reduction in the applicable Medicare Fee-for-Service payment system. CMS links their quality reporting to payment for Medicare-eligible acute care hospitals, inpatient rehabilitation facilities, long-term acute care facilities, oncology hospitals, inpatient psychiatric facilities, dialysis facilities, and ambulatory surgery centers. Facilities report HAI data and healthcare personnel influenza vaccination summary data to CMS via NHSN as part of CMS's quality reporting programs to receive full payment. Still, many healthcare facilities, even in States without HAI reporting legislation, submit limited HAI data to NHSN voluntarily. NHSN's data collection updates continue to support the incentive programs managed by CMS. For example, survey questions support requirements for CMS' quality reporting programs. Additionally, CDC has collaborated with CMS on a voluntary
The ICR was previously approved in March 2024 for 2,433,165 burden hours. The proposed changes in this new ICR include revisions to 80 existing data collection forms and three new forms. In this Revision, CDC requests OMB approval for an estimated annual burden 3,635,534 hours.
In accordance with the Paperwork Reduction Act of 1995, the Centers for Disease Control and Prevention (CDC) has submitted the information collection request titled “Global Public Health Data Innovation Performance Monitoring” to the Office of Management and Budget (OMB) for review and approval. CDC previously published a “Proposed Data Collection Submitted for Public Comment and Recommendations” notice on February 9, 2024 to obtain comments from the public and affected agencies. CDC received two comments related to the previous notice. This notice serves to allow an additional 30 days for public and affected agency comments.
CDC will accept all comments for this proposed information collection project. The Office of Management and Budget is particularly interested in comments that:
(a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(c) Enhance the quality, utility, and clarity of the information to be collected;
(d) Minimize the burden of the collection of information on those who are to respond, including, through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(e) Assess information collection costs.
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570. Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Global Public Health Data Innovation Performance Monitoring (OMB Control Number pending)—New—Global Health Center (GHC), Centers for Disease Control and Prevention (CDC).
The Global Public Health Data Innovation (GPHDI) initiative, led by the U.S. Centers for Disease Control and Prevention (CDC), aims to equip government decision makers with timely, accurate, and comprehensive public health data to effectively prevent, detect, and respond to public health threats. Challenges, such as limited data access, non-standardization, workforce limitations, and gaps in data systems and governance, often hinder the optimal use of data in public health response efforts. To overcome these challenges, GPHDI focuses on strengthening global outbreak response, pandemic preparedness, and surveillance through improved data availability and utilization. This is achieved by modernizing data systems and processes at all levels.
GPHDI is made possible by the American Rescue Plan Act passed by the U.S. Congress in 2021 and is rooted in key strategic pillars within CDC, namely the Data Modernization Initiative (DMI) and the Global Digital Health Strategy (GDHS). DMI is an agency-wide initiative aimed at improving data systems infrastructure within the United States, offering valuable insights and artifacts that can be adapted and leveraged for the global context of the GPHDI initiative. The goal of DMI is to get better, faster, actionable insights for decision making at all levels of public health. Complementing this, the GDHS incorporates inputs from a multi-partner engagement process, enhancing the strategic approach of the initiative.
GPHDI is currently a three-year investment that builds on an existing foundation laid by various country governments, donor agencies, and multilateral organizations. This investment is specifically allocated to advance the initiative in 10 selected countries, including Kenya, Sierra Leone, Uganda, and Zambia in Africa; Colombia and Paraguay in the South American Region; Georgia and Ukraine in Eastern Europe; Thailand in the Central Asia Region; and Honduras in the Central American Region.
This data collection is aimed at monitoring and assessing the contributions of current GPHDI investments in data modernization and digital public health infrastructure towards improving data availability to prevent, detect, and respond to public health threats in the selected countries. The indicators to be collected as shown in the data collection instrument include both structured response-type questions (Yes-No answers, coded answers) and narrative response-type questions. CDC contractors, RTI International (RTI) will conduct the interviews and CDC-funded implementing partners (IPs) monitoring and evaluation (M&E) point of contacts will provide responses to the indicators based on their funded activities. RTI will document the responses from the interviews using an instance of CDC RedCap. Interviews will be conducted in a live one-on-one session between RTI and identified M&E point of contacts at the funded IPs. No patient-level or individual level or identifiable data will be collected for this project.
CDC requests OMB approval for an estimated 64 annual burden hours. There are no costs to respondents other than their time to participate.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled Direct Reading Methodologies, Sensors, and Robotics Technology Assessment in Lab/Simulator-based Settings. The proposed data collection will allow NIOSH to assess the safety and health considerations of these rapidly changing direct reading methods, sensor, and robotics technologies.
CDC must receive written comments on or before June 24, 2024.
You may submit comments, identified by Docket No. CDC-2024-0029 by either of the following methods:
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To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS H21-8, Atlanta, Georgia 30329; Telephone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected;
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
Direct Reading, Sensor, and Robotics Technology Assessment in Lab/Simulator-based Settings—New—National Institute for Occupational Safety and Health (NIOSH), Centers for Disease Control and Prevention (CDC).
The Centers for Disease Control and Prevention (CDC), National Institute for Occupational Safety and Health (NIOSH), is requesting approval of a new Generic information collection for a period of three years under the project titled, Direct Reading Methodologies, Sensor Technologies, and Robotics Technology Assessment in Lab/Simulator-based Settings. NIOSH is a Federal institute that operates within the CDC specifically dedicated to generating new knowledge in the field of occupational safety and health and responsible for transferring that knowledge into practice for the betterment of workers. Given NIOSH's mission to develop new knowledge, the Institute is uniquely positioned to evaluate potential benefits and risks relative to occupational safety and health issues of the 21st century workplace, work, and workforce—also discussed as the Future of Work (FOW). Areas requiring detailed attention and advancement include research and development in artificial intelligence, robotics, and sensor technologies. NIOSH has established alliances and partnerships with other Federal agencies and external partners to collaborate and share technical knowledge to improve awareness around workplace hazards and appropriate safeguards as it relates to technology. Consequently, NIOSH created two Centers charged with leading and coordinating these FOW efforts, with a focus on technology assessment and integration in the workplace that revolves around emerging recommendations and standards in advancing automation.
First, in 2014, the NIOSH Center for Direct Reading and Sensor Technologies (CDRST) was established to research and develop recommendations on the use of 21st century technologies in occupational safety and health. Both direct-reading methodologies and sensors are used to detect and monitor hazardous conditions, to assess and document intervention strategies, and especially to immediately trigger alarms in the event of unsafe conditions. Examples of direct reading and sensor technologies include real-time personal monitoring, wearable monitors, and exoskeletons including wearable robots.
Second, in 2017, NIOSH established the Center for Occupational Robotics Research (CORR) to study the nature of robots in the workplace, conduct workplace interventions to prevent robot-related worker injuries, and develop guidance for safe interactions between humans and robots. There are several common types of robots used in occupational environments—traditional industrial robots; professional or service robots; collaborative robots; and mobile
Direct reading methodologies, sensor technologies, and robotics technology play important roles in advancing automation to keep many workers within various industries safe while performing their professional duties but rapidly evolve and change in scope and use. NIOSH requests a Generic information collection package for assessing the safety and health considerations of these rapidly changing direct reading methods, sensor, and robotics technologies.
Different types of data will be collected around these technologies including: (1) body function assessments to identify the validity and reliability of direct reading, sensor, and robotic technologies; (2) physiological assessments to identify the impact of direct reading, sensor, and robotic technologies on worker outputs; (3) perceived knowledge, attitudes, skills, and other personal attributes to assess risks associated with the use and integration of direct reading, sensor, and robotics technologies among workers; and (4) barriers that workers face while using or interacting with direct reading methodologies, sensor technologies, and robotic technologies to prevent unintended safety and health consequences—including adoption and maintenance challenges. Collectively, this information will be used to inform research, development, and integration recommendations to advance the nation's FOW needs. These data collection efforts will most often occur in controlled laboratory space, including virtual reality space that simulates these technologies. In some cases (
Respondents are expected to be reflective of the full spectrum of the U.S. workforce and from industries that rely heavily on direct reading methodologies, sensor technologies, and robotics technologies to protect workers (
CDC requests OMB approval for an estimated 205,002 total burden hours with an estimated annual burden of 68,334 hours. There is no cost to respondents other than their time to participate.
In accordance with the Paperwork Reduction Act of 1995, the Centers for Disease Control and Prevention (CDC) has submitted the information collection request (ICR) titled “Workplan Templates for Ten Regional Centers to Enhance Public Health Preparedness and Response” to the Office of Management and Budget (OMB) for review and approval. CDC previously published a “Proposed Data Collection Submitted for Public Comment and Recommendations” notice on May 19, 2023 to obtain comments from the public and affected agencies. CDC received one comment related to the previous notice. This notice serves to allow 30 days for public and affected agency comments on new and updated information collection instruments.
CDC will accept all comments for this proposed information collection project. The Office of Management and Budget is particularly interested in comments that:
(a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(c) Enhance the quality, utility, and clarity of the information to be collected;
(d) Minimize the burden of the collection of information on those who are to respond, including, through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(e) Assess information collection costs.
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570. Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Workplan Templates for Ten Regional Centers to Enhance Public Health Preparedness and Response—New—Office of Readiness and Response (ORR), Centers for Disease Control and Prevention (CDC).
Since 2001, CDC supported development implementation, evaluation, translation and dissemination of research findings, strategies, and interventions to improve public health preparedness and response systems, infrastructures, processes, and practices. This includes the long-standing PHEP cooperative agreement, CDC's Public Health Crisis Response Funding, and support for applied research and evaluation, metrics, measures, tools, and training development. In 2021, with contract support, CDC's Office of Applied Research (OAR) initiated 12 scoping reviews, six landscape analyses, and one systematic review to conduct deeper dives into topics such as trust in public health preparedness and response, emergency communications strategies with people with limited English proficiency, public health emergency preparedness and response (PHEPR) practice in rural and tribal communities, and use of health equity coordinators in incident management. The results of these reviews show great breadth in the PHEPR field as it relates to knowledge available to support current practice and highlights the need to expand knowledge to address specific gaps. These needs and gaps may differ across geographical regions and within those regions at the state or local level. To address needs to increase the uptake of evidence-based interventions, in December 2022, through section 2231 of the federal appropriations for fiscal year 2023, CDC was directed to support not fewer than 10 Centers for Public Health Emergency Preparedness and Response that are equally distributed among the geographical regions of the U.S. (referred to as the “network of centers”).
This project aims to establish up to 10 centers across the designated Health and Human Services (HHS) regions for public health preparedness and response (PHPR). The goal is to improve PHPR practices by increasing the uptake of evidence-based strategies and interventions (EBSIs) that align with the needs of the communities involved. This will be achieved through: (1) the development of a five-year workplan that covers known strategies or interventions, plans to implement each strategy or intervention, or the development and evaluation of new approaches in PHPR; (2) the use of a Cooperative Agreement Work Plan Template to monitor performance of activities throughout the funding period; and (3) the use of an Evaluation Work Plan Template to support evaluation of implemented work plan activities.
The Five-Year Regional Work Plan addresses: (1) focus areas and objectives across State, Tribal, Local, and Territorial (STLT) and relevant partners that would benefit from use of new or enhanced PHPR EBSIs; (2) activities to meet objectives; (3) prioritized EBSIs to implement; (4) capability and capacity of STLT health departments and relevant partners to implement and evaluate activities; and (5) regional sustainability for implementation of evidence-based practice beyond the five-year period. Contractors will collect information from the 10 HHS regional Strategic Coordinators to develop focus areas, objectives, or activities for individualized workplans to advance the implementation of EBSIs for PHPR activities.
This proposed project also includes two additional instruments including: (1) an Evaluation Work Plan Template that provides background information needed to understand approaches in evaluating selected strategies or intervention activities; and (2) a Cooperative Agreement Work Plan Template that serves as a performance monitoring instrument that supports tracking of project activities throughout the performance period.
OMB approval is sought for three years. The estimated annualized burden for this information collection is 150 hours. There is no cost to respondents other than their time.
In accordance with the Paperwork Reduction Act of 1995, the Centers for Disease Control and Prevention (CDC) has submitted the information collection request titled “Diabetes Prevention Recognition Program (DPRP)” to the Office of Management and Budget (OMB) for review and approval. CDC previously published a “Proposed Data Collection Submitted for Public Comment and Recommendations” notice on 12/15/2023 to obtain comments from the public and affected agencies. CDC received 19 comments related to the previous notice. This notice serves to allow an additional 30 days for public and affected agency comments.
CDC will accept all comments for this proposed information collection project. The Office of Management and Budget is particularly interested in comments that:
(a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(c) Enhance the quality, utility, and clarity of the information to be collected;
(d) Minimize the burden of the collection of information on those who are to respond, including, through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(e) Assess information collection costs.
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570. Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
CDC Diabetes Prevention Recognition Program (DPRP) (OMB Control No. 0920-0909, Exp. 04/30/2024)—Revision—National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP), Centers for Disease Control and Prevention (CDC).
CDC's Division of Diabetes Translation (DDT) established and administers the National DPP's Diabetes Prevention Recognition Program (DPRP), which recognizes organizations that deliver a diabetes prevention program according to evidence-based requirements set forth in the Centers for Disease Control and Prevention's Diabetes Prevention Recognition Program Standards and Operating Procedures (DPRP Standards). Additionally, the Centers for Medicare & Medicaid Services (CMS) Medicare Diabetes Prevention Program (MDPP) expansion of CDC's National DPP was announced in early 2016, when the Secretary of Health and Human Services (HHS) determined that the Diabetes Prevention Program met the statutory criteria for inclusion in Medicare's expanded list of health care services for beneficiaries (
CDC requests an additional three years of OMB approval to continue collecting the information needed to administer the DPRP and provide information needed by CMS to support the MDPP benefit. Based on experience with the DPRP from 2011-2023, including data analysis and feedback from applicant organizations and internal and external partners, CDC plans to revise the DPRP Standards and the associated information collection.
Key changes are a direct result of DPRP data analyses, recent literature reviews, and discussion with national DPP stakeholders, including those serving socially vulnerable populations. Key changes to the evaluation data collection instrument allow for the collection of participant zip codes (for
Key changes to the application data collection instrument allow for a yes/no drop-down question asking if an organization's zip code is in an area of high social vulnerability based on the Social Vulnerability Index, which would permit an in-person organization to be fast-tracked to Preliminary recognition status to allow the organization to apply to CMS to become an MDPP supplier; revisions to the combination delivery mode to include an option for in-person delivery with a distance learning component; and collection of a projected program start-date.
During the period of this Revision, CDC estimates receipt of approximately 200 DPRP application forms per year from new organizations. The estimated burden per one-time application response is one hour (annualized to 200 hours). In addition, CDC estimates receipt of semi-annual evaluation data submissions from the same 200 additional organizations per year, estimated at two hours per response. The total estimated average annualized evaluation burden for new respondents is 2,400 hours. This includes an estimate of the time needed to extract and compile the required data records and fields from an existing electronic database, review the data, and enter the data via the DPRP Data Portal. CDC also has 1,500 currently recognized organizations that will continue to submit semi-annual evaluation data. These organizations are reflected in Supporting Statement B within this OMB revision.
The estimated burden per response is moderate, since the information requested for CDC recognition is routinely collected by most organizations that deliver the National DPP lifestyle change program for their own internal evaluation and possible insurance reimbursement purposes, including the MDPP benefit. Participation in the DPRP is voluntary, data are de-identified, no personally identifiable information (PII) is collected by CDC, and there are no costs to respondents other than their time. CDC is requesting a three-year approval. The total estimated annualized burden is 7,800 hours.
Centers for Medicare & Medicaid Services, Health and Human Services.
Notice.
On May 28, 2010, the Office of Management and Budget (OMB) issued Paperwork Reduction Act (PRA) guidance related to the “generic” clearance process. Generally, this is an expedited clearance process by which agencies may obtain OMB's approval of collection of information requests that are “usually voluntary, low-burden, and uncontroversial,” do not raise any substantive or policy issues, and do not require policy or methodological review. The process requires the submission of an overarching plan that defines the scope of the individual collections that may be submitted under that umbrella. This notice is intended to advise the public of our intent to extend OMB's approval of our MACPro (Medicaid and CHIP Program) umbrella and all of the individual generic collection of information requests that fall under that umbrella. This notice also provides the public with general instructions for obtaining documents that are associated with such collections and for submitting comments.
Comments must be received by May 23, 2024.
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2.
CMS, Office of Strategic Operations and Regulatory Affairs (OSORA), Division of Regulations Development, Attention: CMS-10434/OMB 0938-1188, Room C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
1. We encourage you to access the Federal eRulemaking portal at the applicable web address listed below under the
For general information contact William N. Parham at 410-786-4669. For policy related questions, contact the individual listed below under the
Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from OMB for each collection of information that they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c). Generally, it applies to voluntary and mandatory requirements that are related to any one or more of the following activities: the collection of information, the reporting of information, the disclose of information to a third-party, and/or recordkeeping.
While there are some exceptions (such as collections having non-substantive changes and collections requesting emergency approval) section 3506(c)(2)(A) of the PRA requires Federal agencies to publish 60- and 30-day notices in the
Interested parties are invited to submit comments regarding our burden estimates or any other aspect of the collection, including: the necessity and utility of the proposed information collection for the proper performance of our agency's functions; the accuracy of burden estimates; ways to enhance the quality, utility, and clarity of the information to be collected; and the use of automated collection techniques or other forms of information technology to minimize the information collection burden. See
While we will review all comments received, we may choose not to post off-topic or inappropriate comments. Otherwise, all comments will be posted without edit under the applicable docket number, including any personal information that the commenter provides. Our response to such comments will be posted at reginfo.gov under the applicable OMB control number.
At this time, MACPro is made up of the main umbrella (see collection number 1 in the following list) and nine individual generic collections of information (see collection numbers 2 through 10 in the following list). Details such as the collection's requirements and burden estimates can be found in the collection's supporting statement and associated materials (see
Office of Community Services, Administration for Children and Families, U.S. Department of Health and Human Services.
Request for public comments.
The Office of Community Services (OCS), Administration for Children and Families (ACF), requests an approval of the Community Services Block Grant (CSBG) Model Tribal Plan.
You can obtain copies of the proposed collection of information and submit comments by emailing
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is withdrawing approval of 23 new drug applications (NDAs) from multiple applicants. The applicants notified the Agency in writing that the drug products were no longer marketed and requested that the approval of the applications be withdrawn.
Approval is withdrawn as of May 23, 2024.
Kimberly Lehrfeld, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6226, Silver Spring, MD 20993-0002, 301-796-3137,
The applicants listed in the table have informed FDA that these drug products are no longer marketed and have requested that FDA withdraw approval of the applications under the process in § 314.150(c) (21 CFR 314.150(c)). The applicants have also, by their requests, waived their opportunity for a hearing. Withdrawal of approval of an application or abbreviated application under § 314.150(c) is without prejudice to refiling.
Therefore, approval of the applications listed in the table, and all amendments and supplements thereto, is hereby withdrawn as of May 23, 2024. Approval of each entire application is withdrawn, including any strengths and dosage forms included in the application but inadvertently missing from the table. Introduction or delivery for introduction into interstate commerce of products listed in the table without an approved NDA violates sections 505(a) and 301(d) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(a) and 331(d)). Drug products that are listed in the table that are in inventory on May 23, 2024, may continue to be dispensed until the inventories have been depleted or the drug products have reached their expiration dates or otherwise become violative, whichever occurs first.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of the Agency's annual report entitled “Report on the Performance of Drug and Biologics Firms in Conducting Postmarketing Requirements and Commitments.” Under the Federal Food, Drug, and Cosmetic Act (FD&C Act), FDA is required to report annually on the status of postmarketing requirements (PMRs) and postmarketing commitments (PMCs) required of, or agreed upon by, application holders of approved drug and biological products. The report on the status of the studies and clinical trials that applicants are required to, or have agreed to, conduct is on the FDA's website entitled “Postmarketing Requirements and Commitments: Reports” (
Kathy Weil, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 5367, Silver Spring, MD 20993-0002, 301-796-0700; or James Myers, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911.
Section 506B(c) of the FD&C Act (21 U.S.C. 356b(c)) requires FDA to publish an annual report on the status of postmarketing studies that applicants are required to, or have committed to, conduct and for which annual status reports have been submitted. Under §§ 314.81(b)(2)(vii) and 601.70 (21 CFR 314.81(b)(2)(vii) and 601.70), applicants of approved drug products and licensed biological products are required to submit annually a report on the status of each clinical safety, clinical efficacy, clinical pharmacology, and nonclinical toxicology study or clinical trial either required by FDA (PMRs) or that they have committed to conduct (PMCs), either at the time of approval or after approval of their new drug application, abbreviated new drug application, or biologics license application, as applicable. The status of PMCs concerning chemistry, manufacturing, and production controls and the status of other studies or clinical trials conducted on an applicant's own initiative are not required to be reported under §§ 314.81(b)(2)(vii) and 601.70 and are not addressed in this report. Furthermore, section 505(o)(3)(E) of the FD&C Act (21 U.S.C. 355(o)(3)(E)) requires that applicants report periodically on the status of each required study or clinical trial and each study or clinical trial “otherwise undertaken . . . to investigate a safety issue . . .”
An applicant must report on the progress of the PMR/PMC on the anniversary of the drug product's approval
With this notice, FDA is announcing the availability of the Agency's annual report entitled “Report on the Performance of Drug and Biologics Firms in Conducting Postmarketing Requirements and Commitments.” Information in this report covers any PMR/PMC that was established, in writing, at the time of approval or after approval of an application or a supplement to an application and summarizes the status of PMRs/PMCs in fiscal year 2022 (
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA, Agency, or we) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Either electronic or written comments on the collection of information must be submitted by June 24, 2024.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
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• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
JonnaLynn Capezzuto, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-3794,
Under the PRA (44 U.S.C. 3501-3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
This information collection is intended to support FDA-conducted research. Understanding patients, consumers, and healthcare professionals' perceptions and behaviors plays an important role in improving FDA's regulatory decision-making processes and communications that affect various stakeholders. FDA uses the following methodology to achieve these goals: (1) creation and validation of survey instruments; (2) use of techniques to evaluate sampling and recruitment methods; (3) evaluation of the validity and reliability of survey instruments; (4) individual in-depth interviews, (5) general public focus group interviews, (6) intercept interviews, (7) self-administered surveys, (8) gatekeeper surveys, and (9) focus group interviews. These methods serve the narrowly defined need for direct and informal opinion on a specific topic and serve as a qualitative and quantitative research tool having two major purposes:
• Obtaining useful, valid, and reliable information for the development of variables and measures for formulating the basic objectives of social and behavioral research and
• Successfully communicating and addressing behavioral changes with intended audiences to assess the potential effectiveness of FDA communications, behavioral interventions, and other materials.
While FDA will use these methods to test and refine its ideas and help develop communication and behavioral strategies research, the Agency will generally conduct further research before making important decisions (such as adopting new policies and allocating or redirecting significant resources to support these policies).
FDA's Center for Drug Evaluation and Research, Center for Biologics Evaluation and Research, Office of the Commissioner, and any other Centers will use this mechanism to test communications and social and behavioral methods about regulated drug products on a variety of subjects related to consumer, patient, or healthcare professional perceptions, beliefs, attitudes, behaviors, and use of drug and biological products and related materials. These subjects include social and behavioral research, decision-making processes, and communication and behavioral change strategies.
Further, in addition to overseeing the safety of drug products when used according to approved drug labeling or as directed by a healthcare provider, the Center for Drug Evaluation and Research (CDER) conducts studies on topics related to the safe and effective use of drug products, and emerging safety issues in areas such as nonmedical use of approved drug products, use of unapproved and falsified (
Because often data on these topics are not collected as part of routine healthcare delivery or via established Federal surveys, FDA requires the development and validation of novel instruments (
Annually, FDA projects about 25 social and behavioral studies using the variety of test methods listed in this document. FDA is revising this burden to account for the number of studies we have received in the last 3 years and to better reflect the scope of the information collection.
FDA estimates the burden of this collection of information as follows:
Based on a review of the information collection since our last request for OMB approval, our burden estimate for this information collection reflects an overall increase of 17,300 responses with a corresponding increase of 4,325 hours. We attribute this adjustment to the need to validate information in specific areas.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or the Agency) announces a forthcoming public advisory committee meeting of the Molecular and Clinical Genetics Panel of the Medical Devices Advisory Committee. The general function of the committee is to provide advice and recommendations to the Agency on FDA's regulatory issues. The meeting will be open to the public.
The meeting will take place virtually on May 23, 2024, from 9:30 a.m. to 5:30 p.m. Eastern Time.
All meeting participants will be heard, viewed, captioned, and recorded for this advisory committee meeting via an online teleconferencing and/or video conferencing platform. Answers to commonly asked questions about FDA advisory committee meetings, including information regarding special accommodations due to a disability may be accessed at:
Jarrod Collier, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 5214, Silver Spring, MD 20993-0002,
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its website prior to the meeting, the background material will
For press inquiries, please contact the Office of Media Affairs at
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with disabilities. If you require accommodations due to a disability, please contact Artair Mallett at
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our website at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. 1001
Health Resources and Services Administration (HRSA), Department of Health and Human Services.
Notice.
In compliance with the requirement for opportunity for public comment on proposed data collection projects of the Paperwork Reduction Act of 1995, HRSA announces plans to submit an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this ICR should be received no later than June 24, 2024.
Submit your comments to
To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, email
When submitting comments or requesting information, please include the ICR title for reference.
The RWHAP reporting requirements include the annual submission of client-level data in the Ryan White HIV/AIDS Program Services Report (RSR). The RSR is designed to collect information from grant recipients and their subawarded service providers, funded under Parts A, B, C, and D of the RWHAP statute.
HRSA is requesting a revision of the current RSR with one proposed update:
• Within your organization/agency, identify the number of physicians, nurse practitioners, or physician assistants who obtained a Drug Addiction Treatment Act of 2000 waiver to treat opioid use disorder with medication assisted treatment (MAT), [
• How many of the above physicians, nurse practitioners, or physician assistants prescribed MAT (
• How many physicians, nurse practitioners, or physician assistants in your organization prescribed medications for opioid use disorder (MOUD) [
HRSA specifically requests comments on: (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Board of Scientific Counselors
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Board of Scientific Counselors
The meeting will be closed to the public as indicated below in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended for the review, discussion, and evaluation of individual grant applications conducted by the
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Board of Scientific Counselors, National Institute Environmental Health Sciences.
This will be a hybrid meeting held in-person and virtually and will be open to the public as indicated below. Individuals who plan to attend in-person or view the virtual meeting and need special assistance or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting. The meeting can be accessed from the NIH Videocast at the following link:
The meeting will be closed to the public as indicated below in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended for the review, discussion, and evaluation of individual intramural programs and projects conducted by the National Institute Of Environmental Health Sciences, including consideration of personnel qualifications and performance, and the competence of individual investigators, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has procedures at
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Advisory Environmental Health Sciences Council.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting. The meeting can be accessed from the NIEHS Videocast at the following link:
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has procedures at
Information is also available on the Institute's/Center's home page:
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration (USCIS) invites the general public and other Federal agencies to comment upon this proposed extension of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until June 24, 2024.
All submissions received must include the OMB Control Number 1615-0008 in the body of the letter, the agency name and Docket ID USCIS-2005-0024. Comments must be submitted in English, or an English translation must be provided. Submit comments via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number (240) 721-3000 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
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Office of the Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development (HUD).
Notice of Housing Counseling Federal Advisory Committee public meeting.
This gives notice of a Housing Counseling Federal Advisory Committee (HCFAC) meeting and sets forth the proposed agenda. The HCFAC meeting will be held on Thursday, June 13, 2024. The meeting is open to the public and is accessible to individuals with disabilities.
The virtual meeting will be held on Thursday, June 13, 2024, starting at 1:00 p.m. Eastern Daylight Time (EDT), via ZOOM.
Virginia F. Holman, Housing Program Technical Specialist, Office of Housing
HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. To learn more about how to make an accessible telephone call, please visit:
HUD is convening the virtual meeting of the HCFAC on Thursday June 13, 2024, from 1:00 p.m. to 4:30 p.m. EDT. The meeting will be held via ZOOM. This meeting notice is provided in accordance with the Federal Advisory Committee Act, 5 U.S.C. 1009(a)(2).
The Housing Counselors' Role in Educating Consumers About Real Estate Commissions & Augmenting the Delivery of Housing Counseling in Tribal Communities.
The public is invited to attend this half-day (3.5 hours) virtual meeting, using ZOOM. Advance registration is required to attend. To register, please visit
Members of the public will have an opportunity to provide oral and written comments relative to agenda topics for the HCFAC's consideration. Your registration confirmation will also explain the process for speaking. Available time for public comments will be limited to ensure pertinent HCFAC business is completed. The amount of time allotted to each person will be limited to two minutes and will be allocated on a first-come first-served basis by HUD. Written comments can be provided on the registration form no later than June 12, 2024. Please note, written comments submitted will not be read during the meeting. The HCFAC will not respond to individual written or oral statements during the meeting; but it will take all public comments into account in its deliberations.
Records and documents discussed during the meeting as well as other information about the work of the HCFAC, will be available for public viewing as they become available on hud.gov at:
Information on the Committee is also available on HUD Exchange at
Bureau of Indian Affairs, Interior.
Notice.
This notice publishes the approval of the Seventh Amendment to the Tribal-State Compact for Class III Gaming between the Suquamish Indian Tribe of the Port Madison Reservation and the State of Washington, titled Memorandum of Incorporation of Most Favored Nation Amendments to the Tribal State Compact for Class III Gaming between the Suquamish Tribe and the State of Washington.
The Amendment takes effect on April 23, 2024.
Ms. Paula L. Hart, Director, Office of Indian Gaming, Office of the Assistant Secretary—Indian Affairs, Washington, DC 20240,
Under section 11 of the Indian Gaming Regulatory Act (IGRA), Public Law 100-497, 25 U.S.C. 2701
The Amendment is approved.
National Park Service, Interior.
Notice.
The National Park Service is soliciting electronic comments on the significance of properties nominated before April 13, 2024, for listing or related actions in the National Register of Historic Places.
Comments should be submitted electronically by May 8, 2024.
Comments are encouraged to be submitted electronically to
Sherry A. Frear, Chief, National Register of Historic Places/National Historic Landmarks Program, 1849 C Street NW,
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before April 12, 2024. Pursuant to section 60.13 of 36 CFR part 60, comments are being accepted concerning the significance of the nominated properties under the National Register criteria for evaluation.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
Nominations submitted by State or Tribal Historic Preservation Officers.
A request to move has been received for the following resource(s):
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-2000. The public version of the complaint can be accessed on the Commission's Electronic Document Information System (EDIS) at
General information concerning the Commission may also be obtained by accessing its internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of ArcelorMittal on April 17, 2024. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain high-strength aluminum or aluminum alloy-coated steel, and automotive products and automobiles containing same. The complaint names as respondents: VinFast Auto Ltd. of Vietnam; VinFast Auto, LLC of Los Angeles, CA; VinFast USA Distribution, LLC of Los Angeles, CA; Vingroup USA, LLC of Los Angeles, CA; and VinFast Trading and Production JSC of Vietnam. The complainant requests that the Commission issue a limited exclusion order, cease and desist orders, and impose a bond upon respondent alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, and members of the public are invited to file comments on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this
In particular, the Commission is interested in comments that:
(i) explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions on the public interest must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. Submissions should refer to the docket number (“Docket No. 3738”) in a prominent place on the cover page and/or the first page. (
Please note the Secretary's Office will accept only electronic filings during this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined not to review an initial determination (“ID”) (Order No. 11) of the presiding Chief Administrative Law Judge (“CALJ”) terminating the enforcement proceeding based on settlement. The enforcement proceeding is terminated.
Ronald A. Traud, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-3427. Copies of non-confidential documents filed in connection with this investigation may be viewed on the Commission's electronic docket (EDIS) at
On May 19, 2021, the Commission instituted the underlying investigation based on a complaint filed on behalf of complainants DISH DBS Corporation of Englewood, Colorado; DISH Technologies L.L.C. of Englewood, Colorado; and Sling TV L.L.C. of Englewood, Colorado (collectively, “DISH”). 86 FR 27106, 27106-07 (May 19, 2021). The complaint alleged violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain fitness devices, streaming components thereof, and systems containing the same by reason of infringement of certain claims of U.S. Patent Nos. 9,407,564 (“the '564
On March 8, 2023, the Commission issued its final determination, finding respondents Peloton and iFit in violation of section 337 as to the asserted claims of the '156, '554, and '555 patents, but not as to the asserted claims of the '564 patent.
On May 5, 2023, the Commission modified the remedial orders in certain respects.
On October 17, 2023, the Commission instituted an enforcement proceeding under Commission Rule 210.75 (19 CFR 210.75) to investigate alleged violations of the remedial orders by iFit. 88 FR 71603 (Oct. 17, 2023). In addition to DISH and iFit, OUII was also named as a party to the enforcement proceeding.
On March 8, 2024, DISH and iFIT filed a joint motion requesting termination of the enforcement proceeding based on a settlement agreement. On March 18, 2024, OUII filed a response supporting the motion. No other responses were received in response to the motion. Separately, DISH filed a petition with the Commission requesting that the Commission rescind the remedial orders issued in the underlying investigation based on the settlement.
On March 19, 2024, the CALJ issued the subject ID (Order No. 11) granting the motion. The ID found that the joint motion complies with Commission Rule 210.21(b)(1), 19 CFR 210.21(b)(1). Furthermore, in accordance with Commission Rule 210.50(b)(2), 19 CFR 210.50(b)(2), the ID found “no evidence that terminating this enforcement proceeding on the basis of settlement would adversely affect” the public interest.
No petitions for review of the subject ID were filed.
The Commission has determined not to review the subject ID. The enforcement proceeding in this investigation is hereby terminated in its entirety.
The Commission vote for this determination took place on April 18, 2024.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
Environment and Natural Resources Division, United States Department of Justice.
Notice of a modified system of records.
Pursuant to the Privacy Act of 1974 and Office of Management and Budget (OMB) Circular No. A-108, notice is hereby given that the Environment and Natural Resources Division (hereinafter “ENRD” or “Division”), a component within the United States Department of Justice (DOJ or Department), proposes to modify a system of records last published in full on February 23, 2000, titled “Environment and Natural Resources Division Case and Related Files System,” (JUSTICE/ENRD-003).
In accordance with 5 U.S.C. 552a(e)(4) and (11), this notice is applicable upon publication, subject to a 30-day period in which to comment on the routine uses, described below. Please submit any comments by May 23, 2024.
The public, OMB, and Congress are invited to submit any comments by mail to the United States Department of Justice, Office of Privacy and Civil Liberties, ATTN: Privacy Analyst, 145 N St. NW, Suite 8W.300, Washington, DC 20530; by facsimile at 202-307-0693; or by email at
Charles Smiroldo, FOIA Coordinator and Public Liaison, Department of Justice, Environment and Natural Resources Division Law and Policy Section, 950 Pennsylvania Avenue NW, Washington, DC 20530-0001 Telephone: (202) 514-0424.
Pursuant to updated OMB Guidance, ENRD has made administrative edits to the order and titles of sections in the notice. The Division also proposes these modifications to incorporate substantial developments made to the ENRD Justice Consolidated Office Network (ENRD JCON) information system, where the Division's “Case and Related Files System” is maintained, in addition to various applications which maintain additional categories of information subject to the Privacy Act. Specifically, the Division will modify the system of records by renaming it, “Environment and Natural Resources Division Administrative and Case Related Files” (JUSTICE/ENRD-003); updating the “System Manager(s)” and “Addresses” section to reflect administrative changes; revising the categories of records covered by adding additional information maintained by applications housed on ENRD JCON; adding new routine uses for the new categories of records maintained on ENRD JCON (primarily relating to the electronic management and handling of case files during investigation and litigation, human capital, transit subsidy and financial reporting information, and public access to the records pursuant to Federal statutes or regulations); deleting and revising routine uses to provide clarity and additional specificity; revising the categories of records and purpose sections to reflect changes made to the system of records that
ENRD continues to assert the same Privacy Act (j) and (k) exemptions as previously published in 28 CFR 16.92.
As stated above, the purpose of the modified notice is to incorporate the changes and developments to the ENRD JCON information system, a standalone major system residing on the DOJ Justice Consolidated Office Network (JCON) general support system platform, which includes hybrid cloud and on-premises hosting environments. The system interconnects with various applications designed to facilitate ENRD litigation support, and to manage administrative processes. The purpose for modifying the Privacy Act System of Records Notice is to assist with the facilitation of ENRD's litigation mission, and the Division's need to collect and maintain information pertaining to civil and criminal enforcement investigations, actions, and defensive work on behalf of the United States Government. Specifically, collecting and maintaining the records will support ENRD in reviewing documents for relevance and privilege claims, tracking use of documentary evidence in litigation, preparing witness kits/binders for depositions and hearings, determining and organizing the facts about the case, and selecting exhibits for trial. The records will also be used to support ENRD's administrative functions.
Additional modifications to the system of records have been made to incorporate OMB guidance, technological advancements, and update existing routine uses and propose new routine uses. Pursuant to OMB Circular No. A-108, various sections were rearranged, and various section titles were edited. ENRD moves the System Manager(s) section in the system of records notice, as well as edited Policies and Practices for Storing, Retrieving, Accessing, Retaining, and Disposing of Records in the System: Storage, Retrievability, Safeguards, and Retention and Disposal to the following section titles: Policies and Practices for Storage of Records; Policies and Practices for Retrieval of Records; Policies and Practices for Retrieval of Records; Policies and Practices for Retention and Disposal of Records; and Administrative, Technical, and Physical Safeguards. Technological advancements, such as the ability to store records in the cloud and creation of stronger authentication methods, and institutional changes led the ENRD to modify and update the Policies and Practices for Storage of Records, Policies and Practices for Retrieval of Records, Administrative, Technical, and Physical Safeguards, System Location, and System Manager(s), and Addresses sections.
Previously routine uses have been consolidated and updated with language consistent with other Department routine uses. ENRD also has included new routine uses, including model routine uses that are included in all DOJ SORNs. The model routine uses permit disclosure to: to a former employee of the Department for purposes of responding to an official inquiry by a Federal, State, or local government entity or professional licensing authority, in accordance with applicable Department regulations; facilitating communications with a former employee that may be necessary for personnel-related or other official purposes where the Department requires information and/or consultation assistance from the former employee regarding a matter within that person's former area of responsibility; communication with licensing agencies or associations which require information concerning the suitability or eligibility of an individual for a license or permit; communication with contractors, grantees, experts, consultants, students, and others performing or working on a contract, service, grant, cooperative agreement, or other assignment for the Federal Government, when necessary to accomplish an agency function related to this system of records; communication with designated officers and employees of State, local, territorial, or Tribal law enforcement or detention agencies in connection with the hiring or continued employment of an employee or contractor, where the employee or contractor would occupy or occupies a position of public trust as a law enforcement officer or detention officer having direct contact with the public or with prisoners or detainees, to the extent that the information is relevant and necessary to the recipient agency's decision; communication with any agency, organization, or individual for the purpose of performing authorized audit or oversight operations of ENRD and meeting related reporting requirements; and communication with any entities or individuals under such circumstances and procedures as are mandated by Federal statute or treaty. ENRD also proposes two new routine uses (x) and (y) to permit disclosure of information related to caring for a live animal or plant that has been seized as a result of an investigation, and to the public, where required, for purposes of publishing proposed consent decrees, settlements, or comments, respectively.
In accordance with 5 U.S.C. 552a(r), the Department has provided a report to OMB and Congress on this new system of records.
“Environment and Natural Resources Division Administrative and Case Related Files,” (JUSTICE/ENRD-003).
Unclassified.
Records are located in hybrid cloud and on-premise hosting environments, and may be retained in the Central Office, Field Offices/Locations, Offsite Storage Facilities, or Federal Records Center. Primary contact information may be found on the ENRD's website at
The System Manager is the Assistant Director, Office of Information Technology, in coordination with the Office of Administrative Services' Records Management Unit.
Authority to establish and maintain this system is contained in 5 U.S.C. 301 and 44 U.S.C. 3101, which authorize the Attorney General to create and maintain Federal records of agency activities, in addition to 28 U.S.C. 514-19; 42 U.S.C. 7413(g); 5 U.S.C. 552; 42 U.S.C. 6973(d); 42 U.S.C. 9622(d)(2); 42 U.S.C. 9622(i); 28 CFR Part O, subpart L; 28 CFR 50.7; and 28 CFR 16.41.
Case records are maintained to litigate or otherwise resolve civil or criminal cases or matters handled by ENRD. The automated case tracking is maintained to manage and evaluate the Division's litigation and related activities, which includes reviewing documents for relevance and privilege claims, tracking use of documentary evidence in litigation, preparing witness kits/binders for depositions and hearings, determining and organizing the facts about the case, and selecting exhibits for
The categories of individuals covered by this system include: (a) individuals being investigated in anticipation of civil or criminal suits; (b) individuals involved in civil or criminal suits; (c) defense or plaintiff's counsel(s); (d) information sources; (e) individuals relevant to the development of civil or criminal suits, including expert and other witnesses; (f) individual plaintiffs or defendants; (g) members of the public who contact the Division; and (h) attorneys, paralegals, and other employees of the Division directly involved in these cases or personnel related matters.
The categories of records in this system include information relating to: (1) litigation and related activities by the Division, including, but not limited to, the protection, use and development of natural resources and public lands, wildlife protection, Indian rights and claims, cleanup of hazardous waste sites, acquisition of private property for Federal use, prosecution of environmental crimes, enforcement of environmental laws, and defense of environmental challenges to government programs and activities. The case files contain court records (such as briefs, motions, and orders), inter-agency and intra-agency correspondence, legal research, and other related documents. These records may include civil investigatory and/or criminal law enforcement information and information classified pursuant to Executive order to protect national security interests. (2) Summary information of these cases or matters (such as names of principal parties or subjects, court docket numbers, status, and attorney assignments) is maintained in an automated Case Management and Time Reporting software application. (3) A timekeeping function for attorneys, paralegals, and other employees of the Division provides data used in: civil and criminal enforcement investigations, actions and litigation; documentary evidence including relevance and privilege claims; witness kits/binders for depositions and hearings; trial exhibits and other litigation support documentation; financial reporting documentation; ENRD personnel records; correspondence, comments, and requests for members of the public; and internal case management records.
Sources of information contained in this system include, but are not limited to: investigative reports of client agencies of the Department of Justice; discovery materials; non-Department of Justice forensic reports; statements of witnesses and parties; verbatim transcripts of depositions and court proceedings; data, public reports, memoranda and reports from the court and agencies thereof; and Division Attorneys, Department of Justice attorneys, investigators, staff, and legal assistants.
In addition to those disclosures generally permitted under 5 U.S.C. 552a(b), all or a portion of the records or information contained in this system of records may be disclosed as a routine use pursuant to 5 U.S.C. 552a(b)(3) under the circumstances or for the purposes described below, to the extent such disclosures are compatible with the purposes for which the information was collected:
(a) Where a record, either alone or in conjunction with other information, indicates a violation or potential violation of law—criminal, civil, or regulatory in nature—the relevant records may be referred to the appropriate Federal, State, local, territorial, Tribal, or foreign law enforcement authority or other appropriate entity charged with the responsibility for investigating or prosecuting such violation or charged with enforcing or implementing such law;
(b) To any person or entity that the ENRD has reason to believe possesses information regarding a matter within the jurisdiction of the ENRD, to the extent deemed to be necessary by the ENRD in order to elicit such information or cooperation from the recipient for use in the performance of an authorized activity;
(c) A record relating to a case or matter may be disseminated in a Federal, State, local, or Tribal administrative or regulatory proceeding or hearing in accordance with the procedures governing such proceeding or hearing;
(d) To an actual or potential party to litigation or the party's authorized representative, or to a third party neutral, for the purpose of negotiation or discussion of such matters as settlement, plea bargaining, or formal or informal discovery proceedings;
(e) A record relating to a case or matter that has been referred by an agency for investigation, civil or criminal action, enforcement or defense, or that involves a case or matter within the jurisdiction of an agency, may be disseminated to such agency to notify it of the status of the case or matter, or of any decision or determination that has been made, or to make such other inquiries and reports as are necessary during the processing of the case or matter;
(f) A record relating to a case or matter may be disseminated to a foreign country, through the United States Department of State or directly to the representative of such country, pursuant to an international treaty or convention entered into and ratified by the United States or pursuant to an executive agreement;
(g) A record may be disseminated to a foreign country, through the Department of Justice Civil Division, United States Department of State, or directly to the representative of such country, to the extent necessary to assist such country in general crime prevention, the pursuit of civil or criminal judicial actions or general civil regulatory or administrative actions, or to provide investigative leads to such country, or assist in the location and/or returning of witnesses and other evidence;
(h) In an appropriate proceeding before a court, grand jury, or administrative or adjudicative body, when the Department of Justice determines that the records are arguably relevant to the proceeding; or in an appropriate proceeding before an administrative or adjudicative body when the adjudicator determines the records to be relevant to the proceeding;
(i) To the news media and the public, including disclosures pursuant to 28 CFR 50.2, unless it is determined that release of the specific information in the context of a particular case would constitute an unwarranted invasion of personal privacy;
(j) To appropriate officials and employees of a Federal agency or entity that requires information relevant to a decision concerning the hiring, appointment, or retention of an employee; the assignment, detail, or deployment of an employee; the issuance, renewal, suspension, or revocation of a security clearance; the execution of a security or suitability investigation; the letting of a contract, or the issuance of a grant or benefit;
(k) Pursuant to subsection b(12) of the Privacy Act, records relating to an individual who owes an overdue debt to the United States may be disseminated
(l) To a Member of Congress or staff acting upon the Member's behalf when the Member or staff requests the information on behalf of, and at the request of, the individual who is the subject of the record;
(m) To the National Archives and Records Administration for purposes of records management inspections conducted under the authority of 44 U.S.C. 2904 and 2906;
(n) To complainants and/or victims to the extent necessary to provide such persons with information and explanations concerning the progress and/or results of the investigation or case arising from the matters of which they complained and/or of which they were a victim;
(o) Timekeeping records may be disclosed to opposing parties and to courts in litigation regarding litigation costs;
(p) To a former employee of the Department for purposes of: responding to an official inquiry by a Federal, State, or local government entity or professional licensing authority, in accordance with applicable Department regulations; or facilitating communications with a former employee that may be necessary for personnel-related or other official purposes where the Department requires information and/or consultation assistance from the former employee regarding a matter within that person's former area of responsibility;
(q) To appropriate agencies, entities, and persons when (1) the Department suspects or has confirmed that there has been a breach of the system of records; (2) the Department has determined that as a result of the suspected or confirmed breach there is a risk of harm to individuals, the Department (including its information systems, programs, and operations), the Federal Government, or national security; and (3) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed breach or to prevent, minimize, or remedy such harm;
(r) To another Federal agency or Federal entity, when the Department determines that information from this system of records is reasonably necessary to assist the recipient agency or entity in (1) responding to a suspected or confirmed breach, or (2) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the Federal Government, or national security, resulting from a suspected or confirmed breach;
(s) To Federal, State, local, territorial, Tribal, foreign, or international licensing agencies or associations which require information concerning the suitability or eligibility of an individual for a license or permit;
(t) To contractors, grantees, experts, consultants, students, and others performing or working on a contract, service, grant, cooperative agreement, or other assignment for the Federal Government, when necessary to accomplish an agency function related to this system of records;
(u) To designated officers and employees of state, local, territorial, or tribal law enforcement or detention agencies in connection with the hiring or continued employment of an employee or contractor, where the employee or contractor would occupy or occupies a position of public trust as a law enforcement officer or detention officer having direct contact with the public or with prisoners or detainees, to the extent that the information is relevant and necessary to the recipient agency's decision;
(v) To any agency, organization, or individual for the purpose of performing authorized audit or oversight operations of ENRD and meeting related reporting requirements;
(w) To such recipients and under such circumstances and procedures as are mandated by Federal statute or treaty;
(x) In a matter under investigation or in litigation, a record, or facts derived from it, may be disclosed to an organization or person who is taking a live animal or plant into their care for the purpose of preventing harm to that animal or plant.
(y) To the public, for the purposes of publishing proposed consent decrees, settlements, or comments thereon, as may be required by statute, regulation, or Department policy.
All information, except that specified in this paragraph, is recorded on computer files or basic paper/cardboard material that is stored in file folders, file cabinets, shelves, or safes. Some material is recorded and stored on other data processing storage forms located in file rooms and offsite facilities.
Records in this system are retrieved by the name of the individual, employee identification number, tax identification number, case number, case name, complainant/court docket number, and in limited circumstances Social Security number.
In accordance with the Federal Records Act, DOJ's Office of Records Management Policy (ORMP), and consistent with NARA standards, ENRD ensures that all applications hosted on the ENRD JCON system are in compliance with appropriate retention schedules to manage the use, maintenance, retention and disposition of all DOJ records created and captured. Records are maintained in paper and electronic format, and retentions periods for these records, which include case files, range from approximately 2 years to 100 years after the case closure date. Temporary records are destroyed at the end of the retention period, and permanent records are transferred to the custody of NARA.
To ensure NARA and OMB electronic records compliance, ENRD is modernizing its information intake efforts. As part of this process, legacy hard copy records are in the process of being converted to electronic files for storage/use.
Records maintained in the ENRD JCON system are both confidential and non-confidential and located in file cabinets, safes and file rooms as well as hybrid cloud and on-premises hosting environments, and may be retained in the Central Office, Field Offices/Locations, Offsite Storage Facilities, or Federal Records Center. Records are also located in litigation support contract document centers and offsite storage locations. Confidential records are in locked file drawers, safes, and secured file rooms. Offices are secured by either Federal Protective Service or private building guards. Electronic records retrievable by Division personnel trained to access existing ENRD software applications or successor applications, within various ENRD offices, are password protected and require access privileges to ENRD JCON.
All requests for access to records must be in writing and should be addressed to the Department of Justice, Environmental and Natural Resources Division, Law and Policy Section, 950 Pennsylvania Avenue NW, Washington, DC 20530 ATTN: FOIA/Privacy Act Coordinator. The envelope and letter
Although no specific form is required, you may obtain forms for this purpose from the FOIA/Privacy Act Mail Referral Unit, United States Department of Justice, 950 Pennsylvania Avenue NW, Washington, DC 20530, or on the Department of Justice website at
More information regarding the Department's procedures for accessing records in accordance with the Privacy Act can be found at 28 CFR part 16 Subpart D, “Protection of Privacy and Access to Individual Records Under the Privacy Act of 1974.”
Individuals seeking to contest or amend records maintained in this system of records must direct their requests to the address indicated in the “RECORD ACCESS PROCEDURES” paragraph, above. All requests to contest or amend records must be in writing and the envelope and letter should be clearly marked “Privacy Act Amendment Request.” All requests must state clearly and concisely what record is being contested, the reasons for contesting it, and the proposed amendment to the record. Some information may be exempt from the amendment provisions as described in the “EXEMPTIONS PROMULGATED FOR THE SYSTEM” paragraph, below. An individual who is the subject of a record in this system of records may contest or amend those records that are not exempt. A determination of whether a record is exempt from the amendment provisions will be made after a request is received.
More information regarding the Department's procedures for amending or contesting records in accordance with the Privacy Act can be found at 28 CFR 16.46, “Requests for Amendment or Correction of Records.”
Individuals may be notified if a record in this system of records pertains to them when the individuals request information utilizing the same procedures as those identified in the “RECORD ACCESS PROCEDURES” paragraph, above.
The Attorney General has promulgated rules to exempt those records in this system that pertain to the enforcement of criminal laws, that are investigatory materials compiled for law enforcement purposes, or that are classified secret by an Executive Order, from the following Privacy Act requirements: (1) The requirement under (c)(3) to make available to the individual named in the record an accounting of the circumstances under which records about the individual were disclosed; (2) the requirement under (e)(1) to maintain only such information about an individual that is relevant and necessary to accomplish a purpose of the agency; and (3) the requirement under (f) to establish agency procedures to respond to an individual's request for information about himself. The Attorney General also has promulgated a rule to exempt records in this system compiled for criminal enforcement purposes from these additional requirements: (1) The requirement under (c)(4) to inform any party or agency that received an individual's records about any subsequent corrections made to the record; (2) the requirement under (e)(2) to collect information to the greatest extent practicable directly from the individual when the information may result in adverse determinations about an individual's rights, benefits and privileges under Federal programs; (3) the requirement under (e)(3) to inform each individual from whom information is collected of the authority for the information the principal purposes for the information, the routine uses, and the effects, if any, of not providing the information; (4) the requirement under (e)(5) to maintain all records with such accuracy, relevance, timeliness and completeness as is reasonably necessary to assure fairness to the individual, (5) the requirement under (e)(8) to make reasonable efforts to serve notice on an individual when any record on the individual is made available to any person under compulsory legal process when that process becomes a matter of public record; and (6) the authority under (g) providing that individuals may bring a civil action against the agency for violations of the Privacy Act.
These rules have been promulgated in accordance with the requirements of 5 U.S.C. 553(b), (c) and (e), and have been published in the
65 FR 8990 (February 23, 2000): Last published in full; 66 FR 8425 (January 31, 2001); 70 FR 61159 (October 10, 2005); 72 FR 3410 (January 25, 2007) (Rescinded by 82 FR 24147); 82 FR 24147 (May 25, 2017).
Occupational Safety and Health Administration (OSHA), Labor.
Notice.
In this notice, OSHA announces the final decision to expand the scope of recognition of DEKRA Certification Inc., (DEKRA) as a Nationally Recognized Testing Laboratory (NRTL). Additionally, OSHA announces the final decision to add one test standard to the NRTL List of Appropriate Test Standards.
The expansion of the scope of recognition becomes effective on April 23, 2024.
Information regarding this notice is available from the following sources:
OSHA hereby gives notice of the expansion of the scope of recognition of DEKRA Certification Inc., (DEKRA) as a
OSHA recognition of a NRTL signifies that the organization meets the requirements specified in 29 CFR 1910.7. Recognition is an acknowledgment that the organization can perform independent safety testing and certification of the specific products covered within the scope of recognition. Each NRTL's scope of recognition includes (1) the type of products the NRTL may test, with each type specified by the applicable test standard; and (2) the recognized site(s) that has/have the technical capability to perform the product-testing and product-certification activities for test standards within the NRTL's scope. Recognition is not a delegation or grant of government authority; however, recognition enables employers to use products approved by the NRTL to meet OSHA standards that require product testing and certification.
The agency processes applications by NRTLs or applicant organizations for initial recognition, as well as for expansion or renewal of recognition, following requirements in Appendix A to 29 CFR 1910.7. This appendix requires that the agency publish two notices in the
DEKRA submitted an application on December 24, 2021 (OSHA-2019-0009-0004), which requested the addition of twenty-two standards to the scope of recognition. DEKRA submitted an amended application, dated June 21, 2023 (OSHA-2019-0009-0003), which requested that OSHA consider three of the twenty-two standards separately. OSHA then moved forward with consideration only of the three standards requested in the June 21, 2023, amended application; it is still evaluating the initial application and will announce the preliminary decision on the remaining nineteen standards in a separate notice. OSHA staff performed a detailed analysis of the application packet for the three standards covered by the June 21, 2023, amended application, and other pertinent information. OSHA staff performed an on-site assessment of DEKRA's Netherlands facility on June 5-7, 2023, in which OSHA assessors found some nonconformances with the requirements of 29 CFR 1910.7. DEKRA has addressed these issues sufficiently, and OSHA staff preliminarily determined that OSHA should grant the June 21, 2023, amended application.
OSHA published the preliminary notice announcing DEKRA's expansion application in the
To obtain or review copies of all public documents pertaining to the DEKRA application, go to
OSHA staff examined DEKRA's expansion application, its capability to meet the requirements of the test standards, and other pertinent information. Based on its review of this evidence, OSHA finds that DEKRA meets the requirements of 29 CFR 1910.7 for expansion of its recognition, subject to the limitations and conditions listed in this notice. OSHA, therefore, is proceeding with this final notice to grant DEKRA's expanded scope of recognition. OSHA limits the expansion of DEKRA's recognition to testing and certification of products for demonstration of conformance to the test standards listed below in table 1.
In this notice, OSHA also announces the final decision to add one new test standard to the NRTL Program's List of Appropriate Test Standards. Table 2 below lists the standard that is new to the NRTL Program. OSHA has determined that this test standard is an appropriate test standard and will add it to the NRTL Program's List of Appropriate Test Standards.
The American National Standards Institute (ANSI) may approve the test standards listed above as American National Standards. However, for convenience, we may use the designation of the standards-developing organization for the standard as opposed to the ANSI designation. Under the NRTL Program's policy (see OSHA Instruction CPL 01-00-004, Chapter 2, Section VIII), any NRTL recognized for a particular test standard may use either the proprietary version of the test standard or the ANSI version of that standard. Contact ANSI to determine whether a test standard is currently ANSI-approved.
In addition to those conditions already required by 29 CFR 1910.7,
1. DEKRA must inform OSHA as soon as possible, in writing, of any change of ownership, facilities, or key personnel, and of any major change in its operations as a NRTL, and provide details of the change(s);
2. DEKRA must meet all the terms of its recognition and comply with all OSHA policies pertaining to this recognition; and
3. DEKRA must continue to meet the requirements for recognition, including all previously published conditions on DEKRA's scope of recognition, in all areas for which it has recognition.
Pursuant to the authority in 29 CFR 1910.7, OSHA hereby expands the scope of recognition of DEKRA as a NRTL, subject to the limitations and conditions specified above. OSHA also adds one test standard to the NRTL Program's List of Appropriate Test Standards.
James S. Frederick, Deputy Assistant Secretary of Labor for Occupational Safety and Health, authorized the preparation of this notice. Accordingly, the agency is issuing this notice pursuant to 29 U.S.C. 657(g)(2), Secretary of Labor's Order No. 8-2020 (85 FR 58393, Sept. 18, 2020), and 29 CFR 1910.7.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend (1) make a non-substantive, clarifying change to a footnote in prior rule filings submitted to the U.S. Securities and Exchange Commission (“Commission”) for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to: (1) make a non-substantive, clarifying change to a footnote in prior rule filings submitted to the Commission for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act
The Exchange offers two versions of the Liquidity Taker Event Report: (1) Liquidity Taker Event Report (referred to herein as the “Simple Order Report”); and (2) Liquidity Taker Event Report—Resting Simple Orders (referred to herein as the “Resting Simple Order Report”).
In general, each Liquidity Taker Event Report is a daily report that provides a Member (“Recipient Member”) with its liquidity response time details for executions and contra-side responses of
Proposal To Amend a Footnote in Each of the Filings To Adopt the Reports (SR-PEARL-2021-25 and SR-PEARL-2023-01)
The Exchange proposes to make a clarifying change to one of the footnotes in each of the filings to adopt each Liquidity Taker Event Report. Each of the filings to adopt each Liquidity Taker Event Report contains a section that describes information in each report that corresponds to the Recipient Member. Each of the prior filings states that the “following information would be included in the [Simple Order Report or Resting Simple Order Report] regarding response(s) sent by the Recipient Member: (A) Recipient Member identifier; (B) the time difference between the time the first response that executes against the resting order was received by the Exchange and the time of each response sent by the Recipient Member, regardless of whether it executed or not; (C) size and type of each response submitted by Recipient Member; and (D) response reference number, which is a unique reference number attached to the response by the Recipient Member.
For purposes of calculating this duration of time, the Exchange will use the time the resting order and the Recipient Member's response(s) is received by the Exchange's network, both of which would be before the order and response(s) would be received by the System. This time difference would be provided in nanoseconds.
The Exchange proposes to clarify the above footnote. Specifically, the Exchange proposes to replace “the resting order” with “the first response that executes against the resting order.” Accordingly, with the proposed change, the referenced footnotes in each of the filings to adopt the Reports would read as follows:
For purposes of calculating this duration of time, the Exchange will use the time the first response that executes against the resting order and the Recipient Member's response(s) is received by the Exchange's network, both of which would be before the order and response(s) would be received by the System. This time difference would be provided in nanoseconds.
The purpose of the proposed change is to correct a non-substantive error in a footnote of each rule filing to adopt the Reports. The Exchange notes that the rule text in Exchange Rule 531 that describes each of the Reports was correctly adopted and does not require any change; only the footnote described above needs to be clarified. This change does not impact or alter the information provided to any Recipient Member.
The Exchange proposes to make a non-substantive clarifying change to Exchange Rule 531, Reports and Market Data Products. Currently, Exchange Rule 531(c) provides the rule text for the Resting Simple Order Report. In particular, Exchange Rule 531(c) provides that “[t]he Liquidity Taker Event Report-Resting Simple Orders is a daily report that provides a Member (`Recipient Member') with its liquidity response time details for executions against an order resting on the Simple Order Book, where that Recipient Member attempted to execute against such resting order within the timeframe specified under paragraph (2) below.” The Exchange proposes to delete the words “Simple Order” when referring to the Book. The purpose of this proposed change is to provide consistency and clarity within the Rulebook as the defined term, the “Book,” refers to the Exchange's electronic book of buy and sell orders and quotes maintained by the System.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed change to each of the footnotes described above for each Liquidity Taker Event Report protects investors and the public interest, as well as removes impediments to and perfects the mechanism of a free and open market and a national market system because the change is designed solely to correct non-substantive errors in prior filings, and none which have any impact on the Exchange's actual rule text for each of the Reports. This proposed change does not impact or alter the operation of Exchange Rule 531 regarding the Reports.
Similarly, the Exchange believes that the proposed change to delete the words “Simple Order” when referring to the Book in Exchange Rule 531(c) removes impediments to and perfects the mechanism of a free and open market and a national market system because the change is designed to provide consistency and clarity within the Rulebook as the defined term, the “Book,” refers to the Exchange's electronic book of buy and sell orders and quotes maintained by the System. This proposed change does not impact or alter the operation of Exchange Rule 531(c).
The Exchange does not believe that the proposed rule changes will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, as amended.
The non-substantive corrections to the footnotes in prior filings to adopt each Liquidity Taker Event Report would not impact competition because such changes would not enhance or alter the Exchange's ability to compete, but rather, clarify a prior error which would reduce the potential for inadvertent investor confusion. Similarly, the proposed change to delete the words “Simple Order” when referring to the Book in Exchange Rule 531(c) would not impact competition because such change would not enhance or alter the Exchange's ability to compete, but rather, provide consistency and clarity within the Rulebook.
Written comments were neither solicited nor received.
Because the foregoing proposed rule change does not: (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission” or “SEC”).
Notice.
Notice of application for an order (“Order”) under sections 6(b) and 6(e) of the Investment Company Act of 1940 (the “Act”) granting an exemption from all provisions of the Act, except sections 9, 17, 30, and 36 through 53, and the rules and regulations under the Act (the “Rules and Regulations”). With respect to sections 17(a), (d), (e), (f), (g), and (j) of the Act, sections 30(a), (b), (e), and (h) of the Act and the Rules and Regulations and rule 38a-1 under the Act, applicants request a limited exemption as set forth in the application.
Applicants request an order to exempt certain limited partnerships, limited liability companies, business trusts or other entities (“Funds”) formed for the benefit of eligible employees of Hines Investment Management Holdings Limited Partnership and its affiliates from certain provisions of the Act. Each Fund, and each series thereof with segregated assets and liabilities, will be an “employees' securities company” within the meaning of section 2(a)(13) of the Act.
Hines Investment Management Holdings Limited Partnership and Hines Employee Access Partners I LP.
The application was filed on August 17, 2022 and amended on March 14, 2023, November 1, 2023, February 16, 2024 and April 1, 2024.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the SEC's Secretary at
The Commission:
Matthew Cook, Senior Counsel, or Marc Mehrespand, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
For Applicants' representations, legal analysis, and conditions, please refer to Applicants' fourth amended and restated application, dated April 1, 2024, which may be obtained via the Commission's website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC's EDGAR system.
The SEC's EDGAR system may be searched at, at
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend BOX Rule 5050 (Series of Options Contracts Open for Trading) to permit the listing and trading of options series with Tuesday and Thursday expirations for options on iShares Russell 2000 ETF (IWM), specifically permitting two expiration dates for the proposed Tuesday and Thursday expirations in IWM. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's internet website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend BOX Rule 5050 (Series of Options Contracts Open for Trading) to permit the listing and trading of options series with Tuesday and Thursday expirations for options on iShares Russell 2000 ETF (IWM), specifically permitting two expiration dates for the proposed Tuesday and Thursday expirations in IWM. This is a competitive filing that is based on a proposal submitted by NASDAQ ISE, LLC (“ISE”) and approved by the Commission.
Currently, Table 1 in IM-5050-6 specifies each symbol that qualifies as a Short Term Option Daily Expiration.
Today, Tuesday Short Term Option Daily Expirations in SPDR S&P 500 ETF Trust (SPY) and the INVESCO QQQ Trust
Pursuant to BOX Rule 100(a)(66),
Currently, for each option class eligible for participation in the Short Term Option Series Program, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.
With this proposal, Tuesday and Thursday IWM Expirations would be treated the same as Tuesday and Thursday Expirations in SPY and QQQ. With respect to standard option series, Short Term Option Daily Expirations may expire in the same week in which standard option series on the same class expire.
The Exchange does not believe that any market disruptions will be encountered with the introduction of P.M.-settled Tuesday and Thursday IWM Short Term Option Daily Expirations. The Exchange has the necessary capacity and surveillance programs in place to support and properly monitor trading in the proposed Tuesday and Thursday Short Term Option Daily Expirations. The Exchange currently trades P.M.-settled Short Term Option Series that expire Tuesday and Thursday for SPY and QQQ and has not experienced any market disruptions nor issues with capacity. Today, the Exchange has surveillance programs in place to support and properly monitor trading in Short Term Option Series that expire Tuesday and Thursday for SPY and QQQ.
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Securities Exchange Act of 1934 (the “Act”),
With this proposal, Tuesday and Thursday IWM Expirations would be treated similarly to existing Tuesday and Thursday SPY and QQQ Expirations and would expire in the same week that standard monthly options expire on Fridays.
Finally, the Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in the proposed Tuesday and Thursday IWM Short Term Option Daily Expirations, in the same way that it monitors trading in the current Short Term Option Series and trading in Tuesday and Thursday SPY and QQQ Expirations. The Exchange also represents that it has the necessary systems capacity to support the new options series. Finally, the Exchange does not believe that any market disruptions will be encountered with the introduction of Tuesday and Thursday IWM Short Term Option Daily Expirations.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In this regard and as indicated above, the Exchange notes that the rule change is being proposed as a competitive response to a filing submitted by ISE that was recently approved by the Commission.
The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents other options exchanges from proposing similar rules to list and trade Short Term Option Series with Tuesday and Thursday Short Term Option Daily Expirations. The Exchange notes that having Tuesday and Thursday IWM expirations is not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations are currently listed on BOX.
Further, the Exchange does not believe the proposal will impose any burden on intramarket competition, as all market participants will be treated in the same manner under this proposal.
The Exchange has neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Cboe BZX Exchange, Inc. (the “Exchange” or “BZX”) proposes to amend the Short Term Options Series Program in Rule 19.6, Interpretation and Policy .05. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the Short Term Option Series Program in Rule 19.6, Interpretation and Policy .05 (Series of Options Contracts Open for Trading). Specifically, the Exchange proposes to expand the Short Term Option Series program to permit the listing and trading of options series with Tuesday and Thursday expirations for options on iShares Russell 2000 ETF (“IWM”), specifically permitting two expiration dates for the proposed Tuesday and Thursday expirations in IWM.
Currently, Table 1 in Rule 19.6, Interpretation and Policy .05(h), specifies each symbol that qualifies as a Short Term Option Daily Expiration.
Today, Tuesday Short Term Option Daily Expirations in SPDR S&P 500 ETF Trust (“SPY”) and the INVESCO QQQ TrustSM, Series 1 (“QQQ”) may open for trading on any Monday or Tuesday that is a business day series of options on the symbols provided in Table 1 that expire at the close of business on each of the next two Tuesdays that are business days and are not business days in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire (“Tuesday Short Term Option Expiration Date”).
In the event that options on IWM expire on a Tuesday or Thursday and that Tuesday or Thursday is a business day in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire, the Exchange would skip that week's listing and instead list the following week; the two weeks would therefore not be consecutive. With this proposal, the Exchange would be able to open for trading series of options on IWM that expire at the close of business on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days beyond the current week and are not business days in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire.
The interval between strike prices for the proposed Tuesday and Thursday IWM Short Term Option Daily Expirations will be the same as those for Tuesday and Thursday IWM Short Term Option Daily Expirations in SPY and QQQ, applicable to the Short Term Option Series Program.
Pursuant to Rule 19.6, Interpretation and Policy .05(h), with respect to the Short Term Option Series Program, a Tuesday or Thursday expiration series shall expire on the first business day immediately prior to that Tuesday or Thursday,
Currently, for each option class eligible for participation in the Short Term Option Series Program, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.
The Exchange notes that listings in the Short Term Option Series Program comprise a significant part of the standard listing in options markets. The below table sets forth the percentage of weekly listings as compared to monthly, quarterly, and Long-Term Option Series in 2023 in the options industry.
Similar to SPY and QQQ, the Exchange would limit the number of Short Term Option Daily Expirations for IWM to two expirations for Tuesday and Thursday expirations while expanding the Short Term Option Series Program to permit Tuesday, and Thursday expirations for IWM. Expanding the Short Term Option Series Program to permit the listing of Tuesday and Thursday expirations in IWM will account for the addition of 6.77% of strikes for IWM.
Weeklies comprise 48.30% of the total volume of options contracts.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that IWM Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase IWM options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. Further, the proposal to permit Tuesday and Thursday Short Term Daily Expirations for options on IWM listed pursuant to the Short Term Option Series Program, subject to the proposed limitation of two nearest expirations, would protect investors and the public interest by providing the investing public and other market participants more flexibility to closely tailor their investment and hedging decisions in IWM options, thus allowing them to better manage their risk exposure. In particular, the Exchange believes the Short Term Option Series Program has been successful to date and that Tuesday and Thursday IWM Short Term Daily Expirations should simply expand the ability of investors to hedge risk against market movements stemming from economic releases or market events that occur throughout the month in the same way that the Short Term Option Series Program has expanded the landscape of hedging. Similarly, the Exchange believes Tuesday and Thursday IWM Short Term Daily Expirations should create greater trading and hedging opportunities and provide customers the flexibility to tailor their investment objectives more effectively. The Exchange currently lists SPY and QQQ Tuesday and Thursday Short Term Daily Expirations.
With this proposal, Tuesday and Thursday IWM Expirations would be treated similar to existing Tuesday and Thursday SPY and QQQ Expirations and would expire in the same week that standard monthly options expire on Fridays.
Finally, the Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in the proposed Tuesday and Thursday IWM Short Term Daily Expirations, in the same way that it monitors trading in the current Short Term Option Series and trading in Tuesday and Thursday SPY and QQQ Expirations. The Exchange also represents that it has the necessary systems capacity to support the new options series. Finally, the Exchange does not believe that any market disruptions will be encountered with the introduction of Tuesday and Thursday IWM Short Term Daily Expirations.
Finally, the Exchange notes the proposed rule change is substantively
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Similar to SPY and QQQ Tuesday and Thursday Expirations, the introduction of IWM Tuesday and Thursday Short Term Daily Expirations does not impose an undue burden on competition. The Exchange believes that it will, among other things, expand hedging tools available to market participants and continue the reduction of the premium cost of buying protection. The Exchange believes that IWM Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase IWM options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively.
The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents other options exchanges from proposing similar rules to list and trade Short-Term Option Series with Tuesday and Thursday Short Term Daily Expirations. The Exchange notes that having Tuesday and Thursday IWM expirations is not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations are currently listed on the Exchange.
The Exchange neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the fee schedule (the “Fee Schedule”) applicable to MIAX Pearl Equities, an equities trading facility of the Exchange.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the Fee Schedule to: (1) modify certain rebates and volume thresholds for the NBBO Setter Plus Program (referred to in this filing as the “NBBO Program”);
In general, the NBBO Program provides enhanced rebates for Equity Members
Pursuant to the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule, the NBBO Program provides six volume tiers enhanced by three market quality levels to provide increasing rebates in this segment. The six volume tiers are achievable by greater volume from the best of three alternative methods. The three market quality levels are achievable by greater NBBO participation in a minimum number of specific securities (described below).
MIAX Pearl Equities first determines the applicable NBBO Program tier based on three different volume calculation methods. The three volume-based methods to determine the Equity Member's tier for purposes of the NBBO Program are calculated in parallel in each month, and each Equity Member receives the highest tier achieved from any of the three methods each month. All three volume calculation methods are based on an Equity Member's respective ADAV,
Under volume calculation Method 1, the Exchange provides tiered rebates based on an Equity Member's ADAV as a percentage of TCV. An Equity Member qualifies for the base rebates in Tier 1 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADAV of at least 0.00% and less than 0.035% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 2 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADAV of at least 0.035% and less than 0.05% of TCV. An Equity Member qualifies for the enhanced
Under volume calculation Method 2, the Exchange provides tiered rebates based on an Equity Member's NBBO Set Volume as a percentage of TCV. Under volume calculation Method 2, an Equity Member qualifies for the base rebates in Tier 1 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an NBBO Set Volume of at least 0.00% and less than 0.01% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 2 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an NBBO Set Volume of at least 0.01% and less than 0.015% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an NBBO Set Volume of at least 0.015% and less than 0.02% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 4 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an NBBO Set Volume of at least 0.02% and less than 0.03% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 5 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an NBBO Set Volume of at least 0.03% and less than 0.08% of TCV. Finally, an Equity Member qualifies for the enhanced rebates in Tier 6 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an NBBO Set Volume of at least 0.08% of TCV.
Under volume calculation Method 3, the Exchange provides tiered rebates based on an Equity Member's ADV as a percentage of TCV. An Equity Member qualifies for the base rebates in Tier 1 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADV of at least 0.00% and less than 0.15% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 2 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADV of at least 0.15% and less than 0.18% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 3 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADV of at least 0.18% and less than 0.20% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 4 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADV of at least 0.20% and less than 0.60% of TCV. An Equity Member qualifies for the enhanced rebates in Tier 5 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADV of at least 0.60% and less than 1.00% of TCV. Finally, an Equity Member qualifies for the enhanced rebates in Tier 6 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADV of at least 1.00% of TCV.
After the volume calculation is performed to determine highest tier achieved by the Equity Member, the applicable rebate is calculated based on two different measurements based on the Equity Member's participation at the NBBO on the Exchange in certain securities (referenced below).
The Exchange provides one column of base rebates (referred to in the NBBO Setter Plus Table as “Level A”) and two columns of enhanced rebates (referred to in the NBBO Setter Plus Table as “Level B” and “Level C”),
The base rebates (“Level A”) are as follows: ($0.00240)
The Exchange also offers an NBBO Setter Additive Rebate, which is an additive rebate of ($0.0003) per share for executions of orders in securities priced at or above $1.00 per share that set the NBB or NBO on MIAX Pearl Equities with a minimum size of a round lot.
The Exchange proposes to amend the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule to: (1) amend the volume threshold requirements for Tiers 4 and 5 of volume calculation Method 1 of the NBBO Program; and (2) decrease the rebates applicable to Tier 1, Tier 5 and Tier 6 for all rebate Levels of the NBBO Program.
First, the Exchange proposes to reduce the minimum volume threshold by 0.05% for Tier 5 of volume calculation Method 1 and make the corresponding change to reduce the maximum volume threshold by 0.05% for Tier 4 of volume calculation Method 1 of the NBBO Program. Accordingly, with the proposed changes to volume calculation Method 1, an Equity Member will qualify for the enhanced rebates in Tier 4 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADAV of at least 0.08% and less than 0.20% of TCV. Further, an Equity Member will qualify for the enhanced rebates in Tier 5 for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume across all Tapes by achieving an ADAV of at least 0.20% and less than 0.40% of TCV. The Exchange does not propose to change any other volume calculation thresholds for the NBBO Program.
Next, the Exchange proposes to slightly decrease the rebates applicable to Tier 1, Tier 5 and Tier 6 for all rebate Levels of the NBBO Program. With the proposed changes, the Level A rebates will be as follows for Tiers 1, 5 and 6: ($0.00220) per share in Tier 1; ($0.00335) per share in Tier 5; and ($0.00340) per share in Tier 6. The Exchange does not propose to amend the rebate amounts applicable to Level A, Tiers 2, 3 and 4. With the proposed changes, the Level B rebates will be as follows for Tiers 1, 5 and 6: ($0.00225) per share in Tier 1; ($0.00340) per share in Tier 5; and ($0.00345) per share in Tier 6. The Exchange does not propose to amend the rebate amounts applicable to Level B, Tiers 2, 3 and 4. With the proposed changes, the Level C rebates will be as follows for Tiers 1, 5 and 6: ($0.00230) per share in Tier 1; ($0.00345) per share in Tier 5; and ($0.00350) per share in Tier 6. The Exchange does not propose to amend the rebate amounts applicable to Level C, Tiers 2, 3 and 4.
The purpose of these changes is for business and competitive reasons in light of recent volume growth on the Exchange. The Exchange notes that, even with the proposed changes, the base rebates, enhanced rebates and volume requirements of the NBBO Program remain competitive with, or better than, the rebates and volume requirements provided by other exchanges for executions of orders in securities priced at or above $1.00 per share that add displayed liquidity to those exchanges.
In connection with the proposed changes to the Level A, Tier 1 (Base) rebate of the NBBO Program described above, the Exchange proposes to amend the Standard Rates table in Section 1)a) of the Fee Schedule for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume in all Tapes and the Liquidity Indicator Codes and Associated Fees table in Section 1)b) of the Fee Schedule. In particular, the Exchange proposes to amend the Standard Rates table in Section 1)a) of the Fee Schedule to show the reduced standard rebate from ($0.0024) to now be ($0.0022) per share for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume in all Tapes. Further, the Exchange proposes to amend the Liquidity Indicator Codes and Associated Fees table in Section 1)b) of the Fee Schedule to amend Liquidity Indicator Codes “AA,” “AB,” and “AC” to show the reduced standard from ($0.0024) to now be ($0.0022) per share for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume in all Tapes. The purpose of these corresponding changes is to ensure the Fee Schedule is accurate and clear in light of the change to the base rebate amount in Level A, Tier 1 of the NBBO Setter Plus Table. The Exchange notes that despite the modest base rebate reduction proposed herein for executions of securities priced at or above $1.00 per share for Added Displayed Volume in all Tapes, the proposed standard rebate—($0.0022) per share—remains higher than, and competitive with, the standard rebates provided by other exchanges for executions of orders in securities priced at or above $1.00 per share that add displayed liquidity.
The Exchange proposes to amend the NBBO Setter Additive Rebate in the
The Exchange proposes to amend the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule to establish the new “NBBO First Joiner Additive Rebate.” In particular, the Exchange proposes that the NBBO First Joiner Additive Rebate will be an additive rebate of ($0.0002) per share for executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume (other than Retail Orders)
The purpose of adopting the NBBO First Joiner Additive Rebate is to further attract aggressively priced displayed liquidity to the Exchange. The Exchange believes that such change will encourage the submission of orders that join the established NBB or NBO on the Exchange that matches the NBB or NBO first established on an away market, in order to receive the additive rebate on such executions and the Exchange believes that the resulting increased submission of such aggressively priced displayed liquidity would enhance market quality by increasing execution opportunities, tightening spreads, encouraging depth, and promoting price discovery on the Exchange. The Exchange notes that NBBO First Joiner Additive Rebate is comparable to other volume-based incentives and discounts, which have been widely adopted by exchanges, and that the Exchange's proposal to provide an additive rebate for an Equity Member's transaction that brings MIAX Pearl Equities to the established NBB or NBO with a minimum size of a round lot is similar in construct to pricing incentives that have been adopted by other exchanges.
The Exchange proposes to amend the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule to establish a new “Step-Up Rebate,” which will be labelled as Note 4 in the Notes section of the NBBO Setter Plus Table.
The purpose of this proposed change is to provide an incentive for Equity Members to strive for higher ADAV on the Exchange (above their ADAV in the baseline month of February 2024) to receive the additive Step-Up Rebate for
The Exchange proposes to make several changes to the notes section of the NBBO Setter Plus Table in Section 1)c) of the Fee Schedule in light of the proposed changes described above. Note 3 currently provides that “Retail Orders are not eligible for the NBBO Setter Additive Rebate as it applies only to Liquidity Indicator Codes AA, AB and AC.” The Exchange proposes to move Note 3 to the end of the notes section, renumber it as new “Note 5,” and add text that in addition to the NBBO Setter Additive Rebate, Retail Orders will also not be eligible for the proposed NBBO First Joiner Additive Rebate and the Step-Up Rebate. Accordingly, new Note 5 will provide as follows: “Retail Orders are not eligible for the NBBO Setter Additive Rebate, the NBBO First Joiner Additive Rebate, or the Step-Up Rebate as these rebates only apply to Liquidity Indicator Codes AA, AB and AC.”
Next, in connection with the proposed change to establish the Step-Up Rebate as Note 4 (described above), the Exchange proposes to renumber current Note 4 to now be numbered as Note 3. The Exchange does not propose to amend any of the text of current Note 4 (proposed renumbered Note 3). The purpose of all of these changes is to provide clarity within the Fee Schedule in connection with all of the changes proposed herein.
The proposed changes are immediately effective.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Exchange operates in a highly fragmented and competitive market in which market participants can readily direct their order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of sixteen registered equities exchanges, and there are a number of alternative trading systems and other off-exchange venues, to which market participants may direct their order flow. Based on publicly available information, no single registered equities exchange had more than approximately 15-16% of the total market share of executed volume of equities trading for the month of February 2024.
The Exchange believes that the ever-shifting market share among the exchanges from month to month demonstrates that market participants can shift order flow or discontinue or reduce use of certain categories of products, in response to new or different pricing structures being introduced into the market. Accordingly, competitive forces constrain the Exchange's transaction fees and rebates, and market participants can readily trade on competing venues if they deem pricing levels at those other venues to be more favorable. The Exchange believes the proposal reflects a reasonable and competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes would enhance liquidity and market quality in both a broad manner and in a targeted manner with respect to the NBBO Program, in particular, and Added Displayed Volume in securities priced at or above $1.00 per share, in general.
The Exchange believes its proposal to reduce the volume threshold requirement for Tier 5 (and adjacently Tier 4) of volume calculation Method 1 and decrease the rebates applicable to Tier 1, Tier 5 and Tier 6 for all rebate Levels of the NBBO Program provides a reasonable means to continue to encourage Equity Members to not only increase their order flow to the Exchange but also to contribute to price discovery and market quality on the Exchange by submitting aggressively priced displayed liquidity in securities priced at or above $1.00 per share. The Exchange believes that the NBBO Program, as modified with this proposal, continues to be equitable and not unfairly discriminatory because it is open to all Equity Members on an equal basis and provides enhanced rebates that are reasonably related to the value of the Exchange's market quality associated with greater order flow by Equity Members that set the NBB or NBO, and the introduction of higher volumes of orders into the price and volume discovery process. The Exchange believes the proposal is equitable and not unfairly discriminatory because it is designed to incentivize the entry of aggressively priced displayed liquidity that will create tighter spreads, thereby promoting price discovery and market quality on the Exchange to the benefit of all Equity Members and public investors.
In addition, the Exchange believes its proposal to reduce the volume threshold requirement for Tier 5 (and adjacently Tier 4) of volume calculation Method 1 and decrease the rebates applicable to Tier 1, Tier 5 and Tier 6 for all rebate Levels of the NBBO Program is reasonable because, even with the proposed changes, the base rebates,
The Exchange believes its proposal to amend the Standard Rates table and Liquidity Indicator Codes and Associated Fees table to show the reduced standard rebate of ($0.0022) per share for Added Displayed Volume in securities priced at or above $1.00 per share in all Tapes is reasonable because these corresponding changes are to ensure the Fee Schedule is accurate and clear in light of the change to the base rebate amount in Level A, Tier 1 of the NBBO Setter Plus Table. The Exchange believes that even with the proposed reduced standard rebate for Added Displayed Volume in securities priced at or above $1.00 per share in all Tapes, the proposal is reasonable, equitably allocated and not unfairly discriminatory because the proposed standard rebate—($0.0022) per share—remains higher than, and competitive with, the standard rebates provided by other exchanges for executions of orders in securities priced at or above $1.00 per share that add displayed liquidity.
The Exchange believes its proposal to increase the NBBO Setter Additive Rebate to ($0.0004) per share for Added Displayed Volume (other than Retail Orders) for executions of orders in securities priced at or above $1.00 per share that set the NBB or NBO on MIAX Pearl Equities with a minimum size of a round lot is reasonable, equitably allocated and not unfairly discriminatory because the Exchange believes it will continue to provide an additional incentive for Equity Members to contribute Added Displayed Volume in securities priced at or above $1.00 per share that sets the NBB or NBO on MIAX Pearl Equities. In turn, this should benefit all Equity Members by providing greater execution opportunities on the Exchange and contribute to a deeper, more liquid market, to the benefit of all investors and market participants. Further, the NBBO Setter Additive Rebate is available to all Equity Members of the Exchange that transact in securities priced at or above $1.00 per share in all Tapes. The Exchange believes it is reasonable and not unfairly discriminatory to continue to exclude Retail Orders from participating in the NBBO Setter Additive Rebate because executions of orders in securities priced at or above $1.00 per share for Added Displayed Volume in Retail Orders already receive an enhanced rebate of ($0.0037) per share.
The Exchange believes its proposal to establish the NBBO First Joiner Additive Rebate is reasonable because it should attract aggressively priced displayed liquidity to the Exchange, which will encourage the submission of orders that join the established NBB or NBO on the Exchange. This should result in increased orders of aggressively priced displayed liquidity, which would enhance the Exchange's market quality by increasing execution opportunities, tightening spreads, and promoting price discovery on the Exchange to the benefit of all market participants. The Exchange believes its proposal to establish the NBBO First Joiner Additive Rebate is equitably allocated and not unfairly discriminatory because it will be available to all Equity Members and is comparable to other volume-based incentives and discounts, which have been widely adopted by exchanges.
The Exchange believes that the proposed Step-Up Rebate is comparable to other incentives currently offered by other exchanges,
The Exchange believes its proposal to renumber and amend the Notes section of the NBBO Setter Plus Table is reasonable because it will provide additional clarity within the Fee Schedule. In particular, the Exchange believes it is reasonable to set forth in new Note 5 that Retail Orders will note be eligible for the NBBO Setter Additive Rebate, the NBBO First Joiner Additive Rebate, or the Step-Up Rebate as these rebates only apply to Liquidity Indicator Codes AA, AB and AC, which will provide clarity to Equity Members about the applicability of such rebates.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange does not believe that the proposal will impose any burden on intra-market competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes its proposed changes to the NBBO Program, increase to the NBBO Setter Additive Rebate, adoption of the NBBO First Joiner Additive Rebate, and adoption of the Step-Up Rebate would incentivize Equity Members to submit additional orders that add liquidity to the Exchange, thereby contributing to a deeper and more liquid market and promoting price discovery and market quality on the Exchange to the benefit of all market participants and enhancing
The Exchange believes the proposed changes will benefit competition, and the Exchange notes that it operates in a highly competitive market. Equity Members have numerous alternative venues they may participate on and direct their order flow to, including fifteen other equities exchanges and numerous alternative trading systems and other off-exchange venues. As noted above, no single registered equities exchange currently had more than 15-16% of the total market share of executed volume of equities trading for the month of February 2024.
Additionally, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and self-regulatory organization (“SRO”) revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 123D (Halts in Trading) to set forth specific requirements for halting and resuming trading in a security that is subject to a reverse stock split. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
In conjunction with the increase in overall reverse stock splits in recent years, the Exchange proposes to amend Rule 123D (Halts in Trading) to set forth specific requirements for halting and resuming trading in a security that is subject to a reverse stock split.
The Commission recently approved a proposal filed by The Nasdaq Stock Exchange (“Nasdaq”) providing for a regulatory halt at the end of trading on the day immediately before the market effective date of a reverse stock split and a delayed opening of the security on the market effective date of the reverse stock split.
The Exchange has not itself experienced the increase in the number of reverse stock splits that Nasdaq described in its filings. Nevertheless, the Exchange proposes to adopt similar changes at the request of market participants who say that they would benefit from a consistent approach across exchanges with respect to regulatory halt rules around reverse stock splits. The Exchange believes that harmonizing its rules with Nasdaq's in this area would enhance investor protection and maintain fair and orderly markets by minimizing the chance that market participants might make erroneous trades in a security because they were unaware that it had undergone a reverse stock split.
Accordingly, the Exchange proposes to adopt amendments to its trading halt rules to require the Exchange to declare a regulatory halt in trading before the end of after-hours trading on the day immediately before the market effective date of a reverse stock split, and to open the security on the market effective date of a reverse stock split with a Trading Halt Auction
This change would help reduce the potential for market participants' misunderstanding of the impact on the value of the issuer' securities resulting from investors' lack of advance knowledge of the reverse stock split, as well as errors resulting in a material effect on the market resulting from market participants' processing of the reverse stock split, including incorrect adjustment or entry of orders.
The Exchange currently processes reverse stock splits overnight, with the security available for trading on other markets at 4:00 a.m.
As such, the Exchange believes it is appropriate to impose a regulatory halt, which would prohibit pre-market trading immediately after a reverse stock split, and to re-open trading in such securities using a Trading Halt Auction. These changes would allow the Exchange and market participants to better detect any errors or problems with orders for the security resulting from the reverse stock split before trading in the security begins and thereby avoid any material effect on the market.
The Exchange proposes to add new subparagraph (f) to Rule 123D, which would provide that the Exchange will halt trading in a security for which the Exchange is the Primary Listing Market
Proposed Rule 123D(f) would further provide that trading in the security will resume with a Trading Halt Auction starting at 9:30 a.m.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposal removes impediments to and perfects the mechanism of a free and open market and a national market system and protects investors and the public interest. The Exchange is proposing these changes at the request of market participants who say that they would benefit from a consistent approach across exchanges with respect to regulatory halt rules around reverse stock splits. As such, the Exchange believes that harmonizing its rules with Nasdaq's in this area would enhance investor protection and maintain fair and orderly markets by minimizing the chance that market participants might make erroneous trades in a security because they were unaware that it had undergone a reverse stock split.
The Exchange believes that its proposed rule change establishing a reverse stock split trading halt rule would protect investors by giving the Exchange non-discretionary authority to act in situations where it is necessary to maintain fair and orderly markets, such as when a security is subject to a reverse stock split and companies have not updated their systems to account for the new stock price. It would also ensure that the process for resuming trading following a reverse stock split halt is consistent with other types of halts initiated by the Exchange. Currently, none of the Exchange's rules provide authority to pre-emptively halt the trading in a security undergoing a significant corporate action that could lead to investor or market confusion.
The Exchange believes that the proposed amendments would provide greater transparency and clarity with respect to the manner in which trading would be halted due to a reverse stock split, and the process through which that halt would be implemented and terminated. Particularly, the Exchange would not have discretion in determining whether to declare a trading halt in a security following the declaration of a reverse stock split. Rather, following the reverse stock split of a security for which the Exchange is the Primary Listing Market, trading in the security would halt prior to the close of the post-market trading session on other markets on the day immediately before the market effective date of the reverse stock split. The Exchange also believes it is appropriate
Additionally, the Exchange believes that establishing a mandatory trading halt for securities that have undergone a reverse stock split and resuming trading thereafter promotes fair and orderly markets and the protection of investors because it allows the Exchange to protect the broader interests of the national market system and addresses potential concerns that system errors may affect immediate trading in those securities. The Exchange believes that given the increase in companies effecting reverse stock splits, the proposal would help the Exchange reduce the potential for errors resulting in a material effect on the market resulting from market participants' processing of the reverse stock split, including incorrect adjustment or entry of orders.
The Exchange further believes that re-opening a security subject to a reverse stock split with a Trading Halt Auction starting at 9:30 a.m. would promote fair and orderly trading because it would provide market participants and the Exchange ample opportunity to notice errors or problems with orders for the security due to the reverse stock split. In addition, the Exchange believes that re-opening the security with a Trading Halt Auction starting at 9:30 a.m. (instead of at 9:00 a.m. as on NYSE American and NYSE Arca)
Based on the foregoing, the Exchange believes that the proposal is consistent with the Act because it would promote just and equitable principles of trade and would remove any impediments to a free and open market and a national market system by allowing sufficient time for investors to review their orders and the quotes for a security that has undergone a reverse stock split, and allow market participants to ensure that their systems have properly accounted for the reverse stock split. As discussed previously, the Exchange believes that the proposed amendments establishing the authority and process for reverse stock split trading halts and the resumption of trading is consistent with the Act, which itself imposes obligations on exchanges with respect to issuers that are listed.
The Exchange believes that the proposal will not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Section 6(b)(8) of the Act.
The Exchange believes that the proposal will not impose a burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed rule change is designed to protect investors and facilitate a fair and orderly market, which are both important purposes of the Act. To the extent that there is any impact on intermarket competition, it is incidental to these objectives. In addition, at least one other exchange (Nasdaq) has already adopted a substantially similar rule. The Exchange believes that harmonizing its rules with Nasdaq's in this area would minimize the chance that market participants might make erroneous trades in a security because they were unaware that it had undergone a reverse stock split.
The Exchange does not believe that the proposed rule change imposes a burden on intra-market competition because the provisions apply to all market participants and issuers on the Exchange equally. In addition, information regarding the timing of reverse stock splits and the halting and resumption of trading in connection with the effecting of reverse splits would be disseminated using several freely-accessible sources to ensure the broad availability of this information.
In addition, the proposal includes provisions related to the declaration and timing of trading halts and the resumption of trading that are designed to prevent any advantage to those who can react more quickly than other market participants.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
Cboe EDGA Exchange, Inc. (the “Exchange” or “EDGA Equities”) proposes to amend its Fees Schedule. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend its fee schedule to amend the fees and increase the maximum cap for Dedicated Cores.
By way of background, the Exchange recently began to allow Users
The Exchange currently assesses the following monthly fees for those Users that wish to use Dedicated Cores: $650 per Dedicated Core for the first 3 Dedicated Cores; $1,050 per Dedicated Core for the 4th-6th Dedicated Cores; and $1,450 per Dedicated Core for 7 or more Dedicated Cores. The proposed fees are progressive and are assessed and applied in their entirety and are not
Since the Exchange currently has finite amount of space in its data centers in which its servers (and therefore corresponding CPU Cores) are located, the Exchange has also prescribed a maximum limit on the number of Dedicated Cores that Users may purchase each month. Particularly, the Exchange currently provides that Members are limited to a maximum number of 10 Dedicated Cores and Sponsoring Members are limited to a maximum number of 4 Dedicated Cores for each of their Sponsored Access relationships.
The Exchange now proposes to amend these fees and maximum limits. First the Exchange proposes to provide up to two Dedicated Cores to all Users who wish to use Dedicated Cores, at no additional cost. The Exchange also proposes to amend the Fees such that it proposes to charge: $650 per Dedicated Core for 3-10 Dedicated Cores; $850 per Dedicated Core for 11-15 Dedicated Cores; and $1,050 per Dedicated Core for 16 or more Dedicated Cores. The Exchange notes the proposed fees will continue to be progressive and the Exchange proposes to update the current example in the fees schedule to maintain clarity as to how they are applied.
The Exchange also proposes to increase the current maximum number of Dedicated Cores that Users may purchase. In particular, the Exchange continually monitors market participant demand and resource availability and endeavors to adjust the limit if and when the Exchange is able to accommodate additional CPU Cores (including Dedicated Cores). In response to market participant demand and the ability to now accommodate additional Dedicated Cores, the Exchange is proposing to double the current maximum of Dedicated Cores that Users may purchase. Particularly, the Exchange proposes to provide that Members will be limited to a maximum number of 20 Dedicated Cores
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes the proposed changes are reasonable because they provide any Users who wishes to utilize Dedicated Cores up to two Dedicated Cores at no additional cost. Additionally, the proposed changes generally result in reduced fees for Users. For example, only the first three Dedicated Cores are currently assessed the lower $650 per Dedicated Core rate and Dedicated Core quantities above 3 are assessed a higher rate of either $1,050 or $1,450, depending on how many Dedicated Cores a User purchased. As proposed, Users not only get the first two Dedicated Cores for free, but up to 8 additional Dedicated Cores at the lower $650 rate. The Exchange also proposes to reduce the fee rates for the next two tiers as well (
The Exchange also believes the proposed fees are reasonable as Dedicated Cores provide a valuable service that can provide reduced latency, enhanced throughput, and improved performance compared to use of a shared CPU Core since a firm using a Dedicated Core is utilizing the full processing power of a CPU Core. Dedicated Cores continue to not be necessary for trading and as noted above, are entirely optional. Indeed, Users can continue to access the Exchange through shared CPU Cores at no additional cost. Depending on a firm's specific business needs, the proposal enables Users to choose to use Dedicated Cores in lieu of, or in addition to, shared CPU Cores (or as noted, not use Dedicated Cores at all). The Exchange believes the proposal to operate across a mix of shared and dedicated CPU Cores may further provide additional risk and capacity management. If a User finds little benefit in having Dedicated Cores however, or determines Dedicated Cores
The Exchange also believes that the proposed Dedicated Core fees are equitable and not unfairly discriminatory because they continue to be assessed uniformly to similarly situated users in that all Users who choose to purchase Dedicated Cores will be subject to the same proposed tiered fee schedule. Further all Users are entitled to up to 2 Dedicated Cores at no additional cost. The Exchange believes the proposed ascending fee structure is also reasonable, equitable and not unfairly discriminatory as it is designed so that firms that use a higher allotment of the Exchange's finite number of Dedicated Cores pay higher rates, rather than placing that burden on market participants that have more modest needs who will have the flexibility of obtaining Dedicated Cores at lower price points in the lower tiers. As such, the proposed fees do not favor certain categories of market participants in a manner that would impose a burden on competition; rather, the ascending fee structure reflects the resources consumed by the various needs of market participants—that is, the lowest Dedicated Core consuming Users pay the least, and highest Dedicated Core consuming Users pay the most. Other exchanges similarly assess higher fees to those that consume more Exchange resources.
The Exchange also believes it's reasonable, equitable and not unfairly discriminatory to increase the maximum number of Dedicated Cores permitted because Users will be able to avail themselves of additional Dedicated Cores should they so choose. As noted above, the Exchange continually monitors market participant demand and resource availability with the goal to increase the Dedicated Cores limits to meet Users' needs if and when the Exchange is able to do so. The Exchange proposes to increase the limits for Dedicated Cores based on recent market participant demand and the ability to accommodate additional Dedicated Cores as compared to when the Exchange first launched Dedicated Cores. The Exchange notes that it's reasonable to still maintain a maximum number of Dedicated Cores Users can purchase because the Exchange continues to have a finite amount of space in its data centers. The proposed limits also apply uniformly to similarly situated market participants (
The Exchange does not believe that the proposed rule change will impose any burden on intramarket competition that is not necessary in furtherance of the purposes of the Act because the proposed tiered fee structure will apply equally to all similarly situated Users that choose to use Dedicated Cores. As discussed above, Dedicated Cores are optional and Users may choose to utilize Dedicated Cores, or not, based on their views of the additional benefits and added value provided by utilizing a Dedicated Core. The Exchange believes the proposed fee will be assessed proportionately to the potential value or benefit received by Users with a greater number of Dedicated Cores and notes that Users may determine at any time to cease using Dedicated Cores. As discussed, Users can also continue to access the Exchange through shared CPU Cores at no additional cost. Finally, all Users will be entitled to two Dedicated Cores at no additional cost.
Next, the Exchange believes the proposed rule change does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As previously discussed, the Exchange operates in a highly competitive market, including competition for exchange memberships. Market Participants have numerous alternative venues that they may participate on, including 15 other equities exchanges, as well as off-exchange venues, where competitive products are available for trading. Indeed, participants can readily choose to submit their order flow to other exchange and off-exchange venues if they deem fee levels at those other venues to be more favorable. Moreover, the Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) proposes to amend the Short Term Options Series Program in Rule 4.5(d). The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the Short Term Option Series Program in Rule 4.5(d) (Series of Options Contracts Open for Trading). Specifically, the Exchange proposes to expand the Short Term Option Series program to permit the listing and trading of options series with Tuesday and Thursday expirations for options on iShares Russell 2000 ETF (“IWM”), specifically permitting two expiration dates for the proposed Tuesday and Thursday expirations in IWM.
Currently, Table 1 in Rule 4.5(d) specifies each symbol that qualifies as a Short Term Option Daily Expiration.
Today, Tuesday Short Term Option Daily Expirations in SPDR S&P 500 ETF Trust (“SPY”) and the INVESCO QQQ TrustSM, Series 1 (“QQQ”) may open for trading on any Monday or Tuesday that is a business day series of options on the symbols provided in Table 1 that expire at the close of business on each of the next two Tuesdays that are business days and are not business days in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire (“Tuesday Short Term Option Expiration Date”).
In the event that options on IWM expire on a Tuesday or Thursday and that Tuesday or Thursday is a business day in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire, the Exchange would skip that week's listing and instead list the following week; the two weeks would therefore not be consecutive. With this proposal, the Exchange would be able to open for trading series of options on IWM that expire at the close of business on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days beyond the current week and are not business days in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire.
The interval between strike prices for the proposed Tuesday and Thursday IWM Short Term Option Daily Expirations will be the same as those for Tuesday and Thursday IWM Short Term Option Daily Expirations in SPY and QQQ, applicable to the Short Term Option Series Program.
Pursuant to Rule 4.5(d), with respect to the Short Term Option Series Program, a Tuesday or Thursday expiration series shall expire on the first business day immediately prior to that Tuesday or Thursday,
Currently, for each option class eligible for participation in the Short Term Option Series Program, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.
The Exchange notes that listings in the Short Term Option Series Program comprise a significant part of the standard listing in options markets. The below table sets forth the percentage of weekly listings as compared to monthly, quarterly, and Long-Term Option Series in 2023 in the options industry.
Similar to SPY and QQQ, the Exchange would limit the number of Short Term Option Daily Expirations for IWM to two expirations for Tuesday and Thursday expirations while expanding the Short Term Option Series Program to permit Tuesday, and Thursday expirations for IWM. Expanding the Short Term Option Series Program to permit the listing of Tuesday and Thursday expirations in IWM will account for the addition of 6.77% of strikes for IWM.
Weeklies comprise 48.30% of the total volume of options contracts.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that IWM Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase IWM options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. Further, the proposal to permit Tuesday and Thursday Short Term Daily Expirations for options on IWM listed pursuant to the Short Term Option Series Program, subject to the proposed limitation of two nearest expirations, would protect investors and the public interest by providing the investing public and other market participants more flexibility to closely tailor their investment and hedging decisions in IWM options, thus allowing them to better manage their risk exposure. In particular, the Exchange believes the Short Term Option Series Program has been successful to date and that Tuesday and Thursday IWM Short Term Daily Expirations should simply expand the ability of investors to hedge risk against market movements stemming from economic releases or market events that occur throughout the month in the same way that the Short Term Option Series Program has expanded the landscape of hedging. Similarly, the Exchange believes Tuesday and Thursday IWM Short Term Daily Expirations should create greater trading and hedging opportunities and provide customers the flexibility to tailor their investment objectives more effectively. The Exchange currently lists SPY and QQQ Tuesday and Thursday Short Term Daily Expirations.
With this proposal, Tuesday and Thursday IWM Expirations would be treated similar to existing Tuesday and Thursday SPY and QQQ Expirations and would expire in the same week that standard monthly options expire on Fridays.
Finally, the Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in the proposed Tuesday and Thursday IWM Short Term Daily Expirations, in the same way that it monitors trading in the current Short Term Option Series and trading in Tuesday and Thursday SPY and QQQ Expirations. The Exchange also represents that it has the necessary systems capacity to support the new options series. Finally, the Exchange does not believe that any market disruptions will be encountered with the introduction of Tuesday and Thursday IWM Short Term Daily Expirations.
Finally, the Exchange notes the proposed rule change is substantively the same as a rule change proposed by ISE, which the Commission recently approved.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Similar to SPY and QQQ Tuesday and Thursday Expirations, the introduction of IWM Tuesday and Thursday Short Term Daily Expirations does not impose an undue burden on competition. The Exchange believes that it will, among other things, expand hedging tools available to market participants and continue the reduction of the premium cost of buying protection. The Exchange believes that IWM Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase IWM options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively.
The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents other options exchanges from proposing similar rules to list and trade Short-Term Option Series with Tuesday and Thursday Short Term Daily Expirations. The Exchange notes that having Tuesday and Thursday IWM expirations is not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations are currently listed on the Exchange.
The Exchange neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Cboe EDGX Exchange, Inc. (the “Exchange” or “EDGX”) proposes to amend the Short Term Options Series Program in Rule 19.6, Interpretation and Policy .05. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the Short Term Option Series Program in Rule 19.6, Interpretation and Policy .05 (Series of Options Contracts Open for Trading). Specifically, the Exchange proposes to expand the Short Term Option Series program to permit the listing and trading of options series with Tuesday and Thursday expirations for options on iShares Russell 2000 ETF (“IWM”), specifically permitting two expiration dates for the proposed Tuesday and Thursday expirations in IWM.
Currently, Table 1 in Rule 19.6, Interpretation and Policy .05(h), specifies each symbol that qualifies as a Short Term Option Daily Expiration.
Today, Tuesday Short Term Option Daily Expirations in SPDR S&P 500 ETF Trust (“SPY”) and the INVESCO QQQ TrustSM, Series 1 (“QQQ”) may open for trading on any Monday or Tuesday that is a business day series of options on the symbols provided in Table 1 that expire at the close of business on each of the next two Tuesdays that are business days and are not business days in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire (“Tuesday Short Term Option Expiration Date”).
In the event that options on IWM expire on a Tuesday or Thursday and that Tuesday or Thursday is a business day in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire, the Exchange would skip that week's listing and instead list the following week; the two weeks would therefore not be consecutive. With this proposal, the Exchange would be able to open for trading series of options on IWM that expire at the close of business on each of the next two Mondays, Tuesdays, Wednesdays, and Thursdays, respectively, that are business days beyond the current week and are not business days in which standard expiration options series, Monthly Options Series, or Quarterly Options Series expire.
The interval between strike prices for the proposed Tuesday and Thursday
Pursuant to Rule 19.6, Interpretation and Policy .05(h), with respect to the Short Term Option Series Program, a Tuesday or Thursday expiration series shall expire on the first business day immediately prior to that Tuesday or Thursday,
Currently, for each option class eligible for participation in the Short Term Option Series Program, the Exchange is limited to opening thirty (30) series for each expiration date for the specific class.
The Exchange notes that listings in the Short Term Option Series Program comprise a significant part of the standard listing in options markets. The below table sets forth the percentage of weekly listings as compared to monthly, quarterly, and Long-Term Option Series in 2023 in the options industry.
Similar to SPY and QQQ, the Exchange would limit the number of Short Term Option Daily Expirations for IWM to two expirations for Tuesday and Thursday expirations while expanding the Short Term Option Series Program to permit Tuesday, and Thursday expirations for IWM. Expanding the Short Term Option Series Program to permit the listing of Tuesday and Thursday expirations in IWM will account for the addition of 6.77% of strikes for IWM.
Weeklies comprise 48.30% of the total volume of options contracts.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that IWM Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase IWM options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively. Further, the proposal to permit Tuesday and Thursday Short Term Daily Expirations for options on IWM listed pursuant to the Short Term Option Series Program, subject to the proposed limitation of two nearest expirations, would protect investors and the public interest by providing the investing public and other market participants more flexibility to closely tailor their investment and hedging decisions in IWM options, thus allowing them to better manage their risk exposure. In particular, the Exchange believes the Short Term Option Series Program has been successful to date and that Tuesday and Thursday IWM Short Term Daily Expirations should simply expand the ability of investors to hedge risk against market movements stemming from economic releases or market events that occur throughout the month in the same way that the Short Term Option Series Program has expanded the landscape of hedging. Similarly, the Exchange believes Tuesday and Thursday IWM Short Term Daily Expirations should create greater trading and hedging opportunities and provide customers the flexibility to tailor their investment objectives more effectively. The Exchange currently lists SPY and QQQ Tuesday and Thursday Short Term Daily Expirations.
With this proposal, Tuesday and Thursday IWM Expirations would be treated similar to existing Tuesday and Thursday SPY and QQQ Expirations and would expire in the same week that standard monthly options expire on Fridays.
Finally, the Exchange represents that it has an adequate surveillance program in place to detect manipulative trading in the proposed Tuesday and Thursday IWM Short Term Daily Expirations, in the same way that it monitors trading in the current Short Term Option Series and trading in Tuesday and Thursday SPY and QQQ Expirations. The Exchange also represents that it has the necessary systems capacity to support the new options series. Finally, the Exchange does not believe that any market disruptions will be encountered with the introduction of Tuesday and Thursday IWM Short Term Daily Expirations.
Finally, the Exchange notes the proposed rule change is substantively the same as a rule change proposed by ISE, which the Commission recently approved.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Similar to SPY and QQQ Tuesday and Thursday Expirations, the introduction of IWM Tuesday and Thursday Short Term Daily Expirations does not impose an undue burden on competition. The Exchange believes that it will, among other things, expand hedging tools available to market participants and continue the reduction of the premium cost of buying protection. The Exchange believes that IWM Tuesday and Thursday Short Term Daily Expirations will allow market participants to purchase IWM options based on their timing as needed and allow them to tailor their investment and hedging needs more effectively.
The Exchange does not believe the proposal will impose any burden on inter-market competition, as nothing prevents other options exchanges from proposing similar rules to list and trade Short-Term Option Series with Tuesday and Thursday Short Term Daily Expirations. The Exchange notes that having Tuesday and Thursday IWM expirations is not a novel proposal, as SPY and QQQ Tuesday and Thursday Expirations are currently listed on the Exchange.
The Exchange neither solicited nor received comments on the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the authority granted to the United States Small Business Administration under section 309 of the Small Business Investment Act of 1958, as amended, and 13 CFR 107.1900 of the Code of Federal Regulations to function as a small business investment company under the Small Business Investment Company license number 02/02-0658 issued to OFS SBIC I, LP, said license is hereby declared null and void.
The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104-13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes revisions of OMB-approved information collections, and one new collection for OMB-approval.
SSA is soliciting comments on the accuracy of the agency's burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers.
Or you may submit your comments online through
I. The information collection below is pending at SSA. SSA will submit it to OMB within 60 days from the date of this notice. To be sure we consider your comments, we must receive them no later than June 24, 2024. Individuals can obtain copies of the collection instruments by writing to the above email address.
II. SSA submitted the information collections below to OMB for clearance. Your comments regarding these information collections would be most useful if OMB and SSA receive them 30 days from the date of this publication. To be sure we consider your comments, we must receive them no later than May 23, 2024. Individuals can obtain copies of these OMB clearance packages by writing to the
Historically, the process of seeking, tracking, and considering representative availability has been a manual and time-intensive activity. In the past, hearing offices sought representative availability information by contacting each representative individually. More recently, Office of Hearings Operations' Regional Offices representatives collected availability information. Representatives provided Regional Office staff with their hearing availability via telephone or email. However, the process for gathering and considering representative availability was not standardized and varied greatly amongst Regional Offices. The appointed representative community informed SSA they would appreciate a
In the Spring of 2023, SSA initiated the Enhanced Representative Availability Process (ERAP) to provide representatives with a more standardized and streamlined process to email their availability for hearings. In the interim, SSA obtained OMB approval to test a new Representative Availability Portal (Portal) to offer the representative community a web-based option to submit their monthly availability to SSA, as per 20 CFR 404.1740(b)(3)(iii) and 416.1540(b)(3)(iii) and in a manner consistent with ERAP. SSA tested the Portal among 11 appointed representative practice groups nationwide. We are currently seeking OMB approval for the national rollout of the Portal, which collects standardized information regarding appointed representative availability for the purpose of scheduling hearings.
SSA plans to roll the Portal out to all appointed representatives registered with the Registration, Appointment and Services for Representatives (RASR) application, other professional representatives who regularly conduct hearing business with SSA but are not registered with RASR, and delegated officials from appointed representative's Designated Scheduling Groups (DSG). A DSG is a representative-identified scheduling group which can include one representative, or multiple representatives. Respondents will need to have a
Portal respondents, once registered, are authorized representatives and delegated officials from appointed representatives' DSG. SSA will use the Portal to track availability for hearings for the DSG. Representatives provide hearing availability for the DSG monthly (as described above), and SSA considers the DSG-provided availability when scheduling hearings.
SSA will announce the response window for the Portal each month via a reminder email, approximately ten days prior to the deadline for Portal submissions. Following the submission deadline, the Portal will “lock,” and respondents will not be able to submit availability through the Portal at that time. However, SSA has some discretion to approve a request for a late submission or modification and plans to have the capacity to unlock the Portal, when warranted. Portal response options will include DSG group, hearing region, availability during the period of submission, and respondent-preferred case maximums. The Portal will allow SSA to obtain the information we require to schedule hearings for attendees.
If the respondents choose not to submit their availability via the Portal, the option of submitting their availability through email submission (as is the current practice) will remain. If a representative elects not to timely submit any availability via the Portal or email, SSA will schedule their hearings without their input.
We expect use of the Portal will result in receiving consistent structured data from appointed representatives, which will allow for a more streamlined and effective hearing scheduling process. The Portal also meets a longstanding customer-experience request by the representative community, one of SSA's key stakeholders in the process.
The respondents are appointed representatives, and delegated officials from appointed representatives' DSGs who need to submit their availability to SSA for hearings.
3.
While these programs operate within the state's workers' compensation system, and are available only to people experiencing work-related injuries or illnesses, the RETAIN Demonstration Projects provide opportunities to improve SAW/RTW outcomes for both occupational and non-occupational injuries and illnesses of people who are employed, or at a minimum in the labor force, when their injury or illness occurs.
The primary goals of the RETAIN Demonstration Projects are:
1. To increase employment retention and labor force participation of individuals who acquire, and/or are at risk of developing, work disabilities; and
2. To reduce long-term work disability among RETAIN service users, including the need for Social Security Disability Insurance and Supplemental Security Income.
The Retain Demonstration aims to validate and expand evidence-based strategies to accomplish these goals. DOL funds intervention approaches and programmatic technical assistance, while SSA funds evaluation support, including technical assistance and the full evaluation for the demonstration. The demonstration consists of two Phases. The first involves the implementation and assessment of cooperative awards to eight states to conduct planning and start-up activities, including the launch of a small pilot demonstration. During Phase 1, SSA provided evaluation-related technical assistance and planning, and conducts evaluability assessments to assess which states' projects would allow for a rigorous evaluation if continued beyond the pilot phase. SSA completed Phase 1 on May 16, 2021. DOL selected a subset of states and continued to Phase 2 full implementation and evaluation on May 17, 2021, which will end in October 2025. During Phase 2, DOL funds the operations and program technical assistance activities for the recommended states, and SSA funds the full set of evaluation activities. The four components of this evaluation, completed during site visits, interviews with RETAIN service users, surveys of RETAIN enrollees, and surveys of RETAIN service providers, include:
•
•
•
•
The purpose and proposed use of this information collection is to gather qualitative and quantitative data needed to conduct the analysis. These activities, include (1) surveys of RETAIN enrollees and (2) follow-up interviews with RETAIN service users. The qualitative data collection consists of: (1) semi-structured interviews with program staff and service users; and (2) staff activity logs. Program staff interviews focus on staff's perceptions of the successes and challenges of implementing each states program, while staff activity logs house information on staff's time to inform the benefit-cost analysis. Service user interviews inform SSA's understanding of users' experiences with program services. The quantitative data include SSA's program records and survey data. The survey data collection consists of: (1) two rounds of follow-up surveys, focusing on individual-level outcomes, with enrollees, all of whom who have experienced a disability onset; and (2) two rounds of surveys with RETAIN providers. Respondents learn of the RETAIN program data collection efforts through various outreach methods, including, but not limited to mailings, phone calls, and from other individuals. SSA is constantly reviewing our outreach strategies to ensure maximum exposure and accessibility to the materials. the respondents are staff members selected for staff interviews and staff activity logs, and RETAIN service users, enrollees, and providers.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Notice of decision to grant an authorization to exceed Mach 1.
This notice summarizes the petition Boom Supersonic, Inc. submitted to the FAA requesting a special flight authorization as provided for in FAA regulations. The notice also provides for public awareness of FAA's decision to grant Boom Supersonic, Inc.'s request. The FAA is not requesting comments on the petition or the FAA's decision regarding the petition because a special flight authorization petition to exceed Mach 1 follows a separate regulatory process.
The grant of the special flight authorization to exceed Mach 1 is effective April 7, 2024.
Sandy Liu, Office of Environment and Energy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; 202-267-4748,
On March 24, 2023, Boom Supersonic, Inc., Centennial, CO, petitioned the FAA on behalf of Boom Technology, Inc. (“Boom”) to allow Boom to operate a civil aircraft that is expected to exceed Mach 1 speeds during flight testing. Specifically, Boom Supersonic Inc. requested to conduct developmental flight test operations of an experimental aircraft (XB-1) and a chase airplane over Edwards Air Force Base within pre-existing supersonic corridors, located in Los Angeles, Kern, and San Bernardino counties in California. The petitioner requested authorization for up to 20 supersonic test flights over one year. The proposed operations would occur at or above 30,000 ft Mean Sea Level.
On January 12, 2024, the FAA published a notice of availability in the
The FAA finds the request by the petitioner is well within the intent of 14 CFR 91.818. As such, the FAA has decided to grant this Special Flight Authorization to Exceed Mach 1. Authority to exceed Mach 1 during the testing of the Boom XB-1 experimental aircraft is limited to the conditions and limitations stated in the special flight authorization.
The FAA's decision to grant a special flight authorization in response to Boom Supersonic Inc.'s petition and the applicable environmental review documents are available on FAA's website. The FAA is posting special flight authorization applications, grants of special flight authorizations, and applicable environmental review documents. These documents may be found at:
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before May 23, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0054 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel KREWE ZEN is:
The complete application is available for review identified in the DOT docket
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before May 23, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0058 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel MEMORY MAKER is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0058 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before May 23, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0055 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel PAZ is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0055 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before May 23, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0057 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel ANDROMEDA is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0057 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before May 23, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0056 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel ALANA KAI is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0056 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See
OFAC: Bradley Smith, Director, tel.: 202-622-2490; Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or Assistant Director for Compliance, tel.: 202-622-2490.
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On March 11, 2024, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authority listed below.
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See
OFAC: Bradley T. Smith, Director, tel.: 202-622-2490; Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or Assistant Director for Enforcement, Compliance and Analysis, tel.: 202-622-2490.
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On April 18, 2024, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authorities listed below.
1. AL-TAF, Ali Asghar (a.k.a. ATTAF GHOLAMHOSEIN, Ali Asghar), Shahin Shahr, Iran; DOB 21 Dec 1978; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 2529687692 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC).
Designated pursuant to section 1(a)(iii)(A) of Executive Order 13224 of September 23, 2001, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism” (E.O. 13224), 66 FR 49079, as amended by Executive Order 13886 of September 9, 2019, “Modernizing Sanctions To Combat Terrorism,” 84 FR 48041, 3 CFR, 2019 Comp., p. 356 (E.O. 13224, as amended) for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
2. ARAMBUNEZHAD, Hasan (a.k.a. HABIBI, Hasan), Iran; DOB 23 Sep 1975; POB Varamin, Iran; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 6589640386 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC; Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE, a person whose property and interests in property are blocked pursuant to E.O. 13224.
3. AZIZKHANI, Esma'il, Sepahan City, Iran; DOB 07 Oct 1981; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 1285006501 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
4. DEHGHAN, Majid, Iran; DOB 22 Sep 1988; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0083115234 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: FATEH ASEMAN SHARIF COMPANY).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, FATEH ASEMAN SHARIF COMPANY, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
5. EBRAHIMI FORUSHANI, Hamid Hajji (a.k.a. EBRAHIMI FORUSHAN, Hamid Hajji), Esfahan, Iran; DOB 08 Sep 1980; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 1141913534 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
6. FATEHI, Mohammad Sadegh, Iran; DOB 21 Sep 1982; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 1288345801 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
7. MOSHKANI, Abolfazl Ramazanzadeh (a.k.a. MASHKANI, Abolfazl Ramezanzadeh; a.k.a. REZA'I', Abolfazl), Tehran, Iran; DOB 11 Jun 1988; POB Kashan, Iran; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 1263617549 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE, a person whose property and interests in property are blocked pursuant to E.O. 13224.
8. NAGHNEH, Mehdi Ghaffari (a.k.a. NAQNAH, Mahdi Ghaffari), Shar-e Kord, Iran; DOB 01 Mar 1991; POB Borujen, Iran; nationality Iran;
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE, a person whose property and interests in property are blocked pursuant to E.O. 13224.
9. NAHAR DANI, Reza (a.k.a. NAHAR DANI, Ali Reza), Tehran, Iran; DOB 11 Jun 1986; POB Tehran, Iran; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0082970165 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE, a person whose property and interests in property are blocked pursuant to E.O. 13224.
10. RAMSHEH, Ali Reza Nurian, Iran; DOB 25 May 1967; alt. DOB 20 Jun 1967; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0938665847 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC, a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
11. SARTAJI, Abbas (a.k.a. HEDAYAT, Reza; a.k.a. SARTAJI, Abas), Tehran, Iran; DOB 23 Aug 1983; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; Passport M51368656 (Iran); National ID No. 6039648112 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE, a person whose property and interests in property are blocked pursuant to E.O. 13224.
12. TURANLU, Mohsen Sayyadi (a.k.a. TURANLU, Muhsin Sayyadi), Iran; DOB 23 Aug 1979; POB Shiravan, Iran; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0827989709 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: KIMIA PART SIVAN COMPANY LLC).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, KIMIA PART SIVAN COMPANY LLC. a person whose property and interests in property are blocked pursuant to E.O. 13224, as amended.
13. ZAVARAKI, Hadi Jamshidi (a.k.a. KAMALI, Hadi), Karaj, Iran; DOB 23 Apr 1986; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0082700958 (Iran) (individual) [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE).
Designated pursuant to section 1(a)(iii)(A) of E.O. 13224, as amended, for having acted or purported to act for or on behalf of, directly or indirectly, ISLAMIC REVOLUTIONARY GUARD CORPS (IRGC)-QODS FORCE, a person whose property and interests in property are blocked pursuant to E.O. 13224.
14. ABUTALEBI, Mohammad Sadegh (a.k.a. ABOUTALEBI, Mohammad Sadegh; a.k.a. ABUTALEBI, Mohammad Sadiq), Qom, Iran; DOB 22 Jun 1964; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0530439441 (Iran) (individual) [NPWMD] [IRGC] [IFSR] (Linked To: OJE PARVAZ MADO NAFAR COMPANY).
Designated pursuant to section 1(a)(iv) of Executive Order 13382 of June 28, 2005, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters,” 70 FR 38567, 3 CFR, 2005 Comp., p. 170 (E.O. 13382), for acting or purporting to act for or on behalf of, directly or indirectly, OJE PARVAZ MADO NAFAR COMPANY, a person whose property and interests in property are blocked pursuant to E.O. 13382.
15. ABUTALEBI, Ali Asghar (a.k.a. ABOUTALEBI, Ali Asghar; a.k.a. ABU TALEBI, Ali Asghar), Qom, Iran; DOB 10 Aug 1961; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0530657491 (Iran) (individual) [NPWMD] [IRGC] [IFSR] (Linked To: OJE PARVAZ MADO NAFAR COMPANY).
Designated pursuant to section 1(a)(iv) of E.O. 13382 for acting or purporting to act for or on behalf of, directly or indirectly, OJE PARVAZ MADO NAFAR COMPANY, a person whose property and interests in property are blocked pursuant to E.O. 13382.
16. NAJAFI, Ali Habibi (a.k.a. HABIBI, Ali), Tehran, Iran; DOB 25 Dec 1977; nationality Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Gender Male; National ID No. 0060598298 (Iran) (individual) [NPWMD] [IFSR] (Linked To: ASEMAN PISHRANEH CO. LTD)
Designated pursuant to section 1(a)(iv) of E.O. 13382 for acting or purporting to act for or on behalf of, directly or indirectly, ASEMAN PISHRANEH CO. LTD, a person whose property and interests in property are blocked pursuant to E.O. 13382.
1. ASEMAN PISHRANEH CO. LTD (a.k.a. ASEMAN PISHRANEH ENGINEERING SERVICES LIMITED LIABILITY COMPANY; a.k.a. SKY PROPULSION ENGINEERING RESEARCH AND SERVICES CONSULTING COMPANY; a.k.a. SKY PROPULSION ENGINEERING SERVICES COMPANY), Kilometer 13 of Shahid Babaei Highway, Intersection of Telo Road (Northwest Side), Aerospace Complex (Sepehr Airport), Tehran, Iran; Additional Sanctions Information—Subject to Secondary Sanctions; Organization Established Date 14 Apr 1999; National ID No. 10101922753 (Iran); Registration Number 149432 (Iran) [NPWMD] [IFSR] (Linked To: PARAVAR PARS COMPANY)
Designated pursuant to section 1(a)(iv) of E.O. 13382 for being owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, PARAVAR PARS COMPANY, a person whose property and interests in property are blocked pursuant to E.O. 13382.
2. FATEH ASEMAN SHARIF COMPANY (a.k.a. FATEH ASEMAN SHARIF KNOWLEDGE BASED COMPANY), 18th District, 5 Kilometers of Fatah Highway, Nord Blvd., Tehran, Iran; Additional Sanctions Information—Subject to Secondary Sanctions; National ID No. 10320891651 (Iran) [SDGT] [IRGC] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS).
Designated pursuant to section 1(a)(iii)(C) of E.O. 13224, as amended,
Internal Revenue Service (IRS), Treasury.
Solicitation of grant applications.
This document contains a notice that the IRS has provided a grant opportunity in
All applications and requests for continued funding for the 2025 grant year must be filed electronically by 11:59 p.m. (Eastern Time) on June 12, 2024. All organizations must use the funding number of TREAS-GRANTS-042025-001, and the Catalog of Federal Domestic Assistance program number is 21.008, see
Karen Tober at (202) 317-4700 (not a toll-free number) or by email at
Pursuant to 26 U.S.C. 7526, the IRS will annually award up to $6,000,000 (unless otherwise provided by specific Congressional appropriation) to qualified organizations, subject to the limitations in the statute. For FY 2024, Congress has provided overall LITC grant funding of $28 million and has authorized funding of up to $200,000 per clinic. The President's FY 2025 budget request proposes an overall LITC grant funding level of $26 million and a continuation of the $200,000 per-clinic funding cap. In light of the President's budget request and the uncertain timeline for final congressional action, the IRS will allow applicants to request up to $200,000 for the 2025 grant year. The IRS will also continue the ESL Education Pilot Program that was rolled out as part of the February 2023 supplemental funding opportunity. If for FY 2025 Congress significantly reduces the overall LITC grant funding level or reduces the per-clinic funding cap, the IRS will adjust each grant recipient's award to reflect any limitations in place at that time.
For an applicant proposing to provide tax controversy representation, at least 90 percent of the taxpayers represented by the clinic must have incomes which do not exceed 250 percent of the poverty level as determined under criteria established by the Director of the Office of Management and Budget. See 89 FR 2961-2963 (January 17, 2024). In addition, the amount in controversy for the tax year to which the controversy relates generally cannot exceed the amount specified in Internal Revenue Code (IRC) section 7463 ($50,000) for eligibility for special small tax case procedures in the United States Tax Court. IRC section 7526(c)(5) requires clinics to provide dollar-for-dollar matching funds, which may consist of funds from other sources or contributions of volunteer time. See IRS Pub. 3319 for additional details. An applicant who is planning to operate a program to inform ESL taxpayers about their taxpayer rights and responsibilities must have either a volunteer or a staff member designated as a Qualified Tax Expert, generally an attorney, enrolled agent or certified public accountant, to review and approve all educational material.
Low Income Taxpayer Clinics ensure the fairness and integrity of the tax system for taxpayers who are low-income or ESL by providing
IRC section 7526(b)(1)(A) authorizes the IRS to award grants to organizations that represent low-income taxpayers in controversies before the IRS or provide education to ESL taxpayers regarding their taxpayer rights and responsibilities.
To achieve maximum access to justice for low-income and ESL taxpayers, the IRS has expanded the eligibility criteria for a grant by removing the requirement for eligible organizations to provide direct controversy representation. Pursuant to the ESL Education Pilot Program started in 2023 and continued through 2025, a grant may be awarded to an organization to operate a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC without the requirement to also provide tax controversy representation to low-income taxpayers. See IRS Pub. 3319 for examples of what constitutes a “clinic.” Applicants
Despite the IRS's efforts to foster parity in availability and accessibility in choosing organizations receiving LITC matching grants and the continued increase in clinic services nationwide, there remain communities that are underserved by clinics. The states of Hawaii, Kansas, Nevada, North Dakota, South Dakota, and West Virginia and the territory of Puerto Rico currently do not have an LITC. In addition, two states—Florida and Montana—have only partial coverage. The uncovered counties in Florida are Citrus, Hamilton, Hernando, Lafayette, Madison, Nassau, St. Johns, Sumter, Suwannee, Taylor, Brevard, Lake, Orange, Osceola, Seminole, and Volusia. The uncovered counties in Montana and are Blaine, Broadwater, Carbon, Carter, Custer, Daniels, Dawson, Deer Lodge, Fallon, Fergus, Flathead, Garfield, Golden Valley, Granite, Jefferson, Judith Basin, Lincoln, Madison, McCone, Mineral, Missoula, Musselshell, Petroleum, Phillips, Pondera, Powder River, Powell, Prairie, Richland, Sanders, Sheridan, Stillwater, Sweet Grass, Toole, Treasure, Valley, Wheatland, and Wibaux.
Although each application for the 2025 grant year will be given due consideration, the IRS is especially interested in receiving applications from organizations providing services in these underserved geographic areas. For organizations that intend to refer low-income taxpayers involved in controversies with the IRS to other qualified representatives rather than providing representation directly to low-income taxpayers, priority will be given to established organizations that can help provide coverage to underserved geographic areas. For the ESL Education Pilot Program, special consideration will be given to established organizations with existing community partnerships that can swiftly implement and deliver services to the target audiences.
As in prior years, the IRS will consider a variety of factors in determining whether to award a grant, including: (1) the number of taxpayers who will be assisted by the organization, including the number of ESL taxpayers in that geographic area; (2) the existence of other LITCs assisting the same population of low-income and ESL taxpayers; (3) the quality of the program offered by the organization, including the qualifications of its administrators and qualified representatives, and its record in providing services to low-income taxpayers; (4) the quality of the organization, including the reasonableness of the proposed budget; (5) the organization's compliance with all Federal tax obligations (filing and payment); (6) the organization's compliance with all Federal nontax monetary obligations (filing and payment); (7) whether debarment or suspension (31 CFR part 19) applies or whether the organization is otherwise excluded from or ineligible for a Federal award; and (8) alternative funding sources available to the organization, including amounts received from other grants and contributors and the endowment and resources of the institution sponsoring the organization.
For programs where all or the majority of cases will be placed with volunteers, we will also consider the following: (1) the quality of the representatives (attorneys, certified public accountants, or enrolled agents who have agreed to accept taxpayer referrals from an LITC and provide representation or consultation services free of charge); and (2) the ability of the organization to monitor referrals and ensure that the
Applications and requests for continued funding that pass the eligibility screening process will then be subject to technical review. An organization submitting a request for continued funding for the second or third year of a multi-year grant will be required to submit an abbreviated Non-competing Continuation Request and will be subject to a streamlined screening process. Details regarding the scoring process can be found in Publication 3319. The final funding decisions are made by the National Taxpayer Advocate. The costs of preparing and applying are the responsibility of each applicant. Applications may be released in response to Freedom of Information Act requests after any necessary redactions are made. Therefore, applicants must not include any individual taxpayer information. The IRS will notify each applicant in writing once funding decisions have been made.
Internal Revenue Service (IRS), Treasury.
Solicitation of grant applications.
This document contains a notice that the IRS has provided a grant opportunity in
All applications and requests for continued funding for the 2025 grant year must be filed electronically by 11:59 p.m. (Eastern Time) on June 12, 2024. All organizations must use the funding number of TREAS-GRANTS-042025-001, and the Catalog of Federal Domestic Assistance program number is 21.008, see
Karen Tober at (202) 317-4700 (not a toll-free number) or by email at
Pursuant to 26 U.S.C. 7526, the IRS will annually award up to $6,000,000 (unless otherwise provided by specific Congressional appropriation) to qualified organizations, subject to the limitations in the statute. For FY 2024, Congress has provided overall LITC grant funding of $28 million and has authorized funding of up to $200,000 per clinic. The President's FY 2025 budget request proposes an overall LITC grant funding level of $26 million and a continuation of the $200,000 per-clinic funding cap. In light of the President's budget request and the uncertain timeline for final congressional action, the IRS will allow applicants to request up to $200,000 for the 2025 grant year. The IRS will also continue the ESL Education Pilot Program that was rolled out as part of the February 2023 supplemental funding opportunity. If for FY 2025 Congress significantly reduces the overall LITC grant funding level or reduces the per-clinic funding cap, the IRS will adjust each grant recipient's award to reflect any limitations in place at that time.
For an applicant proposing to provide tax controversy representation, at least 90 percent of the taxpayers represented by the clinic must have incomes which do not exceed 250 percent of the poverty level as determined under criteria established by the Director of the Office of Management and Budget. See 89 FR 2961-2963 (January 17, 2024). In addition, the amount in controversy for the tax year to which the controversy relates generally cannot exceed the amount specified in Internal Revenue Code (IRC) section 7463 ($50,000) for eligibility for special small tax case procedures in the United States Tax Court. IRC section 7526(c)(5) requires clinics to provide dollar-for-dollar matching funds, which may consist of funds from other sources or contributions of volunteer time. See IRS Pub. 3319 for additional details. An applicant who is planning to operate a program to inform ESL taxpayers about their taxpayer rights and responsibilities must have either a volunteer or a staff member designated as a Qualified Tax Expert, generally an attorney, enrolled agent or certified public accountant, to review and approve all educational material.
Low Income Taxpayer Clinics ensure the fairness and integrity of the tax system for taxpayers who are low-income or ESL by providing
IRC section 7526(b)(1)(A) authorizes the IRS to award grants to organizations that represent low-income taxpayers in controversies before the IRS or provide education to ESL taxpayers regarding their taxpayer rights and responsibilities.
To achieve maximum access to justice for low-income and ESL taxpayers, the IRS has expanded the eligibility criteria for a grant by removing the requirement for eligible organizations to provide direct controversy representation. Pursuant to the ESL Education Pilot Program started in 2023 and continued through 2025, a grant may be awarded to an organization to operate a program to inform ESL taxpayers about their taxpayer rights and responsibilities under the IRC without the requirement to also provide tax controversy representation to low-income taxpayers. See IRS Pub. 3319 for examples of what constitutes a “clinic.” Applicants should note clearly on their applications their intent to apply for the Pilot Program and should carefully follow special instructions that will be supplied for completing the application for the Pilot Program.
Despite the IRS's efforts to foster parity in availability and accessibility in choosing organizations receiving LITC matching grants and the continued increase in clinic services nationwide, there remain communities that are underserved by clinics. The states of Hawaii, Kansas, Nevada, North Dakota, South Dakota, and West Virginia and the territory of Puerto Rico currently do not have an LITC. In addition, two states—Florida and Montana—have only partial coverage. The uncovered counties in Florida are Citrus, Hamilton, Hernando, Lafayette, Madison, Nassau, St. Johns, Sumter, Suwannee, Taylor, Brevard, Lake, Orange, Osceola, Seminole, and Volusia. The uncovered counties in Montana and are Blaine, Broadwater, Carbon, Carter, Custer, Daniels, Dawson, Deer Lodge, Fallon, Fergus, Flathead, Garfield, Golden Valley, Granite, Jefferson, Judith Basin, Lincoln, Madison, McCone, Mineral, Missoula, Musselshell, Petroleum, Phillips, Pondera, Powder River, Powell, Prairie, Richland, Sanders, Sheridan, Stillwater, Sweet Grass, Toole, Treasure, Valley, Wheatland, and Wibaux.
Although each application for the 2025 grant year will be given due consideration, the IRS is especially interested in receiving applications from organizations providing services in these underserved geographic areas. For organizations that intend to refer low-income taxpayers involved in controversies with the IRS to other qualified representatives rather than providing representation directly to low-income taxpayers, priority will be given to established organizations that can help provide coverage to underserved geographic areas. For the ESL Education Pilot Program, special consideration will be given to established organizations with existing community partnerships that can swiftly implement and deliver services to the target audiences.
As in prior years, the IRS will consider a variety of factors in determining whether to award a grant, including: (1) the number of taxpayers who will be assisted by the organization, including the number of ESL taxpayers in that geographic area; (2) the existence of other LITCs assisting the same population of low-income and ESL taxpayers; (3) the quality of the program offered by the organization, including the qualifications of its administrators and qualified representatives, and its record in providing services to low-income taxpayers; (4) the quality of the organization, including the reasonableness of the proposed budget; (5) the organization's compliance with all Federal tax obligations (filing and payment); (6) the organization's compliance with all Federal nontax monetary obligations (filing and payment); (7) whether debarment or suspension (31 CFR part 19) applies or whether the organization is otherwise
For programs where all or the majority of cases will be placed with volunteers, we will also consider the following: (1) the quality of the representatives (attorneys, certified public accountants, or enrolled agents who have agreed to accept taxpayer referrals from an LITC and provide representation or consultation services free of charge); and (2) the ability of the organization to monitor referrals and ensure that the
Applications and requests for continued funding that pass the eligibility screening process will then be subject to technical review. An organization submitting a request for continued funding for the second or third year of a multi-year grant will be required to submit an abbreviated Non-competing Continuation Request and will be subject to a streamlined screening process. Details regarding the scoring process can be found in Publication 3319. The final funding decisions are made by the National Taxpayer Advocate. The costs of preparing and applying are the responsibility of each applicant. Applications may be released in response to Freedom of Information Act requests after any necessary redactions are made. Therefore, applicants must not include any individual taxpayer information. The IRS will notify each applicant in writing once funding decisions have been made.
The Department of Veterans Affairs (VA) gives notice under the Federal Advisory Committee Act, 5 U.S.C. Ch. 10, that the Cooperative Studies Scientific Evaluation Committee (CSSEC) will hold its virtual meeting on May 23, 2024, via MS Teams from 10 a.m.-4 p.m. EST.
The Committee provides expert advice on VA cooperative studies, multi-site clinical research activities and policies related to conducting and managing these efforts. The session will be open to the public for the first 2 hours of the meeting (approximately) for the discussion of administrative matters and the general status of the program. The remaining portion of the meeting will be closed to the public for the Committee's review, discussion and evaluation of future research and development applications.
During the closed portion of the meeting, the Committee's discussions and recommendations will address the qualifications of the personnel conducting the studies, and staff and consultant critiques of research proposals and similar documents. Premature disclosure of this research information to the public could significantly obstruct implementation of approved research activities. As provided by Public Law 92-463 subsection 10(d), and amended by Public Law 94-409, closing the Committee meeting is in accordance with 5 U.S.C. 552b(c)(6) and (9)(B).
The Committee will accept oral comments from the public during a 30-minute public comment period in the open portion of the meeting. Individual stakeholders will be afforded up to 3 minutes to express their comments. Members of the public who wish to attend the open teleconference should call 872-701-0185, conference ID 481 139 269#. Those who plan to attend or would like additional information should contact David Burnaska, Program Manager, Cooperative Studies Program (14RD), Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420, at
Centers for Medicare & Medicaid Services (CMS), Office of the National Coordinator for Health Information Technology (ONC), Department of Health and Human Services (HHS).
Final rule.
This final rule will revise the Medicare Advantage (Part C), Medicare Prescription Drug Benefit (Part D), Medicare cost plan, and Programs of All-Inclusive Care for the Elderly (PACE) regulations to implement changes related to Star Ratings, marketing and communications, agent/broker compensation, health equity, dual eligible special needs plans (D-SNPs), utilization management, network adequacy, and other programmatic areas. This final rule also codifies existing sub-regulatory guidance in the Part C and Part D programs.
Sections 422.111(l) and 423.530 are applicable beginning January 1, 2026. This final rule also includes revisions to existing regulations in the Risk Adjustment Data Validation (RADV) audit appeals process, the appeals process for quality bonus payment determination at § 422.260, weighting of new Part C and D Star Ratings measures at §§ 422.166(e)(2) and 423.186(e)(2), and the rule for Part C and D Star Ratings non-substantive measure updates at §§ 422.164(d) and 423.184(d) applicable 60 days after the date of publication. The use and release of risk adjustment data provisions at §§ 422.310(f)(1)(vi), 422.310(f)(1)(vii), and 422.310(f)(3)(v) are applicable 60 days after the date of publication.
Carly Medosch, (410) 786-8633—General Questions.
Naseem Tarmohamed, (410) 786-0814—Part C and Cost Plan Issues.
Lucia Patrone, (410) 786-8621—Part D Issues.
Kristy Nishimoto, (206) 615-2367—Beneficiary Enrollment and Appeal Issues.
Kelley Ordonio, (410) 786-3453—Parts C and D Payment Issues.
Hunter Coohill, (720) 853-2804—Enforcement Issues.
Lauren Brandow, (410) 786-9765—PACE Issues.
Sara Klotz, (410) 786-1984—D-SNP Issues.
Joe Strazzire, (410) 786-2775—RADV Audit Appeals Issues.
The primary purpose of this final rule is to amend the regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, Medicare cost plan program, and Programs of All-Inclusive Care for the Elderly (PACE). This final rule includes a number of new policies that will improve these programs beginning with contract year 2025 and will codify existing Part C and Part D sub-regulatory guidance.
Additionally, this final rule will implement certain sections of the following Federal laws related to the Parts C and D programs:
• The Bipartisan Budget Act (BBA) of 2018.
• The Consolidated Appropriations Act (CAA), 2023.
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to have an MTM program designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use, and to reduce the risk of adverse events, including adverse drug interactions. Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. CMS codified the MTM targeting criteria at § 423.153(d)(2).
Through this final rule, CMS establishes improved targeting criteria for the Part D MTM program that will help ensure more consistent, equitable, and expanded access to MTM services. After consideration of the comments received, we are finalizing proposed changes to the MTM eligibility criteria with modifications that are effective for January 1, 2025, as follows:
We are finalizing the provision at § 423.153(d)(2)(iii) that Part D sponsors must include all core chronic diseases in their targeting criteria for identifying beneficiaries who have multiple chronic diseases, as provided under § 423.153(d)(2)(i)(A). As part of this provision at § 423.153(d)(2)(iii), we are codifying the nine core chronic diseases currently identified in guidance and adding HIV/AIDS, for a total of 10 core chronic diseases. The 10 core chronic diseases are: (1) Alzheimer's disease; (2) Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3) Chronic congestive heart failure (CHF); (4) Diabetes; (5) Dyslipidemia; (6) End-stage renal disease (ESRD); (7) Human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS); (8) Hypertension; (9) Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions); and (10) Respiratory disease (including asthma, chronic obstructive pulmonary disease (COPD), and other chronic lung disorders). Sponsors retain the flexibility to target
We are not finalizing the proposal at § 423.153(d)(2)(i)(B) to decrease the maximum number of Part D drugs a sponsor may require from eight to five for Contract Year 2025. At this time, we are retaining the maximum number of drugs a plan sponsor may require for targeting beneficiaries taking multiple Part D drugs as eight at § 423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to set a lower threshold (a number between two and eight Part D drugs) for targeting beneficiaries taking multiple Part D drugs. We may consider revisiting this or similar policies in future rulemaking.
We are finalizing the provision at § 423.153(d)(2)(iv) to require sponsors to include all Part D maintenance drugs in their targeting criteria with minor modifications to the regulatory text to clarify that sponsors must include all Part D maintenance drugs and to provide flexibility for sponsors to include all Part D drugs in their targeting criteria. However, sponsors will not be permitted to limit the Part D maintenance drugs included in MTM targeting criteria to specific Part D maintenance drugs or drug classes. We are also finalizing the requirement at § 423.153(d)(2)(iv) that, for the purpose of identifying Part D maintenance drugs, plans must rely on information in a widely accepted, commercially or publicly available drug information database.
We are finalizing the provision at § 423.153(d)(2)(i)(C) with modification to set the MTM cost threshold at the average cost of eight generic drugs, as defined at § 423.4. CMS will calculate the dollar amount of the MTM cost threshold based on the average daily cost of a generic drug using the PDE data specified at § 423.104(d)(2)(iv)(C).
We are also codifying longstanding guidance at § 423.153(d)(1)(vii)(B)(2) to provide that a beneficiary must be unable to accept the offer to participate in the CMR due to cognitive impairment. We are also finalizing other technical changes at § 423.153(d)(1)(vii)(B)(1)(i) to clarify that the CMR must include an interactive consultation that is conducted in person or via synchronous telehealth.
We are finalizing regulatory changes that will improve access to behavioral health care by adding a new behavioral health provider specialty to our MA network adequacy standards. Specifically, we are finalizing requirements to add a new facility-specialty type to the existing list of facility-specialty types evaluated as part of network adequacy requirements and reviews. The new facility-specialty type, “Outpatient Behavioral Health,” will be included in network adequacy evaluations and can include providers of various types: Marriage and Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid Treatment Program (OTP) providers, Community Mental Health Centers or other behavioral health and addiction medicine specialists and facilities, including addiction medicine physicians, other providers. Other providers may include nurse practitioners (NPs), physician assistants (PAs) and Clinical Nurse Specialists (CNSs), who furnish addiction medicine and behavioral health counseling or therapy services and meet other specific criteria. Beginning January 1, 2024, MFTs and MHCs were eligible to enroll in Medicare and start billing for services due to the new statutory benefit category established by the Consolidated Appropriations Act (CAA) 2023. We aim to strengthen network adequacy requirements and improve beneficiary access to behavioral health services and providers by expanding our network adequacy evaluation requirements for MA organizations.
To address concerns that NPs, PAs, and CNSs might lack the necessary skills, training, or expertise to effectively address the behavioral health needs of enrollees and that the absence of criteria for incorporating these provider types could result in the creation of “ghost networks” (where providers may be listed in a provider directory without actively treating patients for behavioral health), we are also adopting specific criteria that MA organizations must use to determine when an NP, PA or CNS can be considered part of a network to meet the Outpatient Behavioral Health network adequacy standard. MA organizations must independently verify that the provider has furnished or will furnish such services to 20 patients within a recent 12-month period using reliable information about services furnished by the provider such as the MA organization's claims data, prescription drug claims data, electronic health records, or similar data.
Third-Party Marketing Organizations (TPMOs) are selling and reselling beneficiary contact information to skirt existing CMS rules that prohibit cold calling so they can aggressively market MA and Part D Plans. Beneficiaries are unaware that by placing a call or clicking on a generic-looking web-link they are unwittingly agreeing and providing consent for their personal contact information to be collected and sold to other entities for future marketing activities. As a result, we are finalizing requirements to prohibit personal beneficiary data collected by TPMOs for marketing or enrolling a beneficiary into an MA or Part D plan to be shared with other TPMOs, unless prior express written consent is given by the beneficiary. Furthermore, we are finalizing a one-to-one consent structure where TPMOs must obtain prior express written consent through a clear and conspicuous disclosure for each TPMO that will be receiving the beneficiary's data. This provision is designed to address complaints we have received from beneficiaries and their advocates and caregivers about receiving harassing and unwanted phone and email solicitations from individuals attempting to enroll them in MA and Part D plans. This final rule protects beneficiaries against unwanted calls, texts, email solicitations, and other contacts, while still ensuring that beneficiaries have control over their personal data and can connect with the TPMOs they would like to speak with, creating a more transparent and safer environment for beneficiaries to find the plan that best fits their health needs.
Section 1851(j) of the Act requires that CMS develop guidelines to ensure that the use of agent and broker compensation creates incentives to enroll individuals in the MA plan that is intended to best meet their health care needs. To that end, for many years CMS has set upper limits on the amount of compensation agents and brokers can receive for enrolling Medicare beneficiaries into MA and PDP plans. We have learned, however, that many MA and PDP plans, as well as third-party entities with which they contract (such as Field Marketing Organizations (FMOs)) have structured payments to agents and brokers that allow for separate payments for these agents and brokers and have the effect of circumventing compensation caps. We also note that that these separate payments appear to be increasing. In this rule, we are finalizing requirements that will generally prohibit contract terms between MA organizations and agents, brokers or other TPMOs that may interfere with the agent's or broker's ability to objectively assess and
We are finalizing regulatory changes that will help ensure that SSBCI items and services offered by MA plans are appropriate and meet applicable statutory and regulatory standards, including that the SSBCI items and services are reasonably expected to improve or maintain the health or overall function of chronically ill enrollees. First, we are finalizing requirements that, by the date on which it submits its bid to CMS, an MA organization must establish a bibliography of relevant acceptable evidence that an item or service offered as SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee. Second, we are clarifying in the regulation that an MA plan must follow its written policies based on objective criteria for determining an enrollee's eligibility for an SSBCI when making such eligibility determinations. Third, we are requiring that the MA plan document both denials and approvals of SSBCI eligibility. Additionally, we are codifying CMS's authority to review and deny approval of an MA organization's bid if the MA organization has not demonstrated, through relevant acceptable evidence, that its proposed SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. Finally, we are codifying CMS's authority to review SSBCI offerings annually for compliance, considering the evidence available at the time. We believe these revisions to § 422.102(f) will better ensure that the benefits offered as SSBCI are reasonably expected to improve or maintain the health or overall function of the chronically ill enrollee while also guarding against the use of MA rebate dollars for SSBCI that are not supported by acceptable evidence.
The new SSBCI requirements regarding creation of a bibliography and documentation of SSBCI eligibility for enrollees will apply to plans beginning with the CY2025 bid process. The codification of other SSBCI requirements regarding plans' obligation to follow written SSBCI eligibility policies, and our authority to decline to accept a bid if the MA organization has not demonstrated that its proposed SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee do not represent a change in policy and CMS will continue in practice during the CY2025 bid process and in subsequent years.
In addition, we are finalizing new policies to protect beneficiaries and improve transparency regarding SSBCI so that beneficiaries are aware that SSBCI are only available to enrollees who meet specific eligibility criteria. We are modifying and strengthening the current requirements for the SSBCI disclaimer that MA organizations offering SSBCI must use whenever SSBCI are mentioned. Specifically, we are requiring that the SSBCI disclaimer list the relevant chronic condition(s) the enrollee must have to be eligible for the SSBCI offered by the MA organization. The MA organization must convey in its SSBCI disclaimer that even if the enrollee has a listed chronic condition, the enrollee may not receive the benefit because other eligibility and coverage criteria also apply. We are also finalizing specific font and reading pace parameters for the SSBCI disclaimer in print, television, online, social media, radio, other voice-based ads, and outdoor advertising (including billboards). Finally, we are requiring that MA organizations include the SSBCI disclaimer in all marketing and communications materials that mention SSBCI. We believe that imposing these new SSBCI disclaimer requirements will help to ensure that the marketing of and communication about these benefits is not misleading or potentially confusing to enrollees who rely on these materials to make enrollment decisions.
In addition, over the past several years, the number of MA plans offering supplemental benefits has increased. The benefits offered are broader in scope and variety and we are seeing an increasing amount of MA rebate dollars directed towards these benefits. At the same time, plans have reported that enrollee utilization of many of these benefits is low. To help ensure MA enrollees are fully aware of all available supplemental benefits and to promote equitable access to care, we will now require MA plans to notify enrollees mid-year of the unused supplemental benefits available to them. The notice will list any supplemental benefits not utilized by the enrollee during the first 6 months of the year (January 1 to June 30). Currently, MA plans are not required to send any communication specific to an enrollee's usage of supplemental benefits and CMS believes such a notice could be an important part of a plan's overall care coordination efforts. As finalized, this policy will educate enrollees on their access to supplemental benefits to encourage greater utilization of these benefits and ensure MA plans are better stewards of the rebate dollars directed towards these benefits.
We are finalizing regulatory changes to the composition and responsibilities of the Utilization Management (UM) committee. These policies will require that at least one member of the UM committee have expertise in health equity. These policies will also require that the UM committee conduct an annual health equity analysis of the use of prior authorization at the plan-level. The analysis will examine the impact of prior authorization on enrollees with one or more of the following social risk factors (SRFs): (i) receipt of the low-income subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or (ii) having a disability. To enable a more comprehensive understanding of the impact of prior authorization practices on enrollees with the specified SRFs at the plan level, the analysis must compare metrics related to the use of prior authorization for enrollees with the specified SRFs to enrollees without the specified SRFs. Finally, the policies will require MA organizations to make the results of the analysis publicly available on their plan's website in a manner that is easily accessible and without barriers.
In this final rule, we are affirming our authority to collect detailed information from MA organizations and Part D plan
Beneficiaries enrolled in Traditional Medicare and MA plans have the right to a fast-track appeal by an Independent Review Entity (IRE) when their covered skilled nursing facility (SNF), home health, or comprehensive outpatient rehabilitation facility (CORF) services are being terminated. Currently, Quality Improvement Organizations (QIO) act as the IRE and conduct these reviews. Under current regulations, MA enrollees do not have the same access to QIO review of a fast-track appeal as Traditional Medicare beneficiaries in connection with terminations of these types of services. In this final rule, we are finalizing proposals to: (1) require the QIO, instead of the MA plan, to review untimely fast-track appeals of an MA plan's decision to terminate services in an HHA, CORF, or SNF; and (2) fully eliminate the current provision that requires the forfeiture of an enrollee's right to appeal a termination of services to the QIO when the enrollee leaves the CORF or SNF or ends HHA services. These will bring MA regulations in line with the parallel reviews available to beneficiaries in Traditional Medicare and expand the rights of MA beneficiaries to access the fast-track appeals process in connection with terminations of HHA, CORF, or SNF services.
Current regulations permit Part D sponsors to immediately remove from their formularies a brand name drug and substitute its newly released generic equivalent. Part D sponsors meeting the requirements can provide notice of specific changes, including direct notice to affected beneficiaries, after they take place; do not need to provide a transition supply of the substituted drug; and can make these changes at any time including in advance of the plan year. Consistent with these requirements, we proposed in the proposed rule titled “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications,” which appeared in the December 27, 2022
Our proposed regulatory text in the December 2022 proposed rule did not specify how Part D sponsors could treat substitution of biosimilar biological products other than interchangeable biological products. Under current policy, Part D sponsors have to obtain explicit approval from CMS prior to making a midyear formulary change that removes a reference product and replaces it with a biosimilar biological product other than an interchangeable biological product. Further, if such a change is approved, the Part D sponsor may apply the change only to enrollees who begin therapy after the effective date of the change. In other words, enrollees currently taking the reference product are able to remain on the reference product until the end of the plan year without having to obtain an exception. In response to comments received on our initial proposal in the December 2022 proposed rule (discussed in section III.P. of this final rule), and to increase access to biosimilar biological products consistent with the Biden-Harris Administration's commitment to competition as outlined in Executive Order (E.O.) 14036: “Promoting Competition in the American Economy,” we proposed in the proposed rule titled “Medicare Program; Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications,” which appeared in the November 16, 2023
Having now considered comments (discussed in section III.P. of this final rule) received on the proposals in both the December 2022 and November 2023 proposed rules, we are finalizing regulations to permit Part D sponsors that meet all requirements: (1) to immediately substitute an interchangeable biological product for its reference product, a new unbranded biological product for its corresponding brand name biological product, and a new authorized generic for its brand name equivalent; and (2) to substitute upon 30 days' notice any biosimilar biological product for its reference product.
We are finalizing, with some modifications, interconnected proposals to: (a) replace the current quarterly special enrollment period (SEP) with a one-time-per month SEP for dually eligible individuals and others enrolled in the Part D low-income subsidy program to elect a standalone PDP, (b) create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis, (c) limit enrollment in certain D-SNPs to those individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO), and (d) limit the number of D-SNP plan benefit packages an MA organization can offer for full-benefit dually eligible individuals in the same service area that it, its parent organization, or any entity that shares a parent organization with the MA organization offers an affiliated Medicaid MCO. This final rule will increase the percentage of full-benefit dually eligible MA enrollees who are in plans that—directly by the MA
We are finalizing a limitation on out-of-network cost sharing for D-SNP preferred provider organizations (PPOs) for specific services. The final rule will reduce cost shifting to Medicaid, increase payments to safety net providers, expand dually eligible enrollees' access to providers, and protect dually eligible enrollees from unaffordable costs.
Under existing regulations, CMS does not contract with and will not renew the contract of a D-SNP look-alike—that is, an MA plan that is not a SNP but in which dually eligible enrollees account for 80 percent or more of total enrollment. We are finalizing a reduction to the D-SNP look-alike threshold from 80 percent to 70 percent for plan year 2025 and 60 percent for plan year 2026 and subsequent years. This provision will help address the continued proliferation of MA plans that are serving high percentages of dually eligible individuals without meeting the requirements to be a D-SNP.
We are finalizing regulatory language to address gaps and operational constraints included in existing RADV appeal regulations. Currently, if MA organizations appeal both medical record review determinations and payment error calculations resulting from RADV audits, both issues must be appealed and move through the appeals process concurrently, which we foresee could result in inconsistent appeal adjudications at different levels of appeal that impact recalculations of the payment error. This has the potential to cause burden, confuse MA organizations, and negatively impact the operations and efficiency of CMS's appeals processes. This final rule will standardize and simplify the RADV appeals process for CMS and MA organizations, as well as address operational concerns at all three levels of appeal. We are finalizing requirements that MA organizations must exhaust all three levels of appeal for medical record review determinations before beginning the payment error calculation appeals process. This will ensure adjudication of medical record review determinations are final before a recalculation of the payment error is completed and subject to appeal. We are also finalizing several other revisions to our regulatory appeals process to conform these changes to our procedures.
Finally, we are clarifying and emphasizing our intent that if any provision of this final rule is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, it shall be severable from this final rule and not affect the remainder thereof or the application of the provision to other persons not similarly situated or to other, dissimilar circumstances. Through this rule, we adopt provisions that are intended to and will operate independently of each other, even if each serves the same general purpose or policy goal. Where a provision is necessarily dependent on another, the context generally makes that clear (such as by a cross-reference to apply the same standards or requirements).
In this final rule, CMS addresses many of the remaining proposals from the December 2022 proposed rule in addition to the proposals from the November 2023 proposed rule. There are several proposals from the December 2022 proposed rule that were not finalized. CMS may address these proposals in a future final rule.
We received 3,463 timely pieces of correspondence containing one or more comments on the November 2023 proposed rule. Some of the public comments were outside of the scope of the proposed rule. These out-of-scope public comments are not addressed in this final rule. Summaries of the public comments that are within the scope of the proposed rule and our responses to those public comments are set forth in the various sections of this final rule under the appropriate heading.
We received some overarching comments related to the December 2022 and the November 2023 proposed rules, which we summarize in the following paragraphs:
Under the governing statute, any Medicare Advantage Organization (MA organization) that “has received an overpayment,” 42 U.S.C. 1320a-7k(d)(1), must “report and return the overpayment,” 42 U.S.C. 1320a-7k(d)(1)(A), no later than “60 days after the date on which the overpayment was identified” 42 U.S.C. 1320a-7k(d)(2)(A). CMS implemented this statutory overpayment provision through a May 23, 2014, final rule titled “Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs”. See 79 FR 29844. A group of MA organizations challenged that rule's inclusion of instances where an MA organization “should have determined through the exercise of reasonable diligence . . . that [it] has received an overpayment” in the regulation's definition of “identified,” 42 CFR 422.326(c). The District Court for the District of Columbia held that this regulatory provision was impermissible under the statute.
In light of recent cybersecurity events impacting health care operations nationally, we expect all payers to review and implement HHS's voluntary
Private-fee-for-service (PFFS) plans were established by the Balanced Budget Act of 1997 (Pub. L. 105-33) and were originally not required to have networks. The Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) (MIPPA) revised the PFFS requirements to require that, beginning with contract year 2011, PFFS plans have a network when operating in the same service area as two or more network-based plans. For purposes of this requirement, section 1852(d)(5)(C) of the Act and § 422.114(a)(3)(ii) define network-based plans as a coordinated care plan (as described in section 1851(a)(2)(A) of the Act and § 422.4(a)(1)(iii)), a network-based MSA plan, and a section 1876 reasonable cost plan. The statutory and regulatory definitions both specifically exclude an MA regional plan that meets access requirements substantially through means other than written contracts, per § 422.112(a)(1)(ii).
When codifying this requirement in the final rule that appeared in the
This proposed change has no policy implications for other provisions in part 422 in which the definition or description of network plans plays a role, for example, the network adequacy provisions at § 422.116 and the plan contract crosswalk provisions at § 422.530. However, in specifying the network adequacy requirements for the various plan types, § 422.116(a)(1)(i) references the current definition of a network-based plan at § 422.2 even though the definition for network-based plan currently remains at § 422.114(a)(3)(ii) because CMS inadvertently finalized what was intended to be a conforming change to § 422.116(a)(1)(i)
We did not receive any public comments on our proposal to move the definition and are finalizing the proposal for the reasons outlined in the December 2022 proposed rule with slight modifications to reorganize the regulation text for additional clarity.
We established at §§ 422.502(b) and 423.503(b) that we may deny an application submitted by MA organizations and Part D sponsors that failed to comply with the requirements of a previous MA or Part D contract, which we refer to as “past performance.” We proposed several technical changes to the regulation text related to past performance. These changes are intended to clarify the basis for application denials due to past performance and to ensure that the factors adequately account for financial difficulties that should prevent an organization from receiving a new or expanded MA or Part D contract.
One factor we consider regarding the past performance of MA organizations and Part D sponsors is their record of imposition of intermediate sanctions, because intermediate sanctions represent significant non-compliance with MA or Part D contract requirements. To clarify the basis for application denials due to intermediate sanctions, at §§ 422.502(b)(1)(i)(A) and 423.503(b)(1)(i)(A) we proposed to change “Was subject to the imposition of an intermediate sanction” to “Was under an intermediate sanction.” We proposed this revision because MA organizations and Part D sponsors may have a sanction imposed in one 12-month past performance review period and effective for all or part of the subsequent 12-month review period. For instance, CMS could impose a sanction in December 2022 that remains in effect until September 2023. The sanction would be in effect for the past performance review period that runs from March 2022 through February 2023 (for Contract Year 2024 MA and Part D applications filed in February 2023) and for the past performance review period that runs from March 2023 through February 2024 (for Contract Year MA and Part D applications filled in February 2024). Our proposal reflects our stated intent to deny applications from MA organizations and Part D sponsors when an active sanction existed during the relevant 12-month review period when we previously codified that intermediate sanctions are a basis for denial of an application from an MA organization or Part D sponsor in “Medicare and Medicaid Programs; Contract Year 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly,” which appeared in the
An additional factor we consider regarding the past performance of MA organizations and Part D sponsors is involvement in bankruptcy proceedings. At §§422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C) we proposed to incorporate federal bankruptcy as a basis for application denials due to past performance and to conform the two paragraphs by changing the text to “Filed for or is currently in federal or state bankruptcy proceedings” from “Filed for or is currently in State bankruptcy proceedings,” at § 422.502(b)(1)(i)(C) and “Filed for or is currently under state bankruptcy proceedings” at § 423.503(b)(1)(i)(C). We codified state bankruptcy as a basis for an application denial for the past performance of an MA or Part D sponsor in “Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency,” which appeared in the
We invited public comment on this proposal and received several comments in support of this proposal. We received no comments opposing this proposal. Therefore, we are finalizing this proposal without modification.
In accordance with standards under sections 1857 and 1860 of the Act, each Medicare Advantage (MA) organization and Part D sponsor is required to have a contract with CMS to offer an MA or prescription drug plan. Further, section 1857(e)(1) and 1860D-12(b)(3)(D) of the Act authorizes additional contract terms consistent with the statute and which the Secretary finds are necessary and appropriate. Pursuant to this authority and at the outset of the Part C and Part D programs, we implemented regulations at §§ 422.550 and 423.551, respectively. These regulations require the novation of an MA or Part D contract in the event of a change of ownership involving an MA organization or Part D sponsor (63 FR 35106 and 70 FR 4561).
Our current regulations at §§ 422.550 and 423.551, as well as our MA guidance under “Chapter 12 of the Medicare Managed Care Manual—Effect of Change of Ownership”
The current regulations do not fully address what happens when the contract becomes “invalid” due to a change of ownership without a novation agreement and/or advance notice to CMS, or in other words, what happens to the existing CMS contract that was held by the purchased entity. In that circumstance, CMS would still recognize the original entity as the owner, even if the contract is now held by a different entity. Therefore, we proposed to revise §§ 422.550(d) and 423.551(e) to make it clear that in such a circumstance, CMS may unilaterally terminate the affected contract in accordance with §§ 422.510(a)(4)(ix) and 423.509(a)(4)(ix), which establish that failure to comply with the regulatory requirements contained in part 422 or part 423 (if applicable) is a basis for CMS to unilaterally terminate an MA or Part D contract.
In addition, we are strengthening CMS's enforcement authority regarding this process through the proposed amendments to §§ 422.550(d) and 423.551(e). Pursuant to CMS's authority under sections 1857 and 1860 of the Act, we proposed to amend the regulations at §§ 422.550(d) and 423.551(e) to outline the enforcement process CMS will follow, which includes imposing applicable sanctions before terminating a contract that has a change in ownership without a novation agreement in accordance with CMS requirements.
In the interest of protecting and effectively managing the MA and Part D programs, CMS, through either the novation agreement or the application process, must ensure that MA organizations and Part D Sponsors—through their respective legal entities—are eligible to contract with CMS. If CMS has no chance to assess the qualifications of the new entity and a change in ownership from one legal entity to another occurs without CMS approval of a novation agreement, CMS's ability to ensure the integrity of the MA and Part D programs and ability to monitor a contract's activity under the new legal entity would be compromised, thereby putting enrollees at risk. Thus, any change in ownership from one legal entity to another requires CMS to determine whether the new entity meets the statutory and regulatory requirements for operating a contract under the MA or Part D programs.
We proposed to impose enrollment and marketing sanctions, as outlined in §§ 422.750(a)(1) and (a)(3) and 423.750(a)(1) and (a)(3) on the affected contract. Such sanctions will remain in place until CMS approves the change of ownership, (including execution of an approved novation agreement) or the contract is terminated. We also proposed to provide an opportunity for organizations to demonstrate that the legal entity assuming ownership by way of a change of ownership without a novation agreement meets the requirements set forth by our regulations. This may be completed in the following ways:
• If the new owner does not participate in the same service area as the affected contract, at the next available opportunity, it must apply for and be conditionally approved for participation in the MA or Part D program and, within 30 days of the conditional approval (if not sooner), submit the documentation required under §§ 422.550(c) or 423.551(d) for review and approval by CMS (note that organizations may submit both the application and the documentation for the change of ownership concurrently); or
• If the new owner currently participates in the MA or Part D program and operates in the same service area as the affected contract, it must, within 30 days of imposition of intermediate sanctions, submit the documentation required under §§ 422.550(c) or 423.551(d) for review and approval by CMS.
• If the new owner is not operating an MA or Part D contract in the same service area and fails to apply for an MA or Part D contract in the same service area at the next opportunity to apply, the existing contract will be subject to termination in accordance with §§ 422.510(a)(4)(ix) or 423.509(a)(4)(x). Or, if the new owner is operating in the same service area and fails to submit the required documentation within 30 days of imposition of intermediate sanctions, the existing contract will be subject to termination in accordance with §§ 422.510(a)(4)(ix) or 423.509(a)(4)(x).
Imposition of intermediate sanctions under §§ 422.750(a)(1) and (a)(3) and 423.750(a)(1) and (a)(3) triggers the past performance rules applicable under §§ 422.502(b)(1) or 423.503(b)(1). Imposition of intermediate sanctions is a factor considered under CMS's evaluation and determination of an organization's information from a current or prior contract during the MA and Part D application process.
We solicited comments on these proposals. We appreciate stakeholders' input on the proposed changes. We received the following comments and have provided responses.
We believe that our process provides a sufficient opportunity for organizations to demonstrate, and CMS to determine, that they meet all CMS's requirements as set forth in our regulations.
After considering the comments received and for the reasons discussed in the proposed rule and our responses to comments, we are finalizing our proposal to amend the regulations at §§ 422.550(d) and 423.551(e) with technical corrections to the cross-references proposed in § 423.551(e). The cross-references in paragraphs (e)(1) and (e)(2) have been corrected to reflect the appropriate Part D sections in the final regulatory text in this final rule. In addition, we are finalizing minor grammatical and organizational revisions to the regulations to improve the readability and clarity of the text.
Pursuant to the authority under section 1860D-15(f)(1)(B) of the Act, the Secretary has the right to inspect and audit any books and records of a Part D sponsor or MA organization that pertain to the information regarding costs provided to the Secretary. We stated in the January 2005 Part D final rule (70 FR 4194, 4316) that this right to inspect and audit would not be meaningful, if upon finding mistakes pursuant to such audits, the Secretary was not able to reopen final payment determinations. Therefore, we established that CMS may rectify any final payment determination issues in a reopening provision at § 423.346. In the January 2005 Part D final rule, we established that a reopening was at CMS' discretion and could occur within the following timeframes after the final payment determination was issued: (1) 12 months for any reason, (2) 4 years for good cause, or (3) at any time when there is fraud or similar fault. We operationalized this provision by conducting program-wide reopenings (that is, global reopenings) and, when necessary, reopenings targeted to specific sponsors' contracts (that is, targeted reopenings).
In our December 2022 proposed rule, we proposed to codify the definitions of “global reopening” and “targeted reopening.” We also proposed to modify the timeframe CMS may perform a reopening for good cause from within 4 years to within 6 years to align with the 6-year overpayment look-back period described at § 423.360(f) and to help ensure that payment issues, including overpayments, can be rectified. In addition, we proposed to codify the circumstances under which CMS will notify the sponsor(s) of our intention to perform a final payment determination reopening and the requirement for CMS to announce when it has completed a reopening. We are finalizing our proposed changes without modifications.
Under the current process and under § 423.346, CMS performs a reopening of a Part D payment reconciliation (that is, the initial payment determination) as a result of revisions of prescription drug event (PDE) data and/or direct and indirect remuneration (DIR) data due to plan corrections, CMS system error corrections, post reconciliation claims activity, and audit and other post reconciliation oversight activity. Based on our experience in the Part D program and the PDE and DIR data changes, we understood that this process would require CMS to perform an initial payment determination reopening every contract year.
By calendar year 2013, CMS had reopened the 2006, 2007, and 2008 Part D payment reconciliations and, approximately 4 years after those reopenings were completed, began subsequent Part D payment reconciliation reopenings (consistent with the timing described at § 423.346(a)(2)). These reopenings included all Part D contracts that met the following criteria: (1) were in effect during the contract year being reopened, and (2) were either in effect at the time CMS completed the reopening or, if nonrenewed or terminated pursuant to § 423.507 through § 423.510 (collectively referred to as “terminated” for the purposes of these reopening provisions), had not completed the final settlement process by the time CMS completed the reopening. CMS has referred to this type of program-wide reopening as a “global reopening.” See, for example, HPMS memorandum, “Reopening of the 2006, 2007, and 2008 Part D Payment Reconciliations,” April 2, 2012 (available at
In addition to “global reopenings,” CMS has performed reopenings as part of our process to correct certain issues. We would consider performing a reopening to correct issues such as those associated with CMS-identified problems with an internal CMS file that CMS used in a Part D payment reconciliation, a coverage gap discount program reconciliation, or a reopening; CMS corrections to a PDE edit that impacted a specific plan type (for example, EGWPs); fraud or similar fault of the Part D sponsor or any subcontractor of the Part D sponsor; or a Part D sponsor's successful appeal of a reconciliation result. See, for example, HPMS memorandum, “Second reopening of the 2011 Final Part D Payment Reconciliation,” July 7, 2017 (available at
Although CMS has in recent experience utilized targeted reopenings as part of our process to correct certain issues, under the current process, if a particular issue was program-wide, CMS would perform a global reopening to address that issue. This global reopening could be in addition to the scheduled global reopening that CMS has performed approximately 4 years after the Part D payment reconciliation for that year.
Pursuant to the current § 423.346(a)(2), CMS may reopen and revise an initial or reconsidered final payment determination within 4 years after the date of the notice of the initial or reconsidered determination to the Part D sponsor, upon establishment of good cause for reopening. As already discussed, this paragraph (a)(2) has set up our current global reopening schedule. CMS performs the Part D payment reconciliation (that is, the initial payment determination) for a contract year, and then within 4 years of announcing the completion of that reconciliation, CMS performs a global reopening on that contract year.
This reopening process is used to recoup overpayments associated with PDE and DIR related overpayments. Pursuant to the current overpayment provision at § 423.360(f), there is a “look-back period” in which a Part D sponsor must report and return any overpayment identified within the 6 most recent completed payment years. As described at § 423.360, an overpayment occurs after the “applicable reconciliation.” The applicable reconciliation refers to the deadlines for submitting data for the Part D payment reconciliation.
The following example illustrates the timing of the look-back period. The deadlines for submitting data for the 2021 Part D payment reconciliation were in June 2022. Prior to the deadlines for submitting data for the 2021 Part D payment reconciliation, a PDE or DIR related overpayment could not exist for 2021, and the latest year for which an overpayment could occur was 2020. Therefore, prior to the deadlines for submitting data for the 2021 Part D payment reconciliation, the look-back period was 2015-2020.
This 6-year look-back period along with the 4-year reopening timeframe described at § 423.346(a)(2) results in overpayments being reported for a contract year after CMS has performed the global reopening for that contract year. Continuing the prior example, if a Part D sponsor identified a PDE or DIR related overpayment associated with contract year 2016 in May 2022 (that is, prior to the deadlines for submitting data for the 2021 Part D payment reconciliation), that overpayment falls within the 2015-2020 look-back period, and the sponsor would have reported the overpayment to CMS mid-2022. However, CMS completed the global reopening of the 2016 Part D payment reconciliation in January 2022. This discrepancy between the 4-year reopening timeframe and the 6-year overpayment look-back period results in operational challenges for CMS, as discussed subsequently in this section.
CMS had described a process for recouping PDE and DIR related overpayments after the global reopening for the contract year at issue had been completed. In the preamble to our final rule, “Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs,” 79 FR 29843 (May 23, 2014) and in subsequent subregulatory guidance, we stated that overpayments reported after the global reopening would be reported by the sponsor with an auditable estimate and that CMS would recoup the overpayment by either requesting a check or offsetting monthly prospective payments for the amount provided in the auditable estimate. See HPMS memorandum, “Reopening Process and Updates to the PDE/DIR-related Overpayment Reporting,” April 6, 2018 (available at
We have contemplated doing targeted reopenings to reconcile the changes in PDE and DIR data, but that also presents operational challenges. Targeted reopenings are conducted using the same payment reconciliation system that conducts the Part D payment reconciliation, the coverage gap discount program reconciliation, and the scheduled global reopening. Given the volume of reporting after the scheduled global reopening, it would be challenging to find the time and resources to run multiple targeted reopenings.
Therefore, we proposed to modify § 423.346(a)(2) such that CMS may reopen and revise an initial or reconsidered final payment determination after the 12-month period (described at § 423.346(a)(1)), but within 6 years after the date of the notice of the initial or reconsidered determination to the Part D sponsor, upon an establishment of good cause for reopening. This change will allow CMS to process all changes to PDE data and DIR data after the overpayment look-back period for a contract year. Once a contract year falls outside of the look-back period, we would perform the global reopening for that contract year within the new 6-year timeframe, to recoup the PDE and DIR related overpayments reported by sponsors for that contract year (and process underpayments).
Prior to the new reopening timeframe going into effect, CMS will provide operational guidance, as has been done for past regularly scheduled global reopenings. The following example describes the timing for performing the scheduled global reopening. The data for the 2020 Part D payment reconciliation was due in June 2021. That reconciliation was completed in November 2021. Assuming a 4-year schedule, the DIR data for the contract year 2020 global reopening would be due to CMS by the end of July 2025, PDE data would be due in September 2025, and the 2020 global reopening would be completed the end of 2025 or early 2026. However, the 2020 contract year remains in the overpayment look-back period through June 2027. Under the 6-year timeframe, data for the 2020 global reopening would be due middle to late 2027, and the global reopening would be completed late 2027 or early 2028, after the 6-year look-back period.
We decline the commenter's recommendation to withdraw the proposal unless an analysis demonstrates that the expanded timeframe would result in overpayment recoupments that exceed increased administrative costs. We do not believe that expanding the reopening timeframe from within 4 years to within 6 years will result in any additional burden. Additionally, the intent of the proposed change is not strictly focused on overpayment recoupment, but rather, is a remedy to operational challenges associated with the misalignment of the overpayment look-back period and the reopening timeframe.
After consideration of comments, we are finalizing the proposed requirements related to aligning the timing of reopenings to the overpayment look-back period without modification.
Consistent with the existing regulation at § 423.346(a) and (d), reopenings are at CMS's discretion. Under the current process, CMS has used its discretion to perform a scheduled global reopening on a Part D payment reconciliation within the timeframe specified at § 423.346(a)(2). Given the significant time and costs associated with conducting a reopening, it is expected that CMS will use its discretion to conduct a targeted reopening (or an additional global reopening for a program-wide issue) only under limited circumstances. We would contemplate using our discretion to perform a targeted reopening (or an additional global reopening) to correct or rectify a CMS file or CMS-created PDE edit-type issue, revise a payment determination that was based on PDE and/or DIR data that was submitted due to fraudulent activity of the sponsor or the sponsor's contractor, or pursuant to a successful appeal under § 423.350. CMS will not use its discretion to conduct a reopening to reconcile data that will be, or should have been, reconciled in the scheduled global reopening, which would include data from plan corrections, claims activity, and audits completed after the deadline to submit data for the scheduled global reopening. In addition, we are unlikely to conduct a reopening solely pursuant to a sponsor's request.
We proposed that in order to be included in a reopening, a contract must have been in effect (that is, receiving monthly prospective payments and submitting PDE data for service dates in that year) for the contract year being reopened. Intuitively, if a contract was not in the reconciliation for a particular contract year, it cannot be included in the reopening of that contract year's reconciliation. We also proposed that if CMS has sent a nonrenewed or terminated contract the “Notice of final settlement,” as described at § 423.521(a), by the time CMS completes the reopening, described at proposed § 423.346(f), CMS will exclude that contract from that reopening. We established the proposed exclusion based on the timing of the issuance of the “Notice of final settlement” and completion of the reopening, as opposed to the announcement of the reopening, due to the potentially lengthy reopening process and the likelihood that the “Notice of final settlement” will be issued prior to CMS completing the reopening process. For example, under the current timeframe for the scheduled global reopening, CMS has typically announced in the Spring and completed the reopening in December of that year or January of the next. During that timeframe, nonrenewed or terminated contracts will likely go through the final settlement process, and as a result, will not be able to complete the reopening process. This is because, pursuant to § 423.521, after the final settlement amount is calculated and the “Notice of final settlement” is issued to the Part D sponsor, CMS will no longer apply retroactive payment adjustments, and there will be no adjustments applied to amounts used in the calculation of the final settlement amount. We proposed to codify these inclusion criteria at § 423.346(g).
We also proposed at § 423.346(g)(2) that, specifically for targeted reopenings, CMS will identify which contracts or contract types are to be included in the reopening. This is because targeted Part D contract reopenings are impacted by the particular issue that CMS needs to address. Therefore, in order to be included in a targeted reopening, the Part D contract must have been impacted by the issue that causes CMS to perform a reopening. To date, most targeted reopenings have been performed because of a CMS-identified issue that most sponsors were not aware of prior to CMS completing the targeted reopening. Accordingly, sponsors would not be aware of this specific inclusion criteria unless CMS informed the sponsors of the CMS-identified issue and the sponsors' contracts were impacted. Therefore, we proposed that CMS notify sponsors of this specific inclusion criteria via the proposed reopening notification and/or the proposed reopening completion announcement.
We did not receive comments on this section of the proposal and are finalizing the proposed requirements related to the standards for performing global and targeted reopenings without modification.
We proposed to add new paragraphs (e) and (f) at § 423.346 to codify our existing policy regarding reopening notifications and reopening completion announcements, respectively. We proposed to codify at § 423.346(e) that CMS will notify the sponsor(s) that will be included in the global or targeted reopening of its intention to perform a global or a targeted reopening—that is, the sponsor would receive prior notice
We proposed at § 423.346(e)(1) that CMS will include in the notification the deadline for submitting PDE data and/or DIR data to be included in the reopening. We also proposed that the deadline to submit this data will be at least 90 calendar days after the date of the notice.
In addition, we proposed at § 423.346(e)(2) that the reopening notification will include inclusion criteria in the form of a description of the contract(s) (either specifically by contract number or generally by contract-type or contract status) that will be included in the reopening. This will put a sponsor on notice of whether its contracts are included in the reopening.
We proposed to codify at § 423.346(f) that CMS will announce when it has completed a reopening, including in cases where CMS issued a notice under proposed paragraph (e). This announcement is consistent with existing policy and past practice. At paragraph (f)(1), we proposed to specify that CMS will provide a description of the data used in the reopening. As in past reopenings, this data could include PDE data described by the processed date on the Prescription Drug Front-end System (PDFS) response report, DIR data described by the date received in the Health Plan Management System (HPMS), as well as any other relevant data used to perform the reopening.
At paragraph § 423.346(f)(2), we proposed to include in the announcement a statement of the contract(s) (either specifically by contract number or generally by contract-type or contract status) that were included in the reopening, consistent with proposed § 423.346(e)(2). We proposed to specify which contracts or contract types are included in the reopening in both the announcement of the completion of the reopening and the reopening notification because CMS' proposal would not require issuing a reopening notification when it is not necessary for the sponsor(s) to submit PDE data and/or DIR data prior to the reopening.
At paragraph § 423.346(f)(3), we proposed to include in the announcement of the completion of the reopening the date by which reports describing the reopening results will be available to the sponsor. In addition, at paragraph (f)(4), we proposed to include the date by which a sponsor must submit an appeal, pursuant to § 423.350, if the sponsor disagrees with the reopening results.
We did not receive comments on this section of the proposal and are finalizing the proposed requirements related to the reopening notification and the announcement of the completion of the reopening without modification.
We proposed to establish definitions of global reopening and targeted reopening at § 423.308. We proposed to define a global reopening as a reopening under § 423.346 in which CMS includes all Part D sponsor contracts that meet the inclusion criteria described at proposed § 423.346(g). We proposed to define a targeted reopening as a reopening under § 423.346 in which CMS includes one or more (but not all) Part D sponsor contracts that the meet the inclusion criteria described at proposed § 423.346(g). Finally, consistent with these proposed definitions, we proposed to include the terms “global reopening” and “targeted reopening” at the beginning of existing § 423.346(a) to clarify that the reopenings that CMS may perform under § 423.346(a) may be global or targeted, as defined in proposed § 423.308.
We are finalizing the proposed definitions of “global reopening” and “targeted reopening” without modification.
The proposals described in this section of the final rule are consistent with our current guidance and requirements. None of the proposed changes would place additional requirements on Part D sponsors, nor do the proposed changes to §§ 423.308 and 423.346 place any additional burden on the Part D sponsors or their pharmacy benefit managers (PBMs). Our proposed rule does not change the extent to which Part D sponsors comply with the reopening process. Part D sponsors' compliance with this reopening process is evidenced by each Part D sponsor's signed attestation certifying the cost data (pursuant to § 423.505(k)(3) and (5)) that CMS uses in each of the reopenings. In addition, the burden associated with the submission of cost data is already approved under the OMB control numbers 0938-0982 (CMS-10174) and 0938-0964 (CMS-10141). Therefore, as our changes do not result in additional burden, we have not included a discussion a of this provision in the COI section of this rule. In addition, we are not scoring this provision in the Regulatory Impact Analysis section because industry is already complying with this process.
Based on the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposed changes to the reopening provision at § 423.346 and the related changes to § 423.308 without modification.
In our December 2022 proposed rule, we proposed to amend 42 CFR part 422, subpart K, and part 423, subpart K, to codify in regulation our final settlement process for Medicare Advantage (MA) organizations and Part D sponsors whose contracts with CMS have been consolidated with another contract, nonrenewed, or otherwise terminated. As described subsequently in this section, we are finalizing our proposed changes.
Sections 1857(a) and 1860D-12(b)(1) of the Act require contracts between CMS and the legal entity that offers, respectively, one or more MA plans or Part D plans to beneficiaries. Sections 1857(e)(1) and 1860D-12(b)(3)(D)(i) of the Act provide that these contracts shall contain terms and conditions that the Secretary may find necessary and appropriate in addition to the applicable requirements and standards set forth in the statute and the terms of payment set by the statute. At Part 422, subpart K, and Part 423, subpart K, we have codified provisions relating to the contracts between CMS and MA
CMS makes monthly payments to MA organizations and Part D sponsors for each beneficiary enrolled in a plan for that month. If there is an update to the payment amount that was paid for a month, CMS will make an adjustment to a month's payment for a beneficiary in a later month. For example, if a beneficiary's Medicaid eligibility for a month is changed, CMS will recalculate the payment for that month after receipt of the updated Medicaid eligibility status for a beneficiary and make a retroactive payment update to that month's payment in a later month. In addition, CMS reconciles a number of different payment amounts after specified periods of time to permit plan data submission for a payment year as described subsequently in this section. These reconciliations typically take place the year after a payment year and result in retroactive payment adjustments for the prior payment year.
Generally, MA organizations and Part D sponsors continue to offer plans to beneficiaries from one year to the next. From time to time, a contract between CMS and an MA organization or Part D sponsor may consolidate, nonrenew, or otherwise terminate as a result of a plan-initiated termination, mutual termination, or CMS-initiated termination. Once a contract has consolidated, nonrenewed, or otherwise terminated, the retroactive payment adjustments for a year that would have been made had the contract remained in effect are not paid to the MA organization or Part D sponsor but are held until after the reconciliations for the final payment year are calculated as described subsequently in this section. After such time, all retroactive adjustments to payment for the consolidated, nonrenewed, or otherwise terminated contract are totaled and either a net payment amount is made to the MA organization or Part D sponsor, or an amount is charged to the MA organization or Part D sponsor.
The process used to determine the final net payments for an MA organization or Part D sponsor, provide notice of these amounts to the MA organization or Part D sponsor, adjudicate disputes, and receive or remit payment constitutes the
Before CMS determines the final settlement amount owed to or from an MA organization or Part D sponsor whose contract has consolidated, nonrenewed, or otherwise terminated, CMS first completes a series of reconciliation activities and calculates the related payment adjustments for both consolidated, nonrenewed, or otherwise terminated contracts as well as ongoing contracts: (1) MA risk adjustment reconciliation (described in § 422.310(g)), (2) Part D annual reconciliation (described in §§ 423.336 and 423.343), (3) Coverage Gap Discount Program annual reconciliation (described in § 423.2320), and (4) medical loss ratio (MLR) report submission and remittance calculation (described in §§ 422.2460, 422.2470. 423.2460, and 423.2470). Each individual reconciliation process allows the MA organization or Part D sponsor to raise concerns about the calculation of that particular reconciliation amount. Once each reconciliation is complete and no errors have been identified, the MA organization or Part D sponsor is presumed to accept that reconciliation amount and it is not reconsidered during the final settlement process.
For a given consolidated, nonrenewed, or otherwise terminated contract, the
The
The final settlement adjustment period ends on the date on the
After determining the final settlement amount, CMS issues a notice of final settlement to the MA organization or Part D sponsor for each contract that has consolidated, nonrenewed, or otherwise
In our proposed rule, we proposed to codify longstanding and existing guidance pertaining to procedures for the final settlement process described in the previous paragraphs. In addition, we proposed to add a new appeals process for MA organizations or Part D sponsors that disagree with the final settlement amount. MA organizations or Part D sponsors may request an appeal of the final settlement amount within 15 calendar days of the date of issuance of the notice of final settlement. We believe that will provide organizations with sufficient time to request an appeal, as MA organizations and Part D sponsors will already be aware of the reconciliation amounts that factor into the final settlement amount at the time the notice of final settlement is issued, and requiring a request for appeal within this timeframe will help ensure accurate and timely payment of final settlement amounts. If an MA organization or Part D sponsor agrees with the final settlement amount, no response will be necessary or required. Failure to request appeal within 15 calendar days of the date of issuance of the notice of final settlement will indicate acceptance of the final settlement amount. We strongly encourage MA organizations and Part D sponsors to communicate their acceptance to CMS to facilitate prompt payment.
Finally, in addition to codifying our longstanding and existing review process under which MA organizations and Part D sponsors are able to request a reconsideration of CMS's final settlement amount calculation, we proposed to add two additional levels of appeal: (1) an informal hearing conducted by the CMS Office of Hearings to review CMS's initial determination, following a request for appeal of the reconsideration of CMS's initial determination, and (2) a review by the CMS Administrator of the hearing officer's determination if there is an appeal of the hearing officer's determination. We believe that these additional levels of appeal will afford MA organizations and Part D sponsors sufficient opportunities to present objections to the calculation of the final settlement amount. This additional process will only be available to appeal CMS's final settlement amount calculation and will not be used to review any prior payments or reconciliation amounts. MA organizations and Part D sponsors seeking review of prior payments or reconciliation amounts must do so during the appropriate reconciliation process. CMS believes that these additional levels of appeal will only be used in exceptional circumstances given the narrow, mathematical nature of the final settlement process. We anticipate that calculation errors will be rare, and, if they do occur, that they will be quickly corrected to the mutual satisfaction of both parties without a need for further review.
If an MA organization or Part D sponsor that owes a final settlement amount to CMS does not request an appeal or provides an optional response acknowledging and confirming the amount owed to CMS within 15 calendar days of the date of the notice of final settlement, the MA organization or Part D sponsor will be required to remit full payment to CMS within 120 calendar days of receiving the notice of final settlement. If an MA organization or Part D sponsor is owed money and does not appeal the final settlement amount, CMS will remit payment to the MA organization or Part D sponsor within 60 calendar days of the date of issuance of the notice of final settlement. If an MA organization or Part D sponsor does not owe or is not owed a final settlement amount and does not request an appeal of the $0 final settlement amount within 15 calendar days of the date of issuance of the notice of final settlement, no further actions will occur. If an MA organization or Part D sponsor does not appeal the final settlement amount indicated in the notice of final settlement within 15 calendar days of the issuance of the notice of final settlement, no subsequent requests for appeal will be considered.
CMS did not receive comments on this section of the proposal.
In cases in which the MA organization or Part D sponsor submits a request for an appeal of the final settlement amount within 15 calendar days of the date of the notice of final settlement, the MA organization or Part D sponsor will have to specify the calculation with which they disagree and the reasons for their disagreement, as well as provide evidence supporting the assertion that CMS's calculation of the final settlement amount described in the notice of final settlement is incorrect. MA organizations and Part D sponsors will not be able to submit new reconciliation data or data that was submitted to CMS after the final settlement notice was issued. CMS will not consider information submitted for the purpose of retroactively adjusting a prior reconciliation.
CMS will not accept requests for appeal that are submitted more than 15 calendar days after the date of issuance of the notice of final settlement. As noted previously, if an MA organization or Part D sponsor does not reply within 15 calendar days, they will be deemed to accept the final settlement amount indicated in the notice of final settlement.
Once CMS has reconsidered the calculation of the final settlement amount in light of the evidence provided by the MA organization or Part D sponsor, CMS will provide written notice of the reconsideration decision to the MA organization or Part D sponsor.
If the MA organization or Part D sponsor does not agree with CMS's reconsideration decision, it will be able to request an informal hearing from a CMS hearing officer. The MA organization or Part D sponsor will have to submit a request for review within 15 calendar days of the date of CMS's reconsideration decision. The MA organization or Part D sponsor will be required to provide a copy of CMS's decision, the findings or issues with which it disagrees, and the reasons why it disagrees with CMS's decision. As the hearing officer's review will be limited to a review of the existing record, the MA organization or Part D sponsor will not be able to submit new evidence to support its assertion that CMS's calculation of the final settlement amount described in the notice of final settlement is incorrect in addition to the evidence submitted during CMS's reconsideration.
The CMS hearing officer will provide written notice of the time and place of the informal hearing at least 30 days before the scheduled date and the CMS
Once the hearing officer has reviewed the record, the hearing officer will send a written decision to the MA organization or Part D sponsor explaining the basis of the hearing officer's decision. The hearing officer's decision will be final and binding unless the decision is reversed or modified by the CMS Administrator.
If the MA organization or Part D sponsor does not agree with the hearing officer's decision, they will be able to request an additional, final review from the CMS Administrator. The MA organization or Part D sponsor will have to submit a request for review within 15 calendar days of the date of the issuance of CMS hearing officer's decision. The MA organization or Part D sponsor will be able to submit written arguments to the Administrator for review but will not be able to submit evidence in addition to the evidence submitted during CMS's reconsideration.
The CMS Administrator will have the discretion to elect to review the hearing officer's decision or decline to review the hearing officer's decision within 30 calendar days of receiving the request for review. If the Administrator declines to review the hearing officer's decision, the hearing officer's decision will be final and binding. If the Administrator elects to review the hearing officer's decision and any written argument submitted by the MA organization or Part D sponsor, the Administrator will review the information included in the record of the hearing officer's decision and any written argument submitted by the MA organization or Part D sponsor. Based on this review, the Administrator may uphold, reverse, or modify the hearing officer's decision. The Administrator's decision will be final and binding and no other requests for review will be considered.
If an MA organization or Part D sponsor requests an appeal of the final settlement amount, the financial transaction associated with the issuance or payment of the final settlement amount will be stayed until all appeals are exhausted. Once all levels of appeal are exhausted or the MA organization or Part D sponsor fails to request further review within the 15-day timeframe, CMS will communicate with the MA organization or Part D sponsor to complete the financial transaction associated with the issuance or payment of the final settlement amount, as appropriate.
At all levels of review, the MA organization or Part D sponsor's appeal will be limited to CMS's calculation of the final settlement amount. CMS will not consider information submitted for the purposes of retroactively adjusting a prior reconciliation. The MA organization or Part D sponsor will bear the burden of proof by providing evidence demonstrating that CMS's calculation of the final settlement amount is incorrect.
CMS did not receive comments on this section of the proposal.
We proposed to amend §§ 422.500(b) and 423.501 to add several definitions relevant for the codification of the final settlement process.
First, we proposed to add a definition for the term
We proposed to add a definition for the term
We proposed to add §§ 422.528 (for MA) and 423.521 (for Part D) to our regulations to codify our process for notifying MA organizations and Part D sponsors of the final settlement amount and how payments to or from CMS will be made.
CMS will calculate and notify MA organizations and Part D sponsors of the final settlement amount. At paragraph (a) of proposed §§ 422.528 (for MA) and 423.521 (for Part D), we proposed to codify that CMS will send a notice of final settlement to MA organizations and Part D sponsors. Specifically, proposed paragraphs (a)(1), (a)(2), (a)(3), and (a)(4) specify that the notice will contain at least the following information: a final settlement amount; relevant banking and financial mailing instructions for MA organizations and Part D sponsors that owe CMS a final settlement amount; relevant CMS contact information; and a description of the steps for the MA organizations or Part D sponsor to request an appeal of the final settlement amount calculation.
At paragraph (b) of proposed §§ 422.528 and 423.521, we proposed to establish that MA organizations and Part D sponsors will have 15 calendar days from the date of issuance of the notice to request an appeal. We proposed at paragraphs (b)(1) and (b)(2) of these new regulation sections that, if an MA organization or Part D sponsor agrees with the final settlement amount, no response will be required, and that, if an MA organization or Part D sponsor does not request an appeal within 15 calendar days, CMS will not consider any subsequent requests for appeal of the final settlement amount.
At paragraph (c) of proposed §§ 422.528 and 423.521, we proposed to codify the actions that will take place if an MA organization or Part D sponsor does not appeal the final settlement amount. Specifically, at paragraph (c)(1), we proposed to specify that, if an MA organization or Part D sponsor owed a final settlement amount from CMS does not appeal, CMS will remit payment within 60 calendar days of the date of the issuance of the notice of final settlement. At proposed paragraph (c)(2), we proposed that an MA organization or Part D sponsor that owes money to CMS and does not appeal will have to remit payment in full to CMS within 120 calendar days from issuance of the notice of final settlement. We further specify that an MA organization or Part D sponsor that does not appeal and does not remit payment within 120 calendar days of issuance of the notice will be subject to having any debts owed to CMS referred to the Department of the Treasury for collection.
At paragraph (d) of proposed §§ 422.529 (for MA) and 423.522 (for Part D), we proposed to establish the actions following submission of a request for an appeal that will be taken.
At paragraph (e) of proposed §§ 422.529 (for MA) and 423.522 (for Part D), we proposed that after the final settlement amount is calculated and the notice of final settlement is issued to the MA organization or Part D sponsor, CMS will no longer apply retroactive payment adjustments for the terminated contract and there will be no adjustments applied to the final settlement amount.
We proposed to add §§ 422.529 (for MA) and 423.522 (for Part D) to our regulations to codify that an MA organization or Part D sponsor will be able to request an appeal of the calculation of the final settlement amount, and the process and requirements for making such a request.
At paragraph (a) of proposed §§ 422.529 and 423.522, we proposed to establish requirements that will apply to MA organizations' and Part D sponsors' requests for appeal of the final settlement amount calculation.
Specifically, at proposed paragraph (a)(1), we proposed to establish the process under which an MA organization or Part D sponsor may request reconsideration of the final settlement amount. We proposed to specify that the 15-calendar-day period for filing the request will begin on the date the notice of final settlement from CMS is issued. We also proposed that MA organizations and Part D sponsors will have to include in their request: (1) the calculation with which they disagree and (2) evidence supporting the assertion that the CMS calculation of the final settlement amount is incorrect. We further specify that CMS will not consider (for purposes of retroactively adjusting a prior reconciliation), and MA organizations and Part D sponsors should not submit, new reconciliation data or data that was submitted to CMS after the final settlement notice was issued.
At proposed paragraph (a)(1)(iii), we proposed to establish that the CMS reconsideration official will review the final settlement calculation and evidence timely submitted by the MA organization or Part D sponsor supporting the assertion that the CMS calculation of the final settlement amount is incorrect. We further proposed to establish that the CMS reconsideration official will inform the MA organization or Part D sponsor of their decision on the reconsideration in writing and that their decision will be final and binding unless the MA organization or Part D sponsor requests a hearing officer review.
At proposed paragraph (a)(2), we proposed to establish that MA organizations and Part D sponsors that disagree with CMS's reconsideration decision under paragraph (a)(1) of this section will be able to request an informal hearing by a CMS hearing officer.
Specifically, at paragraph (a)(2)(i), we establish that MA organizations and Part D sponsors will have to submit their requests for an informal hearing within 15 calendar days of the date of the reconsideration decision. At paragraph (a)(2)(ii), we proposed that MA organizations and Part D sponsors will have to include in their request a copy of CMS's decision, the specific findings or issues with which they disagree, and the reasons for which they disagree. At paragraph (a)(2)(iii), we proposed to establish the informal hearing procedures. Specifically, we proposed that the CMS hearing officer will provide written notice of the time and place of the informal hearing at least 30 calendar days before the scheduled date and the CMS reconsideration official will provide a copy of the record that was before CMS when CMS made its reconsideration decision to the hearing officer. We further proposed that the hearing will be conducted by a hearing officer who will neither receive testimony nor accept new evidence. We finally proposed that the hearing officer will be limited to the review of the record that CMS had when making its decision. At paragraph (a)(2)(iv), we proposed that the CMS hearing officer will send a written decision to the MA organization or Part D sponsor explaining the basis for the decision. At proposed paragraph (a)(2)(v), we proposed to establish that the hearing officer's decision is final and binding, unless the decision is reversed or modified by the CMS Administrator.
We further proposed to establish at paragraph (a)(3) that MA organizations and Part D sponsors that disagree with the hearing officer's decision will be able to request a review by the CMS Administrator.
At paragraph (a)(3)(i), we establish that MA organizations and Part D sponsors will have to submit their requests for a review by the Administrator within 15 calendar days of the date of the decision and may submit written arguments to the Administrator for review. At paragraph (a)(3)(ii), we proposed that the CMS Administrator will have the discretion to elect or decline to review the hearing officer's decision within 30 calendar days of receiving the request for review. We further proposed that if the Administrator declines to review the hearing officer's decision, the hearing officer's decision will be final and binding. We proposed at paragraph (a)(3)(iii) that, if the Administrator elects to review the hearing officer's decision, the Administrator will review the hearing officer's decision, as well as any information included in the record of the hearing officer's decision and any written arguments submitted by the MA organization or Part D sponsor, and determine whether to uphold, reverse, or modify the decision. At proposed paragraph (a)(3)(iv), we proposed that the Administrator's determination will be final and binding.
At proposed paragraph (b), we proposed to establish the matters subject to appeal and that an MA organization or Part D sponsor bears the burden of proof. At proposed paragraph (b)(1), we proposed to establish that the Part D sponsor's appeal will be limited to CMS's calculation of the final settlement amount. We further proposed that CMS will not consider information submitted for the purposes of retroactively adjusting a prior reconciliation. At proposed paragraph (b)(2), we proposed that the MA organization or Part D sponsor will bear the burden of proof by providing evidence demonstrating that
At proposed paragraph (c), we proposed that if an MA organization or Part D sponsor requests an appeal of the final settlement amount, the financial transaction associated with the issuance or payment of the final settlement amount will be stayed until all appeals are exhausted. Once all levels of appeal are exhausted or the MA organization or Part D sponsor fails to request further review within the 15-calendar-day timeframe, CMS will communicate with the MA organization or Part D sponsor to complete the financial transaction associated with the issuance or payment of the final settlement amount, as appropriate.
Proposed paragraph (d) clarifies that nothing in this section will limit an MA organization or Part D sponsor's responsibility to comply with any other applicable statute or regulation.
CMS did not receive comments on this section of the proposal.
Based on the lack of comments received, we are finalizing the additions to §§ 422.500(b), 422.528, 422.529, 423.501, 423.521, and 423.522 to codify the final settlement process as proposed.
Sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act provide CMS with the ability to impose Civil Money Penalties (CMPs) of up to $25,000 per determination (determinations are those which could otherwise support contract termination, pursuant to § 422.509 or § 423.510), as adjusted annually under 45 CFR part 102, when the deficiency on which the determination is based adversely affects or has the substantial likelihood of adversely affecting an individual covered under the organization's contract. Additionally, as specified in §§ 422.760(b)(2) and 423.760(b)(2), CMS is permitted to impose CMPs of up to $25,000, as adjusted annually under 45 CFR part 102, for each enrollee directly adversely affected or with a substantial likelihood of being adversely affected by a deficiency. CMS has the authority to issue a CMP up to the maximum amount permitted under regulation, as adjusted annually
On December 15, 2016, CMS released on its website, the first public CMP calculation methodology for calculating CMPs for MA organizations and Part D sponsors starting with referrals received in 2017. On March 15, 2019, CMS released for comment a proposed CMP calculation methodology on its website that revised some portions of the methodology released in December 2016. Subsequently, on June 21, 2019, CMS finalized the revised CMP calculation methodology document, made it available on its website, and applied it to CMPs issued starting with referrals received in contract year 2019 and beyond.
On January 19, 2021, CMS published a final rule in the
The intent of the minimum penalty increase policy was to establish the CMP calculation methodology document in regulation to ensure consistency and transparency with CMP penalty amounts. Although parts of the regulations at §§ 422.760(b)(3) and 423.760(b)(3) have set standards for CMP penalties, in hindsight, CMS believes that other parts of the regulations unnecessarily complicated CMS's approach to calculating CMPs, which has the effect of limiting CMS's ability to protect beneficiaries when CMS determines that an organization's non-compliance warrants a CMP amount that is higher than would normally be applied under the CMP methodology. In addition, although CMS always has had the authority to impose up to the maximum authorized under sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act, parts of the minimum penalty increase policy may have inadvertently given the impression that CMS was limiting its ability to take up to the maximum amount permitted in statute and regulation. This was not the intent of the rule. For example, there may be instances where an organization's non-compliance has so substantially adversely impacted one or more enrollees that CMS determines it is necessary to impose the maximum CMP amount permitted under statute, or an amount that is higher than the amount set forth in the CMP methodology guidance, to adequately address the non-compliance. In order to clarify its ability to adequately protect beneficiaries and encourage compliance, CMS proposed to modify its rules pertaining to minimum penalty amounts.
Specifically, we proposed to remove §§ 422.760(b)(3)(i)(E) and 423.760(b)(3)(i)(E), respectively, which is the cost-of-living multiplier. We also proposed to remove §§ 422.760(b)(3)(ii)(A)-(C) and 423.760(b)(3)(ii)(A)-(C), which describes how CMS calculates and applies the minimum penalty amount increase. Lastly, we proposed to revise and add new provisions §§ 422.760(b)(3) and 423.760(b)(3), which explain that CMS will set standard minimum penalty amounts and aggravating factor amounts for per determination and per enrollee penalties in accordance with paragraphs (b)(1) and (b)(2) of paragraph (b) on an annual basis, and restates that CMS has the discretion to issue penalties up to the maximum amount under paragraphs (b)(1) and (2) when CMS determines that an organization's
Once finalized, CMS would continue to follow our existing CMP methodology and would only impose up to the maximum CMP amount in instances where we determine non-compliance warrants a higher penalty. This update will also be incorporated in forthcoming revised CMP calculation methodology guidance.
After consideration of the comments received, we are finalizing our changes to §§ 422.760(b)(3) and 423.760(b)(3) as proposed.
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to have an MTM program designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use and to reduce the risk of adverse events, including adverse drug interactions. Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. Since January 1, 2022, Part D sponsors are also required by section 1860D-4(c)(2)(A)(ii)(II) of the Act to target all at-risk beneficiaries (ARBs)
As discussed in the December 2022 proposed rule (87 FR 79452), MTM eligibility rates have steadily declined over time to 8 percent in 2020. In conjunction with the decreasing eligibility rates, CMS has observed near-universal convergence among Part D sponsors to the most restrictive targeting criteria currently permitted under § 423.153(d)(2). When CMS finalized the current regulatory requirements for targeting criteria over 13 years ago, CMS elected to continue to give plan sponsors significant flexibility in establishing their MTM eligibility criteria. However, sponsors have used this flexibility to adopt increasingly restrictive criteria that we believe are limiting access to MTM for vulnerable, clinically high-risk beneficiaries.
We performed an extensive analysis to identify potential disparities in MTM program eligibility and access, as discussed in the December 2022 proposed rule, and we identified the high cost threshold and increasingly restrictive plan criteria (
The proposed changes included:
• Requiring plan sponsors to target all core chronic diseases identified by CMS, codifying the current nine core chronic diseases in regulation,
• Lowering the maximum number of covered Part D drugs a sponsor may require from eight to five drugs and requiring sponsors to include all Part D maintenance drugs in their targeting criteria; and
• Revising the methodology for calculating the cost threshold ($5,330 in 2024) to be commensurate with the average annual cost of five generic drugs ($1,004 in 2020).
CMS received many comments on these proposed changes, including the following general comments, and our responses follow.
Several commenters agreed that the proposed changes to the MTM eligibility criteria have the potential to significantly improve the effectiveness of the MTM program and achieve equity for underserved Medicare patients. One commenter noted studies highlighting that individuals with multiple comorbid chronic conditions tend to have the greatest disparities in accessing the care and treatments they need. The commenter also cited studies that noted that the current MTM eligibility criteria do not optimally target beneficiaries most at risk of underuse or poor adherence and that eligibility is limited to beneficiaries with high drug use and high spending, which systematically excludes beneficiaries who could benefit from these services. Another commenter suggested that rather than using MTM to improve outcomes and reduce health care costs for Part D enrollees with multiple chronic diseases, plan sponsors have instead used it as a cost control tool by focusing on enrollees who take high-cost drugs.
MTM is a patient-centric and comprehensive approach to improve medication use, reduce the risk of adverse events, and improve medication adherence. To continue to provide quality MTM services to an expanded population and better manage resources, we remind sponsors that the delivery of MTM may be tailored to meet each enrollee's needs. For example, the length of the CMR consultation or number of follow-up interventions needed following targeted medication reviews (TMRs) may vary between MTM enrollees with more complex drug regimens and those who are stable on their medication regimens as long as the minimum level of MTM services is met as specified in § 423.153(d)(1)(vii). Sponsors may also leverage effective MTM programs to improve several measures in the Medicare Part D Star Ratings and display page such as medication adherence, polypharmacy, and gaps in therapy. Lastly, while we acknowledge commenters' concerns regarding the availability of MTM vendors, we note that Part D plan sponsors may use in-house resources, one or more external vendors, or a combination of both, to administer their MTM programs.
A few other commenters stated that when combined the proposed changes would result in MTM enrollment increases that exceeded the estimated program-wide size (23 percent of Part D enrollees) in the proposed rule (for example, increasing enrollment to 60 percent of their Medicare population, by five times, etc.), depending on the population or type of plan. Commenters asserted that such an increase in MTM enrollment would increase administrative costs, resulting in increased premiums, and could limit the offering of Part D plans.
In addition, we remind Part D sponsors that while a CMR must be an interactive consultation with the beneficiary and the pharmacist or other qualified provider, other aspects of MTM may be automated as described in CMS MTM guidance (See HPMS Memorandum Correction to Contract Year 2024 Part D Medication Therapy Management Program Guidance and Submission Instructions dated April 21, 2023).
We acknowledge that the needs and goals of newly eligible MTM enrollees may be different from those who have already received MTM services and continue to be eligible for MTM. However, for both populations of beneficiaries, annual CMRs may be an opportunity to understand new information about the beneficiary, including but not limited to if the beneficiary's goals have changed, if they have new or unresolved medication therapy problems, or if they have any social risk factors that may be affecting their medication use that can only be assessed through an interactive consultation.
As discussed later in this preamble, we are finalizing the proposals with modifications in response to public comments we received. However, we are committed to addressing the main drivers of the inequities in MTM program eligibility discussed in the December 2022 proposed rule. Accordingly, we will continue to request input from interested parties on improving aspects of the MTM program in the future, including enhanced targeting and better engagement with MTM enrollees. We will also look for opportunities to improve the information available for beneficiaries on CMS' websites about Part D MTM programs.
We now address comments on specific aspects of the proposed eligibility criteria changes and describe our rationale for finalizing the proposed changes with modifications.
The regulation at § 423.153(d)(2)(i)(A) specifies that to be targeted for MTM, beneficiaries must have multiple chronic diseases, with three chronic diseases being the maximum number a Part D sponsor may require for targeted enrollment. In the current CMS MTM guidance (See HPMS Memorandum Correction to Contract Year 2024 Part D Medication Therapy Management Program Guidance and Submission Instructions dated April 21, 2023), CMS identifies nine core chronic diseases.
In the December 2022 proposed rule, we proposed to amend the regulations at § 423.153(d)(2) by adding a new paragraph (iii) to require all Part D sponsors to include all core chronic diseases when identifying enrollees who have multiple chronic diseases, as provided under § 423.153(d)(2)(i)(A). As part of the proposed new provision at § 423.153(d)(2)(iii), we also proposed to codify the nine core chronic diseases currently identified in guidance and to add HIV/AIDS, for a total of 10 core chronic diseases. We explained that the current flexibility afforded to plans to identify enrollees with multiple chronic diseases had led to variability across plans and was a main driver of eligibility gaps and inequitable beneficiary access to MTM services. Under our proposal to codify the 10 core chronic diseases, plan sponsors would maintain the flexibility to target beneficiaries with additional chronic diseases that are not identified as core chronic diseases, or to include all chronic diseases in their targeting criteria.
In the December 2022 proposed rule, CMS also solicited comment on whether we should consider including additional diseases in the core chronic diseases proposed at § 423.153(d)(2)(iii), including cancer to support the goals of the Cancer Moonshot.
The comments we received on our proposed policies with respect to targeting of core chronic diseases are summarized below along with our responses.
The CMS analysis presented in the December 2022 proposed rule found that, on average, Part D enrollees with HIV/AIDS have 4 core chronic diseases (including HIV/AIDS), take 12 Part D covered drugs (including eight maintenance drugs), and incur $40,490 in Part D annual drug spend. Because beneficiaries with HIV/AIDS are likely to have complex drug regimens and are at increased risk of medication-related problems, they could benefit from MTM to improve medication use. Despite having multiple chronic diseases, taking multiple Part D drugs, and incurring high Part D drug costs, many of these individuals were not eligible for MTM because their plan did not target HIV/AIDS or did not target enough of their other chronic diseases. However, we also found that HIV/AIDS was more likely to be targeted by plans (about 10 percent of plans in 2021) than any other non-core chronic disease, suggesting that these plans have already recognized the value of offering MTM services to this population.
Other commenters who supported the proposal suggested that requiring the 10 core chronic diseases should provide more consistency in MTM eligibility between plans and broaden beneficiaries' eligibility for MTM in each plan.
We will continue to analyze chronic diseases that are highly prevalent in the Part D population, align with common targeting practices across sponsors, and are commonly treated with Part D drugs, where MTM services could most impact therapeutic clinical outcomes, including those suggested by the commenters, and may consider proposing additional core chronic diseases such as neurodegenerative diseases and/or other dementias in future rulemaking. Although we are not adding pain as a core chronic disease in this final rule, we remind sponsors that as of January 1, 2022, they are now required to target ARBs as defined at § 423.100 for MTM enrollment. We also note that plan sponsors retain the flexibility to target additional chronic diseases beyond those codified as core chronic diseases.
While we are not adding cancer as a core chronic disease at this time, we emphasize that some cancer patients may still be eligible for MTM based on meeting the eligibility criteria. We encourage Part D plans and MTM providers to seek opportunities to promote cancer screening where possible for MTM enrollees and to coordinate with specialty cancer programs to develop medication safety recommendations for cancer patients. In support of the Cancer Moonshot, CMS has initiated other activities, such as the Enhancing Oncology Model (EOM),
Section 1860D-4(c)(2)(A)(ii) of the Act requires that targeted beneficiaries be taking multiple covered Part D drugs. The current regulation at § 423.153(d)(2)(i)(B) specifies that eight is the maximum number of Part D drugs a Part D plan sponsor may require for targeted MTM enrollment. In accordance with the technical HPMS User Guide for the MTM Program submission module, sponsors are permitted to include all Part D drugs, all Part D maintenance drugs, or specific drug classes.
We proposed to revise § 423.153(d)(2)(i)(B) to decrease the maximum number of Part D drugs a sponsor may require for targeted enrollment from eight to five for plan years beginning on or after January 1, 2024. As discussed in the preamble to the December 2022 proposed rule, while there is no consensus definition of polypharmacy in terms of the use of a certain number of medications or medication classes concurrently, the proposed change would ensure the MTM program continues to focus on more individuals with complex drug regimens and increased risk of medication therapy problems. In addition, although we proposed changes to the targeting criteria with respect to the number of Part D drugs, we noted that the CMR described in § 423.153(d)(1)(vii)(B) should continue to include review of all prescription medications, OTC medications, herbal therapies, and dietary supplements.
We also proposed to add a new provision at § 423.153(d)(2)(iv) to
Below, we address comments on the proposed revisions to the maximum number of covered Part D drugs a plan sponsor may require and our proposal to require sponsors to include all Part D maintenance drugs in their targeting criteria. We also describe our rationale for finalizing the proposed changes with modifications.
We are finalizing the proposed provision at § 423.153(d)(2)(iv) with modification. Specifically, we are revising the regulation text to clarify that sponsors must include all Part D maintenance drugs and to expressly state that Part D sponsors retain the flexibility to include all Part D drugs in their targeting criteria. Additionally, we are finalizing the requirement that sponsors rely on information contained within a widely accepted, commercially or publicly available drug information database to identify Part D maintenance drugs. We are also updating the text of this provision to reflect that these requirements will apply beginning on January 1, 2025. We are not finalizing the proposal to lower the maximum number of covered Part D drugs a sponsor may require from eight to five drugs at this time.
Section 1860D-4(c)(2)(A)(ii) of the Act specifies that beneficiaries targeted for MTM must be likely to incur annual costs for covered Part D drugs that
In the December 2022 proposed rule, we proposed to amend the regulation at § 423.153(d)(2)(i)(C) to set the MTM cost threshold at the average cost of five generic drugs, as defined at § 423.4, for plan years beginning on or after January 1, 2024. Under this proposal, CMS would calculate the dollar amount of the MTM cost threshold based on the average daily cost of a generic drug using the PDE data specified at § 423.104(d)(2)(iv)(C). As noted in the December 2022 proposed rule, based on 2020 data, the average annual cost of five generic drugs was $1,004. In the proposed rule, CMS indicated that for 2024, the calculation would use PDE data from 2022 to identify the average daily cost of a generic fill, multiplied by 365 days for an annual amount. The average daily cost for a drug would be based on the ingredient cost, dispensing fees, sales tax, and vaccine administration fees, if applicable, and would include both plan paid amounts and enrollee cost sharing. Based on 2022 PDE data analyzed after publication of the December 2022 proposed rule, the average annual cost of five generic drugs was $994. In the December 2022 proposed rule, we noted that in subsequent years, the MTM cost threshold would be published in the annual Part D Bidding Instructions memo.
Below, we address comments on the proposed revisions to the annual cost threshold and describe our rationale for finalizing a modified MTM cost threshold methodology at § 423.153(d)(2)(i)(C) based on the average annual cost of eight generic drugs, which will be applicable beginning January 1, 2025.
Some commenters suggested alternative proposals for lowering the MTM cost threshold. One commenter suggested CMS seek insight from the industry, such as the PQA, on how best to adjust the cost threshold. A few commenters recommended alternative approaches to establish the cost threshold, such as commensurate with the average cost of eight generic drugs, a specific dollar amount, the cost of a mix of brand and generic drugs as many beneficiaries take at least one brand drug, or an incremental approach to decreasing the cost threshold, starting with the annual cost of six or seven drugs.
Beginning January 1, 2025, CMS will calculate the dollar amount of the MTM cost threshold based on the average daily cost of a generic drug as determined using PDE data from the plan year that ended 12 months prior to the applicable plan year, which is the PDE data currently used to determine the specialty-tier cost threshold as specified in the provision at § 423.104(d)(2)(iv)(C). CMS will analyze the PDE data for all Part D covered generic drugs utilized by all Part D enrollees during the plan year to calculate the average daily cost of one generic fill and multiply the average daily cost of one generic fill by 365 days to determine an annual amount. Therefore, the cost threshold may change annually. Although average costs for all Part D covered generic drug fills will be used to calculate the MTM cost threshold, a beneficiary would not be required to only take generic drugs to meet the eligibility criteria for MTM, and beneficiary-specific drug costs may vary from the averages.
For example, based on 2022 PDE data, the average annual cost of eight generic drugs was $1,591. If the MTM threshold were set at this amount, plans would be required to target beneficiaries who are likely to incur annual covered Part D drug costs greater than or equal to $1,591 (across all Part D drugs they take, not just generic drugs) and meet the other MTM targeting criteria for having multiple chronic diseases and taking multiple Part D drugs for enrollment in their MTM program.
Based on analysis of 2023 PDE data, the MTM cost threshold will be $1,623 for 2025. The MTM cost threshold will be published in the annual Part D Bidding Instructions memo for future years.
Following consideration of the comments received on the cost threshold, as well as on the maximum number of Part D drugs plans may target, we are finalizing a modified MTM cost threshold methodology at § 423.153(d)(2)(i)(C) based on the average annual cost of eight generic drugs as defined at § 423.4. This new cost threshold methodology will be applicable beginning January 1, 2025.
After consideration of the comments received, we are finalizing proposed changes to the Part D MTM program eligibility requirements with the modifications discussed. The changes are effective January 1, 2025 and are summarized below.
• We are finalizing the provision at § 423.153(d)(2)(iii) that Part D sponsors must include all core chronic diseases in their targeting criteria for identifying beneficiaries who have multiple chronic diseases, as provided under § 423.153(d)(2)(i)(A). As part of this provision at § 423.153(d)(2)(iii), we are codifying the nine core chronic diseases currently identified in guidance and adding HIV/AIDS, for a total of 10 core chronic diseases. The 10 core chronic diseases are: (A) Alzheimer's disease; (B) Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis); (C) Chronic congestive heart failure (CHF); (D) Diabetes; (E) Dyslipidemia; (F) End-stage renal disease (ESRD); (G) Human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS); (H) Hypertension; (I) Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions); and (J) Respiratory disease (including asthma, chronic obstructive pulmonary disease (COPD), and other chronic lung disorders). Sponsors retain the flexibility to target additional chronic diseases beyond those codified as core chronic diseases.
• We are not finalizing the proposal at § 423.153(d)(2)(i)(B) to decrease the maximum number of Part D drugs a sponsor may require from eight to five at this time. We are retaining the maximum number of drugs a plan sponsor may require for targeting beneficiaries taking multiple Part D drugs as eight at § 423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to set a lower threshold (a number between two and eight Part D drugs) for targeting beneficiaries taking multiple Part D drugs. We may revisit the maximum number of Part D drugs (eight) a sponsor may require in future rulemaking.
• We are finalizing the provision at § 423.153(d)(2)(iv) to require sponsors to include all Part D maintenance drugs in their targeting criteria with minor modifications to the regulatory text to clarify that sponsors must include all Part D maintenance drugs and to provide flexibility for sponsors to include all Part D drugs in their targeting criteria. However, sponsors will not be permitted to limit the Part D maintenance drugs included in MTM targeting criteria to specific Part D maintenance drugs or drug classes. We are also finalizing the requirement at § 423.153(d)(2)(iv) that, for the purpose of identifying Part D maintenance drugs, plans must rely on information in a widely accepted, commercially or publicly available drug information database.
• We are finalizing the provision at § 423.153(d)(2)(i)(C) with modification to set the MTM cost threshold at the average cost of eight generic drugs, as defined at § 423.4. CMS will calculate the dollar amount of the MTM cost threshold based on the average daily cost of a generic drug using the PDE data specified at § 423.104(d)(2)(iv)(C).
We believe these final policies will allow us to address specific gaps identified in MTM program eligibility by reducing marked variability across plans and ensuring more equitable access to MTM services; better align with Congressional intent while focusing on beneficiaries with complex drug regimens; and keep the program size manageable. The changes also take into consideration the burden a change in the MTM program size would have on sponsors, MTM vendors, and the health care workforce as a whole. With these changes, we estimate that the number and percent of Part D enrollees eligible for MTM will increase from 3.6 million (7 percent of Part D enrollees based on actual 2022 MTM enrollment data) to a total of 7.1 million (13 percent of Part D enrollees estimated using 2022 data), which is smaller than the estimated program size of 11 million beneficiaries in the December 2022 proposed rule. Burden estimates and impacts are discussed in sections X. and XI. of this proposed rule, respectively.
In guidance issued annually, CMS has consistently stated that we consider a beneficiary to be unable to accept an offer to participate in a CMR only when the beneficiary is cognitively impaired and cannot make decisions regarding their medical needs. In the December 2022 proposed rule, we proposed to codify this definition by amending the current regulation text at § 423.153(d)(1)(vii)(B)(2) to specify that in order for the CMR to be performed with an individual other than the beneficiary, the beneficiary must be unable to accept the offer to participate in the CMR due to cognitive impairment.
We received the following comments on this proposal, and our responses follow:
CMS would also like to remind plan sponsors that they are expected to put in place safeguards against discrimination based on the nature of their MTM interventions. Hearing impairment should not prevent a beneficiary from receiving MTM services. Relevant federal regulations for MTM programs may include Federal Communications Commission requirements for accessibility, as defined in 47 CFR part 64 Subpart F; Americans with Disabilities Act (ADA): Nondiscrimination on the Basis of Disability by Public Accommodations and in Commercial Facilities, 28 CFR part 36; Nondiscrimination on the Basis of Race, Color, National Origin, Sex, Age, or Disability in Health Programs or Activities Receiving Federal Financial Assistance and Programs or Activities Administered by the Department of Health and Human Services Under Title I of the Patient Protection and Affordable Care Act or by Entities Established Under Such Title, 45 CFR Part 92; Section 504 of the Rehabilitation Act, Nondiscrimination on the Basis of Handicap in Programs or Activities Receiving Federal Financial Assistance, 45 CFR part 84; and 21st Century Communications and Video Accessibility Act (CVAA). Part D sponsors should also refer to the standards for communications and marketing found at 42 CFR 423.2267(a).
After consideration of the comments received, we are finalizing the definition of a “unable to accept an offer to participate” in a CMR as proposed at § 423.153(d)(1)(vii)(B)(2) to provide that a beneficiary must be unable to accept the offer to participate in the CMR due to cognitive impairment.
As discussed in the December 2022 proposed rule, we proposed to amend the existing regulation text at § 423.153(d)(1)(vii)(B)(1)(i) to require that the CMR be performed either in person or via synchronous telehealth to clarify that the CMR must include an interactive consultation that is conducted in real-time, regardless of whether it is done in person or via telehealth. As discussed in the December 2022 proposed rule, while the consultation must be conducted in real-time, under this proposal, plans would continue to have the discretion to determine whether the CMR can be performed in person or using the telephone, video conferencing, or another real-time method.
We received the following comments on this proposal, and our responses follow:
After consideration of the comments received, we are finalizing the proposed revisions to § 423.153(d)(1)(vii)(B)(1)(i) without modification.
In the December 2022 proposed rule, we proposed several technical changes to the regulation text related to the Part D MTM program. At § 423.4, we proposed to add a definition for “MTM program” to clarify the meaning of this term as used in Part 423. In the heading for § 423.153(d), we proposed to remove the dash and replace it with a period to be consistent with other paragraph headings in Subpart D. We proposed to amend § 423.153(d) by striking “or” from the end of existing paragraph (d)(2)(i)(C)(2) to clarify that, consistent with section 1860D-4(c)(2)(A)(ii) of the Act, plan sponsors must target enrollees described in paragraph (d)(2)(i) and enrollees described in paragraph (d)(2)(ii). Throughout Part 423, Subpart D, we proposed to replace “MTMP” with “MTM program” to ensure that the terminology is used consistently.
We did not receive any comments regarding these changes and are finalizing these MTM program technical changes as proposed.
At § 423.505(i), we proposed to require Part D sponsors to include a provision in certain contracts with first tier, downstream, and related entities (FDRs) (as defined at § 423.501) that the FDR may terminate its contract only at the end of a calendar month after providing at least 60 days' prior notice. Specifically, we proposed that this prior notice be required in contracts with FDRs that perform critical functions on the sponsor's behalf, as described in the December 2022 proposed rule. We believe this change is necessary to protect beneficiaries from disruptions in receiving Part D benefits and to protect
As discussed in the December 2022 proposed rule preamble, Part D sponsors contract with FDRs to perform many of the services critical to the operation of the Part D program. For example, FDRs administer formularies, process beneficiary enrollments into plans, contract with pharmacies, process Part D claims at the point of sale, and administer enrollee appeals and grievance processes. Many Part D sponsors do not have the internal capability to take over administration of these functions from their FDRs on short notice. If an FDR ceases operations under a contract, enrollees in an affected plan may therefore be left without access to their Part D benefits until the sponsor is able to make alternative arrangements. For these reasons, CMS has a critical interest in ensuring Part D sponsors' contracts with these FDRs protect beneficiaries and the program.
Occasionally, Part D sponsors face financial difficulties so severe that they may stop paying FDRs for services provided under their Part D contracts. Such difficulties may also cause sponsors to be placed into receivership or bankruptcy. In response to such developments, an FDR may terminate its contract with the Part D sponsor or, in the case of FDRs that administer claims at the point of sale, stop paying claims to prevent or minimize operating losses. Such actions may be prompted by overdue reimbursement from the sponsor or anticipated payment stoppages and can occur in the middle of a month, depending on the termination notice terms in the sponsor's contract with the FDR. Fortunately, such mid-month terminations are rare. However, when they occur, they can result in significant disruptions for enrollees, including a lack of access to needed prescriptions through their Part D plan. For instance, a PDP contract was terminated in the middle of March 2021 due, in part, to the PDP's PBM terminating its contract mid-month for nonpayment. This disrupted care for almost 40,000 beneficiaries and forced CMS to incur additional expense to ensure that all beneficiaries had continuous coverage for the month of March.
Mid-month terminations can also result in CMS incurring additional costs. CMS makes prospective monthly capitation payments to Part D sponsors, as provided in section 1860D-15(a)(1) of the Act and codified in § 423.315(b). When an FDR performing critical functions on a sponsor's behalf terminates a contract mid-month, CMS has already paid the sponsor for the services that the FDR was supposed to render for the remainder of that month. To protect beneficiaries from suffering further harm, CMS may find it necessary to terminate a sponsor's contract pursuant to § 423.509 or come to terms for a mutual termination pursuant to § 423.508. CMS reassigns affected beneficiaries to other Part D plans in the same service area when such terminations occur at any time other than the end of a contract year. When these reassignments occur mid-month, CMS makes a full prospective payment for that month to the plan into which enrollees are reassigned, so that CMS pays twice for the same month. For example, if contract 1 terminates effective May 15 and CMS reassigns enrollees to contract 2, CMS would pay contract 2 for the full month of May even though it already paid contract 1 for the month of May. CMS has authority under § 423.509(b)(2)(ii) to recover the prorated share of the capitation payments made to the Part D sponsors covering the period of the month following the contract termination, but as a practical matter, a contract terminated due to financial difficulties usually does not have the funds available to repay CMS. Nor is CMS able to make a prorated monthly payment to the contract into which enrollees are reassigned.
To protect beneficiaries and the Part D program from the consequences of mid-month terminations of certain FDR contracts, we proposed to establish at § 423.505(i)(6) a requirement that all Part D sponsors' contracts with FDRs that perform certain key Part D functions require a minimum of 60-days' prior notice of termination with an effective date that coincides with the end of a calendar month. We are adopting this change pursuant to our authority at section 1857(e) of the Act, made applicable to Part D through section 1860D-12(b)(3)(D), which authorizes the Secretary to adopt contract terms and conditions as necessary and appropriate and not inconsistent with the Part D statute. This policy is consistent with the existing requirement that FDRs must comply with Part D requirements and support the sponsor's performance of its Part D functions, including ensuring access to covered Part D drugs under § 423.120(a), as required at § 423.505(i)(3)(iii) and (iv). Because Part D sponsors are paid prospectively and in units of no less than one calendar month, they and their subcontractors should be able to negotiate arrangements for access to covered Part D drugs in no less than 1-month increments by, for example, requiring Part D sponsors to provide a surety bond to compensate the FDR in the event of the sponsors' fiscal insolvency. We do not believe that this will result in significant additional expense for Part D sponsors because mid-month terminations have been very rare to date.
The proposed provision at new paragraph (6) requires the contract between a Part D sponsor and an FDR providing certain functions to state that a contract termination could only occur after a 60-day notice period and have an effective date that coincides with the end of a calendar month. The functions for which this requirement would apply would be—
• Authorization, adjudication, and processing of prescription drug claims at the point of sale;
• Administration and tracking of enrollees' drug benefits in real time;
• Operation of an enrollee appeals and grievance process; and
• Contracting with or selection of prescription drug providers (including pharmacies and non-pharmacy providers) for inclusion in the Part D sponsor's network.
All of these functions are critical to beneficiaries maintaining access to Part D drugs and ensuring that they pay appropriate out of pocket costs. The disruption of any one of these functions could result in beneficiaries failing to receive necessary drugs or incurring unnecessary costs.
We received comments on this proposal, which are summarized below, and respond to them as follows.
After considerations of the comments and for the reasons outlined in the proposed rule and our response to comments, we are finalizing the provision as proposed with one grammatical edit regarding capitalization.
In the December 2022 proposed rule, we proposed to amend §§ 423.507(a)(3) and 423.508(e) to clarify that the prohibition on PDP sponsors that non-renew or mutually terminate a contract entering into a new PDP contract for 2 years applies at the PDP region level. That is, if a sponsor non-renews or mutually terminates a PDP contract, the two-year exclusion would only prohibit them from entering into a new or expanded PDP contract in the PDP region(s) they exited and would not prevent them from entering into a new or expanded contract in another region(s). We also proposed to clarify that the 2-year exclusion applies whenever a PDP sponsor terminates all of its plan benefit packages (PBPs) in a PDP region, commonly known as a “service area reduction,” even if they continue to serve other PDP regions under the contract.
Under current regulations at §§ 423.507(a)(3) and 423.508(e), Part D sponsors that non-renew or mutually terminate their contracts with CMS are ineligible to enter into a new Part D contract for two years following the non-renewal or mutual termination, absent circumstances that warrant special consideration. CMS adopted the two-year exclusion at the beginning of the Part D program in 2006 in order to implement the requirements of section 1857(c)(4) of the Act, made applicable to the Part D program by section 1860D-12(b)(3)(B) of the Act. The 2-year exclusion following contract non-renewal or mutual termination promotes stability in the Part D program, as the additional period of contracting ineligibility causes organizations to consider more than just the year-to-year fluctuations in the Part D market in deciding whether to discontinue their participation in the program.
As described in the proposed rule, the 2-year exclusion at the PDP region level would sufficiently promote the market-stabilizing purpose of the exclusion by prohibiting PDP sponsors from non-renewing all their plans in a region and returning to the same market after only one year of absence from the program. We believe the 2-year exclusion as applied at the regional level would prevent sponsors from undermining the nondiscrimination requirements at section 1860D-11(e)(2)(D)(i) of the Act by, for example, terminating PBPs in a region so they would no longer receive LIS auto-enrollment. If the two-year exclusion were not applied at the regional level, the effective penalty for the Part D sponsors choosing to stop serving LIS beneficiaries would be only one year's absence from offering plans in that region, rather than two. However, these same concerns do not apply across regions. A sponsor that non-renews a plan receiving LIS auto-enrollments in one region that wishes to enter a different region the next year would not simply be seeking to enroll more desirable beneficiaries who had declined to enroll in their previous plan; instead, they would be competing in a completely different market. Therefore, we see no reason to prohibit sponsors that non-renew their plans in one region from offering plans in a new region before the 2-year exclusion period elapses.
We proposed to modify §§ 423.507(a) as follows:
• Revising paragraph (3) to add regulatory text clarifying that the requirements in this paragraph pertain to PDP sponsors' ineligibility to enter into a contract for 2 years;
• Redesignating paragraph (a)(3) regarding the current regulatory requirement regarding a 2-year contracting ban following non-renewal of a PDP contract as new paragraph (a)(3)(i);
• Adding language to new paragraph (a)(3)(i) stating that CMS cannot enter into a new contract in the PDP region or regions served by the non-renewing contract;
• Adding new paragraph (a)(3)(ii) to authorize CMS to make organizations that non-renew all of their PBPs in a PDP region ineligible to have plan bids approved again in that region for 2 years; and
• Adding new paragraph (a)(3)(iii) exempting new EGWP PBPs from the 2-year ban.
Similarly, we proposed to apply our policy limiting the offering of plans at the PDP region level for 2 years to mutual terminations under § 423.508. We proposed to add a sentence to the existing regulatory text at paragraph (e) stating that a mutual termination of participation in a PDP region makes a PDP sponsor ineligible to apply for qualification to offer new plans in that region for 2 years. While we already require sponsors seeking a mutual termination to agree not to apply for a new contract for two years, we believe that the same concerns that support applying the 2-year exclusion for non-renewals at the regional level pertain to mutual terminations. Allowing a sponsor that mutually terminates a contract in one PDP region to apply for a new contract in another PDP region does not incentivize the market-destabilizing practice of entering and exiting the PDP market in rapid succession. Therefore, we believe our application of the 2-year exclusion should be consistent between non-renewals and mutual terminations.
We note that this proposed provision would not apply to a PDP sponsor's non-renewal of its EGWP plans since those plans do not affect the availability of plan choices to beneficiaries or the number of plans that qualify for automatic LIS enrollments. We are also not concerned that non-renewal of EGWP plans would be driven by a sponsor's attempt to engage in adverse selection because EGWP plans are subject to contract negotiation between employers and sponsors and are not open to enrollment to all beneficiaries in the service area.
We received a comment on this proposed provision.
After consideration of the comments received and for the reasons outlined in the proposed rule and our response to those comments, we are finalizing the provision as proposed with minor grammatical and formatting changes.
In the December 2022 proposed rule, we proposed to codify, with modifications, the current process and conditions under which PDP sponsors can transfer their enrollees into a different PDP's plan benefit packages (PBPs) from year to year when such enrollees have made no other election. This process is known as a “plan crosswalk” and does not apply to enrollees in employer group health or waiver plans. Our proposal defined plan crosswalks and crosswalk exceptions; codified the circumstances under which enrollees can be transferred into different PDP PBPs from year to year; established the circumstances under which enrollees can be transferred into PDP PBPs offering different types of prescription drug coverage (“basic” or “enhanced alternative” coverage); established the circumstances under which enrollees can be transferred due to contract consolidations of PDPs held by subsidiaries of the same parent organization; and provided protections against excessive premium increases resulting from crosswalks. We also proposed to limit the ability of PDP sponsors to create new PDP PBPs to replace non-renewing PBPs under certain circumstances.
We requested comment on whether and under what circumstances we should permit crosswalks from PBPs offering basic prescription drug coverage to PBPs offering enhanced alternative prescription drug coverage, whether we should require sponsors that non-renew an enhanced alternative PBP while continuing to offer individual market coverage in the same PDP region to crosswalk affected beneficiaries into another PBP, and limitations we should place on premium and cost increases for enrollees who are crosswalked between different PBPs. We were particularly interested in how best to balance avoiding gaps in prescription drug coverage, preserving beneficiary choice and market stability, and preventing substantial increases in costs to beneficiaries resulting from crosswalks.
Finally, we proposed to codify the current procedures that a Part D sponsor must follow when submitting a crosswalk or crosswalk exception request.
Section 1860D-1(b)(1)(B) of the Act requires the Secretary to use rules similar to and coordinated with the rules for enrollment, disenrollment, termination, and change of enrollment in MA-PD plans under certain provisions of section 1851 of the Act. Therefore, in codifying general rules for plan crosswalks, we seek both to maintain current policy and, to the extent possible, be consistent with the requirements for MA plan crosswalks codified at § 422.530 in the final rule published in the January 19, 2021
At § 423.530(a)(1), we proposed to define a plan crosswalk as the movement of enrollees from one PDP PBP to another PDP PBP. We noted that this definition is consistent with current policy and with the definition of crosswalks for MA plans, codified at § 422.530(a)(1).
We proposed at § 423.530(a)(2)(i) through (iii) to adopt the crosswalk prohibitions in current CMS subregulatory guidance, described in the “Guidance for Prescription Drug Plan (PDP) Renewals and Nonrenewals” (hereinafter referred to as the PDP Renewal and Nonrenewal Guidance), issued in April 2018 and posted to the CMS website at
In the preamble to the December 2022 proposed rule, we noted that, in the past, organizations have sought exceptions to the prohibition of basic-to-enhanced alternative crosswalks on the grounds that one of the available enhanced alternative PBPs is lower cost or otherwise a better alternative for enrollees in a non-renewing basic PBP than the available basic PBP. These requests come in the context of proposed contract consolidations crosswalks and, because CMS prohibits PDP contracts from offering more than one PBP offering basic coverage in a region under § 423.265(b)(2), there would only be one option for the enrollees in non-renewing basic PBP to be transferred into. PBPs offering basic prescription drug coverage can vary widely in premium and estimated out-of-pocket costs. Enhanced alternative PBPs sometimes offer lower premiums than basic PBPs under the same contract. However, as discussed previously in section IV.AD.2. of the December 2022 proposed rule, a portion of the premium for an enhanced alternative PBP is the “supplemental” premium and any LIS-eligible individuals transferred from a basic to an enhanced alternative PBP might therefore have to pay more than they would in the available basic PBP, even if the enhanced alternative PBP has a lower overall premium. 87 FR 79602. Therefore, we proposed to continue our current policy in order to protect LIS-eligible beneficiaries from unanticipated premium increases.
We solicited comments on whether and under what circumstances to allow crosswalks from PBPs offering basic prescription drug coverage to enhanced alternative coverage. CMS was particularly interested in how such crosswalks could be administered in a way that protects LIS-eligible beneficiaries from premium and other cost increases.
Plan crosswalks often occur in the context of contract renewals and non-renewals. We proposed at § 423.530(a)(3) to require sponsors seeking crosswalks to comply with rules in §§ 423.506 and 423.507 governing renewals and non-renewals, respectively. This requirement is consistent with the requirement for MA plan crosswalks codified at § 422.530(a)(3). We also proposed at § 423.530(a)(4) to make clear that only enrollees eligible for enrollment under § 423.30 can be crosswalked from one PBP to another. Finally, we proposed at § 423.530(a)(5) to continue to allow enrollees in employer group health or waiver PBPs to be transferred between PBPs in accordance with the usual
We proposed at § 423.530(b)(1) and (2) to require enrollees in PDP PBPs that are renewing to be transferred into the same PBP for the following contract year. This is consistent with the current process summarized for renewal plans in the PDP Renewal and Nonrenewal Guidance. As discussed in the December 2022 proposed rule preamble, this requirement would continue to apply to PBPs offering both enhanced alternative and basic coverage and would continue to facilitate evergreen enrollment as required by section 1851(c)(3)(B) of the Act. We also noted that the proposal was consistent with the requirements for MA renewal crosswalks codified at § 422.530(b)(1)(i).
We proposed at § 423.530(c) to classify consolidated renewal and contract consolidation crosswalks as “crosswalk exceptions.” We proposed to define “consolidated renewals” and “contract consolidations” consistent with the current policy described previously in section IV.AD.2. of the December 2022 proposed rule. We proposed to codify our current policy for the two types of plan crosswalk exceptions with some modifications.
For consolidated renewals, we proposed to codify current policy at § 423.530(c)(1)(i) through (iv) with modifications that balance concerns for beneficiaries in non-renewing plans losing coverage with concerns about market stability and limiting unexpected premium increases. Specifically, we proposed that:
• The plan ID for the upcoming contract year PBP must be the same plan ID as one of the PBPs for the current contract year;
• The PBPs being consolidated must be under the same PDP contract;
• A PBP offering basic prescription drug coverage may not be discontinued if the PDP contract continues to offer plans (other than employer group waiver plans) in the service area of the PBP; and
• Enrollment from a PBP offering enhanced alternative coverage may be crosswalked either into a PBP offering either enhanced alternative or basic prescription drug coverage.
We also proposed four major modifications to current policy with respect to consolidated renewals:
• At § 423.530(c)(1) to allow, but not require, plan crosswalks in consolidated renewal scenarios. PDP sponsors could request a crosswalk of enrollment from a non-renewing PBP to another PBP under the same contract, provided it meets the other requirements of § 423.530;
• At § 423.530(c)(1)(v), to require enrollees from non-renewing PBPs offering enhanced alternative coverage to be crosswalked into the PBP that will result in the lowest premium increase;
• At § 423.530(c)(1)(vi), to prohibit plan crosswalks if the crosswalk would result in a premium increase greater than 100 percent, unless the dollar amount of the premium increase would be less than the base beneficiary premium, as described in § 423.286(c), compared to the current year premium for the non-renewing PBP; and
• At § 423.530(c)(1)(vii), to prohibit sponsors that fail to request and receive a plan crosswalk exception from offering a new enhanced alternative PBP in the same service area for the contract year after they non-renew an enhanced alternative PBP.
As discussed in the preamble to the December 2022 proposed rule, we recognize that premiums are not the only aspect of a PBP's structure that affect costs to beneficiaries or the beneficiary experience. The PBP's formulary and cost-sharing structure are also important elements affecting beneficiary costs. However, premiums for a PBP are the same for every enrollee and are therefore the most straightforward factor to use to protect enrollees from unexpected cost increases. We solicited comments on whether we should use other factors, such as differences in estimated out of pocket costs (OOPC) between the non-renewing and surviving PBPs, rather than simply the difference in plan premiums, to determine whether approving a plan crosswalk exception is the best option for enrollees in a non-renewing PBP. We also requested comments on whether to allow plan crosswalks to a higher premium plan if the difference between the higher premium plan and the lower premium plan is less than a certain dollar amount—for example, should CMS permit a crosswalk to a higher premium surviving PBP despite the availability of a lower premium surviving PBP if the difference between the premiums is less than a fixed dollar amount. Finally, we sought comment on alternatives to using the base beneficiary premium. Potential alternatives included a fixed dollar amount, the low-income premium subsidy amount, described in § 423.780(b), for the non-renewing PBP's region, or the national average monthly bid amount, described in § 423.279.
These four proposed changes represented a significant shift from current policy. As such, we solicited comments on alternative approaches. Possible alternatives included, but were not limited to: (1) requiring plan crosswalks when a sponsor non-renews an enhanced alternative PBP while continuing to offer individual market coverage under the same PDP contract, but prohibiting sponsors from creating a new PBP to replace the non-renewing PBP; (2) adopting the requirements as proposed, but prohibiting sponsors from creating new PBPs to replace non-renewing PBPs even if a plan crosswalk exception is requested and received; (3) using an alternative measure, such as OOPC, instead of or in addition to plan premiums to assess whether a plan crosswalk exception should be granted; or (4) adopting the current subregulatory policy without modification.
We also proposed requirements for contract consolidations that would reflect our current subregulatory policy, but with two significant differences that parallel the proposals with respect to consolidated renewals. We proposed at § 423.530(c)(2)(i)-(iv) to adopt the following requirements of current subregulatory policy:
• The non-renewing PDP contract and the surviving contract must be held by the same legal entity or by legal entities with the same parent organization;
• The approved service area of the surviving contract must include the service area of the non-renewing PBPs whose enrollment will be crosswalked into the surviving contract;
• Enrollment may be crosswalked between PBPs offering the same type of prescription drug coverage (basic or enhanced alternative); and
• Enrollment from a PBP offering enhanced alternative coverage may be crosswalked into a PBP offering basic prescription drug coverage.
We proposed the following significant changes to current policy with respect to contract consolidations:
• At § 423.530(c)(2)(v), require plan crosswalks from non-renewing PBPs offering enhanced alternative coverage into the PBP that would result in the lowest premium increase; and
• At § 423.530(c)(2)(vi), prohibit plan crosswalks that would result in a premium
increase greater than 100 percent, unless the dollar amount of the premium increase would be less than the base beneficiary premium, as
We proposed to codify current procedures for submitting plan crosswalks and/or making plan crosswalk exception requests at § 423.530(d), as described in “Bid Pricing Tool for Medicare Advantage Plans and Prescription Drug Plans” CMS-10142, posted for final comment pursuant to the Paperwork Reduction Act of 1995 at 87 FR 2441 (February 14, 2022). We proposed that a Part D sponsor must submit all mandatory plan crosswalks in writing through the bid submission process in HPMS by the bid submission deadline. We further proposed that a Part D sponsor must submit all plan crosswalk exceptions by the plan crosswalk exception request deadline announced annually by CMS. Through the bid submission process, the Part D sponsor may indicate if a plan crosswalk exception is needed at that time; however, the Part D sponsor must also ultimately request a crosswalk exception through the crosswalk exception functionality in HPMS in accordance with the deadline announced annually. CMS would verify the exception request and notify the requesting Part D sponsor of the approval or denial of the request after the plan crosswalk exception request deadline. CMS would approve any plan crosswalk exception that met the requirements of the regulation. Because plan crosswalks are requested when a PBP is non-renewing, a denied crosswalk request would result in the PBP being non-renewed without enrollment being crosswalked. Part D sponsors would be required to submit these exception requests to ensure that PBP enrollment is allocated properly.
We are finalizing crosswalk requirements for PDPs at § 423.530 without modification, as discussed in the responses to comments that follow.
Each plan does have an estimated OOPC value, which estimates the average monthly out-of-pocket costs for enrollees in a PBP. But while that is a useful bid review and actuarial tool, the actual costs incurred by beneficiaries are highly variable because they are based on characteristics—including but not limited to LIS status, health status, medications used, pharmacies chosen—that vary widely among beneficiaries. Premiums, on the other hand, are uniform for all beneficiaries. We believe that attempting to use other information, including OOPC and formulary composition and structure, to determine which plans beneficiaries may be crosswalked into is too complicated to be practical at this time.
CMS will continue to encourage beneficiaries to investigate the cost and benefits of available Part D plans during each Annual Election Period (AEP). Beneficiaries can use Medicare Plan Finder and other tools to assess which plans offer the combination of premiums, cost sharing, pharmacy networks, and formulary coverage that best meets their individual needs. Part D sponsors will continue to be required to send Annual Notices of Change (ANOCs), Evidences of Coverage (EOCs) and other materials as described in § 423.2267(e) to all beneficiaries enrolled in their plans before the AEP so that beneficiaries will have information such as formulary coverage, cost sharing, and prior authorization requirements to use when comparing plans.
CMS understands the commenters' concerns about the unanticipated consequences of changes to the Part D program required by the IRA. As discussed earlier in this preamble in response to another comment, the IRA includes a mechanism to limit the growth in the base beneficiary premium (used to calculate the plan-specific base premium) for Part D plans starting on January 1, 2024. The 2024 Part D premiums reflect both the IRA's premium stabilization provisions and its provisions limiting cost sharing for covered insulin products and recommended adult vaccines and ending beneficiary cost sharing for covered Part D drugs during the catastrophic phase of the benefit. Rather than increasing, the average total monthly premium for Medicare Part D coverage was projected to decrease 1.8 percent from $56.49 in 2023 to $55.50 in 2024 for 2024.
While we do not believe it is necessary to suspend or delay these elements of the proposed rule, we will delay implementation of this proposal until January 1, 2026 to allow time for necessary system updates to be made to the CMS systems for the 2026 bid cycle that commences in June 2025. To the extent that commenters are concerned about the burden of implementing the new crosswalk requirements while adjusting to major changes under the IRA, this delay should allay their concerns.
After considerations of the comments and for the reasons outlined in the proposed rule and our response to comments, we are finalizing the plan crosswalk provisions as proposed but with minor grammatical and formatting changes and a delayed effective date from January 1, 2025 to January 1, 2026.
We proposed to make a technical change by modifying §§ 422.111(h)(1)(iv)(B) and 423.128(d)(1)(v)(B) to require a plan's call center to establish contact with a customer service representative within 7 minutes on no fewer than 80 percent of incoming calls requiring TTY services, rather than establishing contact with a TTY operator within 7 minutes on no fewer than 80 percent of incoming calls. Our proposed change was intended to remove any ambiguity that might result from our use of the term “TTY operator,” because our intent was to ensure a beneficiary could establish contact with a customer service representative within 7 minutes. When an MA organization or Part D sponsor operates their own TTY device and thereby creates a direct TTY to TTY communication, the plan customer representative is also the TTY operator. However, when MA organizations and Part D sponsors use telecommunications relay systems, a TTY operator serves as an intermediary between the caller and the plan's customer service representative and is not able to answer the caller's questions about plan benefits.
We received several comments supporting and no comments opposing this proposal. CMS thanks those in support of our proposal. For the reasons outlined in the proposed rule, we are finalizing the revision as proposed.
In the December 2022 proposed rule, we summarized the history of our treatment of substantially incomplete applications and proposed to amend the language in §§ 422.502 and 423.503 to codify CMS's authority to decline to consider a substantially incomplete application for a new or expanded Part C or D contract. We also proposed to codify longstanding criteria for determining that an application is substantially incomplete. We are finalizing these provisions as proposed.
We proposed to modify §§ 422.502 and 423.503 by adding new paragraphs (a)(3) and (a)(4), respectively, regarding substantially incomplete applications. At §§ 422.502(a)(3)(i) and 423.503(a)(4)(i), we proposed to codify that we do not evaluate or issue a notice of determination as described in §§ 422.502(c) and 423.503(c), respectively, when an entity submits a substantially incomplete application. This proposed modification to the regulatory text is consistent with our longstanding policy to treat substantially incomplete applications as if they were not submitted by the application deadline and therefore the submitting entity is not entitled to review of its submitted material or an opportunity to cure deficiencies.
We also proposed at §§ 422.502(a)(3)(ii) and 423.503(a)(4)(ii) to codify our definition of a substantially incomplete application as one that does not include responsive materials to one or more sections of the MA or Part D application. Pursuant to §§ 422.501(c) and 423.502(c), entities seeking to qualify as an MA organization (or to qualify to offer a specialized MA plan for special needs individuals (a SNP)) and/or Part D sponsor to must fully complete all parts of a certified application, in the form and manner required by CMS. Applications for service area expansions are subject to the same rules and review processes because we treat the expansion of a plan service area as a new application for a new area. We prescribe the form and manner in an application published annually. This application is subject to the Paperwork Reduction Act review process. The form and manner vary somewhat from year to year, but generally include several sections that require an entity to demonstrate compliance with specific categories of program requirements. For instance, Part D applications for new Part D contracts include: (1) a series of attestations whereby the applicant agrees that it understands and complies with various program requirements; (2) a contracting section that requires entities to demonstrate compliance with Part D requirements by submitting certain first tier, downstream, and related entity contracts and network pharmacy templates; (3) a network section that requires entities to submit lists of contracted pharmacies that meet geographic and other access requirements; (4) a program integrity section that requires entities to submit documentation that they have documented and implemented an effective compliance program as required by § 423.504(b)(vi); and (5) a licensure and solvency section that requires entities to meet applicable licensure and fiscal solvency requirements. MA applications require substantially similar information related to the operation of an MA plan, and SNP applications include additional sections related specifically to SNP requirements for the type of SNP the applicant seeks to offer. Consistent with past practice, CMS proposed to treat an application that does not include required content or responsive materials for one or more of these sections as substantially incomplete. In our assessment, applications that fail to include significant amounts of responsive information and/or materials, including failing to include required content or responsive material for any section of the application, in their submission by the application deadline are merely submitting placeholder applications that do not merit additional opportunities to meet CMS requirements.
An example of a Part D application that would be incomplete and therefore excluded from further consideration under the proposed rule is one that failed to include (by uploading to the application system) a retail pharmacy list that would allow CMS to determine whether it met pharmacy access requirements. This would include failure to submit a list at all, submitting a list containing fictitious pharmacies, or submitting a list that contained so
An example of an MA application that would be incomplete and therefore excluded from further consideration is one that failed to upload either a state license or documentation that the state received a licensure application from the applicant before the CMS application due date. Another example of an incomplete MA application might be one that failed to upload network adequacy materials, including failing to submit network lists for designated provider types, submitting fictitious providers, or submitting a list that contained so few providers that CMS could only conclude that no good faith effort had been made to create a complete network.
An example of a SNP application that would be incomplete and therefore excluded from further consideration is one that failed to upload a model of care (MOC) that would allow CMS to determine whether or not it met MOC element requirements. This would include failure to submit MOC documents at all or submitting incomplete documents that did not contain all of the required MOC elements.
Finally, we proposed at §§ 422.502(a)(3)(iii) and 423.503(a)(4)(iii) to explicitly state that determinations that an application is substantially incomplete are not contract determinations as defined at §§ 422.641 and 423.641, respectively. Because they are not contract determinations, determinations that an application is substantially incomplete are not entitled to receipt of specific notices or to file an appeal under Parts 422 and 423, subpart N. CMS has consistently taken this position when determining an application is substantially incomplete because a submission that is so incomplete as to not be deemed a valid application did not meet the application deadline and cannot be meaningfully reviewed. Nevertheless, a few entities have used the contract determination hearing process to appeal CMS's determination that they did not submit a substantially complete application by the application deadline. In such cases, the Hearing Officer has ruled that such determinations were not contract determinations entitled to hearings under §§ 422.660 and 423.650.
We do not believe that our proposed regulatory provisions at §§ 422.502(a)(3)(i) and 423.503(a)(4)(i) will have a significant impact on the Part C or D programs. Only a handful of entities have attempted to submit substantially incomplete applications in recent years. We believe that codifying our treatment of substantially incomplete applications will further discourage entities from submitting placeholder applications and ensure that materials submitted by the application deadline represent entities' good faith efforts to meet application requirements.
We received comments on this proposal, which are summarized below:
CMS did not propose and does not currently use a “best efforts” standard for determining whether an application is substantially incomplete. In the proposed rule (87 FR 79520), we described an example of an MA applicant submitting a list of providers that was so few that CMS could only conclude that that applicant had not even made a good faith effort to create a complete network by the application deadline, which is key to demonstrating the ability to provide adequate access to covered services. For example, an application would be substantially incomplete if it only included a single pharmacy in the retail pharmacy network submission, regardless of how much effort the organization submitting the application put into enrolling pharmacies in the network. An organization that was acting in good faith would not have filed an application wherein they certified they met application requirements if they had not been able to enroll more than a single pharmacy by the application deadline. While CMS recognizes that it can be challenging for an organization to prepare to offer MA and Part D plans, CMS expects any organization filing an application to have already made sufficient progress in its preparations to provide responsive materials to all parts of the application.
After consideration of the comments and for the reasons outlined in the proposed rule and our response to comments, we are finalizing the revisions to §§ 422.502(a)(3) and 423.503(a)(4) as proposed without substantive modification. The final regulation text includes minor stylistic changes.
Section 1852(d)(1) of the Act allows an MA organization to select the providers from which an enrollee may receive covered benefits, provided that the MA organization, in addition to meeting other requirements, makes such benefits available and accessible in the service area with promptness and assures continuity in the provision of benefits. Further, our regulation at § 422.112(a), requires that a coordinated care plan maintain a network of appropriate providers that is sufficient
While our regulation at § 422.116(b)(3) authorizes the removal of a specialty or facility type from the network evaluation criteria for a specific year without rulemaking, CMS did not implement a process in § 422.116 to add new provider types without rulemaking. In a continued effort to address access to behavioral health services within MA networks, we proposed to add to the list of provider specialties at § 422.116(b) and add corresponding time and distance standards at § 422.116(d)(2).
In addition to meeting the network adequacy evaluation requirements, MA organizations are required at § 422.112(a) to maintain and consistently monitor their provider networks to ensure they are sufficient to provide adequate access to covered services that meet the needs of enrollees. This also helps MA organizations maintain a complete and accurate health plan provider directory as required under §§ 422.111(b)(3) and 422.120(b). The Health Plan Management System (HPMS) provides MA organizations with access to the “Evaluate my Network” functionality, which allows MA organizations the opportunity to test their provider networks against the evaluation standards in § 422.116 outside of a formal network review. The “Evaluate my Network” functionality provides MA organizations the ability to test their networks using the standards in § 422.116(a)(2) in different scenarios, including at the Plan Benefit Package (PBP) level, to consistently monitor whether their provider networks are meeting the current network adequacy standards. We encourage MA organizations to utilize the HPMS “Evaluate my Network” tool to monitor their PBP-level active provider networks and keep abreast of any network issues that could hinder access to care for enrollees. We also remind MA organizations to report any compliance issues or significant changes in their provider network to their CMS Account Manager.
With the revisions applicable to coverage beginning January 1, 2024, MA organizations are required to demonstrate that they meet network adequacy for four behavioral health specialty types: psychiatry, clinical psychology, clinical social work, and inpatient psychiatric facility services. The Consolidated Appropriations Act (CAA), 2023 (Pub. L. 117-328) amended the Act to authorize payment under Medicare Part B for services furnished by a Marriage and Family Therapist (MFT) and by a Mental Health Counselor (MHC), effective January 1, 2024. Specifically, section 4121 of the CAA amends section 1861(s)(2) of the Act by adding a new subparagraph (II) that establishes a new benefit category under Part B for MFT services (as defined in section 1861(lll) of the Act) and MHC services (as defined in section 1861(lll) of the Act). MA organizations are required to cover virtually all Part B covered services. As such, these new services must be covered as defined and furnished, respectively, by MFTs, as defined in section 1861(lll)(2) of the Act, and MHCs, as defined in section 1861(lll)(4) of the Act. As a practical matter, MA organizations need to ensure access to these new Medicare-covered services that can only be provided by these types of individual providers and therefore must contract with these types of providers in order to furnish basic benefits as required by section 1852 of the Act (when furnished by different providers, the services will be supplemental benefits covered by the MA plan).
In addition, we discussed in the April 2023 final rule that the responses CMS received to the January 2022 proposed rule RFI emphasized the importance of expanding network adequacy standards to include other outpatient behavioral health physicians and health professionals that treat substance use disorders (SUDs) to better meet behavioral health care needs of enrollees. Medicare fee-for-service claims data for 2020 shows that Opioid Treatment Program (OTP) providers had the largest number of claims for SUD services during that timeframe. At the time of publishing our April 2023 final rule, we indicated that while we were not able to finalize adding a combined specialty type called “Prescribers of Medication for Opioid Use Disorder,” which included OTPs and Medication for Opioid Use Disorder (MOUD) waivered providers to the facility-specialty type list in § 422.116(b)(2) as proposed, we would consider the appropriateness of setting network adequacy standards for OTPs in future rulemaking.
Considering the statutory changes to section 1861 of the Act as mentioned, and our interest in establishing network adequacy standards for SUD providers, CMS proposed to amend the MA network adequacy requirements to address the new provider types and SUD provider types through a combined behavioral health specialty type to include MFTs, MHCs, OTPs, Community Mental Health Centers and other behavioral health and addiction medicine specialty providers that will help us enhance behavioral health access for enrollees. This is consistent with the explanation in our April 2023 final rule that setting a meaningful access standard for the OTP specialty type will be possible under a combined behavioral health specialty type.
CMS is committed to improving access to behavioral health care services for enrollees in the MA program. The
We proposed to add this combined facility-specialty type instead of adding individual provider-specialty types for a few reasons. First, data from the U.S. Department of Labor, Bureau of Labor Statistics show that currently MFTs and MHCs are generally providing services in outpatient behavioral health settings, such as community mental health centers, substance abuse treatment centers, hospitals, and some private practices.
As mentioned previously, the statutory change under the CAA will allow MFTs and MHCs to bill Medicare directly for services provided beginning January 1, 2024. We acknowledge that these provider types may not always be located in facilities and provide facility-based services. As such, we will continue to monitor the appropriateness of maintaining this proposed new behavioral health specialty type as a facility-specialty type (that is, under § 422.116(b)(2)) for network adequacy review purposes. Similarly, as the list
Our current regulations, at § 422.116(a)(2), specify that an MA plan must meet maximum time and distance standards and contract with a specified minimum number of each provider and facility-specialty type. Therefore, as part of the proposed changes to our list of facility specialty types under § 422.116(b)(2), we proposed base time and distance standards in each county type for the new specialty type as follows:
In the proposed rule titled “Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly” which appeared in the
Finally, as we indicated in the April 2023 final rule, Medicare FFS claims data shows that telehealth was the second most common place of service for claims with a primary behavioral health diagnosis in 2020 (88 FR 22170). Per § 422.116(d)(5), MA plans may receive a 10-percentage point credit towards the percentage of beneficiaries that reside within published time and distance standards for certain providers when the plan includes one or more telehealth providers of that specialty type that provide additional telehealth benefits, as defined in § 422.135, in its contracted network. Currently, § 422.116(d)(5) specifies 14 specialty types for which the 10-percentage point credit is available. Because we understand from stakeholders who commented on our April 2023 final rule that they were supportive of usage of the 10-percentage point credit for behavioral health specialty types, we also proposed to add the new Outpatient Behavioral Health facility-specialty type to the list at § 422.116(d)(5) of the specialty types that will receive the credit if the MA organization's contracted network of providers includes one or more telehealth providers of that specialty type that provide additional telehealth benefits, as defined in § 422.135, for covered services.
We solicited comments on this proposal. Our responses to the comments received are outlined below.
Recognizing the specialized nature of these services, commenters advocated for differentiating MH and SUD network adequacy requirements. Many commenters recommended establishing separate specialty categories for “Outpatient Mental Health” and “Outpatient Substance Use Disorder,” while other commenters suggested separate categories for Opioid Treatment Programs (OTPs), and separate standards for MFTs and MHCs. Commenters stated that the creation of separate standards for these specialties would allow for more visibility for enrollees of the availability of these services and better meet enrollees' behavioral health and SUD needs.
We indicated in the November 2023 proposed rule that setting meaningful network adequacy standards that include MFTs, MHCs, and OTPs at this time is possible under a combined behavioral health specialty type. We determined this through our review of U.S. Department of Labor data and the Place of Service codes recorded on certain professional claims data from 2017-2020 for behavioral health services in the Traditional Medicare program, which indicate that MFTs and MHCs are generally providing services in outpatient behavioral health settings.
The Outpatient Behavioral Health facility-specialty type will include individual practitioner and facility providers that furnish psychotherapy and/or counseling services to individuals with mental health or substance use disorders. Our review of certain Traditional Medicare claims data from 2017-2020 (Place of Service codes, Type of Bill codes, CCN codes, and Revenue Center codes) indicates that facility types treat individuals with both mental health disorders and substance use disorders. While the individual providers may specialize in either mental health or substance use disorder treatment, many of the facility providers will offer a variety of services and provider types to meet the range of enrollees' behavioral health needs. In the absence of more robust utilization and claims data, the Outpatient Behavioral Health specialty type should be effective for use in our MA plan network adequacy standards at this time.
Finally, § 422.116(a) requires that each network-based MA plan demonstrate that it has an adequate contracted provider network that is sufficient to provide access to medically necessary covered services consistent with standards in section 1851(d) of the Act, the regulations at §§ 422.112(a) and 422.114(a), and when required by CMS, an MA organization must attest that it has an adequate network for access and availability of a specific provider or facility type that CMS does not independently evaluate in a given year (see section II.A. of this final rule regarding the definition of “network-based plan”). In addition, § 422.112 requires MA coordinated care plans (which are network-based plans) to ensure covered services are accessible and available to enrollees. Therefore, MA organizations must always provide access to all covered services whether or not access to a particular provider specialty is specifically evaluated by CMS through our network adequacy standards.
Recognizing the diverse capabilities of NPs, PAs, and CNSs in providing services to beneficiaries, CMS acknowledges the concerns raised by stakeholders regarding the use of NPs, PAs, and CNSs to satisfy the Outpatient Behavioral Health network adequacy standards without verifying their qualifications to address and actual practice of addressing behavioral health or SUD needs. To address this, we are finalizing a clarification in § 422.116(b)(2)(xiv) to limit when MA organizations may list an NP, PA, or CNS, for purposes of network evaluation under the Outpatient Behavioral Health facility-specialty type. Specifically, the final rule establishes a standard to identify when an NP, PA, or CNS regularly furnishes, or will furnish, behavioral health counseling or therapy services, including psychotherapy or medication prescription for SUDs.
For an NP, PA, or CNS to satisfy the Outpatient Behavioral Health network adequacy standards, the NP, PA, and/or CNS must have furnished certain psychotherapy or SUD prescribing services to at least 20 patients within the previous 12-months. The 20-patient threshold is consistent with the minimum denominator requirement of several quality measures, including many that are measured at the clinician-level in the Merit-based incentive payment system (MIPS) in Traditional Medicare. If the threshold is an important minimum for individual practitioners being held accountable for the quality of care delivered in Traditional Medicare, then having a similar threshold here for when the practitioner “regularly furnishes” behavioral health care will ensure that the NP, PA, or CNS is providing a meaningful amount of behavioral health counseling or therapy services, including psychotherapy or medication prescription for SUDs. In addition, we believe the 12-month period timing will provide the best reflection of current practice and is a sufficient time predicter of the next year's practice by the provider.
Further, this standard supports the intent that a provider who is an NP, PA or CNS, must “regularly furnish or will regularly furnish” behavioral health
As part of this minimum threshold for identifying that a specific PA, NP and CNS regularly furnishes behavioral health services, we are adopting specific requirements in new paragraphs (b)(2)(xiv)(A) and (B) for how this threshold will be used. The list of psychotherapy or SUD prescribing services to be used for this purpose will be identified by CMS in the Health Service Delivery (HSD) Reference File (described in § 422.116(a)(4)(i)). CMS will identify the applicable services in the HSD Reference File, using HCPCS code(s), narrative descriptions, or something sufficiently similar to specify the necessary type of services on an annual basis.
The MA organization must annually verify that this standard is met by each individual NP, PA and/or CNS it intends to submit for purposes of the Outpatient Behavioral Health facility type by analyzing reliable information about services furnished by the provider such as the MA organization's claims data, prescription drug claims data, electronic health records, or similar data. This analysis must be performed at least annually using a recent 12-month period and must be completed before the MA organization includes the NP, PA and/or CNS to CMS for purposes evaluation of the MA organization's network for the Outpatient Behavioral Health facility type. If there is insufficient evidence of these provider types having previous practice experience sufficient to meet the threshold of 20 patients within a recent 12-month period, MA organizations must have a reasonable and supportable basis for concluding that the provider will meet the threshold in the next 12 months. If an NP, PA, or CNS is new to independent practice (and therefore doesn't have the appropriate claims record in previous years), has received psychiatry or addiction medicine specialized training, and is listed as a psychiatry or addiction medicine NP, PA, or CNS on public-facing websites, this would be a reasonable and supportable basis for concluding that the practitioner would meet the requirement in the next 12 months, and therefore able to be utilized towards meeting network adequacy standards for Outpatient Behavioral Health. We are establishing these requirements in § 422.116(b)(2)(xiv)(B)(1) and (2).
This requirement is designed to prevent MA organizations from including providers in their networks submitted to CMS for review that are lacking a history of delivering or intent to deliver behavioral health services, thereby improving the reliability of MA organization's network's once operational. Further, this requirement will help MA organizations identify the requisite services that NPs, PAs, and CNSs must provide. MA organizations may be required to demonstrate, in the specified form and manner requested by CMS, that the MA organization has verified the service provision threshold. These criteria aim to enhance transparency and accountability while preventing the formation of “ghost networks.” This ensures that beneficiaries receive care from providers with proven expertise in treating mental health and substance use disorders.
Finally, we are also adopting a requirement, at § 422.116(b)(2)(xiv)(B)(3) that an MA organization must submit evidence and documentation to CMS, upon request and in the form and manner specified by CMS, of the MA organization's determination that the PA, NP, and/or CNS has furnished or is reasonably expected to furnish one or more of the specified psychotherapy or medication prescription to at least 20 patients within a 12 month period.
This provision will help to ensure compliance.
A few commenters suggested that CMS should increase the telehealth credit from the proposed 10 percent up to 30 percent or that we increase the credit and make it applicable to all behavioral health network adequacy standards under § 422.116(d)(5). Other commenters expressed concerns regarding CMS's proposal to add Outpatient Behavioral Health to the list at § 422.116(d)(5). Commenters cautioned against an over-reliance on telehealth that may not provide the same level of care as in-person visits. These commenters emphasized the need for telehealth services to adhere to the same capacity and accessibility standards as in-person services, including the ability to accept new patients and deliver specified services promptly.
The telehealth credit is designed to encourage the use of telehealth services but is not a replacement for in-person care. Per § 422.116(d)(5), the telehealth credit is available when the MA plan includes one or more telehealth providers that provide additional telehealth benefits, as defined in § 422.135, in the listed specialties. Consistent with § 422.135, MA plans that cover additional telehealth benefits must offer enrollees the option to choose their preferred mode of care delivery and to access the services in person. This requirement underlines our commitment to encouraging use of and access to telehealth without compromising the availability of in-person care. Providers who receive the telehealth credit are listed under § 422.116(d)(5) and currently include all outpatient behavioral health providers that are evaluated for network adequacy purposes.
We understand and appreciate the concerns raised about the potential over-reliance on telehealth services. We agree it is necessary for these services to meet the same standards of capacity and accessibility as in-person visits, including the acceptance of new patients and the timely delivery of specified services. We recognize the careful balance between expanding access through telehealth and maintaining the quality and immediacy of care. As we move forward, CMS will continue to monitor the effectiveness and impact of the telehealth credit on network adequacy, especially in the context of Outpatient Behavioral Health services. We remain open to considering adjustments to the telehealth credit percentage in future rulemaking based on evidence, stakeholder feedback, and the evolving landscape of telehealth services. Our goal is to ensure that our policies support the effective use of telehealth in enhancing access to care while maintaining high standards of care delivery for MA enrollees.
We are committed to conducting an in-depth evaluation of network adequacy, acknowledging the changing landscape of healthcare delivery where behavioral health services are becoming an integral part of primary care. To that end, CMS annually publishes a Provider Supply file (42 CFR 422.116(a)(4)(ii)) that lists available providers and facilities and their corresponding office locations and specialty types. MA organizations may use this as a resource to identify providers and facilities. However, given the dynamic nature of the market, MA organizations remain responsible for conducting validation of data used for network adequacy review purposes.
Based on our review and consideration of the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing these provisions as proposed with modifications to outline the criteria MA organizations must use to determine when an NP, PA or CNS can be considered as part of a network to meet the Outpatient Behavioral Health network adequacy standard. To address concerns that NPs, PAs, and CNSs might lack the necessary skills, training, or expertise to effectively address the behavioral health needs of enrollees and that the absence of criteria for incorporating these provider types could result in networks where these providers may be listed in a provider directory without actively treating patients, ” we are finalizing provisions in § 422.116(b)(2)(xiv) to establish specific criteria that MA organizations must use to determine when an NP, PA or CNS can be considered part of a network to meet the Outpatient Behavioral Health network adequacy standard. MA organizations must independently verify that the provider has furnished or will furnish certain services to 20 patients within a recent 12-month period, using reliable information about services furnished by the provider such as the MA organization's claims data, prescription drug claims data, electronic health records, or similar data. For NPs, PAs, or CNSs new to independent practice, MA organizations must have a reasonable and supportable basis for concluding that the practitioner would meet the requirement in the next 12 months, including information related to psychiatry or addiction medicine specialized training, and that the provider listed as a psychiatry or addiction medicine NP, PA, or CNS on public-facing websites.
Section 1860D-4(c)(5)(A) of the Act requires that Part D sponsors have a drug management program (DMP) for beneficiaries at risk of abuse or misuse of frequently abused drugs (FADs), currently defined by CMS as opioids and benzodiazepines. CMS codified the framework for DMPs at § 423.153(f) in the April 16, 2018 final rule “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Programs, and the PACE Program” (83 FR 16440), hereafter referred to as the April 2018 final rule.
Under current DMP policy, CMS identifies potential at-risk beneficiaries (PARBs) who meet the clinical guidelines described at § 423.153(f)(16), which CMS refers to as the minimum Overutilization Monitoring System (OMS) criteria. CMS, through the OMS, reports such beneficiaries to their Part D plans for case management under their DMP. There are also supplemental clinical guidelines, or supplemental OMS criteria, which Part D sponsors can apply themselves to identify additional PARBs. Under § 423.153(f)(2), sponsors are required to conduct case management for PARBs, which must include informing the beneficiary's prescribers of their potential risk for misuse or abuse of FADs and requesting information from the prescribers relevant to evaluating the beneficiary's risk, including whether they meet the regulatory definition of exempted beneficiary.
If the sponsor determines through case management that the enrollee is an at-risk beneficiary (ARB), after notifying the beneficiary in writing, the sponsor may limit their access to opioids and/or benzodiazepines to a selected prescriber and/or network pharmacy(ies) and/or through a beneficiary-specific point-of-sale claim edit, in accordance with the requirements at § 423.153(f)(3). CMS regulations at § 423.100 define exempted beneficiary, at-risk beneficiary, potential at-risk beneficiary, and frequently abused drug.
Section 1860D-4(c)(5)(C)(ii) of the Act defines an exempted individual as one who receives hospice care, who is a resident of a long-term care facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy, or who the Secretary elects to treat as an exempted individual. At § 423.100 CMS defines an exempted beneficiary as an enrollee being treated for active cancer-related pain, or who has sickle-cell disease, resides in a long-term care facility, has elected to receive hospice care, or is receiving palliative or end-of-life care.
The OMS criteria finalized in the April 2018 final rule were developed to align with available information and guidelines, such as the Centers for Disease Control and Prevention (CDC) Guideline for Prescribing Opioids for Chronic Pain (2016 CDC Guideline) issued in March 2016.
In the interest of alignment with the 2022 CDC Guideline regarding applicability in individuals with cancer, we proposed to amend the regulatory definition of “exempted beneficiary” at § 423.100 by replacing the reference to “active cancer-related pain” with “cancer-related pain.” With this proposal, we would expand the definition of exempted beneficiary to more broadly refer to enrollees being treated for cancer-related pain to include beneficiaries undergoing active cancer treatment, as well as cancer survivors with chronic pain who have completed cancer treatment, are in clinical remission, or are under cancer surveillance only.
We solicited comments on this proposal.
We will also consider how best to update future OMS reporting, including the level of detail reported for PARBs. As detailed in the OMS technical user guide available on the CMS Part D Overutilization website,
After reviewing the comments received, we are finalizing the proposal to amend the regulatory definition of “exempted beneficiary” at § 423.100 by replacing the reference to “active cancer-related pain” with “cancer-related pain” without modification.
As discussed above under section III.N. Improvements to Drug Management Programs of this final rule, sponsors must provide case management for any PARB that meets the OMS criteria to determine whether the individual is an ARB and whether to implement a limitation on their access to FADs. Under section 1860D-4(c)(5)(B)(i)(I) of the Act, a sponsor must send an initial and second notice to such beneficiary prior to imposing such limitation. In the April 2018 final rule (83 FR 16440), CMS adopted requirements for the initial and second notices at §§ 423.153(f)(5) and 423.153(f)(6). The initial notice must inform the beneficiary that they have been identified as a PARB and must include information outlined in § 423.153(f)(5)(ii). The second notice must inform the beneficiary that they have been identified as an ARB and of the limitations on the beneficiary's coverage of FADs, as specified in § 423.153(f)(6)(ii). In the event that, after sending an initial notice, a sponsor determines that a PARB is not an ARB, a second notice is not sent; instead, an alternate second notice is sent. Though not required by the Act, CMS codified a requirement at § 423.153(f)(7) to provide an alternate second notice for the purpose of informing the beneficiary that they are not an ARB and that no limitation on their coverage of FADs will be implemented under the DMP.
Section 1860D-4(c)(5)(B)(iv) of the Act establishes that sponsors must send a second notice on a date that is not less than 30 days after the initial notice. The 30 days allow sufficient time for the beneficiary to provide information relevant to the sponsor's determination, including their preferred prescribers and pharmacies. CMS codified at § 423.153(f)(8) the timing for providing both the second notice and alternate second notice. Currently, CMS requires sponsors to send either the second or alternate second notice on a date not less than 30 days from the date of the initial notice and not more than the earlier of the date the sponsor makes the determination or 60 days after the date of the initial notice.
We proposed to change the timeframe within which a sponsor must provide an alternate second notice to a beneficiary who is determined to be exempt from the DMP subsequent to receiving an initial notice. Specifically, we proposed to redesignate existing § 423.153(f)(8)(ii) as § 423.153(f)(8)(iii), and to revise the text at § 423.153(f)(8)(ii) to specify that, for such exempted beneficiaries, the sponsor must provide the alternate second notice within 3 days of determining the beneficiary is exempt, even if that occurs less than 30 days from the date of the initial notice. In other words, we proposed to remove the
Through program oversight, including audits of Part D sponsors, CMS has observed that initial notices are sometimes sent to Part D enrollees who meet the definition of an exempted beneficiary at § 423.100, often because the sponsor does not have the necessary information—for example, that the enrollee has a cancer diagnosis or is receiving palliative care or end-of-life care—at the time the sponsor sends the initial notice. However, this information may be provided later by the enrollee or their prescriber in response to the initial notice. In some cases, sponsors identify exemptions very quickly after issuing the initial notice, prior to 30 days elapsing. Under current CMS regulations, if a beneficiary meets the definition of an exempted beneficiary, the beneficiary does not meet the definition of a PARB. For this reason, exempted beneficiaries cannot be placed in a Part D sponsor's DMP. Therefore, as stated in the preamble to the April 2018 final rule (83 FR 16455), a sponsor must remove an exempted beneficiary from a DMP as soon as it reliably learns that the beneficiary is exempt (whether that be via the beneficiary, their representative, the facility, a pharmacy, a prescriber, or an internal or external data source, including an internal claims system). CMS understands that sponsors may have already been sending alternate second notices after determining that a beneficiary is exempt, without waiting for 30 days to elapse. This proposed change would specify that sponsors must send such notices to exempted beneficiaries sooner than 30 days after the provision of the initial notice.
CMS reminds Part D sponsors that, during their review and during case management, they are expected to use all available information to identify whether a PARB is exempt in advance of sending an initial notice to protect these vulnerable beneficiaries from unnecessary burden, anxiety, and disruptions in medically necessary drug therapy. Thorough review of plan records and robust outreach efforts to prescribers during case management help to minimize the risk that an exempted beneficiary would receive an initial notice.
Sections 8.1 and 8.2.2 of the DMP guidance
We note that sponsors may determine that a PARB is not an ARB prior to 30 days elapsing for reasons other than the beneficiary being exempt. However, we believe the existing 30-day requirement before a sponsor may send an alternate second notice in such situations is important to maintain because it allows the beneficiary and other prescribers enough time to provide the sponsor with information that may influence the sponsor's determination.
We received the following comments on this proposal and our responses follow.
We proposed an additional technical change related to the timeframe for providing second notices and alternate second notices. The current regulation at § 423.153(f)(8)(i) requires that a sponsor provide a second notice or alternate second notice not more than the earlier of the date the sponsor makes the relevant determination or 60 days after the date of the initial notice. It is critical that beneficiaries receive timely written notice about changes to their access to Part D drugs, as well as information about appeal rights, and the second notice and alternate second notices are tied to the date of the plan's determination. However, CMS understands that sponsors may not always be able to issue printed notices on the exact day they make a determination for a variety of reasons, such as they made the determination on a day when there is no United States Postal Service mail service, or later in the day after files have been sent to a print vendor. Specifically, we proposed to add at § 423.153(f)(8)(i)(A) a window of up to 3 days to allow for printing and mailing the second notice or alternate second notice. We noted in the proposed rule that this change would provide sponsors sufficient time to print and mail the notices while ensuring that beneficiaries receive timely information about DMP limitations. Sponsors must continue to issue these notices as soon as possible when a determination is made, and CMS does not expect that sponsors will routinely take the maximum amount of time.
We did not propose to change the requirement in § 423.153(f)(8)(i)(B) that the second notice or alternate second notice must be provided no later than 60 days from the date of the initial notice. This is because sponsors have ample time to account in advance for the days needed to print and mail these notices.
We received the following comments on this proposal and our responses follow.
Regarding the data disclosure provision at § 423.153(f)(15)(ii)(D) that requires sponsors to update DMP information in MARx as soon as possible but no later than 7 days from the date the sponsor provides an initial notice or second notice to a PARB or ARB or terminates a DMP limitation, it is important to note that this requirement is unrelated to beneficiary notification and thus not as urgent. The purpose of the data disclosure is not comparable to the purpose of sending beneficiary notices regarding a restriction on their access to Part D drugs; therefore, it is not an appropriate benchmark to use to establish this timeframe. CMS does not expect plans to routinely take the maximum amount of time possible and reminds sponsors that the maximum 60-day timeframe from the date of the initial notice is unchanged under our proposal. For example, if a determination is made on day 60, the second notice or alternate second notice must be provided on the same day.
Currently, under § 423.153(f)(8)(i), Part D sponsors must provide the second notice or the alternate second notice on the date of the determination, with no additional window of time for providing (
After consideration of the comments received, we are finalizing the regulation text at §§ 423.153(f)(8)(i)(A) and 423.153(f)(8)(ii) as proposed.
CMS regulations at § 423.153(f)(16) specify that CMS and Part D sponsors identify PARBs and ARBs using clinical guidelines that are developed with stakeholder consultation, derived from expert opinion backed by analysis of Medicare data, and include a program size estimate. In addition, the clinical guidelines (also referred to as the “OMS criteria”) are based on the acquisition of FADs from multiple prescribers, multiple pharmacies, the level of FADs used, or any combination of these factors, or a history of opioid-related overdose.
PARBs are the Part D beneficiaries who CMS believes are potentially at the highest risk of opioid-related adverse events or overdose. The current minimum OMS criteria
In 2019, CMS assigned the Health Federally Funded Research and Development Center (FFRDC) to develop evidence-based recommendations for improving the OMS criteria for the future. The Health FFRDC conducted a literature review, facilitated a Technical Expert Panel (TEP), and performed data analyses. All three activities served as inputs into the evidence-based recommendations. The Health FFRDC recommended that the results of the literature review and data analysis support the continued inclusion of average MME, number of opioid dispensing pharmacies, and number of opioids prescribers as indicators for PARBs. In addition, they recommended that further data analysis would be necessary to determine which additional criteria would be appropriate to potentially adopt. CMS conducted subsequent literature reviews and analysis.
In recent years, there has been a marked decrease in Part D prescription opioid overutilization, but opioid-related overdose deaths continue to be
A past overdose is the risk factor most predictive for another overdose or suicide-related event.
A recently published article that evaluated the use of machine learning algorithms for predicting opioid overdose risk among Medicare beneficiaries taking at least one opioid prescription concluded that the machine learning algorithms appear to perform well for risk prediction and stratification of opioid overdose especially in identifying low-risk groups having minimal risk of overdose.
While we did not propose changes to the clinical guidelines or OMS criteria in the November 2023 proposed rule, we provided information on our data analysis to date and welcome feedback for future changes. Using predictor variables identified through the literature reviews, CMS performed a data analysis to determine the top risk factors for Part D enrollees at high-risk for one of two outcomes: (1) having a new opioid poisoning (overdose) or (2) developing newly diagnosed OUD. Since Part D enrollees with a known opioid-related overdose are already identified in OMS, CMS focused on individuals at high risk for a new opioid-related overdose or OUD. We anticipated no additional sponsor burden since we did not propose regulatory changes and solicited feedback.
In the analysis, we utilized Medicare data and traditional logistic regression as well as machine learning models like Random Forest, Least Absolute Shrinkage and Selection Operator (LASSO), and Extreme Gradient Boosting (XGBoost)
The model population included 6,756,152 Medicare beneficiaries contemporaneously enrolled in Part D and Parts A, B, or C during the period from January to June 2019, who were prescribed at least one non-MOUD prescription opioid during the measurement period and did not have a DMP exemption (that is, cancer, sickle cell disease, hospice, LTC facility resident, palliative care, or end-of-life care). We excluded beneficiaries with a prior opioid-related overdose or an OUD diagnosis in the year prior to the prediction period. The training dataset used to build the model consisted of a random 75 percent sample of the study population (5,067,114). The remaining 25 percent of the population (1,689,038) was used for validating the prediction performance of the model. The measurement period to obtain information for the predictor variables (for example, opioid use patterns, demographics, comorbidities, etc.) was from January 1 to June 30, 2019, and the prediction period we used to identify beneficiaries with a new opioid overdose event or new OUD diagnosis was from July 1 to December 31, 2019.
The following risk factors
We evaluated the performance of the model using the confusion matrix generated by applying the prediction model to the validation dataset to calculate various metrics.
The top 15 risk factors that were highly associated with a new OUD or opioid-related overdose diagnosis were:
The number of short-acting prescription opioid fills and the average daily MME were found to contribute most to XGBoost model predictions of a new OUD or opioid-related overdose diagnosis. Risk was present across a range of MME levels and increased with higher MME levels. The risk of developing a new OUD or opioid-related overdose diagnosis also increased with the number of diagnosed mental health or substance use disorders. Utilization of opioids with other high-risk medications like anticonvulsants, benzodiazepines, anti-psychotics, and anti-anxiety medications were positively associated with higher risk. Also, utilization of opioids like oxycodone and morphine were positively associated with higher risk, while utilization of codeine, tramadol, and opioids in the other category were positively associated with lower risk.
Lastly, we applied our finalized model to data from October 1, 2021 through March 31, 2022 to predict future new opioid-related overdose events and OUD diagnoses during the period from April 1, 2022 to September 30, 2022 to understand program size estimates and NNE values.
Between 9 percent and 15 percent of the beneficiaries with a predicted new opioid-related overdose/OUD actually experienced a new overdose or OUD diagnosis during the evaluation period (April 1, 2022, through September 30, 2022) depending on the Risk Probability Threshold. The Top 1 percent threshold (n = 62,571) reported the lowest precision score, while the Top 1,000 threshold showed the highest precision. Among those who had a new opioid-related overdose/OUD in the evaluation period, about 92 percent developed a new OUD; the proportion with a new opioid overdose increased from 10 percent to 17 percent as the risk probability threshold increased from the Top 1 percent to the Top 1,000; and, as the risk probability threshold increased, about 2 percent to 8 percent had both a new opioid overdose and were identified as having a newly diagnosed OUD. Among the different Risk Probability Thresholds, between 93 to 98 percent of the correctly predicted new overdoses/OUDs do not meet the current OMS criteria. The percentage that meets the current OMS criteria decreases as the Risk Probability Threshold becomes more restrictive. Thus, our analysis shows that there is very little overlap between the population identified through this model and beneficiaries already identified through the OMS.
In the November 2023 proposed rule, we discussed that CMS next plans to assess risk in the model, validate the stability of the model as new data become available, and develop guidelines on how to feasibly implement the model into the existing DMP and OMS processes. We solicited feedback on the following:
• Potentially using such a model to enhance the minimum or supplemental OMS criteria in the future (either in addition to the current criteria or as a replacement).
• How to avoid the stigma and/or misapplication of identification of a PARB at high risk for a new opioid-related overdose or OUD using the variables in the model.
• Implementation considerations, such as effectively conducting case management, as described in 423.153(f)(2), with prescribers of PARBs identified by the model; opportunities to promote MOUD, co-prescribing of naloxone, or care coordination; or potential unintended consequences for access to needed medications.
• Other factors to consider.
CMS maintains the CTM in the Health Plan Management System (HPMS) as the central repository for complaints received by CMS from various sources, including, but not limited to the Medicare Ombudsman, CMS contractors, 1-800-MEDICARE, and CMS websites. The CTM was developed in 2006 and is the system used to comply with the requirement of section 3311 of the Affordable Care Act for the Secretary to develop and maintain a system for tracking complaints about MA and Part D plans received by CMS, CMS contractors, the Medicare Ombudsman, and others. Complaints from beneficiaries, providers, and their representatives regarding their Medicare Advantage (MA) organizations, Cost plans, Programs of All-inclusive Care for the Elderly (PACE) organizations, and Part D sponsors are recorded in the CTM and assigned to the appropriate MA organization (MAO), Cost plan, PACE organization, and Part D sponsor if CMS determines the plan, organization, or sponsor is responsible for resolving the complaint. Unless otherwise noted, “plans” applies to MAOs, Part D sponsors, Cost plans, and PACE organizations for purposes of this section.
We proposed to codify existing guidance for the timeliness of complaint resolution by plans in the CTM. Currently, §§ 422.504(a)(15) and 423.505(b)(22) require MAOs and Part D sponsors to address and resolve complaints received by CMS against the MAO and Part D sponsor through the CTM; we proposed to codify the expectation in guidance that Cost plans and PACE organizations also address and resolve complaints in the CTM. We proposed to codify the existing priority levels for complaints based on how quickly a beneficiary needs to access care or services and to codify a new requirement for plans to make first contact with individuals filing non-immediate need complaints within 3 calendar days. This timeframe will not apply to immediate need complaints because those complaints need to be resolved within two calendar days.
CMS codified the requirement for MAOs and Part D sponsors to address and resolve complaints in the CTM at §§ 422.504(a)(15) and 423.505(b)(22) in the “Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2012 and Other Changes” (76 FR 21431), which appeared in the April 15, 2011
As Part D sponsors, Cost plans and PACE organizations that offer Part D coverage have been required to comply with § 423.505(b)(22). We proposed to add language to §§ 417.472(l) and 460.119 to codify in the Cost plan regulations and PACE regulations, respectively, the requirement that Cost plans and PACE organizations address and resolve complaints in the CTM. This proposed new requirement will apply to all complaints in the CTM for Cost plans and PACE organizations, not just complaints about Part D.
In addition, CMS has issued guidance describing our expectations for how complaints should be handled. In the Complaints Tracking Module Plan Standard Operational Procedures (CTM SOP), the most recent version of which was released on May 10, 2019, via HPMS memo,
In Chapter 7, section 70.1 of the Prescription Drug Benefit Manual, “Medication Therapy Management and Quality Improvement Program,”
Requirements for resolution of complaints received in the CTM do not override requirements related to the handling of appeals and grievances set forth in 42 CFR part 422 subpart M (which apply to cost plans as well as MAOs per § 417.600), Part 423 subpart M, for Part D sponsors, and §§ 460.120-460.124 for PACE organizations. Rather, CTM requirements supplement the appeals and grievance requirements by specifying how organizations must handle complaints received by CMS in the CTM and passed along to the plan. The requirement for organizations to enter information on the resolution of complaints in the CTM within specified time periods allows CMS to track and ensure accountability for complaints CMS itself received, either directly from beneficiaries or via entries in the CTM from the Medicare ombudsman, CMS contractors, or others. A beneficiary who filed a complaint directly with CMS may later contact CMS to find out the status of the complaint and the plan's use of the system will allow CMS to answer the beneficiaries inquires more expeditiously. In order to comply with the applicable regulations, plans must handle any CTM complaint that is also an appeal or grievance within the meaning of the regulation in such a way that complies with the notice, timeliness, procedural, and other requirements of the regulations governing appeals and grievances.
We proposed to codify the timeliness requirements for MAOs and Part D plans at new §§ 422.125 and 423.129, both titled “Resolution of Complaints in Complaints Tracking Module.” We proposed to codify these requirements for Cost plans and PACE organizations at §§ 417.472(l) and 460.119 by adopting §§ 422.504(a)(15) and 422.125 by reference into the requirements for Cost plans and PACE organizations, respectively.
Specifically, we proposed to codify at §§ 422.125(a) and 423.129(a) the definitions of “immediate need” and “urgent” complaints in substantially the same way as they are currently defined in guidance for MA and Part D-related complaints. However, we proposed to specify that immediate need and urgent complaints for MA plans (as well as Cost plans, and PACE) also include situations where a beneficiary has access to enough of a drug or supply to last fewer than 2 days or from 3 to 14 days, respectively, as part of the definition that these complaints are about situations that prevent the beneficiary from accessing care or a service. This proposed change recognizes that some complaints to an MAO (or Cost plan or PACE organization) may overlap with Part D access, such as when a beneficiary reports a problem with their enrollment in an MA-PD plan that is blocking access to Part D coverage. The change also recognizes that non-Part D MA, Cost plan, and PACE complaints relate not just to access to physician services but to drugs and supplies that may be covered by the MA plan, Cost plan, or PACE organization's non-Part D benefit (for example, Part B drugs or diabetic test strips covered under the medical benefit of an MA plan). Further, MA plans, Cost plans, and PACE also cover Part B drugs.
We also proposed to codify at §§ 422.125(b) and 423.129(b) the current timeframes reflected in section 70.2 of Chapter 7 of the Prescription Drug Benefit Manual for resolving immediate need and urgent complaints. A two (2) calendar day deadline for resolving plan-related immediate need complaints is both consistent with current practice by plans and logically follows from the definition of an “immediate need” complaint. By its nature, an immediate need complaint requires swift action. Because we define immediate need, in part, as a situation where a beneficiary has access to two or fewer days' worth of a drug or supply they need, a timeline greater than two calendar days for resolving a complaint would represent an unacceptable risk to beneficiaries.
Similarly, a 7 calendar day deadline for “urgent” complaints reflects the importance of not delaying resolution of a situation that is preventing access to care or services a beneficiary needs. Because we define “urgent” in part as a situation where a beneficiary has 3 to 14 days' worth of a drug or supply they need, allowing more than a week to elapse before resolving the complaint will put beneficiaries at unacceptable risk of not receiving replacement drugs or supplies timely.
For all other Part D and non-Part D complaints in the CTM, we proposed requiring resolution within 30 days of receipt. This is consistent with current practice and the guidance in section 70.2 of Chapter 7 of the Prescription Drug Benefit Manual, and we believe will prevent complaints from lingering for months without resolution in the CTM. Further, a 30-day timeframe for resolving complaints in the CTM aligns with the 30-day period provided in §§ 422.564(e) and 423.564(e) for resolution of grievances. Although those regulations permit an extension of up to 14 days for resolving the grievance if the enrollee requests the extension or if the organization justifies a need for additional information and documents how the delay is in the interest of the enrollee, we do not believe that including the authority to extend the deadline to resolve complaints in the CTM is appropriate because complaints received into the CTM are often the result of failed attempts to resolve issues directly with the plan. Allowing plans to further extend the time to resolve the complaint only allows further delays in addressing beneficiary concerns. Moreover, recent evidence indicates that the vast majority of non-immediate need or urgent complaints are resolved within 30 days—98 percent of such complaints were resolved by plans within 30 days in 2022.
All timeframes for resolution will continue to be measured from the date a complaint is assigned to a plan in the CTM, rather than the date the plan retrieves the complaint from the CTM. This is consistent with current guidance and practice. Measuring the timeframe in this manner is the best way to protect beneficiaries from delayed resolution of complaints and encourages organizations to continue retrieving CTM complaints in a timely manner so that they have sufficient time to resolve complaints.
We do not anticipate that plans will have difficulty meeting these timeframes. The vast majority of complaints are currently resolved in the timelines specified for the priority level of the complaint. For example, in 2022, plans resolved 97 percent of complaints within the required time frames for the level of complaint. Plans resolved 94 percent of immediate need complaints within two (2) calendar days, 97 percent of urgent complaints within seven (7) calendar days, and 98 percent of complaints with no issue level designated within thirty (30) calendar days. Codifying the timeframes as proposed merely formalizes CMS's current expectations and the level of responsiveness currently practiced by plans.
We also proposed to create a new requirement for plans to contact individuals filing non-immediate need complaints. At §§ 422.125(c) and 423.129(c), we proposed to require plans to contact the individual filing a complaint within three (3) calendar days of the complaint being assigned to a plan. While current guidance generally includes the expectation that organizations inform individuals of the progress of their complaint, CMS has never specified a timeframe for reaching out to a complainant. CMS has observed that, particularly for complaints that are not assigned a priority level, plans sometimes wait until the timeframe for resolution has almost elapsed to contact the complainant. Because the timeframe
We acknowledge that our proposed timeframe for reaching out to the complainant concerning a CTM complaint is more specific than our requirement at §§ 422.564(b) and 423.564(b) for plans to “promptly inform the enrollee whether the complaint is subject to its grievance procedures or its appeals procedures.” We proposed a specific timeframe for contacting the beneficiary regarding a CTM complaint because, unlike with complaints received by the plans outside the CTM, the complainant has not reached out directly to the plan and may not know that their complaint has been passed on to the plan by CMS via the CTM. Moreover, as previously noted, CMS monitors the handling of complaints it receives through the CTM in real time. Part of handling CTM complaints through the CTM, as required by §§ 422.504(a)(15) and 423.505(b)(22), is entering information into the CTM when the plan reaches out to the complainant. CMS will therefore be able to monitor whether a plan has reached out to a beneficiary within the required timeframe and follow up with the plan well before timeframe for resolving the complaint has elapsed.
We proposed a three (3) calendar day timeframe for reaching out to the individual filing the complaint because it will provide a timely update to individuals filing both urgent and uncategorized complaints without delaying resolution of immediate need complaints. We expect that a plan will indicate in this communication that the plan has received and is working on the complaint, and that they provide contact information that the individual filing the complaint could use to follow up with the plan regarding the complaint. We solicited comment on whether this timeframe is appropriate and whether a longer or shorter timeframe will better balance the needs of beneficiaries with the capacity of plans to respond to complaints.
We also proposed conforming changes to §§ 422.504(a)(15) and 423.505(b)(22) to incorporate the proposed new requirements into the existing contractual requirements for MAOs and Part D sponsors. The proposed revisions to §§ 417.472(l) and 460.119 incorporate both the requirements in proposed § 422.125 and the requirement for a contract term for resolving complaints received by CMS through the CTM for Cost plans and PACE organizations and their contracts with CMS.
We received comments on the proposal and our responses to the comments are below.
Similarly, PACE service determinations and appeals must be resolved as “expeditiously as the participant's condition requires”, but no later than three days after the request is received for service determinations, 30 days after the request is received for appeals, and 72 hours after the appeal request is received for expedited appeals. See §§ 460.121(i), 460.122(c)(6), and 460.122(f) regarding the timelines for response to PACE participant service determination requests and appeals and the definition of expedited appeals. Pursuant to provisions of this rule, PACE grievances must also be resolved as “expeditiously as the case requires,” but no later than 30 calendar days after the PACE organization receives the grievance. See section XI.H of this rule, adopting changes to § 460.120, including a timeline for resolution of PACE grievances at § 460.120(g). Immediate need complaints that also qualify as PACE grievances, service determination requests, appeals, or expedited appeals therefore need to be resolved within two days under both PACE requirements and the requirements of this rule. Although the regulations at §§ 460.121(i)(1) and 460.122(f)(3) allow the timeline for resolution of service determination requests and expedited appeals to be extended by five days or 14 days, respectively, under certain circumstances, the stricter timing requirements for CTM complaints addressed in §§ 422.125 and 423.129 will control where a CTM complaint has been filed in the same way they would for MA and Part D grievances.
Because existing CMS regulations explicitly permit extension for MA and Part D appeals and grievances, we do not think it is appropriate to penalize an organization for extending the resolution of a non-immediate need and non-urgent CTM complaint that meets the definition of an MA or Part D appeal or grievance. Therefore we are adding a new paragraph (4) to §§ 422.125(b) and 423.129(b) to allow organizations to extend the timeline to respond to a CTM complaint if the complaint is also a grievance within the scope of §§ 422.564, 422.630 or 423.564
We also acknowledge the potential conflict between the timelines for resolving immediate need complaints or urgent complaints and the requirement for organizations to respond within 24-hours to MA and Part D grievances that meet the definition of “expedited grievances” under §§ 422.564(f), 422.630(d), and 423.564(f). Similarly, there is a potential conflict between the timeline for resolving urgent complaints and the three days and 72 hours permitted to respond to PACE service determination requests and expedited appeals under §§ 460.121(i) and 460.122(f)(2). We did not intend to allow organizations to take longer to resolve an expedited MA or Part D grievance or PACE service determination request or expedited appeal than is currently required under the regulation merely because the grievance, service determination request, or appeal was received as a CTM complaint. Therefore, we are adding a new paragraph (5) to §§ 422.125(b) and 423.129(b) to make clear that organizations must comply with the shortest applicable timeframe for resolving a CTM complaint when the complaint also qualifies as a grievance, PACE service determination request, or PACE appeal. By shortest applicable timeframe, we mean the timeframe that (1) applies under this new CTM provision for the type of complaint (that is, immediate need complaint, urgent complaint, or other type of CTM complaint), the grievance regulation (that is §§ 422.56, 422.630, 423.564, or 460.120), or the PACE service determination or appeals regulation (that is §§ 460.121 or 460.122) and (2) is the shortest of those two applicable time frames. So, if a CTM complaint qualifies as both an urgent complaint and an expedited MA or Part D grievance, the organization responsible for responding to the complaint would be required to do so within 24 hours, as required by §§ 422.564(f), 422.630(d), and 423.564(f), and not within the seven days permitted under §§ 422.125(b)(2) and 423.129(b)(2) for urgent complaints. Similarly, with respect to the requirement for organizations to contact the individual making the complaint in the CTM within a specific timeframe, we expect that organizations will meet this timeframe for CTM complaints that also meet the definition of MA, Part D, or PACE grievances. To the extent that the requirement in §§ 422.564(b) and 423.564(b) to “promptly inform the enrollee whether the complaint is subject to its grievance procedures or its appeals procedures” would permit organizations to take longer than seven days to notify enrollees, §§ 422.125(c) and 423.129(c) would nevertheless require organizations to contact individuals who file a complaint that qualifies as a grievance in the CTM within seven days.
The resolution timeframes of two days for immediate need complaints, seven days for urgent complaints, and 30 days for all other CTM complaints have been in effect for many years and we do not have evidence that beneficiaries entitled to quicker resolutions under the regulations for grievances have had those resolutions delayed as a result. We are finalizing the resolution timeframes for CTM complaints as proposed in §§ 422.125 and 423.129 with the modifications described for §§ 422.125(b)(4) & (5) and 423.129(b)(4) & (5), but we will continue to monitor CTM complaint resolutions and appeals and grievances procedures and records for evidence that the CTM resolution timeframes are causing unnecessary delays in the resolution of appeals and grievances.
We also recognize that plans have many ways to contact beneficiaries, including by phone or mail. We expect plans to attempt to contact complainants regarding time sensitive matters by the most expeditious means available. We also expect that plans would generally use the same method to reach out to complainants as the complainants used to file complaints. Generally, this would require that plans attempt to contact complainants by phone, since this is the way the vast majority of complaints are made and the quickest way to reach individuals in real time. Our experience operating the CTM indicates that organizations do attempt to contact complainants by phone. We therefore do not believe that it is necessary to explicitly codify this expectation at this time. However, we
We also do not share the commenter's concern that contacting complainants before a complaint has been resolved would be premature or confusing. As discussed previously, one of the major purposes of requiring organizations to contact individuals filing complaints before the complaint has been resolved is to ensure that the complainant knows that the organization has received and is working to resolve the complaint. We do not believe such communications would be confusing for beneficiaries.
However, we do recognize that a three-calendar day requirement to contact beneficiaries is a new requirement that may prove difficult for organizations to adhere to and that it may not significantly improve the beneficiary experience such that burden is sufficiently outweighed. Based on these comments, we are finalizing a slightly longer deadline by which organizations must attempt to contact individuals filing non-immediate need complaints as finalized §§ 422.125(c) and 423.129(c) require organizations to attempt to contact the complainant within 7 calendar days of the organization being assigned the complaint from the CTM. We believe that this strikes a balance between providing individuals timely information regarding the handling of their complaints with plans' valid concerns about being able to meet a shorter timeframe. We also believe that this will address commenter's concerns about the difficulty of contacting beneficiaries on non-business days—it is unusual for an organization to have more than two or three consecutive non-business days in a 7-day period, so organizations should be able to meet the longer 7-day timeframe regardless of whether a complaint was received immediately before a weekend or holiday.
Section 1860D-11(e)(2) of the Act provides that the Secretary may only approve Part D plans if certain requirements are met, including the provision of qualified prescription drug coverage. Section 1860D-11(e)(2)(D) of the Act specifically permits approval only if the Secretary does not find that the design of the plan and its benefits, including any formulary and tiered formulary structure, are likely to substantially discourage enrollment by certain Part D eligible individuals. Section 1860D-4(c)(1)(A) of the Act requires “a cost-effective drug utilization management program, including incentives to reduce costs when medically appropriate.” Lastly, section 1860D-4(b)(3)(E) of the Act requires Part D sponsors to provide “appropriate notice” to the Secretary, affected enrollees, physicians, pharmacies, and pharmacists before removing a covered Part D drug from a formulary or changing the preferred or tiered cost-sharing status of such a drug.
In section III.Q., Changes to an Approved Formulary, of the December 2022 proposed rule, we proposed regulations related to (1) Part D sponsors obtaining approval to make changes to a formulary already approved by CMS, including extending the scope of immediate formulary substitutions (also generally referred to as immediate substitutions herein);
For reasons discussed therein, the December 2022 proposed rule proposed regulatory changes on how to obtain approval to make changes to a formulary already approved by CMS and to provide notice of such changes. We proposed to codify, with some revisions, longstanding sub-regulatory guidance and terminology specifying when and how Part D sponsors can obtain approval to make negative formulary changes and the enrollees to whom these changes would apply.
In support thereof, we proposed to define “negative formulary changes” to Part D drugs in § 423.100 to include drug removals, moves to higher cost-sharing tiers, and adding or making more restrictive prior authorization (PA), step therapy (ST), or quantity limit (QL) requirements. We proposed to specify that negative formulary changes can be classified in one of three categories, which we also proposed to define in that same section as—
• “Maintenance changes,” which we proposed to define to encompass seven types of changes including drug substitutions that do not meet our requirements of immediate substitutions under § 423.120(e)(2)(i); changes based on particular events such as certain FDA actions, long-term shortages, and new clinical guidelines or information, or to promote safe utilization; or adding PA to help determine Part B versus Part D coverage;
• “Non-maintenance changes,” which we proposed to define as negative formulary changes that are not maintenance changes or immediate negative formulary changes; or
• “Immediate negative formulary changes,” a newly coined term that we proposed to encompass all types of immediate substitutions or market withdrawals under § 423.120(e)(2)(i) or (ii) respectively.
As an exception to the general rule requiring prior CMS approval of formulary changes, our current regulations permit immediate generic substitutions and the removal of drugs “deemed unsafe” by FDA or “removed from the market by their manufacturer.” We proposed in the December 2022 proposed rule to move and incorporate that regulation text as follows: In § 423.120(e)(2)(i), we proposed to permit “immediate substitutions,” meaning Part D sponsors could make immediate generic substitutions as well as substitute a new “interchangeable biological product” for its corresponding reference product; a new “unbranded biological product” for its corresponding brand name biological product; and a new “authorized generic” for its corresponding brand name equivalent. We proposed to support this proposal by defining the above quoted terms in § 423.4; identifying the corresponding relationships (including the previously permitted generic substitutions) in our definition of a “corresponding drug” in § 423.100; and also defining “biological product,” “brand name biological product,” and “reference biological product” in § 423.4. In proposing in § 423.120(e)(2)(ii) to continue to permit plans to immediately remove from their formulary any Part D drugs deemed unsafe by FDA or withdrawn from sale by their manufacturer, we proposed to newly describe these changes as “market withdrawals.” Under § 423.120(e)(2), as proposed in the December 2022 proposed rule, Part D sponsors meeting our requirements for immediate substitutions and market withdrawals would be able to make these changes immediately without submitting negative change requests to CMS. However, proposed § 423.120(f)(2) and (3) would require Part D sponsors to provide advance general notice of such changes and to submit specific changes with their next required or scheduled CMS formulary updates.
We proposed in respective §§ 423.120(b)(3)(i)(B) and 423.120(e)(4) to conform our regulations such that the same transition and timing rules would apply for all immediate negative formulary changes: as proposed, all immediate negative formulary changes could take place at any time (previously this exception only applied to immediate generic substitutions and market withdrawals) and Part D sponsors would not need to provide a transition supply (previously we only specified in regulation that this exception applied to immediate generic substitutions).
We also proposed to update and move to a new place the current regulation at § 423.120(b)(6), which prohibits Part D sponsors from making certain changes from the start of the annual enrollment period to 60 days after the beginning of the contract year. We proposed to update such regulation at § 423.120(e)(4) to specify that plans cannot make negative formulary changes during the stated time period except, as noted earlier, for immediate negative formulary changes (that is, immediate substitutions or market withdrawals).
We also proposed miscellaneous changes in § 423.100 in support of the previously described changes, including updating the definition of “affected enrollee” to encompass beneficiaries affected by all negative formulary changes and moving our current regulatory description of “other specified entities” from § 423.120(b)(5)(1) to be a standalone definition of the term in § 423.100.
We also proposed conforming amendments to update § 423.128(d)(2)(iii) to require online notice of “negative formulary changes” and to update cross citations in §§ 423.104(d)(2)(iv)(A)(6) and 423.128(e)(6) to reflect the fact we proposed to move the bulk of our requirements on formulary changes from § 423.120(b)(5) and (6) to § 423.120(e) and (f). We proposed to revise text at § 423.120(b)(5) and (6) to indicate that Part D sponsors must provide notice of formulary changes and can only make changes to CMS-approved formularies as specified, respectively, in § 423.120(f) and (e).
After receiving comments on the December 2022 proposed rule, we identified a limited number of changes that we wanted to make to that proposed regulatory text, which we proposed in the November 2023 proposed rule. We noted that the November 2023 proposed rule reflected our intent to consider the formulary change proposals in section III.Q. of the December 2022 proposed rule, as updated by the limited changes proposed in the November 2023 proposed rule, for inclusion in future rulemaking.
In the November 2023 proposed rule, we noted that commenters on section III.Q. of the December 2022 proposed rule did not agree on the requirements that should apply to formulary substitutions of Food and Drug Administration (FDA) approved and licensed biosimilar biological products. Different commenters submitted divergent requests that formulary substitutions of biosimilar biological products other than interchangeable biological products be treated as immediate substitutions, be treated as maintenance changes, or not be permitted whatsoever. Our proposed regulatory text in the December 2022 proposed rule only addressed substitution of interchangeable biological products and unbranded biological products, and did not specify how Part D sponsors could treat substitution of biosimilar biological products other than interchangeable biological products. We stated that we believed, in part because of the interest in the topic, it would be appropriate to propose changes then to solicit comment directly on the subject.
Accordingly, we proposed in the November 2023 proposed rule to update the regulatory text we proposed in the December 2022 proposed rule to the extent necessary to permit Part D sponsors to treat substitutions of biosimilar biological products other than interchangeable biological products as “maintenance changes,” as defined in the December 2022 proposed rule. We also proposed to define a new term, “biosimilar biological product,” distinct from our previously proposed term “interchangeable biological product.” We also proposed some technical changes to the term “interchangeable biological product.” We believe these proposals from the November 2023 proposed rule add to the December 2022 proposed rule to increase access to biosimilar biological products in the Part D program, consistent with the Biden-Harris Administration's commitment to competition as outlined in Executive Order (E.O.) 14306: “Promoting Competition in the American Economy.”
We specifically proposed to define biosimilar biological products consistent with sections 351(i) and (k) of the Public Health Service Act (PHSA) to include interchangeable biological products. As we noted in section III.F.2.b.(1) of the November 2023 proposed rule, in section III.Q of the December 2022 proposed rule, we originally proposed to permit maintenance changes and immediate substitutions involving interchangeable biological products. In the November 2023 proposed rule, we also proposed to allow substitution of biosimilar biological products other than interchangeable biological products for reference products as a maintenance change. To ensure clarity, we proposed in the November 2023 proposed rule to address the application of these policies to interchangeable biological products and to biosimilar biological products other than interchangeable biological products in separate paragraphs of the proposed definition of maintenance change in § 423.100.
Further, in considering a comment on immediate formulary substitutions we received on the December 2022 proposed rule, we also determined it would be appropriate to propose in the November 2023 proposed rule to provide Part D sponsors with additional flexibility with respect to the timing requirements for maintenance changes and immediate substitutions than as originally proposed in the December 2022 proposed rule. Rather than requiring a Part D sponsor to add a “corresponding drug” and make a “negative formulary change” (as both such terms are defined in the December 2022 proposed rule) to its related drug “at the same time” for a maintenance change, we proposed in the definition of maintenance change in § 423.100(1) in the November 2023 proposed rule to allow Part D sponsors to make a negative formulary change to the related drug within 90 days of adding the corresponding drug. We made similar changes in § 423.100(2) requiring negative formulary changes be made to a reference product within 90 days of adding a biosimilar biological product other than an interchangeable biological product. This means that the same flexibility is available when Part D sponsors make any biosimilar biological product substitutions that are maintenance changes. Lastly, we also
Additionally, we also proposed in the November 2023 proposed rule a technical change to our proposed definition of “corresponding drug” in § 423.100 included in the December 2022 proposed rule to specify that the reference to an “unbranded biological product of a biological product” is intended to refer to “an unbranded biological product marketed under the same BLA [Biologics License Application] as a brand name biological product.”
Lastly, we proposed in the November 2023 proposed rule to address a technical change to the regulatory text proposed in the December 2022 proposed rule to specify in introductory language to the § 423.100 proposed definition of “maintenance change” that maintenance changes apply with respect to “a covered Part D drug.”
As discussed earlier, we noted in the November 2023 proposed rule that we intended to consider section III.Q. of the December 2022 proposed rule, as updated by the limited proposed changes discussed in that November 2023 proposed rule, for inclusion in future rulemaking. Even though we acknowledged in the November 2023 proposed rule at a high level some comments regarding the December 2022 proposed rule that informed the limited changes we proposed in the November 2023 proposed rule, we stated that if we were to move forward in future rulemaking, we would respond to comments received in response to section III.Q. of the December 2022 proposed rule, as well as comments received in response to the changes proposed in section III.F. of the November 2023 proposed rule. We summarize those comments, and our responses as follows:
When an enrollee goes to the pharmacy, they would not know the difference between an authorized generic drug or a generic drug as those terms will be defined in § 423.4. Similarly, if the name changes from the branded biological product to an unbranded biological product licensed under the same BLA, an enrollee might not know the difference between the unbranded biological product and a biosimilar of the branded biological product. Consequently, to avoid enrollee confusion, we are finalizing a rule that treats all these replacements as substitutions.
We understand that enrollees sign up for plans with the expectation of continued access to their drugs. Accordingly, we have established, and are codifying in this final rule, approval and notice requirements for different kinds of formulary changes. We are permitting the following changes to drugs currently provided on a formulary: (i) immediate substitutions of corresponding drugs, such as new generic drugs for brand name drugs and interchangeable biological products for reference products; (ii) immediate removal of drugs withdrawn from sale by their manufacturer or that FDA determines to be withdrawn for safety or effectiveness reasons; (iii) maintenance changes, which include substitutions of generic drugs for brand name drugs that are not being made on an immediate substitution basis; substitutions of interchangeable biological products for their reference products; and removals based on long term shortage and market availability; (iv) non-maintenance changes, which can only be made if CMS provides explicit approval and which do not apply to enrollees currently taking the applicable drug; and (v) enhancements to the formulary (for instance, Part D sponsors can add a drug to the formulary or lower its cost-sharing), which can be made at any time.
We believe these requirements strike the appropriate balance between protecting enrollees by ensuring they have adequate notice of changes to their plan's formulary, while ensuring Part D sponsors have the flexibility to ensure formularies reflect the latest market developments and clinical guidelines. We monitor negative change request submissions and changes to HPMS formularies as a matter of standard operations, and we are not aware of widespread complaints from beneficiaries stating they have been subject to formulary changes without proper notice. Part D sponsors submit all maintenance and non-maintenance changes to CMS for approval and, even if approved, non-maintenance changes do not apply to enrollees currently taking a drug for the remainder of the plan year. In addition, enrollees can avail themselves of the formulary exception process if the enrollee or their physician believes it is necessary that the enrollee remain on a drug that is subject to a midyear change. The request for a SEP based on a midyear formulary change is out of scope.
As discussed in section II.A.14 of the November 2017 proposed rule, we believe the 30 days' notice provides the necessary beneficiary protections and affords enrollees sufficient time to either change to a covered alternative drug or to obtain needed prior authorization or an exception for the drug affected by the formulary change. CMS regulations establish robust beneficiary protections in the coverage determination and appeals processes. CMS requires at § 423.568(b) that standard coverage determinations are completed within 72 hours and at § 423.572(a) that expedited coverage determinations for exigent circumstances are completed within 24 hours. If an initial coverage determination is unfavorable, the enrollee or prescriber can request a standard redetermination, which in accordance with § 423.590(a) must be completed within 7 days of receipt of the request, or an expedited redetermination, which in accordance with § 423.590(d)(1) must be completed within 72 hours. (See a later response addressing comments supporting and opposing the advance direct notice requirements we would require for Part D sponsors seeking formulary to substitution of biosimilar biological products for reference products as maintenance changes.)
To respond to commenters to the November 2023 proposed rule that asked for longer times frames within which to make negative changes to the drug on the formulary, the purpose of immediate substitutions is to support quick action, in which Part D sponsors put a newer corresponding drug on the formulary right away and remove the drug it replaces as soon as possible. To encourage this quick action, we permit Part D sponsors implementing immediate substitutions to provide notice to affected enrollees of the specific changes after they have taken effect. For that reason, we continue to encourage that immediate substitutions take place “at the same time.” Extending the time within which to remove a brand name drug, brand name biological product, or reference product past 30 days would negate the concept of an “immediate” change.
While maintenance changes are not as urgent a matter, it would be challenging for CMS to monitor negative formulary changes that take place more than 90 days after adding a corresponding drug or biosimilar biological product other than an interchangeable biological product.
In response to the concern that implementing different time frames to make immediate substitutions versus maintenance changes creates a burden for Part D sponsors, they are not required to take advantage of the flexibility offered. The respective 30- and 90-day timeframes to make a negative formulary change after adding a corresponding drug to the formulary are limits, not requirements. Under the proposal, a Part D sponsor could decide to ensure all immediate substitutions and maintenance changes take place “at the same time.”
We have carefully considered the commenter's concern that implementing different windows could confuse enrollees, providers, and pharmacies. It is possible that Part D sponsors are currently removing brand name drugs after the date they add corresponding generic drugs. As discussed in our November 2023 proposed rule, there has been a longstanding operational limitation that Part D sponsors remove a brand name drug from the formulary within 90 days of adding a generic drug. We also do not believe that enrollees will be aware of the exact moment that a Part D sponsor decides to add a drug. Rather, affected enrollees will most likely learn that their plan will be making, or already has made, a formulary substitution either when they receive direct notice or request a refill on a brand name drug or reference product. We are not aware that the current limitation has resulted in undue confusion and do not expect that to be the case with this rule. We will also continue to review beneficiary complaints in our Complaint Tracking Module, should any complaints arise related to confusion about the different timeframes.
Lastly, we do not believe that monitoring immediate substitutions on an annual basis would provide a means to determine or address if Part D sponsors are gaming the system by delaying coverage for generic drugs because this provision has not and will not require Part D sponsors to offer generic drugs.
Our intent is to allow Part D sponsors to promote utilization of biosimilar biological products. We believe the current PA process continues to be the appropriate mechanism for providers to provide the necessary justification for continuing on a reference product.
While § 423.120(b)(5)(ii) does not govern the types of drugs that can be substituted, it requires Part D sponsors to list alternatives. We believe provision of this list could affect treatment in that it might provide alternatives that an enrollee and their provider have not considered, or steer the enrollee to certain drugs on that list given their coverage on their formulary. An enrollee and their provider can consider the list of alternatives to the drug that is being removed or otherwise subject to a negative formulary change as they decide whether to try the new drug added to the formulary, try another drug that appears on the list of alternatives, or to request an exception for coverage of the removed drug. As we noted in our proposal, there can be multiple drug options to treat the same condition and we believe that the list of alternatives should not limit possibilities of treatment by a strict adherence to class and category, particularly since Part D sponsors are not required to use a particular classification system for their Part D formularies. Therefore, we are finalizing § 423.120(f)(4)(iv) as proposed.
As to the question regarding who can determine what drug alternatives exist, we do not believe it is appropriate for Part D sponsors to outsource consideration of formulary alternatives to clinical experts outside of the P&T committee. Section 423.120(b)(1) specifies that a P&T committee must develop and revise the formulary. Applying a negative formulary change to a drug is a formulary revision, and we believe that consideration of the formulary in its entirety is part and parcel of any formulary revision decision. We do not see how, for example, a decision could be made to remove or apply utilization management restrictions to a drug without examining which drugs are being added to or are already on the formulary that could treat the same conditions as the drug subject to the negative formulary change.
It is not within the scope of this provision on formulary changes to address the request for flexibility to determine the lowest price of the drug.
CMS has implemented various requirements to help protect enrollees, address disparities, and mitigate confusion and burdens for enrollees, especially those with low health literacy, language barriers, and cognitive and other health care impairments. For example, under § 423.2267(a), we require Part D sponsors to provide: translated materials proactively in any non-English language that at least 5 percent of the beneficiaries in their service area speak, and materials in alternative formats (such as recordings and braille) to beneficiaries who are visually impaired. Furthermore, pursuant to § 423.128(d), we require all plans to have call centers to respond to current and prospective enrollee requests for assistance, and § 423.128(d)(1)(iii) also requires Part D sponsors to provide interpreters for non-English speaking and limited English proficient (LEP) individuals at their call centers. States also have established State Health Insurance Assistance Programs (SHIPs) that can assist enrollees in navigating their options. Enrollees can also designate a person to speak to plans on their behalf.
Likewise, our proposed regulation would not permit Part D sponsors to immediately substitute a generic for an authorized generic or an authorized generic for a generic as an immediate substitution under § 423.120(e)(2)(i). Nevertheless, an authorized generic and a generic of the same brand name drug generally are represented by the same RxCUI, as assigned by the National Library of Medicine's RxNorm.
With respect to interchangeable biological products, the proposed § 423.120(e)(2)(i) likewise would not permit immediate substitutions among interchangeable biological products—that is, we would not permit Part D sponsors to immediately substitute an interchangeable biological product for another interchangeable biological product as an immediate substitution under § 423.120(e)(2)(i). This is because § 423.120(e)(2)(i) would be limited to immediate substitutions of interchangeable biological products for their reference products, not for other interchangeable biological products that may be interchangeable with the same reference product. However, in contrast to generic drugs and authorized generic drugs of the same brand name drug sharing the same RxCUI, every biosimilar biological product is assigned its own distinct RxCUI. Therefore, a Part D sponsor cannot adjust which NDCs for interchangeable biological products with the same reference product are covered on its formulary in a manner that would not be considered a formulary change subject to the requirements of this rule. We believe this is in line with FDA's approach that approves biosimilar biological products in relation to reference products. For instance, our definition of a “biosimilar
Our proposed definition of a maintenance change at § 423.100 would not permit substitutions among biosimilar biological products that share a reference product as maintenance changes, nor would our proposed definition of immediate substitutions at § 423.120(e)(2)(i) permit maintenance changes among interchangeable biological products that share a reference product. For interchangeable biological products, § 423.100 would define a maintenance change at subparagraph (1) as making any negative formulary change to a drug within 90 days of adding a corresponding drug as specified. Section 423.100 would define a corresponding drug to include “an interchangeable biological product of a reference product”. For biosimilar biological products other than interchangeable biological products, § 423.100 would define a maintenance change at subparagraph (2) as “making any negative formulary changes to a reference product within 90 days of adding a biosimilar biological product other than an interchangeable biological product of that reference product.” This definition does not include making negative formulary changes to a biosimilar biological product after adding a different biosimilar biological product for the same reference product.
With respect to the commenter's question about how to treat enrollees taking a biosimilar biological product that is not the biosimilar biological product on the formulary, this situation would be treated the same as any other situation where an enrollee is taking a non-formulary drug. If the plan only has biosimilar biological product A on the formulary and then an enrollee who has been taking biosimilar biological product B enrolls in the plan, the enrollee would need a new prescription for the biosimilar biological product A.
We do not prohibit multiple maintenance changes with respect to the same drug within the same plan year, and our review process considers each such request on its own merit. We think multiple maintenance changes within the same year would be rare given the type of changes we allow but not impossible. For example, a plan may add a therapeutically equivalent generic drug to the formulary and add a PA to the brand name drug. If the brand name drug then becomes subject to a long-term shortage, a maintenance change to remove the brand name drug from the formulary altogether may be appropriate.
It is beyond the scope of this regulation to address every hypothetical scenario provided by the commenter, but we will take them into account when providing guidance in the future.
Finally, we note that, regardless of whether Part D sponsors are permitted to replace an existing drug, they can always add the generic or authorized generic, or biosimilar biological product or unbranded biological product, to their formulary.
In the December 2022 proposed rule, we proposed to move the current regulation on immediate generic substitutions, § 423.120(b)(5)(iv), to § 423.120(e)(2)(i) and to expand it to include among other products, interchangeable biosimilar biological products. We also proposed in the December 2022 proposed rule to change the reference in § 423.120(b)(3)(i)(B) to now refer to § 423.120(e)(2), which would mean we would not require Part D sponsors to provide a transition supply, for instance, when replacing a reference product with an interchangeable biological product within the requirements of § 423.120(e)(2)(i). Similar to our decision in the April 2018 final rule not to provide transition supplies for immediate generic substitutions under § 423.120(b)(5)(iv), we are not convinced there is a need to require transition supplies for immediate substitutions of interchangeable biological products, authorized generics, or unbranded biological products under the proposed § 423.120(e)(2)(i). Requiring transition supplies for one type of immediate substitution but not others would introduce an unnecessary level of operational complexity for Part D sponsors and inconsistent policies.
With respect to requiring transition supplies for maintenance changes, we did not propose to change the existing transition policy. Maintenance changes require 30 days advance notice to affected enrollees under § 423.120(f)(1). That 30 days' advance notice serves the same function as the transition policy to provide affected enrollees time to consider a formulary alternative or pursue a formulary or tiering exception for the drug they are taking that will be subject to the negative formulary change. As a reminder, the transition regulation at § 423.120(b)(3)(i)(B) requires 30 days' notice and a month's supply. Similarly, affected enrollees getting 30 days advance notice of a maintenance change who have refills or obtain a new prescription can go to the pharmacy and request a refill before the maintenance change becomes effective.
It is beyond the scope of this regulation to address every hypothetical transition scenario, but we will take them into account when providing guidance in the future to reflect regulatory changes.
The first group of commenters supported some or all of our specific proposals regarding biosimilar biological product substitutions, under which we would permit immediate substitutions of interchangeable biological products for their reference products under proposed § 423.120(e)(2)(i) and also permit Part D sponsors to treat as maintenance changes all biosimilar biological product substitutions under subparagraphs (1) and (2) of the definition of maintenance changes proposed in § 423.100. They stated, for instance, that the proposed policies would result in more uptake of biosimilar biological products by switching enrollees taking reference products to biosimilar biological products, a move they felt could improve the overall affordability of the Part D program to enrollees due to the lower cost of biosimilar biological products as compared to reference products. They stated, for instance, that because a distinction is made between interchangeable biological products and biosimilar biological products other than interchangeable biological products, with respect to pharmacy-level substitutions, CMS had struck the right balance by proposing to provide 30 days' advance notice to enrollees to get a new prescription or to ask for an exception before a Part D sponsor substitutes a biosimilar biological product other than an interchangeable biological product for their reference product.
The second group of commenters did not support some or all of the proposed flexibilities for biosimilar biological product substitutions to occur as immediate substitutions or maintenance changes, including interchangeable biological products. These commenters stated, for instance, that switching from biosimilar biological products to reference products was not the same as switching from generic drugs to brand name drugs and that any biosimilar biological product substitutions could disrupt patient treatment. They posited that biosimilar biological products, being complex molecules made from living organisms, are different than small molecule drugs that are chemically synthesized and that even minor differences in manufacturing processes could cause variations leading to clinical differences in a given patient's experience or reaction. They pointed out that biosimilar biological products are often used to treat patients with complex chronic conditions, whom they believe would be less well prepared to deal with adverse effects resulting from changes to the drugs they take.
The final group of commenters did not feel CMS went far enough in providing flexibilities to promote greater use of biosimilar biological products and recommended that we permit immediate substitutions of all biosimilar biological products regardless of whether they are licensed as interchangeable biological products or not. They pointed to the fact that FDA had found all biosimilar biological products to be highly similar and to have no clinically meaningful differences from reference products in safety and effectiveness and pointed out that FDA's recently proposed labeling changes would reduce the visibility of a product's interchangeability status. These commenters stated that interchangeability is only meaningful in that it allows substitution at the pharmacy counter. A commenter stated that treating biosimilar biological products other than interchangeable biological products as maintenance changes would not go far enough to make a major difference in terms of savings because the regulation would still require 30 days' advance notice, time in which the product could already have been switched. A few of these commenters acknowledged that if we did not move towards more flexibility, they supported what we had proposed.
We do not agree with commenters in the second group that did not support permitting any formulary changes for biosimilar biological products. We believe that the emerging biosimilars market provides too great an opportunity for potential savings and that prohibiting plan sponsors from making such formulary changes would fail to acknowledge FDA determinations that such products are as safe and effective as their reference products and could discourage greater use of biosimilar biological products.
As to the last group of commenters, we disagree that our proposals did not go far enough in providing plan sponsors with flexibilities to promote greater use of biosimilar biological products. With respect to the comment that treating formulary substitutions for reference products of biosimilar
We are persuaded to revise our proposed definition of “interchangeable biological product” in § 423.4 to include language that links the standards described in 42 U.S.C. 262(k)(4) to the definition of interchangeability at 42 U.S.C. 262(i)(3), since this is more descriptive while maintaining the accuracy of the proposed definition. We will therefore modify our proposed definition of “interchangeable biological product” in this final rule by adding the following language to the end: “which in accordance with section 351(i)(3) of the Public Health Service Act (42 U.S.C. 262(i)(3)), may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.”
We decline to revise our definition of brand name drug given that we are finalizing a definition of “brand name biological product” in § 423.4, as proposed.
We do not believe our previously finalized policies are inconsistent with our proposal to permit substitution of biosimilar biological products other than interchangeable biological products as maintenance changes. In the December 2022 proposed rule, we stated that we were not permitting the immediate substitution of biosimilar biological products other than interchangeable biological products as immediate substitutions, and our proposals in the November 2023 proposed rule did not propose to permit such immediate substitutions. (See the November 2023 proposed rule at III.F.2.(b)(1) for a detailed discussion.) In our April 2018 final rule, we noted that, to avoid confusion, we were not finalizing a proposed rule regarding the similar treatment of biosimilar biological products and generic drugs for purposes of LIS cost-sharing. We do not believe a concern about avoiding confusion in 2018 with respect to the separate issue of LIS cost-sharing is relevant to the policy proposals in our December 2022 and November 2023 proposed rules that involve the same type of products but in a different context.
We do not believe that finalizing our proposals regarding formulary substitution of biosimilar biological products precludes us from revisiting these policies in the future. Of course, in such instances, as is the case anytime that we feel it necessary to revisit regulatory policy, we would carefully consider all factors and issue proposals through rulemaking subject to public comment and response.
We also note we are finalizing our proposals to provide safeguards to mitigate potential confusion, including a requirement that Part D sponsors provide 30 days' advance notice requirement for substitutions of biosimilar biological products other than interchangeable biological products.
Both [biosimilar biological products and reference products] are rigorously and thoroughly evaluated by the FDA before approval. For [biosimilar biological products] to be approved by the FDA, manufacturers must show that patients taking [biosimilar biological products] do not have any new or worsening side effects as compared to people taking the [reference products].
As it does with all medication approvals, the FDA carefully reviews the data provided by manufacturers and takes several steps to ensure that all [biosimilar biologic products] meet standards for patient use. The FDA's thorough evaluation makes sure that all [biosimilar biological products] are as safe and effective as their [reference products] and meet the FDA's high standards for approval. This means [consumers] can expect the same safety and effectiveness from the [biosimilar biological product] over the course of treatment as [they] would from the original product.
We are not convinced that sending notices to prescriber offices, which serve a great many patients covered by many types of insurance and receive many communications, is an effective means to address enrollee concerns. Prescribers are more likely to respond to direct requests from their patients asking for a new prescription or help supporting an exception request. We agree with the commenter who noted the importance of RTBTs to provide prescribers with drug coverage and cost-sharing information for their patients at the point of prescribing. CMS does not require prescribers to use RTBTs, but requires at § 423.160(b)(7) that Part D sponsors implement at least one RTBT capable of integrating with at least one prescriber's e-prescribing system or electronic health record. See section III.L.5. of this final rule for a discussion of our proposals to enable more widespread access to RTBTs through the adoption of a standard.
Lastly, we agree with commenters about the importance of a robust exceptions process being available to affected enrollees. Since the start of the Part D program in 2006, CMS has had such a process in place. Under the coverage determination and appeal processes described in Part 423, subpart M, Part D enrollees and their prescribers have the right to request an exception to a plan coverage rule, including an exception to the plan's tiered cost-sharing structure or formulary utilization management (UM) criteria. Part D plan sponsors are required to make coverage decisions and notify the enrollee (and the prescriber, as appropriate) in writing in accordance with strict regulatory timeframes. Under § 423.578, a Part D plan must grant a tiering or formulary exception request (for example, provide coverage for a non-formulary drug or an exception to the UM criteria) when it determines that the requested drug is medically necessary, consistent with the prescriber's supporting statement indicating that preferred alternatives(s) would not be as effective and/or would have adverse effects. Enrollees have a statutory right to an expedited determination if the prescriber indicates that applying the standard timeframe may jeopardize the enrollee's health, and plans must issue all coverage decisions, except those seeking reimbursement only, as expeditiously as the enrollee's health condition requires. Any initial coverage request that the plan expects to deny based on a lack of medical necessity must be reviewed by a physician. If the Part D sponsor makes an adverse coverage determination, the required written notice must explain the specific reason(s) for the denial and include a description of the enrollee's right to a standard or expedited redetermination by the plan, and the right to request independent review. We require plans to conduct all redeterminations (first level appeals) using a physician or other appropriate health care professional with sufficient medical and other expertise, including knowledge of Medicare criteria, if the initial denial was based on a lack of medical necessity. If a plan fails to make a coverage decision and notify the enrollee within the required timeframe, the request must be forwarded to the independent review entity to be adjudicated.
Moreover, while we do not treat a claim transaction as a coverage determination, we do require Part D sponsors to arrange with network pharmacies to provide enrollees with a written copy of the Office of Management and Budget (OMB)-approved standardized pharmacy notice (“Notice of Denial of Medicare Prescription Drug Coverage,” CMS-10146) when the enrollee's prescription cannot be filled under the Part D benefit and the issue cannot be resolved at the point of sale. The notice instructs the enrollee on how to contact his or her plan and explains the enrollee's right to request a coverage determination. Thus, all beneficiaries immediately receive clear, concise instructions on how to pursue their appeal rights whenever a prescription cannot be filled. For additional information on the coverage determination, appeals, and grievance process, including information about the pharmacy notice, see 42 CFR part 423, subparts M and U, and the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals
Section 1860D-4(b)(3)(E) of the Act requires “appropriate notice” of formulary changes; further, we view appropriate notice of change as an integral beneficiary right. Therefore, we disagree that we need to change the requirement for advance direct notice of maintenance changes or create more complexity by requiring plans to create a means for enrollees to waive formulary change notice on an individual basis. If a prescriber were to recommend a switch to a new biosimilar biological product to their patient, either they or the patient could call or otherwise reach out to the plan to see if the drug was available on the formulary ahead of receipt of any 30-day advance notice of drug change.
We appreciate that a REMS could cause complications relative to the 30-day notice period, for example, if the prescriber needs to enroll in a different REMS for a biosimilar biological product than for the reference product in order to be certified to prescribe the biosimilar biological product; however, we do not think this scenario is unique to biological products. The same scenario could occur under our current policy for maintenance changes involving generic substitutions for brand name drugs, because when a brand name drug has a REMS, the generic drug must also have a REMS and manufacturers may not have a shared system REMS.
After consideration of the comments received on both the December 2022 and November 2023 proposals, and for the reasons set forth in the proposed rules and our responses to the comments in this final rule, we are finalizing the proposed regulation text changes at §§ 423.4, 423.100, 423.104, 423.120, and 423.128, with the minor modifications discussed below, in addition to other non-substantive organizational and editorial changes for clarity.
• In § 423.4, removing the word “biological” from the term “reference biological product.”
• In § 423.4, adding the following language to the end of the definition of “interchangeable biological product”: “which in accordance with section 351(i)(3) of the Public Health Service Act (42 U.S.C. 262(i)(3)), may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.”
• In § 423.100, in the definition of “maintenance change,” revising and reordering language to provide more clarity by stating that drugs subject to removal include those “that FDA determines to be withdrawn for safety or effectiveness reasons.”
• In § 423.120(b)(5), finalizing the requirement that Part D sponsors must provide notice of changes as specified in § 423.120(f), but removing a reference to selection of a successor regulation to § 423.120(b)(5)(iv) for purposes of section 1860D-4(b)(3)(I)(ii) of the Act.
• In § 423.120(e)(2)(ii), revising and reordering language on market withdrawals to provide more clarity by stating that drugs subject to removal include those “that the Food and Drug Administration (FDA) determines to be withdrawn for safety or effectiveness reasons.”
• In § 423.120(f)(4)(iv), revising language requiring Part D sponsors to include in their written notice of change a list of formulary alternatives to specify that the alternative drugs be “on the formulary” to make clear these alternatives are on the formulary and can meet the definition of a Part D drug.
• In § 423.120(f)(4)(v), revising language specifying that Part D sponsors provide written notice of the coverage determinations and exceptions to make clear that an exception is a type of coverage determination and to correct the regulatory cross-reference.
Additionally, in the course of developing the final rule, it came to our attention that we had inadvertently omitted updating § 423.578(d) when proposing updates to the regulations to reflect the agency's proposals. Accordingly, we are making conforming changes in this final rule to the existing regulation text in § 423.578(d) to correspond with the changes we are finalizing in this rule to require Part D sponsors to provide notice regarding negative formulary changes under § 423.120(f).
Sections 1857(c)(2) and 1860D-12(b)(3)(B) of the Act provide CMS with the ability to terminate MA (including MA-PD) and PDP contracts if we determine that a contract(s) has met any of the following thresholds:
• Has failed substantially to carry out the contract
• Is carrying out the contract in a manner that is inconsistent with the efficient and effective administration of, respectively, Part C or Part D of Title XVIII of the Act (that is, the Medicare statute).
• No longer substantially meets the applicable conditions of the applicable part of the statute.
This termination authority is codified at 42 CFR 422.510(a)(1) through (3) and 423.509(a)(1) through (3), respectively. In addition, section 1857(g)(3) of the Act (incorporated for Part D sponsors under section 1860D-12(b)(3)(F) of the Act) specifies that intermediate sanctions and civil money penalties (CMPs) can be imposed on the same grounds upon which a contract could be terminated (63 FR 34968 and 70 FR 4193). CMS codified this authority at §§ 422.752(b) and 423.752(b) with respect to intermediate sanctions, and §§ 422.752(c)(1)(i) and 423.752(c)(1)(i) with respect to CMPs.
If CMS terminates an MA organization or Part D sponsor contract(s) during the plan year but the termination is not effective until January 1 of the following year, the MA organization or Part D sponsor could potentially continue to market and enroll eligible beneficiaries (as described in 422 Subpart B and 423 Subpart B) into plans under the terminating contract(s) unless CMS imposes separate marketing and enrollment sanctions on the terminating contract(s).
For these reasons, we proposed to add paragraph (e) to § 422.510 and paragraph (f) to § 423.509 that, effective contract year 2025, marketing and enrollment sanctions will automatically take effect after a termination is imposed. At paragraph (e)(1) of § 422.510 and paragraph (f)(1) of § 423.509, we proposed to state that the marketing and enrollment sanctions will go into effect 15 days after CMS issues a contract termination notice. This timeframe is consistent with the number of days CMS often designates as the effective date for sanctions after CMS issues a sanction notice.
At paragraph (e)(2) of § 422.510 and paragraph (f)(2) of § 423.509, we proposed that MA organizations and Part D sponsors will continue to be afforded the same appeals rights and procedures specific to contract terminations under 42 CFR Subpart N of parts 422 and 423, however, there will not be a separate appeal for the sanction (in other words the appeal of the termination will include the associated marketing and enrollment sanctions). In addition, at paragraph (e)(3) of § 422.510 and paragraph (f)(3) of § 423.509 we proposed that if an MA organization or Part D sponsor appeals the contract termination, the marketing and enrollment sanctions will not be stayed pending the appeal consistent with §§ 422.756(b)(3) and 423.756(b)(3). Finally, at paragraph (e)(4) of § 422.510 and paragraph (f)(4) of § 423.509 we proposed that the sanction will remain in effect until the effective date of the termination, or if the termination decision is overturned on appeal, until
CMS rarely terminates MA organization and Part D sponsor contracts and, on average, contract terminations affect less than one MA organization or Part D sponsor a year. Therefore, we anticipate that this proposal will not result in additional costs or additional administrative burden for affected MA organizations and Part D sponsors. For example, an MA organization and Part D sponsor will not be required to submit a corrective action plan, and if appealed there will only be one appeal rather than multiple. MA organizations and Part D sponsors will continue to be required to comply with existing regulations that require public and beneficiary notice that their contract is being terminated under this proposal.
Individuals with limited English proficiency (LEP) experience obstacles to accessing health care in the United States. Language barriers negatively affect the ability of patients with LEP to comprehend their diagnoses and understand medical instructions when they are delivered in English and impact their comfort with post-discharge care regimens.
The multi-language insert (MLI) currently required at §§ 422.2267(e)(31) and 423.2267(e)(33) is a standardized communications material that informs enrollees and prospective enrollees that interpreter services are available in Spanish, Chinese, Tagalog, French, Vietnamese, German, Korean, Russian, Arabic, Italian, Portuguese, French Creole, Polish, Hindi, and Japanese. These were the 15 most common non-English languages in the United States when we reinstituted the MLI in the Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency; Additional Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency final rule (87 FR 27704) (hereafter referred to as the May 2022 final rule). Additionally, §§ 422.2267(e)(31)(i) and 423.2267(e)(33)(i) require plans to provide the MLI in any non-English language that is the primary language of at least five percent of the individuals in a plan benefit package (PBP) service area but is not already included on the MLI. These regulations also provide that a plan may opt to include the MLI in any additional languages that do not meet the five percent threshold, where it determines that including the language would be appropriate. The current MLI states, “We have free interpreter services to answer any questions you may have about our health or drug plan. To get an interpreter, just call us at [1-xxx-xxx-xxxx]. Someone who speaks [language] can help you. This is a free service.” The issuance of the MLI is independent of the Medicare written translation requirements for any non-English language that meets the five percent threshold, as currently required under §§ 422.2267(a)(2) and 423.2267(a)(2), and the additional written translation requirements for fully integrated D-SNPs (FIDE SNPs) and highly integrated D-SNPs (HIDE SNPs) provided in §§ 422.2267(a)(4) and 423.3367(a)(4).
Section 1557 of the Patient Protection and Affordable Care Act (ACA)
None of the rulemaking impacting the various notifications of interpreter services changed the requirement that MA organizations, Part D sponsors, or cost plans must provide these services under applicable law. Plans have long been required to provide interpreters when necessary to ensure meaningful access to individuals with LEP, consistent with existing civil rights laws. In implementing and carrying out the Part C and D programs under
In the May 2022 final rule, we noted that we gained additional insight regarding the void created by the lack of any notification requirement associated with the availability of interpreter services for Medicare beneficiaries (87 FR 27821). We stated that we consider the materials required under §§ 422.2267(e) and 423.2267(e) to be vital to the beneficiary's decision-making process. We also noted that we reviewed complaint tracking module (CTM) cases in the Health Plan Management System (HPMS) related to “language” and found a pattern of beneficiary confusion stemming from not fully understanding materials based on a language barrier. We noted that solely relying on the requirements delineated in the 2020 section 1557 final rule for covered entities to convey the availability of interpreter services is insufficient for the MA, cost plan, and Part D programs and is not in the best interest of Medicare beneficiaries who are evaluating whether to receive their Medicare benefits through these plans and who are enrolled in these plans. We stated that we believed that informing Medicare beneficiaries that interpreter services are available is essential to realizing the value of our regulatory requirements for interpreter services.
On August 4, 2022, OCR published a new proposed rule for section 1557 of the ACA (87 FR 47824) that proposed to require covered entities to notify the public of the availability of language assistance services and auxiliary aids and services for their health programs and activities at no cost using a notice of availability of language assistance services and auxiliary aids and services (Notice of Availability). Proposed 45 CFR 92.11(b) would require the Notice of Availability to be provided in English and at least in the 15 most common languages spoken by individuals with LEP in the relevant State or States, and in alternate formats for individuals with disabilities who request auxiliary aids and services to ensure effective communications. These proposed provisions would result in misalignment with the MLI requirement under §§ 422.2267(e)(31) and 423.2267(e)(33) which require that notice be provided in the 15 most common non-English languages in the United States.
In addition, under § 438.10(d)(2), States must require Medicaid managed care organizations (MCOs), prepaid inpatient health plans (PIHPs), prepaid ambulatory health plans (PAHPs), and primary care case management programs to include taglines in written materials that are critical to obtaining services for potential enrollees in the prevalent non-English languages in the State explaining the availability of oral interpretation to understand the information provided, information on how to request auxiliary aids and services, and the toll-free telephone number of the entity providing choice counseling services in the State. Several States that use integrated Medicare and Medicaid materials for D-SNPs and Medicare-Medicaid Plans have contacted CMS and requested that we change the MLI to be based on the 15 most common languages in the State rather than the 15 most common languages nationally because the most common languages in the State are often not the same as the most common 15 languages nationally.
As a result of the MLI requirements at §§ 422.2267(e)(31) and 423.2267(e)(33) and the Medicaid requirement at § 438.10(d)(2), any applicable integrated plans (AIPs), as defined at § 422.561, that provide integrated Medicare and Medicaid materials for enrollees must currently include the MLI in the 15 most common languages nationally as well as the Medicaid tagline in the prevalent non-English languages in the State to comply with both Medicare and Medicaid regulatory requirements. Specifically, these plans that provide integrated materials must comply with the MLI requirements at §§ 422.2267(e)(31) and 423.2267(e)(33) and the Medicaid requirement at § 438.10(d)(2) to include taglines in written materials that are critical to obtaining services for potential enrollees in the prevalent non-English languages in the State. In the enrollee materials, this can result in a very long multi-page list of statements noting the availability of translations services in many languages. As discussed in greater detail below, we proposed to update §§ 422.2267(e)(31) and 423.2267(e)(33) to instead require that a Notice of Availability be provided in English and at least the 15 languages most commonly spoken by individuals with LEP of the relevant State; we articulated our expectation that this proposed policy would better align with the Medicaid translation requirements at § 438.10(d)(2).
We believe rulemaking regarding a notice of the availability of language assistance services and auxiliary aids and services for individuals with LEP is needed to more closely reflect the actual languages spoken in the service area. We also believe it is in the best interest of enrollees for the requirements to align with the Medicaid translation requirements because it allows D-SNPs that are AIPs to provide a more applicable, concise Notice of Availability to enrollees that does not distract from the main purpose of the document. Further, alignment of Medicare and OCR rules would help to prevent confusion among MA organizations, Part D sponsors, and cost plans regarding which requirements they must comply with.
We proposed to amend §§ 422.2267(e)(31) and 423.2267(e)(33). First, we proposed to replace references to the MLI with references to a Notice of Availability. We proposed that this notice be a model communication material rather than a standardized communication material and thus that CMS would no longer specify the exact text that must be used in the required notice. Second, we proposed to change paragraphs (e)(31) and (e)(33) to require MA organizations and Part D sponsors to provide enrollees a Notice of Availability that, at a minimum, states that MA organizations and Part D sponsors provide language assistance services and appropriate auxiliary aids and services free of charge. Third, we proposed, in new paragraphs (e)(31)(i) and (e)(33)(i), that the Notice of Availability must be provided in English and at least the 15 languages most commonly spoken by individuals with limited English proficiency of the relevant State and must be provided in alternate formats for individuals with disabilities who require auxiliary aids and services to ensure effective communication. We noted in the proposed rule that this State-specific standard would ensure that a significant proportion of each State's particular LEP population receives key information in the appropriate languages. We cited the U.S. Census Bureau's ACS 2009-2013 multi-year data, which show that the top languages spoken in each State can
As discussed in the November 2023 proposed rule, we believe this proposal would make it easier for individuals to understand the full scope of available Medicare benefits (as well as Medicaid benefits available through the D-SNPs, where applicable), increasing their ability to make informed health care decisions, and promote a more equitable health care system by increasing the likelihood that MA enrollees have access to information and necessary health care. Additional benefits include mitigating the risk that §§ 422.2267(e)(31) and 423.2267(e)(33) could conflict with § 438.10(d)(2) and the forthcoming 1557 final rule, requiring applicable Medicare plans to comply with two, disparate sets of requirements. Further, requiring MA organizations and Part D sponsors to provide multiple sets of translated statements accompanying enrollee materials could lead to enrollee confusion and detract from the enrollee material message. Setting aside which specific policies are finalized in the forthcoming 1557 final rule, we generally continue to believe our proposed changes are appropriate given the benefits of a Notice of Availability for individuals with LEP and auxiliary aid and service needs more closely reflecting the actual languages spoken in the service area and aligning with the Medicaid translation requirements.
Additionally, we proposed in §§ 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) that if there are additional languages in a particular service area that meet the 5 percent service area threshold, described in paragraph §§ 422.2267(a)(2) and 423.2267(a)(2), beyond the languages described in §§ 422.2267(e)(31)(i) and 423.2267(e)(33)(i), the Notice of Availability must also be translated into those languages, similar to the current MLI requirements at §§ 422.2267(e)(31)(i) and 423.2267(e)(33)(i). While §§ 422.2267(a)(2) and 423.2267(a)(2) apply to the Notice of Availability since it is a required material under §§ 422.2267(e) and 423.2267(e), we wanted to clarify this in the regulation text. MA organizations and Part D sponsors may also opt to translate the Notice of Availability in any additional languages that do not meet the 5 percent service area threshold at §§ 422.2267(a)(2) and 423.2267(a)(2), where the MA organization or Part D sponsor determines that such inclusion would be appropriate, which is also included in the current MLI requirements at §§ 422.2267(e)(31)(i) and 423.2267(e)(33)(i). It is possible that there may be a subpopulation in the plan benefit package service area that uses a language that does not fall within the top 15 non-English languages or meet the 5 percent service area threshold that the plan determines can benefit by receiving the notice. We noted that pursuant to CMS's authority in section 1876(c)(3)(C) to regulate marketing and the authority in section 1876(i)(3)(D) to specify new section 1876 contract terms, and as established in § 417.428, this proposal would also apply to section 1876 cost plans.
To assist plans with fulfilling their requirements under §§ 422.2267(a)(2) and 423.2267(a)(2) to translate required materials into any non-English language that is the primary language of at least five percent of the population of a plan service area, since 2009 CMS has provided plans with a list of all languages that are spoken by 5 percent or more of the population for every county in the U.S. Each fall, we release an HPMS memorandum announcing that MA organizations and Part D sponsors can access this list in the HPMS marketing review module.
We received the following comments on this proposal and respond to them below:
However, we share the concerns raised by commenters about plans that have a service area covering multiple States and the potential burden associated with determining the State of residence for enrollees within the plan. We also agree that requiring such plans to include the Notice of Availability in at least the top 15 non-English languages in each State in the plan's service area, potentially resulting in many more than 15 languages, may cause enrollee confusion and undue administrative and financial burden to the plan. As a result, we are updating the regulation to require the Notice of Availability to be provided in at least the top 15 languages most commonly spoken by individuals with LEP within the State or States associated with the plan benefit package service area, consistent with the section 1557 proposed rule. This approach would allow plans to aggregate the populations with LEP across all States in the plan's service area to determine the 15 languages in which it must provide the Notice of Availability. For example, if a plan's service area is New York, the Notice of Availability must include at least the top 15 languages spoken by individuals with LEP in New York, based on guidance published by the Secretary. If the plan's service area includes Connecticut, New Jersey, and New York, the plan may aggregate the populations with LEP across Connecticut, New Jersey, and New York to determine the 15 languages in which it must provide the Notice of Availability, based on guidance published by the Secretary. If the service area does not include an entire State, the plans should still use the top 15 languages for the entire State. If the service area is national, the plan may use the top 15 languages nationally for the Notice of Availability, based on guidance published by the Secretary.
We also appreciate commenters asking us to publish more than the 15 top languages spoken by individuals with LEP in each State. Plans will be able to identify the top 15 languages most commonly spoken by individuals with LEP in any State based on guidance published by the Secretary. Plans may opt to include additional languages, for which the U.S. Census Bureau's ACS data would be a helpful data source. We will consider expanding the list of languages provided in HPMS for MA and Part D plans in a future HPMS update.
To mitigate errors in messaging, we specified that the content of the Notice of Availability must include at minimum, a statement that the MA organization provides language assistance services and appropriate auxiliary aids and services free of charge. In addition, for the purpose of compliance with section 1557 of the Affordable Care Act, OCR will be providing model language translated into the 15 languages most commonly spoken by individuals with LEP in every State and nationally that plans can use as a template to comply with the proposed CMS notice requirements. Also, allowing the use of a model Notice of Availability provides flexibility for D-SNPs in States that may require the use of a specific tagline or Notice language so that they do not have to include additional language in materials. We believe that allowing this flexibility along with the OCR model language outweighs the risk of errors in messaging.
We also thank the commenter for the recommendation to develop a Notice of Availability list translated in the top 31 languages spoken nationally. However, we believe that a list of 31 languages would be too long. As we explained in the proposed rule (88 FR 78525), States with AIP D-SNPs contacted CMS concerned that compliance with Medicaid requirements at § 438.10(d)(2) and Medicare requirements at §§ 422.2267(e)(31) and 423.2267(e)(33) would require D-SNPs to include a Notice with a long list of languages in the required materials. One State described how their current list of languages to comply with Medicare and Medicaid requirements for D-SNPs was over four pages. We noted this as a reason for updating this regulation in the proposed rule. As the commenter points out, lengthy notices can dilute the primary message, making it more difficult for enrollees to receive critical information. Lengthy inserts can also increase costs for plans.
We also understand that MA organizations may need to make some administrative adjustments to comply with this requirement. CMS will provide a list of the top 15 languages most commonly spoken by individuals with LEP in each State and nationally, and OCR will provide translations of the model Notice of Availability in those languages. In addition, in this final rule we have updated §§ 422.2267(e)(31) and 423.2267(e)(33) to allow plans to continue using the MLI until the beginning of contract year 2026 marketing on September 30, 2025. However, plans will also have the choice, starting at the beginning of marketing for contract year 2025 on September 30, 2024, of using the Notice of Availability described in subparagraphs 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) to satisfy the MLI requirement, as provided in §§ 422.2267(e)(31)(i)(G) and 423.2267(e)(33)(i)(G). This flexibility will allow D-SNPs in States requiring a State-specific tagline to use the State tagline for contract year 2025 marketing and communications without also having to include the MLI as well. It will also allow those plans that want to provide a State-specific notice for contract year 2025 marketing and communications to do so. Per §§ 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii), all plans will be required to use the Notice of Availability for CY 2026 marketing and communications beginning September 30, 2025.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing revisions to paragraphs at §§ 422.2267(e)(31) and 423.2267(e)(33) as follows: We are allowing plans a choice in the applicability date for the updates to §§ 422.2267(e)(31) and 423.2267(e)(33). Plans may implement the changes for contract year 2026 marketing and communications beginning September
We are modifying sections §§ 422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) to state, “For CY 2026 marketing and communications beginning September 30, 2025, the required notice is referred to as the
Section 1853(a) of the Act requires CMS to risk-adjust payments made to Medicare Advantage (MA) organizations. In order to carry out risk adjustment, section 1853(a)(3)(B) of the Act requires submission of data by MA organizations regarding the services provided to enrollees and other information the Secretary deems necessary. The implementing regulation at § 422.310(b) requires that MA organizations submit to CMS “the data necessary to characterize the context and purposes of each item and service provided to a Medicare enrollee by a provider, supplier, physician, or other practitioner.” Currently, § 422.310(d)(1) provides that MA organizations submit risk adjustment data equivalent to Medicare fee-for-service (FFS) data to CMS as specified by CMS. MA encounter data, which are comprehensive data equivalent to Medicare FFS data, are risk adjustment data.
Section 1106(a)(1) of the Act authorizes the Secretary to adopt regulations governing release of information gathered in the course of administering programs under the Act. In addition, section 1856(b) of the Act authorizes CMS to adopt standards to carry out the MA statute, and section 1857(e)(1) of the Act authorizes CMS to add contract terms that are not inconsistent with the Part C statute and are necessary and appropriate for the program. The regulation at § 422.310(f)(1) establishes permissible CMS uses of MA encounter data (referred to as “risk adjustment data” in the regulation), while § 422.310(f)(2) and (f)(3) establish rules for CMS release of data. Prior to 2008, § 422.310(f) provided for CMS to use MA risk adjustment data to risk adjust MA payments and, except for any medical record data also collected under § 422.310, for other purposes. Over time, we subsequently refined the regulatory language describing the scope of permissible uses and releases of the MA risk adjustment data, including MA encounter data, to (i) risk adjusting MA payments, (ii) updating risk adjustment models, (iii) calculating Medicare disproportionate share hospital percentages, (iv) conducting quality review and improvement activities, (v) for Medicare coverage purposes, (vi) conducting evaluations and other analysis to support the Medicare program (including demonstrations) and to support public health initiatives and other health care-related purposes, (vii) for activities to support administration of the Medicare program, (viii) for activities to support program integrity, and (ix) for purposes authorized by other applicable laws (70 FR 4588; 73 FR 48650 through 48654; 79 FR 50325 through 50334).
Section 422.310(f)(2) permits the release of MA encounter data to other HHS agencies, other Federal executive branch agencies, States, and external entities, and § 422.310(f)(3) of our current regulation specifies circumstances under which we may release MA encounter data for the purposes described in § 422.310(f)(1). Existing regulations allow release of the data after risk adjustment reconciliation for the applicable payment year has been completed, under certain emergency preparedness or extraordinary circumstances, and when CMS determines that releasing aggregated data before reconciliation is necessary and appropriate for activities to support the administration of the
MA enrollment has grown to approximately half of all Medicare beneficiaries; a trend also seen in the enrollment of dually eligible individuals. For example, 51 percent of all dually eligible individuals were enrolled in an MA plan in 2021 (up from 12 percent in December 2006).
We proposed changes to § 422.310(f) to improve States' access to MA encounter data, including making a specific exception to the timing of sharing MA encounter data. We noted that we did not intend for our proposals to impact the terms and conditions governing CMS release of MA risk adjustment data as described in § 422.310(f)(2), in accordance with applicable Federal laws and CMS data sharing procedures. As discussed in the August 2014 final rule, CMS data sharing procedures require each recipient of data from CMS to sign and maintain a CMS data sharing agreement, “which addresses privacy and security for the data CMS discloses” and “contains provisions regarding access to and storage of CMS data to ensure that beneficiary identifiable information is stored in a secure system and handled according to CMS's security policies,” which encompasses the limitations for additional disclosure of CMS data (79 FR 50333). We noted that such provisions would similarly apply to States that receive MA encounter data under our proposed amendments to § 422.310(f).
As stated in the August 2014 final rule, the data described in paragraphs (a) through (d) would include those elements that constitute an encounter data record, including contract, plan, and provider identifiers, with the exception of disaggregated payment data (79 FR 50325). In accordance with § 422.310(f)(2)(iv), we aggregate payment data to protect commercially sensitive information.
As we stated in the Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Fiscal Year 2015 Rates; Quality Reporting Requirements for Specific Providers; Reasonable Compensation Equivalents for Physician Services in Excluded Teaching Hospitals; Provider Administrative Appeals and Judicial Review; Enforcement Provisions for Organ Transplant Centers; and Electronic Health Record (EHR) Incentive Program proposed rule (hereafter referred to as the May 2014 proposed rule; 79 FR 27978), using MA encounter data enables us, our contractors, and external entities to support Medicare program evaluations, demonstration designs, and effective and efficient operational management of the Medicare program, encourages research into better ways to provide health care, and increases transparency in the administration of the Medicare program (79 FR 28281 through 28282). However, because States lack access to MA encounter data, States' ability to conduct activities for dually eligible individuals enrolled in MA plans is limited. As Medicare is the primary payer for dually eligible individuals, States generally lack comprehensive data on care provided to dually eligible individuals enrolled in MA. Over the years, various States have requested that CMS share MA encounter data for dually eligible individuals to better coordinate care, conduct quality improvement activities, support program design, conduct evaluations, and improve efficiency in the administration of the Medicaid program.
Our current regulation text at § 422.310(f)(1)(vi) (evaluations and analysis to support the Medicare program) and (vii) (activities to support administration of the program) specifies that, for these purposes, the encounter data must be used for the Medicare program. Therefore, though § 422.310(f)(2) permits CMS to release MA encounter data to States for the purposes listed in paragraph (f)(1), § 422.310(f)(1)(vi) and (vii) do not clearly permit CMS to release MA encounter data to States to support Medicaid program evaluations and analysis or to support administration of the Medicaid program.
We proposed to add “and Medicaid program” to the current MA encounter data use purposes codified at § 422.310(f)(1)(vi) and (vii) and explained that these additions would enable CMS to use the data and release it (in accordance with § 422.310(f)(2) and (3)) for the purposes of evaluation and analysis and program administration for Medicare, Medicaid, or Medicare and Medicaid combined purposes. We stated our belief that our release of MA encounter data for data use purposes that support the Medicare and Medicaid programs would generally be to the States and would support our responsibility to improve the quality of health care and long-term services for dually eligible individuals; improve care continuity, ensuring safe and effective care transitions for dually eligible individuals; improve the quality of performance of providers of services and suppliers under the Medicare and Medicaid programs for dually eligible individuals; and support State efforts to coordinate and align acute care and long-term care services for dually eligible individuals with other items and services furnished under the Medicare program.
We noted in the November 2023 proposed rule that, as stated above, CMS's usual data sharing procedures apply to the release of MA encounter data in accordance with § 422.310(f)(2) and address access to and storage of CMS data to ensure that beneficiary identifiable information is protected. We explained that we make other data available to external entities, including
As stated in the November 2023 proposed rule, this proposal would allow us to use MA encounter data and disclose it—subject to the other limitations and protections specified in § 422.310(f) and other applicable laws and regulations—to States to perform evaluations and analysis, which would include program planning for dually eligible individuals. Currently, States generally only receive Medicare FFS data from CMS under current authorities, which results in an incomplete assessment of the dually eligible population. Under our proposal, we noted that States could request MA encounter data for all of the dually eligible enrollees they serve and include this growing portion of the dually eligible population in their data analysis and efforts to improve outcomes for low-income older adults and people with disabilities who are enrolled in the Medicaid program.
In the August 2014 final rule, we stated that, in addition to use of these data for review of bid validity and MLR, we expected there would be additional potential uses for these data as part of the program administration purpose, such as the development of quality measures (79 FR 50326). Consistent with our expectation at that time, we clarified in the November 2023 proposed rule that care coordination would be an allowable use for these data as part of the purpose currently codified at § 422.310(f)(1)(vii)—for activities to support the administration of the Medicare program—which includes activities that are not within the scope of the other permitted uses defined at § 422.310(f)(1). Similar to quality measure development, a use we explicitly named, care coordination is critical to ensuring that individuals receive effective and efficient care, especially when services may be covered under multiple health care programs, as is the case for dually eligible individuals who are enrolled in Medicaid and an MA plan. We also stated our belief that use and release of MA encounter data to States to support administering the Medicaid program, including to coordinate care and improve quality of care for Medicaid-covered individuals, is appropriate. We provided the example that, in administering the Medicaid program, a State may need MA encounter data to coordinate care for dually eligible individuals, which may include identification of individuals at high risk of institutional placement or other undesirable outcomes based on past service utilization; coordination of services from the MA plan's coverage of an inpatient stay to Medicaid coverage of subsequent home and community-based services; coordination of Medicaid-covered services in a skilled nursing facility for a dually eligible individual after reaching the limits of the individual's coverage through the MA plan; monitoring nursing facility quality of care, including through tracking rates of hospitalization and emergency room visits; and coordination of physical health services with behavioral health services, where Medicaid coverage differs from the MA plan's coverage.
Section 422.310(f)(3) describes the circumstances under which we may release MA encounter data. Specifically, the current regulation provides that MA encounter data will not become available for release unless the risk adjustment reconciliation for the applicable payment year has been completed, we determine it is necessary for certain emergency preparedness purposes, we determine that extraordinary circumstances exist, or we determine that releasing aggregated data is necessary and appropriate to support activities and authorized uses in the administration of the Medicare program. Section 422.310(g) specifies the deadlines that we use to determine which risk adjustment data submissions we will use to calculate risk scores for a given payment year. This section also establishes a reconciliation process to adjust payments based on additional data from the data collection period
In order to improve utility of MA encounter data for certain approved purposes, we proposed to add a new paragraph (f)(3)(v) to § 422.310 to authorize MA encounter data to be released to States for the purpose of coordinating care for dually eligible individuals when CMS determines that releasing the data to a State Medicaid agency before the final risk adjustment reconciliation for a relevant year is necessary and appropriate to support activities and uses authorized under paragraph (f)(1)(vii). As discussed in the November 2023 proposed rule, the proposed amendment to § 422.310(f)(1)(vii) would expand the scope of that provision to include using the data to support administration of the Medicaid program, and in our discussion, we clarified that coordination of care activities are within the scope of activities that support administration of these health care programs. We specified care coordination in our discussion of the proposal for release of MA encounter data prior to final risk adjustment reconciliation, because, as we explained in the November 2023 proposed rule, we believe providing States access to this more timely data is critical to effectively coordinating care which is directly tied to our responsibility to support States' efforts to coordinate and align care and services for dually eligible individuals and furthers our goal to improve care continuity and ensure safe and effective care transitions for dually eligible individuals (see 42 U.S.C. 1315B) while accommodating the concerns that led us to adopt the time limits in § 422.310(f)(3). Together, the proposed changes to § 422.310(f)(1)(vii) and (f)(3)(v) would improve the timeliness of the MA encounter data we make available to States for coordination of care for dually eligible individuals. For care coordination activities, States rely more on timely data about service utilization than on complete data. We stated our belief that improving access to timely MA encounter data and ensuring Medicaid programs can coordinate care for dually eligible individuals supports our goal of providing dually eligible individuals full access to the benefits to which they are entitled (42 U.S.C. 1315B(d)).
As discussed above, States cannot effectively coordinate care for individuals using data that is more than one or two years old. We recognize that the MA encounter data may be subject to edits before final risk adjustment reconciliation given the final risk adjustment data submission deadline for submission of risk adjustment data under § 422.310(g)(2)(ii), which states that the final risk adjustment data submission deadline is a date no earlier than January 31 of the year following the payment year. Therefore, data from some MA organizations or for some enrollees may not be available as quickly as data from or for others. However, we explained that we believe that earlier release of MA encounter data to States for the purpose of care coordination for dually eligible individuals would be appropriate and, as stated above, many of the reasons and concerns to require a delay releasing MA encounter data likely do not sufficiently apply in the context of care coordination. Care coordination activities require States, or their contractors, to identify and contact individuals who have received or are in need of services from their providers. We explained that as States would use the MA encounter data to identify opportunities for care improvement such as improving transitions of care or promoting the use of underutilized services, we did not foresee any risk to individuals from States using data that may be subject to change in the future. States would be able to use the data to identify more dually eligible individuals who are potentially in need of Medicaid-covered services. States are not required to act on the data and can address potential data concerns arising from using MA encounter data before final risk adjustment reconciliation as States have experience using Medicare data that may not be final for effective care coordination. We noted that many States already obtain timely Medicare FFS claims with a lag between 14 days to 3 months, depending on the data file, for uses such as care coordination, quality improvement, and program integrity. These Medicare FFS claims may also be subject to change subsequent to the States' receipt of the data, yet we are not aware of any problems in these use cases caused by CMS sharing data that is still subject to change. Because the MA encounter data released to States would be for care coordination purposes, we do not anticipate any negative impacts from any potential subsequent changes to the encounters. MA encounter data made available to States prior to final risk adjustment reconciliation would not contain disaggregated payment information, in accordance with § 422.310(f)(2)(iv). Additionally, States will not use the pre-reconciliation MA encounter data for plan payment. Under our proposal, release of the MA encounter data for care coordination purposes must be necessary and appropriate to support administration of the Medicaid program; we stated our belief that it would not be appropriate or necessary to use the MA data released on this accelerated schedule for payment purposes (88 FR 78530).
As we explained in the November 2023 proposed rule, coordination of care is a clear situation where more timely MA encounter data is needed for effective intervention without invoking risks that we have cited in the past about sharing MA risk adjustment data before final risk adjustment reconciliation. The timing limits in § 422.310(f)(3) were adopted in the August 2014 final rule in response to comments expressing concern about release of the MA risk adjustment data (79 FR 50331 through 50332). In that prior rulemaking, some commenters cited concerns about release of MA encounter data submitted in the initial years due to concerns regarding systems development and submission challenges. We stated our belief that these concerns were mitigated by the subsequent years since the implementation of the August 2014 final rule that have resulted in accumulation of experience submitting, reviewing, and using MA encounter data in accordance with § 422.310(f). We noted that, in addition, CMS maintains several checks and edits in the encounter data system to minimize duplicate, incomplete, or inappropriate data stored in the encounter data system. In the November 2023 proposed rule, we reiterated that our proposed amendment to paragraph (f)(3) would only permit the release of MA encounter data to State Medicaid agencies for care coordination for dually eligible individuals.
We also explained that we had noted in prior rulemaking that our approach to reviewing requests for MA encounter data from external entities would incorporate the Medicare Part A/B and Part D minimum necessary data policy, with additional restrictions to protect beneficiary privacy and commercially sensitive information of MA organizations and incorporated that limitation into paragraph (f)(2) (79 FR 50327). Further, we noted that this limitation would also apply when reviewing State requests for MA encounter data under the proposed expansion of § 422.310(f)(1)(vi) and (vii), and to any State requests for MA encounter data before the reconciliation deadline to support coordination of care. We explained that CMS data sharing procedures include a review team that assesses data requests for minimum data necessary and appropriate use justifications for care coordination, and we would only approve release of MA encounter data for any data requests where the requestor has sufficiently demonstrated that the request satisfies all requirements of § 422.310(f). We noted that other commenters on the August 2014 final rule had expressed concerns that MA organizations are able to delete, replace, or correct MA encounter data before the reconciliation deadline, which could potentially result in inaccurate or incomplete MA encounter data and that incomplete or inaccurate data should not be used or released for the purposes outlined in § 422.310(f). Additionally, CMS makes available technical assistance to States to help with State use and understanding of Medicare data. In the November 2023 proposed rule, we expressed our intent to extend this technical assistance to States requesting MA encounter data to mitigate issues arising from non-final data, and to evaluate the potential concerns arising from using MA encounter data before final reconciliation when determining whether to release MA encounter data to States for care coordination activities for dually eligible individuals to support administration of the Medicare and Medicaid programs.
Finally, we proposed that these amendments to § 422.310(f) would be applicable upon the effective date of the final rule. As outlined in section I.A. of the November 2023 proposed rule, the majority of our proposals were proposed to be applicable beginning January 1, 2025. We stated that we do not believe delaying the applicability of these proposed amendments beyond the effective date of the final rule is necessary because these proposals address CMS's authority to use and share MA encounter data but do not impose any additional or new obligations on MA organizations.
We received the following comments on these two proposals and respond to them below:
Additionally, we confirm that our proposal does not impact how MA plans submit MA encounter data to CMS. As mentioned above, we will utilize our existing pathways for new MA encounter data requests, including the existing data transfer mechanisms.
Finally, we note that in the Medicare and Medicaid Programs; Patient Protection and Affordable Care Act; Advancing Interoperability and Improving Prior Authorization Processes for Medicare Advantage Organizations, Medicaid Managed Care Plans, State Medicaid Agencies, Children's Health Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, Issuers of Qualified Health Plans on the Federally-Facilitated Exchanges, Merit-based Incentive Payment System (MIPS) Eligible Clinicians, and Eligible Hospitals and Critical Access Hospitals in the
In the proposed rule, we provided numerous examples of ways States could use MA encounter data. These examples included identification of individuals at high risk of institutional placement or other undesirable outcomes based on past service utilization; coordination of services from the MA plan's coverage of an inpatient stay to Medicaid coverage of subsequent home and community-based services; coordination of Medicaid-covered services in a skilled nursing facility for a dually eligible individual after reaching the limits of the individual's coverage through the MA plan; monitoring nursing facility quality of care, including through tracking rates of hospitalization and emergency room visits; and coordination of physical health services with behavioral health services, where Medicaid coverage differs from the MA plan's coverage (88 FR 78528). As the current regulation at § 422.310(f) does not permit CMS to disclose MA encounter data to States for these data uses, we believe there is harm incurred when States are unable to conduct these activities for dually eligible individuals. We note that we do not know the full extent of States that would have requested MA encounter data if current regulation permitted, the exact data uses for which the States would have used the data, or the number of dually eligible individuals impacted by such data-driven initiatives. However, based on our experience and observations, we believe that it is appropriate to conclude that access to MA risk adjustment data on an accelerated timeframe could support State efforts to coordinate care for dually eligible individuals who are in MA plans.
Finally, as stated in the proposed rule, we believe disclosure for the purpose of improving States' ability to understand and improve care provided to dually eligible individuals is appropriate and consistent with our intention in prior rulemaking regarding uses of MA risk adjustment data and proposed changes to regulation to support our intention (88 FR 78526).
After considering the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing without modification our proposed amendment to add “and Medicaid program” to the current MA encounter data use purposes at § 422.310(f)(1)(vi) to conduct evaluations and other analysis to support the Medicare program (including demonstrations) and to support public health initiatives and other health care-related research, and § 422.310(f)(1)(vii) for activities to support the administration of the Medicare program. We are also finalizing without modification our proposed addition of new § 422.310(f)(3)(v) to allow for MA encounter data to be released to States for the purpose of coordinating care for dually eligible individuals when CMS determines that releasing the data to a State Medicaid agency before reconciliation is necessary and appropriate to support activities and uses authorized under paragraph (f)(1)(vii). These amendments to § 422.310(f) will be applicable upon the effective date of this final rule as outlined in section I.A. of this final rule. As explained in the proposed rule, delaying the applicability of these proposed amendments beyond the effective date of the final rule is not necessary because these proposals address CMS's authority to use and share MA risk adjustment data but do
We requested comments on making MA encounter data available to States to support Child and Adult Core Set reporting as efficiently as possible while complying with § 422.310(f) and balancing considerations related to the timeliness of quality reporting with accuracy and completeness. While States are required to include all Medicaid and CHIP beneficiaries in certain mandatory Child and Adult Core Set reporting, including dually eligible individuals, States lack access to the Medicare utilization data needed to report on dually eligible individuals enrolled in MA plans. We discussed these mandatory Core Set reporting requirements and the timing limitations posed by our current regulations in the November 2023 proposed rule (88 FR 78531).
Several commenters supported CMS sharing MA encounter data to States prior to reconciliation for quality review and improvement use. A commenter suggesting alternative options to using MA encounter data prior to reconciliation. We appreciate the support and suggestions for our efforts to improve both the utility of MA encounter data and support of State requirements for quality reporting. We will consider comments and suggestions received as we move forward.
In this final rule, we are revising certain timing issues in terms of when RADV medical record review determination and payment error calculation appeals can be requested and adjudicated. Specifically, we proposed that Medicare Advantage (MA) organizations must exhaust all levels of appeal for medical record review determinations before the payment error calculation appeals process can begin. We believed that this clarification was necessary because RADV payment error calculations are directly based upon the outcomes of medical record review determinations. We also proposed several other changes to our regulatory appeals process to conform with these proposed revisions.
Section 1853(a)(1)(C) of the Act requires that CMS risk-adjust payments made to MA organizations. Risk adjustment strengthens the MA program by ensuring that accurate payments are made to MA organizations based on the health status and demographic characteristics of their enrolled beneficiaries, and that MA organizations are paid appropriately for their plan enrollees (that is, less for healthier enrollees who are expected to incur lower health care costs, and more for less healthy enrollees who are expected to incur higher health care costs). Making accurate payments to MA organizations also ensures we are safeguarding Federal taxpayer dollars.
Contract-level RADV audits are CMS's main corrective action for overpayments made to MA organizations when there is a lack of documentation in the medical record to support the diagnoses reported for risk adjustment. CMS conducts RADV audits of MA organization-submitted diagnosis data from a selection of MA organizations for specific payment years to ensure that the diagnoses they submitted are supported by their enrollees' medical records. CMS can collect the improper payments identified during CMS and Department of Health and Human Services Office of Inspector General (HHS-OIG) audits, including the extrapolated amounts calculated by the OIG. The RADV audit appeals process, as outlined in 42 CFR 422.311, is applicable to both CMS and HHS-OIG audits and is therefore referred to as the “MA RADV audit appeals process.” Additional information regarding CMS's contract level RADV audits was outlined in the RADV final rule, CMS-4185-F2, published on February 1, 2023.
CMS previously established a process after notice and comment rulemaking for MA organizations to appeal RADV audit findings as outlined by provisions at 42 CFR 422.311(c)(6)-(c)(8). Once review of the medical records submitted by MA organizations to support audited HCCs is completed and overpayment amounts are calculated, HHS (CMS or HHS-OIG) issues an audit report to each audited MA organization contract. In accordance with § 422.311(b)(1), this audit report includes the following:
• Detailed enrollee-level information relating to confirmed enrollee HCC discrepancies.
• The contract-level RADV-payment error estimate in dollars.
• The contract-level payment adjustment amount to be made in dollars.
• An approximate timeframe for the payment adjustment.
• A description of the MA organization's RADV audit appeal rights.
The MA RADV audit appeals process begins once MA organizations are notified of their audit findings via a RADV audit report. MA organizations have 60 days from the date of issuance of a RADV audit report to file a written request for appeal and must follow the Secretary's RADV audit appeals procedures and requirements under § 422.311. MA organizations may appeal RADV medical record review determinations and/or the MA RADV payment error calculation and must specify which findings the MA organization is appealing when requesting an appeal of a RADV audit finding.
Under CMS's existing RADV audit appeals regulations under 42 CFR 422.311(c)(6)-(8), the MA RADV administrative audit appeals process consists of three levels: reconsideration, hearing, and CMS Administrator review. Below is a summary of the three levels of appeal for background information only. This regulation is not revising the basic structure of these three levels of appeal.
Reconsideration is the first stage of the RADV audit appeals process. When appealing a medical record review determination, the MA organization's written request must specify the audited HCC(s) that it wishes to appeal and provide a justification of why the audited HCC(s) should not have been identified as an error. When appealing a payment error calculation, the MA organization's written request must include its own RADV payment error calculation that clearly indicates where HHS' payment error calculation was erroneous, as well as additional documentary evidence pertaining to the calculation of the error that the MA organization wishes the reconsideration official to consider. For payment error calculation appeals, a third-party who was not involved in the initial RADV payment error calculation reviews the HHS and MA organization's RADV payment error calculations and recalculates, as appropriate, the payment error using the appropriate payment error calculation method for the relevant audit.
The reconsideration official issues a written reconsideration decision to the MA organization, and this decision is considered final unless the MA organization disagrees with the reconsideration official's decision and submits a valid request for CMS hearing officer review. A new audit report is
An MA organization that disagrees with the reconsideration decision may request a hearing officer review in accordance with procedures and timeframes established by CMS under 42 CFR 422.311(c)(7). If the MA organization appeals the medical record review reconsideration determination, the written request for RADV hearing must include a copy of the written decision of the reconsideration official, specify the audited HCC(s) that the reconsideration official confirmed as being in error, and explain why the MA organization disputes the reconsideration official's determination. If the MA organization appeals a RADV payment error calculation, the written request for RADV hearing must include a copy of the written decision of the reconsideration official and the MA organization's RADV payment error calculation that clearly specifies where the MA organization believes the Secretary's payment error calculation was erroneous.
The hearing officer has the authority to decide whether to uphold or overturn the reconsideration official's decision and, pursuant to this decision, sends a written determination to CMS and the MA organization explaining the basis for the decision. If necessary, a third party who was not involved in the initial RADV payment error calculation recalculates the RADV payment error and issues a new RADV audit report to the MA organization. For MA organizations appealing the RADV payment error calculation only, a third party not involved in the initial RADV payment error calculation recalculates the MA organization's RADV payment error and issues a new RADV audit report to the appellant MA organization and CMS. The hearing officer's decision is final unless the decision is reversed or modified by the CMS Administrator.
Under the existing RADV audit appeals regulation at 42 CFR 422.311(c)(8), a request for CMS Administrator review must be made in writing and filed with the CMS Administrator within 60 days of receipt of the hearing officer's decision. After receiving a request for review, the CMS Administrator has the discretion to elect to review the hearing officer's decision or decline to review the hearing officer's decision. If the CMS Administrator elects to review the hearing decision, the CMS Administrator then will acknowledge the decision to review the hearing officer's decision in writing and notify CMS and the MA organization of their right to submit comments within 15 days of the date of the notification. The CMS Administrator renders his or her final decision in writing to the parties within 60 days of acknowledging his or her decision to review the hearing officer's decision. The decision of the hearing officer becomes final if the CMS Administrator declines to review the hearing officer's decision or does not render a decision within 60 days.
In this final rule, we are revising the timing of when a medical record review determination and a payment error calculation appeal can be requested and adjudicated. Specifically, we proposed that MA organizations must exhaust all levels of appeal for medical record review determinations before beginning the payment error calculation appeals process. We believed that this change was necessary because RADV payment error calculations are based upon the outcomes of medical record review determinations and the current regulatory language is somewhat ambiguous regarding this point. Adjudicating medical record review determination appeals prior to payment error calculation appeals alleviates operational concerns for CMS and burden on MA organizations by preventing unnecessary appeals of payment error calculations that will be moot if revisions must be made to payment error calculations based on medical record review determination appeal decisions.
Section 422.311(c)(5)(iii) states that, “for [MA organizations] that appeal both medical record review determination appeal and RADV payment error calculation appeal [,] (A) the Secretary adjudicates the request for the RADV payment error calculation following conclusion of reconsideration of the MA organization's request for medical record review determination appeal.” The regulations also state that, for cases in which an MA organization requests both a medical record review determination appeal and payment error calculation appeal, “. . . (B) an [MA organization's] request for appeal of its RADV payment error calculation will not be adjudicated until appeals of RADV medical record review determinations filed by the MA organization have been completed and the decisions are
An MA organization may also choose to only appeal the payment error calculation, and therefore, no preceding medical record review determination appeal will occur. MA organizations choosing to only file a payment error calculation appeal will not be able to file a medical record review determination appeal after the adjudication of payment error calculation appeal. At § 422.311(c)(5)(ii)(B), we proposed to specify that MA organizations will forgo their medical record review determination appeal if they choose to only file a payment error calculation appeal, because medical record review appeals decisions need to be final prior to adjudicating a payment error calculation appeal.
At § 422.311(c)(5)(iii)(A)
We also proposed to revise § 422.311(c)(6)(i)(A) to clarify that an MA organization's request for medical record review determination reconsideration must specify any and all audited HCCs from an audit report that the MA organization wishes to dispute. The intent of this revision is to permit an MA organization to submit only one medical record review determination reconsideration request per audited contract, which includes all disputed audited HCCs, given that the results of all audited HCCs for a given audited contract are communicated as part of a single audit report.
We also proposed to revise § 422.311(c)(6)(iv)(B) to clarify that the reconsideration official's decision is final unless it is reversed or modified by a final decision of the hearing officer as defined at § 422.311(c)(7)(x).
We also proposed to add § 422.311(c)(6)(v) to clarify that the reconsideration official's written decision will not lead to the issuance of a revised audit report until the decision is considered final in accordance with § 422.311(c)(6)(iv)(B). If the reconsideration official's decision is considered final in accordance with § 422.311(c)(6)(iv)(B), the Secretary will recalculate the MA organization's RADV payment error and issue a revised RADV audit report superseding all prior RADV audit reports to the appellant MA organization.
We also proposed to revise § 422.311(c)(7)(ix) to clarify that if the hearing officer's decision is considered final in accordance with § 422.311(c)(7)(x), the Secretary will recalculate the MA organization's RADV payment error and issue a revised RADV audit report superseding all prior RADV audit reports for the specific MA contract audit. Once the medical record review determination decision of the adjudicator is final, we believe the same entity that issued the audit report will be able to revise the audit report by applying any medical record review determination findings that may have changed through the medical record review determination appeal process and issue a revised audit report in the most efficient and streamlined manner. Issuing a revised audit report is a standard process and neutrally applies the final adjudicator's medical record review determination findings. This process is consistent with other long standing CMS appeals program, such as the Provider Reimbursement Review Board (PRRB), where post-adjudication revised determinations are issued by the same entity (
• We also proposed the following to provide clarity to the Administrator's level of appeal: To revise § 422.311(c)(8)(iii) to add a requirement that if the CMS Administrator does not decline to review or does not elect to review within 90 days of receipt of either the MA organization or CMS's timely request for review (whichever is later), the hearing officer's decision becomes final.
• To revise § 422.311(c)(8)(iv)(A) to clarify that CMS and the MA organization may submit comments within 15 days of the date of the issuance of the notification that the Administrator has elected to review the hearing decision.
• To revise § 422.311(c)(8)(v) to clarify that the requirement of the Administrator to render a final decision in writing within 60 days of the issuance of the notice acknowledging the decision to elect to review the hearing officer's decision and the 60-day time period is determined by the date of the final decision being made by the Administrator, not by the date it is delivered to the parties.
• To revise § 422.311(c)(8)(vi) to clarify the scenarios in which the hearing officer's decision becomes final after a request for Administrator review has been made.
• To add new § 422.311(c)(8)(vii) that states once the Administrator's decision is considered final in accordance with § 422.311(c)(8)(vi), the Secretary will recalculate the MA organization's RADV payment error and issue a revised RADV audit report superseding all prior RADV audit reports to the appellant MA organization.
We also proposed to add new § 422.311(c)(9) to specify what actions related to the RADV audit appeals process constitute final agency action. Specifically, in cases when an MA organization appeals a payment error calculation subsequent to an MRRD appeal that has completed the administrative appeals process, the MRRD final decision and the payment error calculation final decision will not be considered a final agency action until the related payment error calculation appeal has completed the administrative appeals process and a final revised audit report has been issued.
We also proposed to revise § 422.311(a) to remove the word “annually” for clarity, as the Secretary may conduct RADV audits on differing cadences between the CMS and HHS-OIG RADV audits.
We invited public comment on these proposals and received several comments. Specifically, we received numerous comments regarding our proposals related to the timing of requesting and adjudication of MRRD and PEC appeals. We did not receive any comments specifically addressing our proposals related to the finality of decisions at each level of appeal of appeal, nor the requirements for revised or reissued audit reports. We did not receive any comments specifically addressing our proposals related to the requirements affecting the elective Administrator review process. We did not receive any comments specifically related to our proposal concerning the definition of final agency action. A discussion of these comments, along with our responses follows.
We received several comments that were beyond the scope of the proposed rule. Commenters sought additional clarification and made recommendations related to the underlying risk adjustment payment model, aspects of the RADV audit methodology related to sampling and extrapolation, and the need for monetary penalties to be applied to providers or other actors that contributed to a negative RADV finding.
We thank commenters for making broad recommendations for changes to the risk adjustment payment model and for the application of monetary penalties; however, the scope of this rule is limited to the RADV audit appeals process.
Regarding the use of extrapolation and other aspects of RADV audit methodology, the RADV audit appeals process is limited to medical record review determinations and payment error calculations communicated to MA organizations in an audit report. Pursuant to § 422.311(c)(3)(iii), the Secretary's medical record review determination methodology and payment error calculation methodology are ineligible for appeal under this process. While MA organizations may appeal individual medical record review determinations and the resulting payment error calculation, they may not appeal the underlying audit methodology.
After consideration of the public comments received, we are finalizing these policies as proposed. As noted above, we did not receive comments on some proposals and are finalizing those policies as proposed.
In our proposed rule titled “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications,” (
We proposed these provisions to codify our longstanding policy prohibiting midyear benefit changes (MYBCs), previously referred to as midyear benefit enhancements (MYBEs), for MA and Part D plans. Specifically, we proposed to prohibit changes to non-drug benefits, premiums, and cost sharing by an MA organization after plans are permitted to begin marketing prospective contract year offerings on October 1 (consistent with § 422.2263(a)) of each year for the following contract year and until the end of the applicable contract year. Similarly, we proposed to codify our longstanding policy prohibiting Part D sponsors from making midyear changes to the benefit design or waiving or reducing premiums, bid-level cost sharing (for example, the cost sharing for an entire formulary tier of Part D drugs), or cost sharing for some or all of a Part D plan's enrollees. This prohibition applies after plans are permitted to begin marketing prospective contract year offerings on October 1 (consistent with § 423.2263(a)) of each year for the following contract year and until the end of the applicable contract year.
In a 2008 final rule titled, “Medicare Program; Prohibition of Midyear Benefit Enhancements for Medicare Advantage Organizations” (
Altering an approved plan to include new benefits after marketing has started may also give MA organizations an unfair advantage over competitors when beneficiaries are selecting their plans during the initial coverage elections period (ICEP). We articulated in the July 2008 final rule that we believe enrolling newly age-eligible enrollees is attractive to MA organizations because of their relatively low health care utilization, as these individuals tend to be healthier compared to older beneficiaries (
We also noted in the December 2022 proposed rule that CMS has interpreted MYBCs after the start of the contract year to violate the uniformity requirements set forth at § 422.100(d)(ii), which require that an MA organization must offer a plan to all beneficiaries in a service area “at a uniform premium, with uniform benefits and level of cost sharing throughout the plan's service area, or segment of service area as provided in § 422.262(c)(2).” Altering the non-prescription drug benefits, premiums, or cost sharing midyear violates this requirement, even if the new benefit, premium, or cost sharing is offered to all of the plan's enrollees, because some enrollees would have paid for such benefits, premiums, or cost sharing already, and might not be eligible for reimbursement of these costs. In other words, some plan enrollees would have paid higher or lower amounts for the same benefits or services than other plan enrollees who paid depending on when the MYBC was put in effect.
Furthermore, we noted in the December 2022 proposed rule that Employer Group Waiver Plans (EGWPs) exclusively enroll the members of the group health plan sponsored by the employer, labor organization (that is, union) or trustees of funds established by one or more employers or labor organizations to furnish benefits to the entity's employees, former employees, or members or former members of the labor organizations; these plans generally have “800 series” MA contracts with CMS. We stated that these EGWPs are not currently subject to this prohibition on MYBCs under existing CMS waivers for EGWPs and will not be subject to the new regulation prohibiting MYBCs. However, we stated, an MA organization is subject to the prohibition on MYBCs if the MA organization offers an MA plan that enrolls both individual beneficiaries and employer or union group health plan members (that is, a plan open to general enrollment); for those types of plans, the employer or union sponsor may make mid-year changes to offer or change only non-MA benefits that are not part of the MA contract (that is, are not basic benefits or MA supplemental benefits). (
We proposed to add new paragraph § 422.254(a)(5) explicitly prohibiting MYBCs and specifying when this prohibition applies. Specifically, we proposed to clarify in regulatory text that any changes to non-prescription drug benefits, cost sharing, and premiums are prohibited starting after plans are permitted to begin marketing prospective contract year offerings on October 1 of each year for the following contract year (consistent with § 422.2263(a)) and through the end of the applicable contract year, except for modifications in benefits required by law.
In the December 2022 proposed rule (
In part, section 1860D-11(e)(2)(C) of the Act, codified at § 423.272(b)(1), requires that CMS may only approve a bid if it determines that the portions of the bid attributable to basic and supplemental prescription drug coverage are supported by the actuarial bases provided and reasonably and equitably reflect the revenue requirements (as used for purposes of section 1302(8)(C) of the Public Health Service Act) for benefits provided under that plan. MYBCs indicate that the plan bid was overstated and render the bid meaningless, while waiving or reducing the premiums, cost sharing, or both, that are reflected in the approved bid would indicate that the amounts provided in the bid were not necessary for the provision of coverage. In our final rule titled “Medicare Program; Medicare Prescription Drug Benefit” (
In the December 2022 proposed rule, we drew a distinction between changes in “bid-level” cost sharing (for example, the cost sharing associated with an entire tier of drugs) and changes in the cost sharing for an individual drug (for example, when such drug moves from one already approved tier of the benefit to another already approved tier of the benefit). Section 1860D-4(b)(3)(E) of the Act, as codified at § 423.120(b)(5), requires that Part D sponsors provide appropriate notice before any removal of a covered Part D drug from a formulary and “any change in the preferred or tiered cost-sharing status” of such a drug. Thus, the statute contemplates midyear changes in cost sharing of individual formulary drugs. Consequently, since the beginning of the Part D program, we have allowed formulary changes that result in changes to the cost sharing for individual drugs (for example, moving a single drug to a different cost-sharing tier). However, CMS has declined to permit Part D sponsors to change their benefit designs, or waive or reduce premiums, “bid-level” cost sharing (for example, the cost sharing associated with an entire tier of drugs), or cost sharing (for all or individual enrollees) once plans are permitted to market for the following contract year (on October 1, now reflected in § 423.2263(a)) on the grounds that such activities would be inconsistent with the CMS-approved bid.
As we noted in our proposed rule titled, “Medicare Program; Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs” (
We received the following comments on the proposed Medicare Advantage and Part D prohibitions on midyear changes to be added at §§ 422.254 and 423.265, and our responses follow:
In addition, the potential distortion between the bid amounts and the actual costs after a mid-year benefit change could reduce the accuracy of information based on the bids that is released by CMS. For example, if Part D sponsors are making changes during the contract year that would have resulted in higher bids, that would mean that the release of the national average monthly bid amount is artificially low. This, in turn, would mean that all downstream payments relying on the national average would be inaccurate as well.
The proposed regulatory provisions would restrict changes to the fundamental aspects of plan benefit package design. Under our proposal, MA plans would not be prohibited from making adjustments to their own rules on such matters as prior authorization or referral policies, or from making changes to their provider network, so long as these adjustments or network changes remain within the bounds of existing regulatory requirements and are consistent with the approved plan benefit package.
In addition, we clarify that the prohibition on MYBCs, which has been longstanding CMS policy, does not and will not prohibit Part D plans (including MA-PD plans) from enhancing their formularies to add coverage of new FDA-approved products. Section 1860D-4(b)(3)(C)(iii) of the Act (echoed in regulation at § 423.120(b)(4)) specifically allows an exception to the rules prohibiting changes to the therapeutic classes and categories of a formulary in order “to take into account new therapeutic uses and newly approved covered Part D drugs.” Nothing in our proposed policy overrides the statutory requirement or the equivalent language in existing regulation. In addition, because MA plans must cover all Part A and Part B benefits (subject to limited exclusions as outlined at § 422.100(c)), changes in items and services covered under Parts A and B due to changes in the law, new or changed NCDs, and advances in medical technology or new healthcare services that are newly covered by Traditional Medicare under existing benefit rules must be covered for MA enrollees as well. See § 422.109 for more information on how NCD and legislative changes in benefits are incorporated into the coverage for MA enrollees.
After consideration of the comments and for the reasons set forth in the proposed rule and our responses to the related comments, we are finalizing the proposed new provisions at §§ 422.254(a)(5) and 423.265(b)(5) without substantive modification. We have made minor modifications to clarify the text.
In the December 2022 proposed rule
Part D sponsors' failure to attempt to collect cost sharing or premiums is a violation of statutory and regulatory requirements. Part D sponsors' incorrectly high or low collections of cost sharing and premiums would have the effect of making the benefit non-uniform and would violate the uniform premium and benefit requirements of section 1860D-2(a) of the Act and § 423.104(b). Existing language at § 423.104(b) mirrors the language at § 422.100(d)(1) and (2)(i) with regard to uniform premiums and cost sharing. Similarly, whether done in a small number of instances or to all members enrolled of a plan, the excess collection of premiums is the basis for intermediate sanctions, as stated in section 1857(g)(1)(B) of the Act, covering Medicare Advantage organizations, and 1860-12(b)(3)(E), for Part D sponsors. However, although CMS adopted a regulation for the MA program at § 422.270 to address incorrect collections of premiums and cost sharing in the final rule titled “Medicare Program; Establishment of the Medicare Advantage Program” (
Specifically, in order to align Part D with the existing MA requirements in § 422.270 we proposed to add a new regulation at § 423.294, which at paragraph (c) would require a Part D sponsor to make a reasonable effort to collect monthly beneficiary premiums under the timing established in § 422.262(e) (made applicable to Part D premiums in § 423.293(a)(2)) and ensure collection of cost sharing at the time a drug is dispensed. If for some reason the Part D sponsor fails to collect or ensure collection in a timely manner, the Part D sponsor would be required to make a reasonable effort to bill for and recover the premium or cost sharing amount after the fact. Any adjustments to the premium or cost sharing amount that occur based on subsequently obtained information would be made within the same timeframe for coordination of benefits as established at § 423.466(b), which is 3 years from the date on which the monthly premium was due or on which the prescription for a covered Part D drug was filled. We also proposed to add new § 423.294(b)(2) to require a Part D sponsor to make a reasonable effort to identify all amounts incorrectly collected and to pay any other amounts due during the timeframe for coordination of benefits as established at § 423.466(b).
In addition, we proposed new Part D requirements for the management of incorrect collections. First, we proposed to clarify that the 3-year lookback period established in § 423.466(b) for coordination of benefits applies to retroactive claim or premium adjustments that result in refunds and recoveries at § 423.294(b)(2) and (4) and § 423.294(c)(2), respectively. Part D sponsors have been required to process retroactive claims adjustments within 45 days of receiving complete information, per § 423.466(a), but there has been no requirement for the timing of retroactive premium adjustments. Although § 423.466(b) allows 3 years for coordination of benefits, there was no limit in the regulation for how far back a Part D sponsor must look to determine whether retroactive premium adjustments or claims adjustments unrelated to coordination of benefits must be made. For example, if a Part D sponsor in 2022 identifies an error in their prior years' drug pricing files that resulted in beneficiaries being charged incorrect cost sharing from 2015 to 2020, the current regulation might require them to refund and/or recover amounts for prescriptions beneficiaries received as far back as seven years ago. This is not only inconsistent with our coordination of benefits requirements, which only require adjustments for the past 3 years, but is potentially confusing to beneficiaries. By establishing a 3-year lookback period in § 423.294(b)(2) and (4) and § 423.294(c)(2), we would align the timeframe established in § 423.466(b) for coordination of benefits with the timeframe for premium adjustments and claims adjustments unrelated to coordination of benefits. This 3-year period coincides with the timeframe established in § 423.466(b) for coordination of benefits with State Pharmaceutical Assistance Programs (SPAPs), other entities providing prescription drug coverage, beneficiaries, and others paying on the beneficiaries' behalf. A Part D sponsor would not be required to make a premium or claims payment adjustment if more than 3 years have passed from the date of service, just as a Part D sponsor is required to coordinate benefits for a period of 3 years.
Second, we proposed in §§ 423.294(b)(2) and (4) and 423.294(c)(2), respectively, that the 45-day timeframe in § 423.466(a) applies to the processing of refunds and recoveries for both claims and premium adjustments. This would make the timeframes for the refund or recovery of premium adjustments the same as the timeframes for claims adjustments, refunds, and recoveries related to the low-income subsidy program (which, under § 423.800(e), are the same as the requirements of § 423.466(a)). In other words, whenever a Part D sponsor receives, within the 3-year lookback period, information that necessitates a refund of enrollee overpayment of premiums and/or cost sharing, or recovery of underpayments of premiums and/or cost sharing, the Part D sponsor would be required to issue refunds or recovery notices within 45 days of the Part D sponsor's receipt of such information. Nothing in this proposal would alter the requirements of § 423.293(a)(4) with respect to the options a Part D sponsor must provide Part D enrollees for retroactive collection of premiums.
Finally, we proposed to apply a de minimis amount, calculated per Prescription Drug Event (PDE) transaction for cost sharing or, for premium adjustments, per month, for these refunds and recoveries. Specifically, we proposed in § 423.294(b) and (c)(1) that if a refund or recovery amount falls below the de minimis amount set for purposes of § 423.34(c)(2) for the low-income subsidy (currently set at $2), the Part D sponsor would not be required to issue a refund or recovery notice. For example, if a plan sponsor in 2025 discovered that it had charged incorrect premiums amounts to certain beneficiaries for a 12-month period from
The proposed rule preamble also noted that we are not making any changes to the Medical Loss Ratio (MLR) requirements under §§ 422.2420(c) and 423.2420(c), which provide that uncollected premiums that could have been collected are treated as revenue and are included in the MLR denominator.
In addition, the proposed rule noted that current MA regulations set forth at § 422.270 do not contain allowances for de minimis amounts or limits to the lookback periods for MA organizations to refund or recover incorrect collections of cost sharing or premiums. On the contrary, § 422.270(b) states that an MA organization must agree to refund all amounts incorrectly collected from its Medicare enrollees, or from others on behalf of the enrollees, and to pay any other amounts due the enrollees or others on their behalf. With regard to timing of recovering underpayments when an enrollee is not at fault, § 422.262(h) provides that an enrollee may make payments in equal monthly installments spread out over at least the same period for which the premiums were due, or through other arrangements mutually acceptable to the enrollee and the Medicare Advantage organization. In the proposed rule, we solicited comments on adding requirements regarding a de minimis amount and lookback periods for recovering or refunding incorrect collections in MA that would mirror the proposed requirements in Part D.
We also proposed to implement a technical change to existing regulation text related to the Part D retroactive collection of monthly beneficiary premiums. Specifically, we proposed to amend § 423.293(a)(4) by replacing “Medicare Advantage organization” with “Part D sponsor” to be consistent with the terminology used in the rest of § 423.293.
We received comments in response to the proposed new regulatory text at §§ 423.293 and 423.294. A summary of the comments received and our responses follow.
However, the uniform benefit requirement at § 423.104(b)(2) requires Part D plan sponsors to offer “a uniform premium, with uniform benefits and level of cost sharing throughout the plan's service area.” As noted in the October 2009 proposed rule
Furthermore, there will be little financial difference to enrollees whether plans adopt the de minimis requirement or continue to refund or recover all incorrectly collected amounts. For instance, the de minimis amount for premium adjustments for 2024 will amount to $2 per month. Thus, under the proposed rule, plans would only be permitted to forego premium adjustments less than or equal to $24 for a calendar year. In the case of one-time errors or errors that took place over a small number of instances, the amounts involved may be less than the postage required to send a refund or recovery notice to a beneficiary. In combination with the 3-year lookback period, we believe that our proposed de minimis amount provision would enable plans to minimize their own burden while also limiting beneficiary confusion over minor adjustments to previously paid premiums and cost-sharing.
After consideration of the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the changes to §§ 423.293 and 423.294 as proposed with minor grammatical and formatting changes.
Section 1852(a)(1)(B)(i) of the Act defines the term “benefits under the original Medicare Fee-for-Service program option” for purposes of the requirement in subparagraph (a)(1)(A) that each MA organization provide enrollees such benefits. Section 17006(c)(1) of the 21st Century Cures Act (Pub. L. 114-255) (hereafter referred to as “the Cures Act”) amended section 1852(a)(1)(B)(i) of the Act by inserting “or coverage for organ acquisitions for kidney transplants, including as covered under section 1881(d)” after “hospice care.” Per section 17006(c)(3) of the Cures Act, this amendment applies with respect to plan years beginning on or after January 1, 2021. Thus, effective January 1, 2021, MA plans no longer cover organ acquisitions for kidney transplants, including the costs for
In the April 2019 final rule
Specifically, we proposed to revise the “basic benefits” definition at § 422.2 to change the phrase “all Medicare-covered benefits” to “Part A and Part B benefits” and correct the phrase “(except hospice services)” to include, beginning in 2021, organ acquisitions for kidney transplants (which includes costs covered under section 1881(d) of the Act).
This provision is a technical change to align the definition of basic benefits with existing law; therefore, neither an economic impact beyond current operating expenses nor an associated paperwork burden are expected.
We invited public comment on this proposal and received a comment in support of our proposal and an out-of-scope comment. We thank the commenter for their support.
For the reasons outlined in the proposed rule and summarized in this rule, we finalize the revisions to the definition of basic benefits at § 422.2 as proposed.
The Balanced Budget Act (BBA) of 2018 included new authorities concerning supplemental benefits that may be offered to chronically ill enrollees in Medicare Advantage (MA) plans. We addressed these new supplemental benefits extensively in the Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program (hereafter referred to as “June 2020 final rule”) (85 FR 33796, 33800-05), where we referred to them as Special Supplemental Benefits for the Chronically Ill (SSBCI).
As we summarized in the June 2020 final rule, we interpreted the intent of this new category of supplemental benefits as enabling MA plans to better tailor benefit offerings, address gaps in care, and improve health outcomes for chronically ill enrollees who meet the definition established by the statute. Section 1852(a)(3)(D)(ii)(II) of the Act authorizes the Secretary to waive the uniformity requirements generally applicable to the benefits covered by MA plans with respect to SSBCI. Therefore, CMS may allow MA plans to offer SSBCI that are not uniform across the entire population of chronically ill enrollees in the plans but that are tailored and covered for an individual enrollee's specific medical condition and needs (83 FR 16481-82).
In addition to limiting the eligibility of enrollees who can receive SSBCI to chronically ill enrollees, section 1852(a)(3)(D)(ii)(I) of the Act requires that an item or service offered as an SSBCI have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. We codified this statutory requirement as part of the definition of SSBCI at § 422.102(f)(1)(ii).
As we provided in a Health Plan Management System (HPMS) memorandum dated April 24, 2019
• Reduced cost sharing for Medicare-covered benefits;
• Reduced cost sharing for primarily health-related supplemental benefits;
• Additional primarily health-related supplemental benefits; and/or
• Non-primarily health-related supplemental benefits.
As we described in the November 2023 proposed rule, to offer an item or service as an SSBCI to an enrollee, an MA plan must make at least two separate determinations with respect to that enrollee in order to satisfy the statutory and regulatory requirements for these benefits. First, the MA plan must determine that an enrollee meets the definition of “chronically ill enrollee.” Section 1852(a)(3)(D)(iii) of the Act defines “chronically ill enrollee” as an individual enrolled in the MA plan who meets all of the following: (I) has one or more comorbid and medically complex chronic conditions that is life-threatening or significantly limits the overall health or function of the enrollee; (II) has a high risk of hospitalization or other adverse health outcomes; and (III) requires intensive care coordination. Per § 422.102(f)(1)(i)(B), CMS may publish a non-exhaustive list of conditions that are medically complex chronic conditions that are life-threatening or significantly limit the overall health or function of an individual. This list is currently the same as the list of chronic conditions for which MA organizations may offer chronic condition special needs plans, which can be found in section 20.1.2 of Chapter 16b of the Medicare Managed Care Manual. We require, currently at § 422.102(f)(3)(i), the MA plan to have written policies for making this determination and to document each determination that an enrollee is a chronically ill enrollee. Documentation of this determination must be available to CMS upon request according to § 422.102(f)(3)(ii) (to be redesignated to § 422.102(f)(4)(ii)).
Second, the MA plan must determine that the SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the enrollee. Currently § 422.102(f)(3)(iii) provides that the MA plan “must have written policies based on objective criteria for determining a chronically ill enrollee's eligibility to receive a particular SSBCI and must document these criteria.” We also require the MA plan to document “each determination that an enrollee is eligible to receive an SSBCI and make this information available to CMS upon request” at § 422.102(f)(3)(iv). (See later in this section for how paragraph (f)(3) of § 422.102 is redesignated and revised in this final rule.)
We noted in the November 2023 proposed rule that we do not define or definitively interpret the phrase “has a reasonable expectation of improving or maintaining the health or overall function of the enrollee” in regulation or policy guidance. Rather, in the 2019 HPMS memo, we provided MA plans with “broad discretion in determining what may be considered `a reasonable expectation' when choosing to offer specific items and services as SSBCI.” We stated that we granted MA plans this discretion so that they might effectively tailor their SSBCI offerings and the eligibility standards for those offerings to the specific chronically ill population upon which the plan is focusing.
We further indicated that “CMS will provide supporting evidence or data to an MA organization if CMS determines that an MA plan may not offer a specific item or service as an SSBCI because it does not have a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee.” In other words, we placed the burden on CMS, and not the MA plan, to generate evidence demonstrating whether the “reasonable expectation” standard—a standard that we granted broad discretion for an MA plan to determine—has been met (or not met) when offering items or services as SSBCI.
As we described in the November 2023 proposed rule, supplemental benefits, including SSBCI, are generally funded using MA plan rebate dollars.
In the November 2023 proposed rule, we noted that based on our internal data, 101 MA plans offered a food and produce benefit in contract year 2020, while 929 MA plans were offering this as an SSBCI in contract year 2023.
Through SSBCI, MA organizations can design and implement benefits, including non-primarily health-related benefits, that may be able to holistically address various needs of chronically ill enrollees. We provided in the November 2023 proposed rule that, as these benefits become a more significant part of the MA program, we believe it is important to update our processes for reviewing and approving SSBCI to manage the growth and development of new SSBCI offerings, as well as to ensure compliance with the statutory requirements at section 1852(a)(3)(D). Additionally, section 1854(b)(1)(C) of the Act requires that MA plans offer the value of MA rebates back to enrollees in the form of payment for supplemental benefits, cost sharing reductions, or payment of Part B or D premiums. As an increasing share of Medicare dollars is going toward MA rebates that plans are using to offer SSBCI, we believe that revising the regulation to adopt greater review and scrutiny of these benefits is important for CMS to maintain good stewardship of Medicare dollars, including the MA rebates used to pay for these benefits, and for ensuring that the SSBCI offered are consistent with applicable law and those most likely to improve or maintain the health or overall function of chronically ill enrollees. Therefore, we proposed to update our rules and processes to simultaneously ensure effective program administration and oversight, while enabling MA organizations to offer SSBCI and improve health outcomes for chronically ill enrollees.
Currently, the burden is on CMS to review SSBCI included in an MA organization's bid and determine whether sufficient evidence or data exists to demonstrate that it has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee. Given the growth in the quantity and type of SSBCI offerings and given the associated burden increase on CMS in reviewing and approving bids that include SSBCI, we believe that it would be more efficient for the MA organization, rather than CMS, to demonstrate that the reasonable expectation standard has been met.
When CMS provides MA organizations with broad latitude in offering items or services as SSBCI and in establishing what a “reasonable expectation” means for a given SSBCI, we believe that it is appropriate for the MA organization, rather than CMS, to identify supporting evidence or data to support an SSBCI and to establish compliance with the applicable law.
We proposed that an MA organization that includes an item or service as SSBCI in its bid must be able to demonstrate through relevant acceptable evidence that the item or service has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee. As part of shifting responsibility this way, we proposed, as relevant to an MA organization that includes SSBCI in its bid, to: (1) require the MA organization to establish, by the date on which it submits its bid, a bibliography of “relevant acceptable evidence” related to the item or service the MA organization would offer as an SSBCI during the applicable coverage year; (2) require that an MA plan follow its written policies (that must be based on objective criteria) for determining eligibility for an SSBCI when making such determinations; (3) require the MA plan to document denials of SSBCI eligibility rather than approvals; and (4) codify CMS's authority to decline to accept a bid due to the SSBCI the MA organization includes in its bid and to review SSBCI offerings annually for compliance, taking into account the evidence available at the time. In addition, we proposed to make a technical edit to § 422.102(f)(1)(i)(A)(
First, we proposed to redesignate what is currently § 422.102(f)(3) to (f)(4), and to address, at new § 422.102(f)(3), new requirements for each MA plan that includes an item or service as SSBCI in its bid. The MA organization must be able to demonstrate, through relevant acceptable evidence, that the item or service to be offered as SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee and must, by the date on which it submits its bid to CMS, establish a bibliography of all “relevant acceptable evidence” concerning the impact that the item or service has on the health or overall function of its recipient. The bibliography must be made available to CMS upon request. As part of this
We also proposed, in new paragraph (f)(3)(iv), that the MA organization must make its bibliography of relevant acceptable evidence available to CMS upon request. CMS may request and use this bibliography, without limitation, during bid review to assess whether SSBCI offerings comply with regulatory requirements, or during the contract year as part of CMS's oversight activities. We noted that CMS does not intend at this time to require MA organizations to submit these bibliographies as a matter of course in submitting bids.
We proposed that the term “relevant acceptable evidence” would include large, randomized controlled trials or prospective cohort studies with clear results, published in a peer-reviewed journal, and specifically designed to investigate whether the item or service (that is proposed to be covered as an SSBCI) impacts the health or overall function of a population, or large systematic reviews or meta-analyses summarizing the literature of the same. We further proposed that the MA plan would need to include in its bibliography all relevant acceptable evidence published within the 10 years preceding the month in which the MA plan submits its bid. Ideally, relevant acceptable evidence should include studies and other investigations specific to the chronic conditions for which the MA organization intends to target the SSBCI, but we are not proposing to make this a requirement at this time. We are concerned that relevant acceptable evidence applicable to many SSBCI will already be limited, and that requiring a bibliography be limited to only studies concerning certain chronic conditions would discourage the development of new SSBCI. Similarly, to the extent there exists sufficient relevant acceptable evidence that the item or service meets the reasonable expectation standard for a sample of a population, an MA organization may still offer an SSBCI to enrollees with a specific chronic condition even in the absence of any studies addressing the connection between an item or service and its effect on the health or overall function of individuals with that condition.
We proposed that, in the absence of publications that meet these standards, “relevant acceptable evidence” for purposes of the MA plan's bibliography could include case studies, federal policies or reports, and internal analyses or any other investigation of the impact that the item or service has on the health or overall function of its recipient. By “bibliography,” we mean a list, and not a description, of scholarly publications or other works, as we describe below.
In our April 2023 final rule, we discussed what constituted sufficiently high-quality clinical literature in the context of an MA organization establishing internal clinical criteria for certain Medicare basic benefits (88 FR 22189, 22197). We believe that those standards are also applicable for identifying “relevant acceptable evidence” in the context of supporting whether an item or service offered as SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee. Therefore, our proposal for § 422.102(f)(3)(ii) largely tracked the language in § 422.101(b)(6) describing acceptable clinical literature for purposes of establishing internal coverage criteria, but with revisions to be specific to the context of SSBCI and the reasonable expectation standard.
As we noted in the November 2023 proposed rule, literature that CMS considers to be “relevant acceptable evidence” for supporting an SSBCI offering include large, randomized controlled trials or cohort studies or all-or-none studies with clear results, published in a peer-reviewed journal, and specifically designed to answer a question relevant to the requirements for offering and covering SSBCI and how the MA plan will implement the coverage—such as the impact of structural home modifications on health or overall function. Literature might also include that which involves large systematic reviews or meta-analyses summarizing the literature specifically related to the subject of the SSBCI—such as meal delivery, availability of certain food or produce, or access to pest control—published in a peer-reviewed journal with clear and consistent results. Under this proposal, an MA organization would be required to cite all such available evidence in its bibliography, and not just studies that present findings that are favorable to its SSBCI offering.
We also proposed that, in the absence of literature that conforms to these standards for relevant acceptable evidence, an MA organization would be required to include in its bibliography any other investigations of the impact of the item or service which may include evidence that is unpublished, is a case series or report, or derived solely from internal analyses within the MA organization. In this way, our proposed policy would deviate from the standard we established for the type of evidence necessary to support an MA organization's internal coverage criteria for Medicare basic benefits. We noted in our proposal that we believe this deviation is appropriate as there is relatively less research into the impact of the provision on items or services commonly offered as SSBCI on health or overall function of chronically ill individuals.
We did not propose that relevant acceptable evidence must directly address whether there is a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee with a specific chronic illness or condition (conditions that the MA plan would have identified in its PBP submission), but such materials may be more persuasive than materials that only describe the impact of certain items and services—particularly non-primarily health-related items and services—on healthier individuals or populations. Further, our proposal was limited to SSBCI offered as additional primarily health-related supplemental benefits and non-primarily health-related supplemental benefits. We did not propose to require a bibliography for SSBCI that are exclusively cost sharing reductions for Medicare-covered benefits or primarily health-related supplemental benefits, so the regulation text was limited to SSBCI that are items or services. Although we did not propose to apply this new documentation requirement to cost sharing reductions offered as SSBCI, that type of SSBCI must also meet the reasonable expectation standard to be offered as SSBCI.
We believe that this proposal for new paragraph (f)(3) (which we are finalizing without modification, as discussed in the responses to public comments in the following pages) will serve our goal of ensuring that SSBCI regulatory standards are met—specifically, that an item or service covered as an SSBCI has a reasonable expectation of improving or maintaining the health or overall
We solicited comments on our proposed requirement that an MA organization that includes an item or service as SSBCI in its bid must, by the date on which it submits its bid to CMS, establish in writing a bibliography of all relevant acceptable evidence concerning the impact that the item or service has on the health or overall function of its recipient. We also solicited comments on our definition of “relevant acceptable evidence,” including the specific parameters or features of studies or other resources that would be most appropriate to include in our definition. We also solicited comments on our proposal that, for each citation in the written bibliography, the MA organization would be required to include a working hyperlink to or a document containing the entire source cited. Additionally, we solicited comments on whether we should apply this requirement to all items or services offered as SSBCI, or whether there are certain types or categories of SSBCI for which this requirement should not apply. We address comments received and our responses at the end of this section.
Second, for clarity, we proposed to explicitly require at redesignated § 422.102(f)(4)(iii) that an MA plan apply its written policies, which must be based on objective criteria, that it establishes for determining whether an enrollee is eligible to receive an SSBCI. The regulation currently requires MA organizations to have written policies based on objective criteria for determining a chronically ill enrollee's eligibility to receive a particular SSBCI and must document these criteria. While we anticipate that MA plans are already applying their written policies that identify the eligibility criteria when making these determinations, we proposed to make clear that an MA plan must apply its written policies when making SSBCI eligibility determinations.
We stated that we were considering whether to exclude the policies required by current § 422.102(f)(3) (that is, the requirements we are proposing to redesignate to new paragraph (f)(4)) from the general rule reflected in § 422.111(d) that MA plans may change plan rules during the year so long as notice is provided to enrollees. We solicited comments on whether CMS should permit changes in SSBCI eligibility policies during the coverage year, and, if so, the limitations or flexibilities that CMS should implement that would still allow CMS to provide effective oversight over SSBCI offerings. As we explained in our proposal, the ability to change plan rules during the year does not permit changes in benefit coverage but would include policies like utilization management requirements, evidentiary standards for a specific enrollee to be determined eligible for a particular SSBCI, or the specific objective criteria used by a plan as part of SSBCI eligibility determinations.
Third, we proposed to amend redesignated paragraph (f)(4)(iv) to require that an MA plan document each instance wherein the plan determines that an enrollee is ineligible to receive an SSBCI. Denials of coverage when an enrollee requests an SSBCI are organization determinations subject to the rules in Subpart M, including the requirements related to the timing and content of denial notices in § 422.568. By fully documenting denials as required by this proposal, MA organizations should be better placed to address any appeals, including when an adverse reconsideration must be sent to the independent review entity for review. Similarly, requiring robust documentation of denials of SSBCI by MA organizations will make oversight and monitoring by CMS easier and more productive, should CMS request documentation.
We solicited comments on our proposal to require an MA plan to document its findings that a chronically ill enrollee is ineligible, rather than eligible, for an SSBCI.
Fourth, we proposed to add § 422.102(f)(5) to codify CMS's authority to decline to approve an MA organization's bid, if CMS determines that the MA organization has not demonstrated, through relevant acceptable evidence, that an SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollees that the MA organization is targeting. We clarified that while this proposal would establish a specific basis on which CMS may decline to approve an MA organization's bid, our authority to enforce compliance with other regulations and to negotiate bids (see section 1854(a) of the Act and Subpart F) would not be limited by this provision. As described in section 1854(a)(5)(C) of the Act, CMS is not obligated to accept any or every bid submitted by an MA organization, and CMS may reject bids that propose significant increases in cost sharing or decreases in benefits offered under the plan. Similarly, CMS's authority to review benefits to ensure non-discrimination is not limited or affected under this proposal. Our proposal was intended to clarify and establish that CMS's review of bids that include SSBCI could include specific evaluation of SSBCI and that CMS may decline to approve bids based on a lack of relevant acceptable evidence in support of the SSBCI offering the MA organization includes in its bid.
We also proposed to codify that, regardless of whether an SSBCI offering was approved in the past, CMS may annually review the items or services that an MA organization includes as SSBCI in its bid for compliance with all applicable requirements, considering the relevant acceptable evidence applicable to each item or service at the time the bid is submitted. Under this proposal, CMS would have clear authority to evaluate an SSBCI included in a bid each year based on the evidence available at that time. CMS would not be bound to approve a bid that contains a certain SSBCI only because CMS approved a bid with the same SSBCI in the past. We believe this provision, if finalized, would help ensure sound use of Medicare dollars by establishing a clear connection between an SSBCI and the most current evidence addressing whether there is a reasonable expectation that the SSBCI will improve or maintain the health or overall function of a chronically ill enrollee.
We believe that codifying that CMS may decline to approve a bid for an MA
We solicited comment on this proposal to codify CMS's authority to decline to approve an MA organization's bid if the MA organization fails to demonstrate, through relevant acceptable evidence, that an SSBCI included in the bid has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollees that the MA organization is targeting.
The policies proposed in this section, which we are finalizing with modifications detailed further below, will work together to place the burden of showing whether an item or service offered as SSBCI has a reasonable expectation of improving the health or overall function of a chronically ill enrollee onto the MA organization. Implementing these proposals changes the policy set forth in the 2019 HPMS memo requiring CMS to provide supporting evidence or data to an MA organization if CMS determines that an MA plan may not offer a specific item or service as an SSBCI because it has not met the reasonable expectation standard. Under these proposals, the MA organization must, in advance of including an SSBCI in its bid, have already conducted research on the evidence establishing a reasonable expectation that the item or service would improve or maintain the health or overall function of the recipient of the item or service. By the time the MA organization submits its bid, it must be able to show CMS, upon request, the relevant applicable evidence that supports the reasonable expectation that the item or service would improve or maintain the health or overall function of the chronically ill enrollees it is targeting. We expect that MA plans are already proactively conducting similar research and establishing written policies for implementing SSBCI based on this research when designing them. Additionally, MA plans may seek guidance from CMS regarding SSBCI items or services not defined in the PBP or in previous CMS guidance prior to bid submission. However, plans should note that such guidance provided in advance of the bid submission process is not a guarantee that CMS will approve the bid. As such, we believe this proposal, if implemented, would create efficiency while imposing relatively little burden on MA plans.
In addition, we proposed at § 422.102(f)(3)(iv) that MA plans will be required to document and submit to CMS upon request each determination that an enrollee is not eligible to receive an SSBCI. We believe that requiring an MA organization to support its SSBCI offerings with a written bibliography of relevant acceptable evidence and an MA plan to document denials of SSBCI work together to ensure that SSBCI are being implemented in an evidence-based, non-discriminatory, and fair manner. The evidence base established by an MA organization could serve to inform an MA plan's objective criteria for determining eligibility. By requiring an MA plan to document instances of SSBCI denials, we believe this proposal will improve the experience of MA plans, enrollees, and CMS in managing and oversight of appeals of such denials. Further, it will help ensure that MA plans are not denying access to SSBCI based on factors that are biased or discriminatory or unrelated to the basis on which the SSBCI are reasonably expected to improve or maintain the health or overall function of the chronically ill enrollees. For example, researchers have identified that certain algorithms that have been used to decide who gets access to additional services can have clear racial bias, when factors such as expected future cost or expected future utilization are incorporated into the algorithm.
Finally, we proposed to make a technical edit to § 422.102(f)(1)(i)(A)(
We invited public comment on this proposal and received several comments. A discussion of these comments, along with our responses follows.
To this end, we are modifying our proposed language at § 422.102 (f)(3)(ii) to require plans to include in their bibliographies “a comprehensive list” of relevant acceptable evidence published within the 10 years prior to the June immediately preceding the coverage year during which the SSBCI will be offered. We proposed requiring plans to include “all relevant acceptable evidence” in these bibliographies. We intend that this change to the final rule will allow plans, especially those offered by smaller MA organizations or organizations with more limited resources, to meet the requirements without exhaustive efforts to find evidence from every available source. However, we note that plans must demonstrate genuine efforts to be thorough and inclusive of evidence related to the SSBCI offered. We also reiterate that plans must provide any available negative evidence and literature, which means including studies beyond those which present findings favorable to its SSBCI offering. Plans must demonstrate best efforts in including all evidence which adheres to the requirements proposed at § 422.102 (f)(3).
We are not limiting the sources from which plans may pull their evidence base as suggested by a commenter as we wish to provide flexibility for plans to cull from sources they deem acceptable to comply with the standards proposed. Additionally, we are not imposing a minimum number of bibliographic citations for a certain SSBCI. However, we expect that for more established items or services, plans are accordingly including a greater number of citations as there are likely to be a greater number of studies and investigations into the impact such items or services have on the studied sample group. Further, instituting such a minimum number of citations may be limiting for plans offering SSBCI which are less established and may not be able to meet such an arbitrary requirement. We note, however, that CMS may propose such a requirement in future rulemaking if it becomes evident that plans are not making a good faith effort in complying with the requirements or are allowing for SSBCI items or services with little to no evidence which do not meet the “reasonable expectation” standard.
While, as modified in this final rule, requirements about the standards for the evidence used to support SSBCI, creation of a bibliography, and making the bibliography available to CMS may require plans to conduct further research than they currently do, we anticipate that the new burden will be manageable to the extent that the plans are building on existing efforts to ensure that their SSBCI offerings meet the “reasonable expectation” standard in the statute and currently at § 422.102(f)(1)(ii). As noted in the preamble, we expect that MA plans are already proactively conducting similar research and establishing written policies for implementing SSBCI based on this research when designing them. Additionally, MA plans may seek guidance from CMS regarding SSBCI items or services not defined in the PBP or in previous CMS guidance prior to bid submission. However, plans should note that such guidance provided in advance of the bid submission process is not a guarantee that CMS will approve the bid. To the extent that plans must conduct research anew to support novel, innovative SSBCI, we note that plans must only do so in the absence of large, randomized controlled trials or prospective cohort studies with clear results, published in a peer-reviewed journal, or large systematic reviews or meta-analyses summarizing the literature of the same (as proposed at § 422.102(f)(3)(i)), as well as any other evidence including case studies, federal policies or reports (as proposed at § 422.102(f)(3)(iii)).
It is not necessary for CMS to be overly prescriptive in listing every type of acceptable evidence that a plan may collect and submit. As noted in this preamble, CMS does not wish to hamper innovation in offering new benefits. At the same time, we are concerned that any further broadening of this standard may make the requirement meaningless when keeping in mind that this proposal is meant to ensure quality care for chronically ill individuals. We will consider in future rulemaking whether it should refine this standard, including but not limited to being more prescriptive regarding the acceptable sources of evidence. For now, we believe it appropriate to promote flexibility in demonstrating that a given SSBCI offering complies with the reasonable expectation standard.
To that end, while we recognize that providing “a comprehensive list of relevant acceptable evidence” may sometimes mean a large number of studies are collected for a single benefit, gathering this evidence base is critical for greater review and scrutiny of these benefits in order for CMS to maintain good stewardship of Medicare dollars, and for ensuring that the SSBCI offered are consistent with applicable law and those most likely to improve or maintain the health or overall function of chronically ill enrollees. Requiring a broad scope of relevant acceptable evidence over a specified period of time is necessary so that CMS may be apprised of both positive and negative research related to a specific item or service that an MA plan proposes to cover as an SSBCI.
Additionally, we reassert that the relevant acceptable evidence need not necessarily relate to a specific chronic condition. We note there are some conditions for which there is little evidence relating to non-medical services which may benefit an individual. As we noted in this preamble, while ideally the evidence would include the specific chronic condition used by the MA plan in its SSBCI eligibility criteria and how the specific item or service would address that specific chronic condition, we are not making this a requirement at this time. We also note that relevant acceptable evidence does not necessarily have to be related to Medicare eligible populations. Acceptable studies or other sources of evidence may focus on other groups, including individuals in specific geographies or underserved communities. Since plans may consider social determinants of health (SDOH) as a factor to help identify chronically ill enrollees whose health or overall function could be improved or maintained with SSBCI (42 CFR 422.102(f)(2)(iii)), we recognize that some relevant acceptable evidence may also be focused on certain communities that share a characteristic other than Medicare eligibility status. We therefore do not agree that specific types of MA plans, like SNPs, or services like residential treatment noted by the commenter would have difficulty meeting the requirement for the above reasoning.
We are also not exempting any particular SSBCI beyond those which are cost-sharing reductions. While some plans may choose to cover services which are substantially similar to already approved mandatory supplemental benefits, at this time, we are not making a distinction between services which are “substantially” similar to mandatory supplemental benefits, which vary by plan, and those which are not “substantially” similar.
We also appreciate the suggestion that plans publish their written SSBCI eligibility requirements, and while we are not finalizing such a requirement at this time, we may consider this in future rulemaking. We note that currently plans are expected to include SSBCI eligibility criteria in their Evidence of Coverage (EOC) and Annual Notice of Change (ANOC) documents. We stated in the June 2020 final rule “[. . .]It is our expectation that plans communicate information on SSBCI to enrollees in a clear manner about the scope of SSBCI that the MA plan covers and who is eligible for those benefits.”
We originally proposed documenting denials of SSBCI eligibility not only to increase ease of monitoring and oversight by CMS of whether benefits are being furnished consistent with how MA plans describe them but also to better position plans should enrollees appeal their SSBCI eligibility denials. However, commenters rightly pointed out that without the full picture of both approvals and denials, CMS may not be able to fully understand how plans are using their resources as it relates to SSBCI. If, for example, there are many denials as compared to approvals, it may alert the plan and CMS to an improper marketing of the benefit, or of overly broad recommendations of the benefit by a physician. Further, we agree with the commenter that by capturing both approvals and denials, CMS may be able to compare statistics of approvals and denials across MA plans, which, over time, may allow CMS to better determine if plans are improperly denying or approving SSBCI eligibility for plan enrollees. These additional capabilities and insights, which will be possible when there is adequate documentation of both approvals and denials, may allow for CMS to further refine SSBCI policy in future rulemaking to improve the enrollee experience and improve CMS's stewardship over Medicare dollars.
For these reasons, we are finalizing the proposal to require that MA plans document its eligibility determinations with a modification to require MA organizations to document both approvals and denials of eligibility for an enrollee to receive a particular SSBCI in § 422.102(f)(4)(iv).
Additionally, we are not requiring plans to report to CMS documentation regarding the approvals or denials on a regular basis at this time. However, CMS may request this data on a case by case or ad hoc basis or may incorporate this into regular reporting by MA organizations under §§ 422.504(f)(2) or 422.516(a). We also acknowledge concerns about equity and equitable treatment of enrollees, concerns which we share. It is our belief, through the modification of this proposal to include documentation of both approvals and denials, that MA plans will be additionally mindful of these concerns when making determinations. We note that plans may choose to include additional information, including demographic information about the enrollee, when documenting approvals and denials; however, CMS is not requiring plans to collect or submit this information as part of § 422.102(f). We may consider implementing such requirements in future rulemaking. We note that CMS has addressed some concerns regarding health equity and social risk factors elsewhere in this final rule. In the section titled “Annual Health Equity Analysis of Utilization Management Policies and Procedures” CMS sets forth additional requirements related to prior authorization determinations and their impact on health equity for MA organizations.
For these reasons, we are also adding new paragraph (f)(4)(v) as part of the changes we are finalizing to § 422.102(f) in this rule. New paragraph (f)(4)(v) requires that an MA plan offering SSBCI must maintain without modification for the full coverage year for the SSBCI offered, evidentiary standards for a specific enrollee to be determined eligible for a particular SSBCI, and the specific objective criteria used by an MA plan as part of SSBCI eligibility determinations.
While CMS considered additionally prohibiting plans from making changes to their utilization management policies related to SSBCI during the coverage year, we are not finalizing such a prohibition at this time. It is important that plans have the flexibility to relax utilization management criteria and policies in the event of extraordinary circumstances. For example, during the COVID-19 public health emergency, CMS encouraged plans in the HPMS memo titled “Information Related to Coronavirus Disease 2019—COVID-19” to waive or relax prior authorization policies in order to facilitate enrollees' access to services with less burden on beneficiaries, plans and providers. We wish to allow plans continued flexibility to address such extraordinary circumstances, including disasters, declarations of state of emergency or public health emergencies, through changes made to utilization management policies as appropriate.
After consideration of the comments, and for the reasons provided in our November 2023 proposed rule, we are finalizing our proposed revisions to § 422.102(f) with three modifications. First, we are finalizing our proposals to redesignate current paragraph § 422.102(f)(3) to § 422.102(f)(4). We are finalizing at § 422.102(f)(3) our proposed policy requiring the MA organization to be able to demonstrate through relevant acceptable evidence that the item or service to be offered as SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee and must, by the date on which it submits its bid to CMS, establish a bibliography of “relevant acceptable evidence” concerning the impact that the item or service has on the health or overall function of its recipient.
We are further finalizing our proposal, at paragraph (f)(3)(i) that relevant acceptable evidence includes large, randomized controlled trials or prospective cohort studies with clear results, published in a peer-reviewed journal, and specifically designed to
We are modifying our proposal at § 422.102(f)(3)(ii) that an MA organization must include in its bibliography “all relevant acceptable evidence” published within the 10 years prior to the June immediately preceding the coverage year during which the SSBCI will be offered. Instead, in response to comments received, we are finalizing that an MA organization must include in its bibliography “a comprehensive list of relevant acceptable evidence [. . .] including any available negative evidence and literature.”
We are finalizing at § 422.102(f)(3)(iii) that, if no evidence of the type described in paragraphs (f)(3)(i) and (ii) of this section exists for a given item or service, then MA organization may cite case studies, Federal policies or reports, internal analyses, or any other investigation of the impact that the item or service has on the health or overall function of its recipient as relevant acceptable evidence in the MA organization's bibliography.
Second, we are also finalizing our proposal to explicitly require at § 422.102(f)(4)(iii) that MA plans must apply their written policies based on objective criteria for determining a chronically ill enrollee's eligibility to receive a particular SSBCI. We are effectuating this policy by adding “and apply” to redesignated paragraph (f)(4)(iii)(A) as we proposed. Further, based on comments received, we are finalizing an exemption to the general rule reflected at § 422.111(d) that MA plans may change plan rules for SSBCI during the coverage year. Specifically, we are finalizing at new § 422.102(f)(3)(v) that an MA plan offering SSBCI must maintain without modification for the full coverage year evidentiary standards for a specific enrollee to be determined eligible for a particular SSBCI, and the specific objective criteria used by an MA plan as part of SSBCI eligibility determinations.
Third, after considering comments received, we are modifying our proposal that MA plans would need to document denials of SSBCI eligibility instead of approvals. Instead, we are adopting a requirement that MA plans must document both approvals and denials of SSBCI eligibility. Specifically, we are modifying proposed § 422.102(f)((4)(iv) to say “Document each SSBCI eligibility determination, whether eligible or ineligible, to receive a specific SSBCI and make this information available to CMS upon request.”
Fourth, we are finalizing our proposal without modification to add § 422.102(f)(5) to codify CMS's authority to decline to approve an MA organization's bid, if CMS determines that the MA organization has not demonstrated, through relevant acceptable evidence, that an SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollees that the MA organization is targeting. We are additionally finalizing our proposal that CMS may annually review the items or services that an MA organization includes as SSBCI in its bid for compliance with all applicable requirements, taking into account updates to the relevant acceptable evidence applicable to each item or service. We are further finalizing our clarification that this provision does not limit CMS's authority to review and negotiate bids or to reject bids under section 1854(a) of the Act and subpart F of this part nor does it limit CMS's authority to review plan benefits and bids for compliance with all applicable requirements.
Finally, we are finalizing our technical edit proposed at § 422.102(f)(1)(i)(A)(
Per CMS regulations at § 422.101, MA organizations are permitted to offer mandatory supplemental benefits, optional supplemental benefits, and special supplemental benefits for the chronically ill (SSBCI). When submitting an annual bid to participate in the MA program, an MA organization includes a Plan Benefit Package (PBP) (OMB 0938-0763) and Bid Pricing Tool (BPT) (OMB 0938-0944) for each of its plans where the MA organization provides information to CMS on the premiums, cost sharing, and supplemental benefits (including SSBCI) it proposes to offer. The number of supplemental benefit offerings has risen significantly in recent years, as observed through trends identified in CMS's annual PBP reviews as well as external reports. The 2023 Medicare Trustees Report showed that in the last decade, MA rebates quintupled from $12 billion in 2014 to $67 billion estimated for 2024, resulting in a total of over $337 billion going towards MA rebates over that time period. This increase, which was due to both the increase in MA enrollment and per MA beneficiary rebate growth, which included 27%-30% jumps each year from 2019 to 2023.
CMS remains concerned that utilization of these benefits is low and has taken multiple steps to obtain more complete data in this area. For example, in the May 2022 final rule, we finalized expanded Medical Loss Ratio (MLR) reporting requirements, requiring MA organizations to report expenditures on popular supplemental benefit categories such as dental, vision, hearing, transportation, and the fitness benefit (87 FR 27704, 27826-28).
CMS understands that projected supplemental benefit utilization, that is, the extent to which an MA organization expects a particular supplemental benefit to be accessed during a plan year, is estimated by an MA organization in part by the type and extent of outreach conducted for the benefit.
Additionally, section 1854(b)(1)(C) of the Act requires that MA plans offer the value of MA rebates back to enrollees in the form of payment for supplemental benefits, cost sharing reductions, or payment of Part B or D premiums. Therefore, CMS has an interest in ensuring that MA rebates are provided to enrollees in a way that they can benefit from the value of these rebate dollars. For example, analysis indicates that while supplemental dental benefits are one of the most widely offered supplemental benefits in MA plans, enrollees in these plans are no more likely to access these services than Traditional Medicare enrollees.
As discussed, MA organizations are given the choice of how to provide MA rebates to their enrollees. Organizations may, instead of offering supplemental benefits in the form of covering additional items and services, use rebate dollars to further reduce Part B and Part D premiums, reduce cost sharing for basic benefits compared to cost sharing in Traditional Medicare, and reduce cost sharing in other ways, such as reducing maximum out-of-pocket (MOOP) amounts.
Over the last several years, CMS has observed an increase in (1) the number and variety of supplemental benefits offered by MA plans, (2) plan marketing activities by MA organizations, and (3) overall MA enrollment; we presume that an enrollee's plan choice is influenced, at least in part, by the supplemental benefits an MA plan offers because the absence or presence of a particular supplemental benefit represents a distinguishable and easily understood difference between one plan and another. We are also concerned that some MA plans may be using these supplemental benefits primarily as a marketing tool to steer enrollment towards their plan and are not taking steps to ensure that their enrollees are using the benefits being offered or tracking if these benefits are improving health or quality of care outcomes or addressing social determinants of health. We believe targeted communications specific to the utilization of supplemental benefits may further ensure that covered benefits (including those that are heavily marketed) are accessed and used by plan enrollees during the plan year. This outreach, in conjunction with the improved collection of utilization data for these supplemental benefits through MLR and through Part C reporting requirements, should help inform whether future rulemaking is warranted.
Finally, CMS is also working to achieve policy goals that advance health equity across its programs and pursue a comprehensive approach to advancing health equity for all, including those who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality. Several studies have pointed to disparities in health care utilization. For example, a Kaiser Family Foundation (KFF) study
The establishment of a minimum requirement for targeted outreach to enrollees with respect to supplemental benefits that have not been accessed by enrollees would standardize a process to ensure all enrollees served under MA are aware of and utilizing, as appropriate, the supplemental benefits available to them. Section 1852(c)(1) of the Act requires, in part, that MA organizations disclose detailed descriptions of plan provisions, including supplemental benefits, in a clear, accurate, and standardized form to each enrollee of a plan at the time of enrollment and at least annually thereafter. We proposed to use our authority to establish standards under Part C in section 1856(b)(1) of the Act to ensure adequate notice is provided to enrollees regarding supplemental benefits coverage. This proposal will further implement the disclosure requirement in section 1852(c)(1)(F) of the Act. Specifically, we proposed that MA organizations must provide a model notification to enrollees of supplemental benefits they have not yet accessed. We proposed to implement this by adding new provisions at §§ 422.111(l) and 422.2267(e)(42) to establish this new disclosure requirement and the details of the required notice, respectively.
This proposed requirement will ensure that a minimum outreach effort is conducted by MA organizations to inform enrollees of supplemental benefits available under their plan that the enrollee has not yet accessed. We proposed that, beginning January 1, 2026, MA organizations must mail a mid-year notice annually, but not sooner than June 30 and not later than July 31 of the plan year, to each enrollee with information pertaining to each supplemental benefit available during that plan year that the enrollee has not begun to use. We understand that there may be a lag between the time when a benefit is accessed and when a claim is processed, so we would require that the information used to identify recipients of this notice be as up to date as possible at the time of mailing. MA organizations are not required to include supplemental benefits that have been accessed, but are not yet exhausted, in this proposed mid-year notice.
Understanding that not all Medicare beneficiaries enroll in an MA plan during the AEP, we specifically sought comment on how CMS should address the timing of the notice for beneficiaries that have an enrollment effective date after January 1. One possible approach we described as under consideration was requiring the notice to be sent six months after the effective date of the enrollment for the first year of enrollment, and then for subsequent years, revert to mailing the notice between the proposed delivery dates of June 30 and July 31. Another option was to not require the notice to be mailed for
For each covered mandatory supplemental benefit and optional supplemental benefit (if the enrollee has elected) for which enrollee is eligible, but has not accessed, the MA organization must list in the notice the information about each such benefit that appears in EOC. For SSBCI, MA organizations must include an explanation of the SSBCI covered under the plan (including eligibility criteria and limitations and scope of the covered items and services) and must also provide point-of-contact information for eligibility assessment (which can be the customer service line or a separate dedicated line), with trained staff that enrollees can contact to inquire about or begin the SSBCI eligibility determination process and to address any other questions the enrollee may have about the availability of SSBCI under their plan. When an enrollee has been determined by the plan to be eligible for one or more specific SSBCI benefit but has not accessed the SSBCI benefit by June 30 of the plan year, the notice must also include a description of the SSBCI benefit to which the enrollee is entitled and must describe any limitations on the benefit. In the proposed rule, we noted the proposal to amend § 422.2267(e)(34) (discussed in section VI.B of this final rule), if finalized, would require specific SSBCI disclaimers for marketing and communications materials that discuss the limitations of the SSBCI benefit being offered; we also proposed that this mid-year notice must include the SSBCI disclaimer to ensure that the necessary information provided in the disclaimer is also provided to the enrollee in the notice.
Furthermore, we proposed that each notice must include the scope of the supplemental benefit(s), applicable cost sharing, instructions on how to access the benefit(s), applicable information on the use of network providers for each available benefit, list the benefits consistent with the format of the EOC, and a toll-free customer service number including, as required, a corresponding TTY number, to call if additional help is needed. We solicited public comment on the required content of the mid-year notice.
We also requested public comment on our proposal to require MA plans to provide enrollees with mid-year notification of covered mandatory and optional supplemental benefits (if elected) that have not been at least partially accessed by that enrollee, particularly the appropriate timing (if any) of the notice for MA enrollees who enroll in the plan mid-year. A discussion of these comments, along with our responses follows.
Further, MA organizations have their own unique processes in place for compiling, printing, and disseminating information, and this may lead to variations in cost. Stakeholders will have further opportunity to comment directly on the model notice during the Paperwork Reduction Act process. We also believe that the notice will create an incentive for MA organizations to improve their education and outreach efforts regarding supplemental benefit access and utilization through their marketing and communication materials, during the enrollment process, and into the plan year. We believe that as supplemental benefits are better understood and utilized by enrollees in the first half of the year, the shorter the Mid-Year Notice will become.
Further, the requirement to notify enrollees about their unused supplemental benefits can provide MA organizations with the opportunity to glean useful information to further tailor their PBPs. CMS believes MA organizations could gain valuable insights into their enrollees' healthcare needs and preferences based on the data needed to send these individualized notifications, if MA organizations choose to analyze this data. This notice can benefit MA organizations by encouraging them to thoughtfully reassess which supplemental benefits they choose to offer so they can steer away from unpopular types of supplemental benefits in the future, leading to a more impactful use of resources, including Medicare dollars.
For purposes of the Mid-Year Notice requirement, all unused supplemental benefits that are offered by the MA plan must appear in the Mid-Year Notice regardless of whether the benefits are categorized on the PBP as mandatory, optional, or SSBCI. The only supplemental benefit that does not need to be included in the notice is cost-sharing reduction, and this change has been reflected in the final regulation text for clarification.
The regulation we proposed and are finalizing at § 422.2267(e)(42) lists the information that is required about the unused supplemental benefits. For each mandatory supplemental benefit an enrollee has not used, the MA organization must include the same information about the benefit that is provided in the Evidence of Coverage. For each optional supplemental benefit an enrollee has not used, the MA organization must include the same information about the benefit that is provided in the Evidence of Coverage.
For SSBCI, the Mid-Year Notice must include the SSBCI disclaimer specified at § 422.2267(e)(34) and additional information about the SSBCI. When an enrollee has not been deemed eligible, MA organizations must include an explanation of the SSBCI covered under the plan consistent with the format of other unused supplemental benefits, eligibility criteria for the SSBCI, and point-of-contact information for eligibility assessments, such as a customer service line or a separate dedicated line, to reach trained staff that can answer questions and initiate the SSBCI eligibility determination process. When an enrollee has been determined by the plan to be eligible for one or more specific SSBCI—but has not accessed the SSBCI benefit by June 30 of the plan year—the Mid-Year Notice for that enrollee must also include a description of the SSBCI to which the enrollee is entitled and must describe any limitations on the benefit, consistent with the format of other unused supplemental benefits.
In addition, as specified in § 422.2267(e)(42)(ii)(D), the Mid-Year Notice must include the following about each unused supplemental benefit listed in the Notice to each enrollee:
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(E) Supplemental benefits listed consistent with the format of the EOC.
(F) A customer service number, and required TTY number, to call for additional help.
We believe that the regulation is sufficiently clear as to the scope and required content of the notice.
As discussed in the proposal, the recent significant increase in the number and variety of supplemental benefit offerings combined with marketing activities and an increase in overall MA enrollment has led CMS to believe that an enrollee's plan choice is influenced, at least in part, by the supplemental benefits an MA plan offers. One purpose of the Mid-Year Notice is to address concerns that some MA plans may be using supplemental benefits primarily as marketing tools to steer enrollment; our policy as described here will help to ensure that covered benefits are accessed and used by plan enrollees during the plan year by ensuring that enrollees are aware about supplemental benefits that they have not yet used by June 30 of the applicable year. Any potential underutilization of benefits could be due to a lack of effort by the plan to help the beneficiary access the benefits, or a lack of easy ability to know what benefits have not been accessed and are still available to the enrollee throughout the year. This new notice is intended to address both.
Another purpose of the Mid-Year Notice is to address disparities in health care utilization, aligning with our goal to advance health equity in the MA program and pursue a comprehensive approach to advancing health equity for all by encouraging more equitable utilization of these benefits.
Finally, the Mid-Year Notice will further ensure that MA organizations fulfill their obligation to adequately disclose details and notice of supplemental benefit coverage.
In recent years, CMS has received feedback from interested parties, including people with Medicare, patient groups, consumer advocates, and providers that utilization management (UM) practices in Medicare Advantage (MA), especially the use of prior authorization, can sometimes create a barrier for patients in accessing medically necessary care. Further, some research has indicated that the use of
On January 20, 2021, President Biden issued Executive Order 13985: “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” (E.O. 13985).
The April 2023 final rule
Authority for MA organizations to use utilization management policies and procedures regarding basic benefits is subject to the mandate in section 1852(a)(1) of the Act that MA plans cover Medicare Part A and Part B benefits (subject to specific, limited statutory exclusions) and, thus, to CMS's authority under section 1856(b) of the Act to adopt standards to carry out the MA statutory provisions. In addition, the MA statute and MA contracts cover both the basic and supplemental benefits covered under MA plans, so additional contract terms added by CMS pursuant to section 1857(e)(1) of the Act may also address supplemental benefits. Additionally, per section 1852(b) of the Act and § 422.100(f)(2), plan designs and benefits may not discriminate against beneficiaries, promote discrimination, discourage enrollment, encourage disenrollment, steer subsets of Medicare beneficiaries to particular MA plans, or inhibit access to services. These requirements apply to both basic and supplemental benefits. We consider utilization management policies and procedures to be part of the plan benefit design, and therefore they cannot be used to discriminate or direct enrollees away from certain types of services.
In the April 2023 final rule, CMS finalized a new regulation at § 422.137, which requires all MA organizations that use UM policies and procedures to establish a Utilization Management Committee to review and approve all UM policies and procedures at least annually and ensure consistency with Traditional Medicare's national and local coverage decisions and relevant Medicare statutes and regulations. Per § 422.137, an MA plan may not use any UM policies and procedures for basic or supplemental benefits on or after January 1, 2024, unless those policies and procedures have been reviewed and approved by the UM committee. While this requirement will ensure that all UM policies and procedures are kept up to date, we believe that reviewing and analyzing these policies from a health equity perspective is an important beneficiary protection. In addition, such an analysis may assist in ensuring that MA plan designs do not deny, limit, or condition the coverage or provision of benefits on a prohibited basis (such as a disability) and are not likely to substantially discourage enrollment by certain MA eligible individuals with the organization. For these reasons, we proposed to add health equity-related requirements to § 422.137. First, we proposed at § 422.137(c)(5) to require that beginning January 1, 2025, the UM committee must include at least one member with expertise in health equity. We proposed that health equity expertise includes, but is not limited to, educational degrees or credentials with an emphasis on health equity, experience conducting studies identifying disparities amongst different population groups, experience leading organization-wide policies, programs, or services to achieve health equity, or experience leading advocacy efforts to achieve health equity. Since there is no universally accepted definition of expertise in health equity, we referred to materials from the Council on Linkages Between Academia and Public Health Practice
We also proposed to add a requirement at § 422.137(d)(6) that the UM committee must conduct an annual health equity analysis of the use of prior authorization. We proposed that the member of the UM committee, who has health equity expertise, as required at proposed § 422.137(c)(5), must approve the final report of the analysis before it is posted on the plan's publicly available website. The proposed analysis will examine the impact of prior authorization at the plan level, on
To gain a deeper understanding of the impact of prior authorization practices on enrollees with the specified SRFs, the analysis, as proposed, must compare metrics related to the use of prior authorization for enrollees with the specified SRFs to enrollees without the specified SRFs. Doing so, allows the MA plan and CMS to begin to identify whether the use of prior authorization causes any persistent disparities among enrollees with the specified SRFs. We proposed that the analysis must use the following metrics, calculated for enrollees with the specified SRFS, and for enrollees without the specified SRFs, from the prior contract year, to conduct the analysis:
• The percentage of standard prior authorization requests that were approved, aggregated for all items and services.
• The percentage of standard prior authorization requests that were denied, aggregated for all items and services.
• The percentage of standard prior authorization requests that were approved after appeal, aggregated for all items and services.
• The percentage of prior authorization requests for which the timeframe for review was extended, and the request was approved, aggregated for all items and services.
• The percentage of expedited prior authorization requests that were approved, aggregated for all items and services.
• The percentage of expedited prior authorization requests that were denied, aggregated for all items and services.
• The average and median time that elapsed between the submission of a request and a determination by the MA plan, for standard prior authorizations, aggregated for all items and services.
• The average and median time that elapsed between the submission of a request and a decision by the MA plan for expedited prior authorizations, aggregated for all items and services.
Next, we proposed to add at § 422.137(d)(7) that by July 1, 2025, and annually thereafter, the health equity analysis be posted on the plan's publicly available website in a prominent manner and clearly identified in the footer of the website. We proposed that the health equity analysis must be easily accessible to the general public, without barriers, including but not limited to ensuring the information is available: free of charge; without having to establish a user account or password; without having to submit personal identifying information (PII); in a machine-readable format with the data contained within that file being digitally searchable and downloadable from a link in the footer of the plan's publicly available website, and include a .txt file in the root directory of the website domain that includes a direct link to the machine-readable file, in a format described by CMS (which CMS will provide in guidance), to establish and maintain automated access. We believe that by making this information more easily accessible to automated searches and data pulls, it will help third parties develop tools and researchers conduct studies that further aid the public in understanding the information and capturing it in a meaningful way across MA plans.
Finally, we welcomed comment on the proposal and sought comment on the following:
• Additional populations CMS should consider including in the health equity analysis, including but not limited to: Members of racial and ethnic communities, members of the lesbian, gay, bisexual, transgender, and queer (LGBTQ+) community; individuals with limited English proficiency; members of rural communities; and persons otherwise adversely affected by persistent poverty or inequality.
• If there should be further definition for what constitutes “expertise in health equity,” and if so, what other qualifications to include in a definition of “expertise in health equity.”
• The proposed requirements for publicly posting the results on the plan's website under § 422.137(d)(7) to ensure the data will be easily accessible to both the public and researchers.
• Alternatives to the July 1, 2025, deadline for the initial analysis to be posted to the plan's publicly available website.
• Whether to add an additional requirement that the UM committee submit to CMS the link to the analysis report. This would allow CMS to post every link in one centralized location, which would increase accessibility and transparency.
In addition, we requested comment on any specific items or services, or groups of items or services, subject to prior authorization that CMS should consider also disaggregating in the analysis to consider for future rulemaking. If further disaggregation of a group of items or services is requested, CMS solicited comment on what specific items or services would be included within the group. For example, if CMS should consider disaggregating a group of items or services related to behavioral health treatment in the health equity analysis, what items or services should CMS consider a part of behavioral health treatment.
We invited public comment on this proposal and received over 140 comments. A summary of the comments received, and CMS's responses are below.
This policy for the UM committee to perform and publicly post a health equity analysis with the information on specific prior authorization metrics, calculated using specific social risk factors, is just one piece of a much larger comprehensive approach to advancing equity for all, and we will continue to work to advance health equity. We will also consider all feedback received while working to develop future policy.
A commenter requested that plans should automatically be required to explain their rates of denials for services that meet coverage rules. Some commenters requested general prior authorization utilization management reforms. Some commenters suggested that rather than create new data flows, CMS expand current part C data reporting requirements to include data elements specific to enrollees with the specified SRFs. Some commenters expressed concern that the number of enrollees with the SRFs enrolled in an MA plan (either too high or too low) could cause a comparison to be inaccurate. Several commenters expressed concern over ensuring that appropriate context for results of the analysis is available and not confusing or misleading for the public. Commenters also expressed concern that while making these results publicly available could increase accountability of MA organizations, CMS should also recognize that the amount of information enrollees must process, and that this data may not be useful or easy for a layperson to understand; therefore, commenters suggested that MA plans be required to include an executive summary posted with the report. A few commenters pointed out that for MA organizations that serve 100 percent limited-income subsidy/dual-eligible populations, these MA plans could be asked to publicly report the same metrics twice, since the “Advancing Interoperability and Improving Prior Authorization Processes for Medicare Advantage Organizations, Medicaid Managed Care Plans, State Medicaid Agencies, Children's Health Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, Issuers of Qualified Health Plans on the Federally-Facilitated Exchanges, Merit-based Incentive Payment System (MIPS) Eligible Clinicians, and Eligible Hospitals and Critical Access Hospitals in the Medicare Promoting Interoperability Program” (CMS-0057-F) rule has been finalized to require reporting of certain information about prior authorization metrics.
CMS appreciates the concern that enrollees already must process ample information when making plan decisions and that, as proposed, the information may not be easily comprehended or put into full context by a layperson, and will take these suggestions into account when issuing operational guidance for the format of the report. Further, we believe that by making this information easily accessible to automated searches and data pulls, it will help third parties develop tools and researchers conduct studies that further aid the public in understanding the information and capturing it in a meaningful way across MA plans. We also believe that since the required data must be aggregated for all items and services at the plan level, the resulting analysis, while comprehensive, will not be overwhelming to the public. While CMS is not requiring the health equity report for each MA plan to include an explanatory statement or executive summary with the analysis at this time, if MA organizations wish to provide additional context for the results of the analysis of their MA plans, they may provide clarifying information in the report, provided that any such accompanying language is not misleading.
Regarding concerns that comparing prior authorization metrics across MA plans cannot be done accurately given variation in how plans code and track prior authorizations, CMS does not believe this presents a significant issue, since there is not a requirement in this rule for comparison across plans. The “Advancing Interoperability and Improving Prior Authorization Processes for Medicare Advantage Organizations, Medicaid Managed Care Plans, State Medicaid Agencies, Children's Health Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, Issuers of Qualified Health
• A list of all items and services that require prior authorization.
• The percentage of standard prior authorization requests that were approved, aggregated for all items and services.
• The percentage of standard prior authorization requests that were denied, aggregated for all items and services.
• The percentage of standard prior authorization requests that were approved after appeal, aggregated for all items and services.
• The percentage of prior authorization requests for which the timeframe for review was extended, and the request was approved, aggregated for all items and services.
• The percentage of expedited prior authorization requests that were approved, aggregated for all items and services.
• The percentage of expedited prior authorization requests that were denied, aggregated for all items and services.
• The average and median time that elapsed between the submission of a request and a determination by the payer, plan, or issuer, for standard prior authorizations, aggregated for all items and services.
• The average and median time that elapsed between the submission of a request and a decision by the payer, plan, or issuer, for expedited prior authorizations, aggregated for all items and services.
The performance metrics for the reporting under § 422.122(c), as adopted in the 2024 Interoperability Final Rule, and the reporting metrics adopted in this final rule at § 422.137(d)(6) use the same general categories, except that the 2024 Interoperability Final Rule requires that the information be aggregated for all enrollees, reported at the contract level, and excluding any drug coverage, while this final rule requires the reported information to be by groups with and without the specified social risk factors, reported at the plan level, and for all covered benefits (also excluding Part B drugs and OTC drugs covered by the MA plan and Part D drugs covered under the Part D benefit). The specified social risk factors are (i) receipt of the Part D low-income subsidy or being dually eligible for Medicare and Medicaid and (ii) having a disability, determined using information specified in § 422.137(d)(6)(ii)(B). Because the reporting is not for identical populations, these two separate regulatory reports will not be duplicative, and we believe that they will be complementary by providing information about the same prior authorization metrics for different populations. In addition, excluding drugs—Part B drugs, OTC drugs covered by the MA plan, and Part D drugs—for both lists should help address concerns about burden. To clarify this aspect of the scope of § 422.137(d)(6), we are finalizing additional language to exclude drugs from the scope of the new reporting and health equity analysis metrics; as finalized, § 422.137(d)(6)(iii) provides that the data used for this analysis and reporting excludes data on drugs as defined in § 422.119(b)(1)(v). Further, because MA organizations should already be collecting the data at the plan level, they should be able to report it with the stratification by SRFs for the requirements of § 422.137(d)(6), and then can aggregate that data up to the contract level for the reporting required by the 2024 Interoperability Final Rule. Therefore, having the specific metrics be the same (but reported for different populations) should ease the burden on MA organizations in gathering, validating, and formatting the data.
Some commenters acknowledged that adding populations to the analysis is not feasible at this time, because neither MA plans nor CMS has access to this data. Further, several commenters pointed out that reporting on many of the additional populations suggested would present issues because this type of demographic information would have to be self-reported, which could lead to incomplete and skewed data collection. Some commenters suggested that plans could collect this data upon enrollment. Generally, plans indicated that CMS should not add populations to the annual health equity analysis until data collection and methods for collecting demographic information have been piloted, tested, and found to be reliable in the context of the MA population. A commenter requested that CMS assist plans in gathering this information.
Commenters also provided suggestions for specific items and services for CMS to consider for disaggregation, including: Additional modalities beyond drugs/services that require prior authorization such as diagnostic tests, durable medical equipment, and skilled nursing facility care; substance use disorder and mental health services so these can be compared to medical services; prescription drugs; service category for rehabilitative services; physical therapist services; kidney care services, including dialysis treatments and transplant; prosthetics, orthotics and supplies; cellular and/or tissue-based products (CTPs, or skin substitute) services, in-office injections, in-office medically necessary imaging, ankle-foot orthoses (AFOs) for traumatic conditions, surgical dressings, and biopsy of suspicious lesions; disaggregated data on access to medically necessary post-acute care which should include LTCHs, IRFs, SNFs, and HHAs. A commenter suggested that CMS require MA plans to submit the data underlying the report, disaggregated with demographic and other health equity indicators that would allow CMS to conduct more flexible analysis and compare subpopulations within plans. CMS could then aggregate and provide searchable results across MA plans, including by original reason for entitlement code and by age group. A commenter requested that MA plans should have discretion to determine when disaggregating will provide meaningful information and not compromise the privacy of its members.
Additionally, several commenters also suggested that plans only submit a link to CMS, and not post the report publicly. These commenters generally stated that proposed requirement to post the report publicly on plan sponsors' websites could cause unnecessary confusion to providers and beneficiaries who can easily misinterpret publicly available prior authorization metrics. Further, because providers and enrollees are not consistent across MA plans, commenters pointed out that it may be challenging to compare metrics across plans. Some commenters suggested using Part C reporting requirements instead of the proposed analysis to collect the data.
Some commenters suggested that CMS should establish a unified portal where stakeholders can view all MA plans' health equity analyses and require certain standardized reporting to improve stakeholders' ability to compare health equity impacts across MA plans.
Several commenters requested that CMS first create a standard system of reporting before requiring a publicly reported analysis.
MA plans can access the relevant information through the Beneficiary Eligibility Query (BEQ), which is a pre-enrollment query MA plans use to check eligibility prior to enrolling an individual. The BEQ provides enrollee information including demographics, entitlement/eligibility, Part D employer subsidy, and Low-Income Subsidy. MA plans can submit a BEQ query by submitting their requests in a batch file via CMS Enterprise File Transfer (EFT). MA plans can also perform the query online using the MARx, which provides real time information regarding eligibility. MARx provides MA plans with data related to enrollees and their subsidies.
We thank all commenters for their comments. After careful consideration of all comments received, and for the reasons set forth in the proposed rule and in our responses to the related comments, as previously summarized, we are finalizing the modifications to § 422.137 substantively as proposed but with two revisions. First, we are not finalizing use of the repetitive phrase “but is not limited to” in the sentence that provides the non-exhaustive list of examples of expertise in health equity. Second, we are finalizing a clarification in § 422.137(d)(6)(iii) that the data used for the health equity analysis and reporting excludes data on drugs as defined in § 422.119(b)(1)(v).
Section 231 of the Medicare Modernization Act of 2003 (MMA) amended section 1851(a)(2)(A)(ii) of the Act to establish specialized MA plans for special needs individuals. Special needs plans (SNPs), defined at section 1859(b)(6)(A) of the Act, are plans with limited enrollment, specifically designed to provide targeted care to “special needs individuals,” as defined at section 1859(b)(6)(B) of the Act, and which includes institutionalized individuals, dually eligible individuals, and individuals with severe or disabling chronic conditions. Only those
The January 2005 MA final rule served as the basis for our current sub-regulatory guidance in Chapter 2 of the Medicare Managed Care Manual, Section 50.2.5, which specifically provides that plans send certain notices prior to and following the effective date of involuntary disenrollment based on loss of special needs status. These policies are intended to ensure that enrollees are given adequate notice prior to being disenrolled from an SNP and provided an opportunity to prove that they are eligible to remain enrolled in the plan, if applicable. Providing these enrollees at least 30 days' advance notice of disenrollment, along with information about deemed continued eligibility and eligibility for an SEP to elect other coverage, gives enrollees ample time to prove they are still eligible for their SNP or to evaluate other coverage options.
To provide stability and assurance about the requirements for MA organizations in these situations as well as transparency to interested parties, we proposed to codify current policy for MA plan notices prior to disenrollment for loss of special needs status, as well as a final disenrollment notice. We intend that interested parties will be able to rely on these regulations, establishing the procedures that an MA organization must follow in the event that an SNP enrollee loses special needs status and is disenrolled from the SNP on that basis. Specifically, we proposed to revise § 422.74(d) by redesignating paragraph (d)(8) as paragraph (d)(9) and adding a new paragraph (d)(8), to state that the plan would be required to provide the enrollee a minimum of 30 days' advance notice of disenrollment, regardless of the date of the loss of special needs status. As proposed in new paragraphs (8)(i) and (ii), an advance notice would be provided to the enrollee within 10 calendar days of learning of the loss of special needs status, affording the enrollee an opportunity to prove that such enrollee is still eligible to remain in the plan. The advance notice would also include the disenrollment effective date, a description of SEP eligibility, as described in § 422.62(b)(11), and, if applicable, information regarding the period of deemed continued eligibility, the duration of the period of deemed continued eligibility, and the consequences of not regaining special needs status within the period of deemed continued eligibility. Additionally, as proposed in new paragraph (8)(iii), the plan would be required to provide the enrollee a final notice of involuntary disenrollment within 3 business days following the disenrollment effective date. Such disenrollment effective date is either the last day of the period of deemed continued eligibility, if applicable, or a minimum of 30 days after providing the advance notice of disenrollment. Additionally, the final notice of involuntary disenrollment must be sent before submission of the disenrollment to CMS. Lastly, we proposed in new paragraph (8)(iv), that the final notice of involuntary disenrollment must include an explanation of the individual's right to file a grievance under the MA organization's grievance procedures, which are required by § 422.564.
These proposed changes would codify longstanding guidance. Based on infrequent questions or complaints from MA organizations and enrollees on these notices, we believe that these notice requirements have been previously implemented and are currently being followed by plans. We do not believe the proposed changes to the regulatory text will adversely impact MA organizations or individuals enrolled in MA special needs plans who lose special needs status, other than the appropriate disenrollment from the plan due to the individual's loss of eligibility for the plan. Similarly, we do not believe the proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
After consideration of all public comments and for the reasons outlined in the proposed rule and here, we are finalizing our proposal without substantive changes, but with minor changes for clarity.
Section 4001 of the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 1851(a)(2) of the Act establishing private health plan options available through Part C of the Medicare program known originally as “Medicare + Choice” and later as “Medicare Advantage (MA).” Under this program, eligible individuals may elect to receive Medicare benefits through enrollment in one of an array of private health plan choices beyond the original Medicare program. As enacted, section 1851(a)(2)(B) of the Act established the authority for an MA organization to offer an MA medical savings account (MSA) option which is a combination of a high-deductible MA plan, as defined in section 1859(b)(3) of the Act, with a contribution into a Medical Savings Account (MSA).
In the interim final rule titled Medicare Program; Establishment of the Medicare+Choice Program” which appeared in the
The January 2005 MA final rule implemented section 233 of the MMA, which lifted the time and enrollment limits on MSA plans imposed by the BBA of 1997. However, section 233 of
The current regulations do not specify whether the eligibility criteria described in § 422.56, which preclude an individual with certain health care coverage from electing an MA MSA plan, are applicable to individuals who gain or become eligible for other coverage
To address more clearly the consequences of the general loss of eligibility in an MSA plan, we proposed to amend § 422.74 to add new paragraph (b)(2)(vi) to include the requirement that an MA MSA enrollee must be disenrolled, prospectively, due to the loss of eligibility. If an MA MSA enrollee does not provide assurances that such enrollee will reside in the United States for at least 183 days during the year the election is effective, is eligible for or begins receiving health benefits through Medicaid, FEHBP, DoD, or the VA or obtains other health coverage that covers all or part of the annual Medicare MSA deductible, that enrollee must be involuntarily disenrolled by the MSA plan effective the first day of the calendar month after the month in which notice by the MA organization is issued that the individual no longer meets the MA MSA's eligibility criteria, as proposed in § 422.74(d)(10). We also proposed to revise § 422.74(c) to require MA MSA plans to provide a written notice of the disenrollment with an explanation of why the MA organization is planning to disenroll the individual before the disenrollment transaction is submitted to CMS.
Should an individual's coverage under an MA MSA plan end before the end of a calendar year, CMS recovers from the plan the amount of the lump-sum deposit attributable to the remaining months of that year. This requirement is codified at § 422.314(c)(3). In addition, the disenrolled beneficiary will owe a prorated portion of the current year's deposit amount back to the MA MSA plan. Plans will be able to reconcile and identify MSA deposit amounts for the Current Payment Month (CPM) at the beneficiary level from the monthly generated MSA Deposit-Recovery Data file. We proposed at § 422.74(e)(1) that involuntarily disenrolled individuals will be defaulted to enrollment in Original Medicare, which will now pay claims incurred by the former MSA enrollees. Conversely, the former MSA enrollee also has the option to elect to join another MA plan during a valid enrollment period.
We did not receive comments related to this proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal without modification.
Sections 1851(c)(1) and 1860D-1(b)(1) of the Act establish the enrollment, disenrollment, termination, and change in coverage processes for MA and PDP plans. In the June 1998 interim final rule, we established the M+C (now MA) enrollment process (63 FR 34968). These requirements are codified in regulation at § 422.60. In the January 2005 Part D final rule, we established the PDP enrollment process (70 FR 4193). These requirements are codified in regulation at § 423.32.
Section 1851(g)(3)(B)(i) of the Act provides that MA plans may terminate the enrollment of individuals who fail to pay basic and supplemental premiums on a timely basis; likewise, section 1860D-1(b)(1)(B)(v) of the Act directs the Secretary to use rules similar to (and coordinated with) the rules for a Medicare Advantage plan established under section 1851(g) of the Act. CMS has previously codified this process of optional disenrollment from an MA plan or PDP for failure to pay monthly premiums at §§ 422.74(d) and 423.44(d), as well as requirements for mandatory disenrollment for individuals who fail to pay the Part D Income Related Monthly Adjustment Amount (Part D-IRMAA), where applicable, at § 423.44(e). In addition, CMS has previously codified the ability for MAOs and PDP sponsors to reinstate for good cause an individual who is disenrolled for failure to pay plan premiums (at §§ 422.74(d)(1)(v) and 423.44(d)(1)(vi)) or the Part D-IRMAA (at § 423.44(e)(3)).
However, an individual's enrollment can also be reinstated if their enrollment in another plan is subsequently canceled within timeframes established by CMS.
To provide transparency and stability for interested parties, we proposed at new §§ 422.60(h) and 423.32(h) to require that MA and PDP plans must notify an individual when the individual's enrollment is reinstated due to the individual's cancellation of enrollment in a different plan. A reinstatement is generally not allowed if the individual intentionally initiated a disenrollment and did not cancel the disenrollment prior to the disenrollment effective date. However, when a beneficiary is automatically disenrolled from their plan because of enrollment in a new plan but then cancels the request to enroll in the new plan within established timeframes, the associated automatic disenrollment from the previous plan becomes invalid. Therefore, the beneficiary's enrollment in the previous plan needs to be reinstated and CMS systems will attempt to automatically reinstate enrollment in the previous plan. Consistent with notification requirements in similar enrollment scenarios, we proposed that the
These proposed changes represent the codification of longstanding guidance. Based on infrequent complaints and questions from plans and beneficiaries related to current requirements, we concluded that the requirements have been previously implemented and are currently being followed by plans. There is also no impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
After consideration of all public comments, and for the reasons outlined here and in the proposed rule, we are finalizing our proposal with minor modifications to clarify the regulation text proposed at § 423.32(h).
Section 1860D-1(b) of the Act establishes the disenrollment process for Part D eligible individuals in prescription drug plans. This section of the Act grants the Secretary the authority to establish a process for the enrollment, disenrollment, termination, and change of enrollment of Part D eligible individuals in prescription drug plans. In 2005, the implementing regulations set forth at 70 FR 4525 established the voluntary disenrollment process for Part D prescription drug plans. These requirements are codified in regulation at § 423.36 and require the Part D sponsor to “submit a disenrollment notice to CMS within timeframes CMS specifies.”
As previously noted, section 1860D-1(b)(1)(B) of the Act directs the Secretary to adopt enrollment rules “similar to (and coordinated with)” the rules established under Part C. In 1998 implementing regulations for Part C, CMS provided that if a “Medicare + Choice” (M+C) organization, later known as an MA organization, fails to submit the correct and complete notice of disenrollment, the M+C organization must reimburse the Health Care Finance Administration (the predecessor to CMS), for any capitation payments received after the month in which payment would have ceased if the requirement had been met timely (63 FR 35074). This requirement was codified at § 422.66(b)(4) and has remained in place for MA organizations.
Current Part D regulations, however, do not impose requirements for Part D sponsors that fail to submit the transaction notice to CMS in a timely manner. However, longstanding CMS policy has provided that the PDP sponsor must submit disenrollment transactions to CMS in a timely manner, as described in section 50.4.1 of Chapter 3 of the Medicare Prescription Drug Benefit Manual. When a valid request for disenrollment has not been communicated to CMS successfully within the required timeframes, a retroactive disenrollment can be submitted to CMS. If the retroactive disenrollment request is approved, the PDP sponsor must return any premium paid by the member for any month for which CMS processed a retroactive disenrollment, and CMS will retrieve any capitation payment for the retroactive period for an approved request for retroactive disenrollment, as described in section 60.4 of Chapter 3 of the Medicare Prescription Drug Benefit Manual.
To provide transparency and consistency for interested parties, and to align the Part D regulation with the requirements for MA organizations, we proposed to codify CMS's longstanding sub-regulatory guidance by amending § 423.36 to add a new paragraph (f) to reflect that if the Part D sponsor fails to submit a disenrollment notice to CMS timely as required by § 423.36(b)(1), such that the Part D sponsor receives additional capitation payments from CMS, the Part D sponsor must reimburse CMS for any capitation payments received after the month in which payment would have ceased if the requirement had been met timely.
This proposal is a codification of longstanding Part D sub-regulatory guidance and there is no impact to the Medicare Trust Fund. As these policies have been previously implemented and are currently being followed by plans, we concluded that there is no additional paperwork burden. All information impacts related to our collection of disenrollment requests have already been accounted for under OMB control number 0938-0964 (CMS-10141).
We did not receive comments related to this proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal with one minor modification. We are making a technical correction to the regulation text proposed at § 423.36(f) to update a cross-reference that is inaccurate, changing “paragraph (c)(1)” to “paragraph (b)(1)”.
Section 1851(c)(2)(B) of the Act provides that an individual who elects an MA plan and then chooses to terminate such election can do so by submitting a request to the MA organization. In addition, section 1860D-1(b)(1)(B)(ii) of the Act specifies that in establishing a process for Part D enrollment, disenrollment, termination, and change of enrollment of Part D eligible individuals in prescription drug plans, the Secretary shall use rules similar to (and coordinated with) the rules for an MA—formerly M+C—plan established under section 1851(c) of the Act.
The June 1998 final regulation established the process for individuals to voluntarily disenroll from an MA plan. This process is codified at § 422.66(b). Specifically, at
In 2005, CMS issued implementing regulations establishing disenrollment procedures for Part D plans, whereby an individual elects to voluntarily disenroll from the Part D plan, and also established the requirements imposed upon the Part D sponsor as a result of that disenrollment request (70 FR 4211). These requirements were codified at § 423.36.
However, §§ 422.66(b) and 423.36 do not address what plans should do in the event that they receive incomplete disenrollment requests. CMS has historically provided, at section 50.4.2, Chapter 2 of the Medicare Managed Care Manual and section 50.4.2, Chapter 3 of the Medicare Prescription Drug Benefit Manual, the procedural steps for plans to address incomplete disenrollment requests. These steps include providing that when the disenrollment request is incomplete, plans must document efforts to obtain information to complete the request, and if any additional information needed to make the disenrollment request “complete” is not received within prescribed timeframes, the plan must deny the disenrollment request.
To provide transparency and stability for interested parties about the MA and Part D programs and about the requirements applicable to requests for voluntary disenrollment from MA and Part D plans, we proposed to codify CMS's longstanding policies that a disenrollment request is considered to be incomplete if the required but missing information is not received by the MA plan or Part D sponsor within the specified timeframes at new paragraphs §§ 422.66(b)(6) and 423.36(d). The specified timeframes are described at proposed §§ 422.66(b)(3)(v)(C) and 423.36(b)(4)(iii). We also proposed, at new paragraphs §§ 422.66(b)(3)(v) and 423.36(b)(4), that if the disenrollment request is incomplete, the plan must document its efforts to obtain information to complete the election. Plans would be required to notify the individual (in writing or verbally) within 10 calendar days of receipt of the disenrollment request. For incomplete disenrollment requests received by plan sponsors during the annual election period (AEP), we proposed that information to complete the request must be received by December 7, or within 21 calendar days of the plan sponsor's request for additional information, whichever is later. For all other election periods, we proposed that required information must be received by the end of the month in which the disenrollment request was initially received, or within 21 calendar days of the request for additional information, whichever is later. Finally, we proposed that if any additional information needed to make the disenrollment request complete is not received within these timeframes, the disenrollment request must be denied.
This proposal codifies longstanding guidance. All information impacts related to the procedural steps plans must take to address incomplete disenrollment requests have already been accounted for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D. Based on infrequent questions from MA organizations and Part D plan sponsors, as these requirements have been previously implemented and are currently being followed by plans, we concluded that these updates do not add to the existing disenrollment process and we do not believe there is any additional paperwork burden.
We received the following comment, and our response follows.
After consideration of all public comments, and for the reasons outlined here and in the proposed rule, we are finalizing our proposal without modification.
Sections 1851(g)(3)(B)(i) and 1860D-1(b)(1)(B)(v) of the Act provide that MA and Part D plans may terminate the enrollment of individuals who fail to pay basic and supplemental premiums on a timely basis. In addition, section 1860D-13(a)(7) of the Act mandates that individuals with higher incomes pay an additional premium, the Part D IRMAA, for the months in which they are enrolled in Part D coverage.
Consistent with these sections of the Act, the MA and Part D subpart B regulations set forth our requirements with respect to involuntary disenrollment procedures under §§ 422.74 and 423.44, respectively. Pursuant to §§ 422.74(d)(1)(i) and 423.44(d)(1), an MA or Part D plan that chooses to disenroll beneficiaries for failure to pay premiums must be able to demonstrate to CMS that it made a reasonable effort to collect the unpaid amounts by notifying the beneficiary of the delinquency, providing the beneficiary a grace period of no less than two months in which to resolve the delinquency, and advising the beneficiary of the termination of coverage if the amounts owed are not paid by the end of the grace period. Further, as outlined in § 423.44(e), CMS involuntarily disenrolls individuals from their Part D coverage for failure to pay Part D-IRMAA following an initial grace period of 3 months.
Current regulations at § 417.460(c) specify that an HMO or competitive medical plan (cost plan) may disenroll a member who fails to pay premiums or other charges imposed by the plan for deductible and coinsurance amounts. While there is not a grace period parallel to the grace period required by the MA and Part D regulations, the requirements for cost plans are otherwise similar. The cost plan must demonstrate that it made reasonable efforts to collect the unpaid amount and send the enrollee written notice of the disenrollment prior to transmitting the disenrollment to CMS.
The final rule, titled “Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2012 and Other Changes” which appeared in the
To provide transparency to interested parties, we proposed to codify our current policy for MA organizations, Part D sponsors, or entities offering cost plans, as set out in sub-regulatory guidance in section 60.3.4 of Chapter 2, Medicare Managed Care Manual, section 60.2.4 of Chapter 3, Medicare Prescription Drug Benefit Manual and section 60.6.3 of Chapter 17-D, Medicare Managed Care Manual, that reinstatement for good cause, pursuant to §§ 417.460(c)(3), 422.74(d)(1)(v), and 423.44(d)(1)(vi), will occur only when the individual requests reinstatement within 60 calendar days of the disenrollment effective date and that an individual may make only one reinstatement request for good cause in this 60-day period. Specifically, CMS proposed to amend §§ 417.460(c)(3), 422.74(d)(1)(v), and 423.44(d)(1)(vi) to provide that the disenrolled individual must request reinstatement within 60 calendar days of the disenrollment effective date and has not previously requested reinstatement for good cause during the same 60-day period following the involuntary disenrollment. These proposed changes represent the codification of longstanding guidance. Based on infrequent questions or complaints from plan sponsors and beneficiaries, and a lack of reported instances of noncompliance regarding the 60-day timeframe, as these requirements have been previously implemented and are currently being followed by plan sponsors, we concluded that the proposed changes to the regulatory text will not adversely impact plan sponsors or individuals disenrolled for nonpayment of plan premium who choose to request reinstatement for good cause, nor would the proposed changes have any impact to the Medicare Trust Funds or result in a paperwork burden.
We received the following comment, and our response follows.
After consideration of all public comments, and for the reasons outlined here and in the proposed rule, we are finalizing our proposal with minor modifications to reorganize and clarify the regulation text proposed at §§ 417.460(c)(3), 422.74(d)(1)(v), and 423.44(d)(1)(vi).
Section 1851(g)(3)(B)(ii) of the Act authorizes an MA organization to disenroll individuals who engage in disruptive behavior. Section 1860D-1(b)(1)(B)(v) of the Act generally directs us to establish rules related to enrollment, disenrollment, and termination for Part D plan sponsors that are similar to those established for MA organizations under section 1851(g) of the Act. Section 1876 of the Act sets forth the rules for Medicare cost plan contracts with HMOs and competitive medical plans (CMPs). (For this section and throughout 42 CFR 417, CMP is used to mean competitive medical plan, not civil monetary penalties.) In implementing regulations which appeared in the
In January 2005, we published a final rule that revised the definition for disruptive behavior at § 422.74(d)(2) (70 FR 4718), with the purpose of creating an objective definition that did not use the previously subjective terms such as “unruly” or “abusive.” The current, objective definition from the January 2005 MA final rule both defines disruptive behavior and establishes the required process for an MA plan to request disenrollment of a disruptive individual. In January 2005 we also published the Part D implementing regulation (70 FR 4525), where we established the conditions for a PDP sponsor to disenroll an individual for disruptive behavior. We established the basis for optional disenrollment for disruptive behavior at § 423.44(b)(1)(ii). We also established the definition of disruptive behavior and disenrollment process as it exists currently at § 423.44(d)(2). In the January 2005 Part D final rule, we also established the requirement for a final notice of the submission of the disenrollment transaction, which applies to disruptive behavior disenrollments, at § 423.44(c).
Under CMS's current MA and Part D regulations, disruptive behavior is defined as behavior by the plan enrollee that substantially impairs the plan's ability to arrange for or provide services for the individual or other plan members (§§ 417.460(e)(1); 422.74(d)(2)(i); 423.44(d)(2)(i)). The process for disenrolling an enrollee for disruptive behavior requires approval by CMS before the disenrollment may
To provide transparency to interested parties and stability as to the operation of the program, we proposed to codify current policy for MA, Part D, and cost plan notices during the disenrollment for disruptive behavior process. These notices provide the enrollee with a warning of the potential consequences of continued disruptive behavior. In a new proposed paragraph at § 422.74(d)(2)(vii), we proposed to codify existing policy currently set out in sub-regulatory guidance regarding MA plan notices prior to disenrollment for disruptive behavior. To request approval of a disenrollment for disruptive behavior, an MA organization would be required to provide two notices: (1) an advance notice, informing the plan enrollee that continued disruptive behavior could lead to involuntary disenrollment; and (2) a notice of the plan's intent to request CMS permission to disenroll the individual, sent at least 30 days after the advance notice to give the enrollee an opportunity to cease the behavior. These notices are in addition to the disenrollment submission notice currently required under § 422.74(c). We also proposed to revise the existing requirement at § 422.74(d)(2)(iii) that plans inform the individual of the right to use the plan's grievance procedures to clarify that this information should be conveyed as part of the notices described in new paragraph (d)(2)(vii). Additionally, as proposed in addition to § 422.74(d)(2)(iv), the plan would be required to submit dated copies of these required notices to CMS along with the other documentation regarding enrollee behavior and the plan's efforts to resolve the issues.
At new paragraph § 423.44(d)(2)(viii), we proposed to codify existing policy currently set out in sub-regulatory guidance regarding PDP sponsor notices prior to disenrollment for disruptive behavior. To request approval of a disenrollment for disruptive behavior, a PDP sponsor would be required to provide two notices: (1) an advance notice, informing the plan enrollee that continued disruptive behavior could lead to involuntary disenrollment; (2) a notice of intent to request CMS permission to disenroll the individual, sent at least 30 days after the advance notice to give the enrollee an opportunity to cease the behavior. These notices are in addition to the disenrollment submission notice currently required under § 423.44(c). We also proposed to revise the existing requirement at § 423.44(d)(2)(iii) that plans inform the individual of the right to use the plan's grievance procedures, to clarify that this information should be conveyed as part of the notices described in new paragraph (d)(2)(viii). Additionally, as proposed in additions to § 423.44(d)(2)(iv), the plan would be required to submit dated copies of these required notices to CMS along with the other documentation regarding enrollee behavior and the plan's efforts to resolve the issues.
At § 417.460(e)(7) we proposed to codify existing policy guidance currently set out in sub-regulatory guidance regarding cost plan notices prior to an enrollee disenrollment for cause (disruptive behavior). Current guidance is found in Chapter 17D of the Medicare Managed Care Manual, section 50.3.3. To request approval of a disenrollment for disruptive behavior, an HMO or CMP would be required to provide two notices: (1) an advance notice, informing the enrollee that continued disruptive behavior could lead to involuntary disenrollment; (2) a notice of intent to request CMS permission to disenroll the enrollee, sent at least 30 days after the advance notice to give the enrollee an opportunity to cease the behavior. These notices are in addition to the disenrollment submission notice currently required under § 417.460(e)(6). We also proposed to revise the existing requirement at § 417.460(e)(2) that plans inform the individual of the right to use the plan's grievance procedures, to clarify that this information should be conveyed as part of the notices described in new paragraph (e)(7). Additionally, we proposed in § 417.460(e)(2) that, as part of its efforts to resolve the problem presented by the enrollee, an HMO or CMP must provide reasonable accommodations for individuals with mental or cognitive conditions, including mental illness and developmental disabilities, similar to the existing requirement in the MA and Part D regulations at §§ 422.74(d)(2)(iii); 423.44(d)(2)(iii)). As proposed in § 417.460(e)(4), cost plans would be required to submit dated copies of these required notices to CMS along with other documentation regarding enrollee behavior and the plan's efforts to resolve the issues.
This proposal codifies longstanding guidance. All information impacts related to the involuntary disenrollment by the plan for disruptive behavior have already been accounted for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D. Based on infrequent questions from MA organizations, Part D, and cost plan sponsors on these notices, as these notice requirements have been previously implemented and are currently being followed by plans, we concluded that these updates do not add to the existing disenrollment process and we do not believe there is any additional paperwork burden.
We did not receive comments related to this proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal with slight modifications to reorganize the regulation text for additional clarity.
As noted previously, section 1851(g)(3)(B)(ii) of the Act provides that an MA organization may disenroll individuals who engage in disruptive behavior. In 1998, the Part C implementing regulations at 63 FR 35075 separately referred to a different kind of “disruption” or failure to “cooperate,” namely, fraud or abuse on the part of the individual on the enrollment form, or by misuse of the individual's enrollment card. This ground for termination is if the individual provides fraudulent information on his or her election form or permits abuse of his or her enrollment card, which was also based on section 1851(g)(3)(B)(ii) of the Act
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) enacted the Medicare Advantage program, which replaced the M+C program established under title XVIII of the Act, and amended title XVIII of the Act to add a new part D (Voluntary Prescription Drug Benefit Program). Section 1860D-1(b)(1)(B)(v) of the Act specifies that in establishing a process for Part D enrollment, disenrollment, termination, and change of enrollment of Part D eligible individuals in prescription drug plans, the Secretary shall use rules similar to (and coordinated with) the rules for an MA-PD plan established under section 1851(g) of the Act. In 2005, CMS finalized implementing regulations at §§ 423.44(b)(1)(ii) and (d)(2), providing that PDP sponsors may disenroll an individual who engages in disruptive behavior and defining the process for disenrollment on this basis (70 FR 4530). However, CMS's 2005 implementing regulations did not include provisions allowing PDP sponsors the ability to disenroll individuals on the basis of fraud or abuse on the part of the individual on the enrollment form, or by misuse of the individual's enrollment card, equivalent to the MA regulations at §§ 422.74(b)(1)(iii) and (d)(3). Although CMS has adopted and implemented this same basis for optional disenrollment from a Part D plan in sub-regulatory guidance, we proposed to codify the policy for optional disenrollment from a Part D plan based on an individual providing fraudulent information on his or her election form or permitting abuse of his or her enrollment card. Our intent was to codify the current policy, as reflected in section 50.3.3 of Chapter 3 of the Medicare Prescription Drug Benefit Manual.
We proposed to add a new § 423.44(b)(1)(iii) to codify that if an individual provides fraudulent information on his or her election form or permits abuse of his or her enrollment card as specified in new paragraph § 423.44(d)(9), the Part D plan has the option to involuntarily disenroll the individual. Further, we proposed to establish at such new paragraph § 423.44(d)(9) the process for optional disenrollment for an individual who commits fraud or permits abuse of their enrollment card. We proposed to add a new § 423.44(d)(9)(i) to establish a basis for disenrollment for an individual who commits fraud or permits abuse of their enrollment card, to be provided at §§ 423.44(d)(9)(i)(A) and 423.44(d)(9)(i)(B), respectively. We proposed to establish at § 423.44(d)(9)(i)(A) that a Part D plan may disenroll an individual who knowingly provides, on the election form, fraudulent information that materially affects the individual's eligibility to enroll in the Part D plan. We proposed to establish in § 423.44(d)(9)(i)(B) that a Part D plan may disenroll an individual who intentionally permits others to use his or her enrollment card to obtain drugs under the Part D plan.
We further proposed to add a new § 423.44(d)(9)(ii) to establish that a Part D plan that opts to disenroll an individual who commits fraud or permits abuse of their enrollment card must provide the individual a written notice of the disenrollment that meets the notice requirements set forth in § 423.44(c) of this section. We also proposed to add a new § 423.44(d)(9)(iii) to establish that a Part D plan must report to CMS any disenrollment based on fraud or abuse by the individual.
With regard to the Part D optional involuntary disenrollment for fraud and abuse regulations at § 423.44(d)(9)(i), the following change will be submitted to OMB for review under control number OMB 0938-0964 (CMS-10141). We estimate that it will take a Part D plan three hours to capture and retain the required documentation for each occurrence of disenrollment for fraud and abuse. In part, the burden associated with this requirement is the time and effort necessary for a Part D plan to document and retain the documentation that meets the requirements set forth in this section. Since 2012, there have been only five disenrollments for fraud and abuse. Three of those disenrollments were from MA/MA-PD plans, one was from the Limited Income Newly Eligible Transition (LI NET) plan, and one was from a standalone Part D plan. Thus, the burden to Part D plans is negligible and, per 5 CFR 1320.3(c), not subject to PRA because it involves less than 10 entities per year. Nonetheless, we will still add this information to the information collection currently approved under OMB control number 0938-0964. In addition, based on these data, we do not expect any future impact to the Medicare Trust Fund.
We further proposed in § 423.44(d)(9)(ii) that the Part D plan must provide a written notice of disenrollment to the member to advise them of the plan's intent to disenroll, as required under § 423.44(c) of this subpart. Lastly, we proposed in § 423.44(d)(9)(iii) that the Part D plan must report to CMS any disenrollment based on fraud or abuse by the member. All information impacts related to providing written notice to the member and notifying CMS of the disenrollment have already been accounted for under OMB control numbers 0938-0964 (CMS-10141).
We received no comments on our proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal without modification.
Section 1851(g)(3)(B)(i) of the Act allows MA plans to disenroll members who fail to pay premiums on a timely basis. Section 1860D-1(b)(1)(B)(v) of the Act directs us to adopt Part D disenrollment rules similar to the MA provisions in section 1851(g) of the Act. Additionally, section 1860D-1(b)(3)(A)(iii) of the Act states that disenrollment in a plan for failure to pay premiums will be considered a voluntary disenrollment action. In Part D implementing regulations (70 FR 4525), we established the basis for an optional involuntary disenrollment for failure to pay premiums as well as the disenrollment process. The basis for disenrollment for failure to pay premiums was established at § 423.44(b)(1)(i). The disenrollment process for failure to pay premiums was established at § 423.44(d)(1). In 2009, we added an exception to this disenrollment provision which prohibited plans from disenrolling individuals who are in premium withhold status (74 FR 1543). The premium withhold status exception was established at § 423.44(d)(1)(iv) and later renumbered to paragraph (v) in
Section 1860D-23 of the Act directed the Secretary to establish coordination rules between State Pharmaceutical Assistance Programs (SPAPs) and Part D plan sponsors regarding the payment of premiums for Part D eligible individuals. SPAPs, and other third-party payer assistance programs, have the option to cover Part D premiums for individuals. Implementing regulations (70 FR 4525) established the requirement that Part D plan sponsors must permit SPAPs, and other entities, to coordinate benefits with the plan, including paying for premiums, at § 423.464(a).
To protect beneficiaries who have SPAPs, or other payers, cover their premiums, we proposed to codify current policy that excepts certain prescription drug plan (PDP) members from being disenrolled for failure to pay plan premiums, at § 423.44(d)(1)(v). This policy is currently set out in sub-regulatory guidance at section 50.3.1 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, and Part D plan sponsors have previously implemented and are currently following such policy. We proposed, at revised § 423.44(d)(1)(v), a disenrollment exception if the sponsor has been notified that an SPAP, or other payer, is paying the Part D portion of the premium, and the sponsor has not yet coordinated receipt of the premium payments with the SPAP or other payer. Sponsors would not be able to initiate the disenrollment process or disenroll members who qualify for this exception.
In addition, we proposed a technical correction to revise an erroneous cross reference in § 423.44(d)(1). Instead of referring to paragraph (d)(1)(iv), the language should refer to paragraph (d)(1)(v).
We are codifying longstanding guidance with these changes. All information impacts related to the involuntary disenrollment by the plan for failure to pay Part D plan premiums have already been accounted for under OMB control 0938-0964 (CMS-10141). Based on infrequent questions or complaints from Part D sponsors on these notices, we believe that these disenrollment requirements have been previously implemented and are currently being followed by sponsors. This proposal is a codification of longstanding Part D sub-regulatory guidance and there is no impact to the Medicare Trust Fund. These updates do not add to the existing disenrollment process, so we do not believe there is any additional paperwork burden.
We did not receive comments related to this proposal. For the reasons outlined here and in the proposed rule, we are finalizing our proposal without substantive changes but with minor organizational and editorial changes in § 423.44(d)(1) for clarity.
Section 1851(e)(4)(D) of the Act authorizes the Secretary to establish MA special enrollment periods (SEP) for Medicare-eligible individuals to elect a plan or change the individual's plan election when the individual meets an exceptional condition, as determined by the Secretary. Section 1860D-1(b)(3)(C) of the Act authorizes the Secretary to establish SEPs for exceptional circumstances for Medicare-eligible individuals to make Part D elections.
The SEPs for exceptional circumstances were historically included in our sub-regulatory guidance rather than in regulation. In 2020, we codified and amended a number of SEPs that had been adopted and implemented through sub-regulatory guidance as exceptional circumstances SEPs, including the SEP for Government Entity-Declared Disaster or Other Emergency (85 FR 33901, 85 FR 33909). This SEP, as codified at § 422.62(b)(18) for enrollment in an MA or MA-PD plan and § 423.38(c)(23) for enrollment in a Part D-only plan, allows individuals who are or have been affected by an emergency or major disaster declared by a Federal, state, or local government entity, and did not make an election during another period of eligibility as a result of the disaster/emergency, to make an MA and/or Part D enrollment or disenrollment action. Although CMS originally proposed that this SEP would only apply to FEMA-declared disasters or emergencies, as finalized in 2020, the regulations also include state and local emergency or major disaster declarations (85 FR 33868). This SEP begins the date the disaster/emergency declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier. This SEP ends 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, whichever is later.
In order to clarify the length of this SEP, we proposed to revise the end date(s) for the SEP for Government Entity-Declared Disaster or Other Emergency specified within §§ 422.62(b)(18) and 423.38(c)(23). As part of this proposal, we proposed to create a new § 422.62(b)(18)(i), and redesignate what is currently in § 422.62(b)(18)(i)-(iii) as (b)(18)(ii)-(iv); likewise, we proposed to create a new § 423.38(c)(23)(i) and redesignate what is currently in § 423.38(c)(23)(i)-(iii) as (c)(23)(ii)-(iv).
First, we proposed that for state or local emergencies/disasters, the end date for the SEP may also be based on an emergency/disaster order automatically expiring pursuant to a state or local law, if such a law exists. Applicable state or local law could be statutes, regulations, local or municipal ordinances or codes regarding the automatic expiration date of state or local emergency/disaster orders. If the announced incident period end date is different than the expiration date specified in state or local law, the announced incident end date controls the SEP end date. Under this proposal, the SEP ends based on the end of the emergency/disaster period, regardless of whether that period ends based on an announcement by the applicable authority or expires based on applicable state or local law.
Second, we proposed an automatic incident end date which will apply if no end date for the period of disaster/emergency is otherwise identified within 1 year of the start of the SEP. This automatic incident end date will fall 1 year after the SEP start date, meaning that if no end date is otherwise identified, the SEP will be 14 full calendar months in length. For example, under our proposed changes, if no incident end date was identified in the declaration, or announced later, and there is no applicable expiration date provided by state or local law, CMS would consider the incident end date to be 1 year after the SEP start date and the SEP would end 2 full calendar months after that incident end date, which would result in a 14-month maximum SEP. We sought public comment on this automatic 1-year incident end date to determine if the 14-month maximum eligibility period for this SEP is sufficient. We proposed that if the emergency/disaster declaration is extended, then the automatic 1-year incident end date would be from the date of the extension. This would address situations where a declaration of emergency or major disaster is renewed or extended (perhaps multiple times) so that the state of emergency or major disaster lasts for a year or more. These proposed changes will provide clear end dates for this SEP and should allow interested parties to more easily calculate SEP length and determine beneficiary eligibility for the SEP.
Because an individual may elect a Medicare Advantage or Part D plan only during an election period, Medicare Advantage organizations and Part D sponsors already have procedures in place to determine the election period(s) for which an applicant is eligible. Our proposal would not add to existing enrollment processes, so we believe any burden associated with this aspect of enrollment processing would remain unchanged from the current practice and would not impose any new requirements or burden. All information impacts of this provision have already been accounted for under OMB control numbers 0938-0753 (CMS-R-267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141). In addition, Medicare Advantage organizations and Part D sponsors have previously implemented and are currently following the process to determine applicant eligibility for this SEP. We believe that changing the possible end date for this SEP will make a negligible impact, if any. We do not believe the proposed changes will adversely impact individuals requesting enrollment in Medicare plans, the plans themselves, or their current enrollees. Similarly, we do not believe the proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
After consideration of all public comments, and for the reasons outlined here and in the proposed rule, we are finalizing our proposal with minor edits at §§ 422.62(b)(18) and 423.38(c)(23) for grammar and clarity, as well as modifications to correctly redesignate existing paragraphs.
Section 1851(b)(1)(A) of the Act provides that an individual is eligible to elect an M+C, later known as MA, plan only if the plan serves the geographic area in which the individual resides. Section 1851(b)(1)(B) of the Act provides for a continuation of enrollment option under which an MA organization offering an MA local plan may offer its enrollees the option to continue enrollment in the plan when they move out of the plan service area and into a continuation area, so long as the organization provides that in the continuation area enrollees have access to the full range of basic benefits under the original Medicare fee-for-service program option. In addition, section 1860D-1(b)(1)(B)(i) of the Act generally directs CMS to use rules for enrollment, disenrollment, and termination relating to residence requirements for Part D sponsors that are similar to those established for MA organizations under section 1851(b)(1)(A) of the Act.
In the June 1998 Interim Final Rule with Comment Period (IFC), we adopted regulations to address the residency and continuation area requirements, at §§ 422.50(a)(3) and 422.54, respectively, as well as a regulation, at § 422.74(b)(2)(i), requiring that an MA organization must disenroll an individual who no longer resides in the plan service area.
In January 2005, we published a final rule (70 FR 4194) to establish at § 423.30(a)(2)(ii) that an individual must reside in a Part D plan service area in order to be eligible to enroll in the plan and at § 423.44(b)(2)(i) that a Part D plan sponsor is required to disenroll an individual who no longer resides in the plan service area.
Section 1851(e)(4)(B) of the Act establishes that an individual who is no longer eligible to elect an MA plan because of a change in the individual's place of residence is eligible for a special election period (SEP) during which the individual may disenroll from the current plan or elect another plan. Further, section 1860D-1(b)(1)(B)(iii) of the Act directs CMS to generally use rules related to coverage election periods that are similar to those established for MA organizations under section 1851(e) of the Act. In the June 1998 IFC (63 FR 35073), we established at § 422.62(b)(2) an SEP for an individual who is not eligible to remain enrolled in an MA plan because of a change in his or her place of residence to a location out of the service area or continuation area. Likewise, in the January 2005 Part D final rule (70 FR 4194), we established at § 423.38(c)(7) an SEP for an individual who is no longer eligible for the PDP because of a change in his or her place of residence to a location outside of the PDP region(s) where the PDP is offered are eligible for an SEP.
Current sub-regulatory guidance for these SEPs that are codified at §§ 422.62(b)(2) and 423.38(c)(7) are reflected in section 30.4.1 of Chapter 2 of the Medicare Managed Care Manual
The intent of our proposal was to codify current policy as reflected in CMS's existing sub-regulatory guidance and that is being carried out currently by MA organizations and Part D plan sponsors. Codifying our current policy for these SEPs will provide transparency and stability for interested parties about the MA and Part D programs and about the nature and scope of these SEPs.
Separate from, but related to, the aforementioned policy for disenrolling individuals who report that they no longer reside in the plan service area are the current regulations at § 422.74(d)(4)(ii) that require that MA organizations disenroll individuals who are absent from the service area for more than six months. However, § 422.74(d)(4)(iii) provides an exception for individuals enrolled in MA plans that offer a visitor/traveler benefit are permitted an absence from the service area for up to 12 months; such individuals are disenrolled if their absence from the service area exceeds 12 months (or the length of the visitor/traveler program if less than 12 months). As outlined at § 423.44(d)(5)(ii), PDP sponsors must disenroll PDP enrollees who are absent from the plan service area for more than 12 consecutive months.
If member materials are returned to plan sponsors as undeliverable and a forwarding address is not specified, current sub-regulatory guidance directs the plan sponsor to document the return, retain the returned material and continue to send future correspondence to that same address, as a forwarding address may become available at a later date. See § 50.2.1.4 of Chapter 2 of the Medicare Managed Care Manual for MA and § 50.2.1.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual for Part D. In sub-regulatory guidance, we state that plan sponsors are to consider returned mail as an indication of a possible change in residence that warrants further investigation. As such, we encourage the plan sponsor to attempt to locate the member using any available resources, including CMS systems, to identify new address information for the member. We describe how plans should attempt to research a member's change of address at § 50.2.1.4 of Chapter 2 of the Medicare Managed Care Manual for MA and § 50.2.1.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual for Part D. Plan sponsors that are unable to contact the member or obtain current address information will disenroll the member upon expiration of the 6- or 12-month period of permitted temporary absence from the plan service area, as previously discussed.
Current MA guidance in § 50.2.1.4 of Chapter 2 of the Medicare Managed Care Manual regarding research of potential changes in address is consistent with the MA regulation at § 422.74(d)(4)(i) providing that “the MA organization must disenroll an individual if the MA organization establishes, on the basis of a written statement from the individual or other evidence acceptable to CMS, that the individual has permanently moved . . .” The analogous Part D regulation at § 423.44(d)(5)(i) requires that the “PDP must disenroll an individual if the individual notifies the PDP that he or she has permanently moved out of the PDP service area,” but the Part D regulation does not provide a basis similar to the MA regulation for when PDPs may start the process of researching and acting on a change of address that the plan learns about from a source other than the member. Although current Part D guidance in § 50.2.1.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual allows PDPs to use information they receive from sources other than the member, specifically from either CMS or the U.S. Postal Service, as an indicator that a beneficiary may no longer reside in the service area, this is not codified in the Part D regulation. Therefore, we proposed to align the Part D regulation with the MA regulation by amending § 423.44(d)(5)(i) to state that a PDP must disenroll an individual if the PDP establishes, on the basis of a written statement from the individual or other evidence acceptable to CMS, that the individual has permanently moved out of the PDP service area.
Current sub-regulatory guidance does not identify returned mail as a basis for involuntary disenrollment. Materials plans send to members that include protected health information (PHI) and/or personal identifying information (PII), as well as materials intended to inform members of plan-specific information, such as premiums, benefits, cost-sharing, network and network changes and plan rules, have the potential for greater adverse impact on individual members, if returned as undeliverable, than materials such as newsletters, flyers and other items covering general health and wellness.
To provide additional clarity to plan sponsors in their efforts to ascertain the residency status of members when there is an indication of a possible temporary or permanent absence from the service area, we proposed to amend § 422.74 by adding paragraphs (d)(4)(ii)(A) and (d)(4)(iii)(F) for MA and to amend § 423.44 by revising paragraph (d)(5)(ii) for Part D to state that an individual is considered to be temporarily absent from the plan service area when any one or more of the required materials and content referenced in §§ 422.2267(e) and 423.2267(e), respectively, if provided by mail, is returned to the plan sponsor by the U.S. Postal Service as undeliverable and a forwarding address is not provided. Codifying current sub-regulatory guidance regarding the use of returned mail as a basis for considering a member potentially out of area would provide a regulatory basis for plan sponsors to apply the 6- and 12-month timeframes as previously described, as well as the current practice of disenrolling individuals when the plan sponsor is unable to communicate with them using the residence address provided by the individual to the plan sponsor. Since plan sponsors are required by regulation to continue to mail certain materials to enrollees until the point at which the individual is no longer enrolled in the plan, we believe that it is important to codify the basis on which plan sponsors are to consider an individual to be temporarily out of the plan service area and able to be disenrolled, after an appropriate period of time, thus bringing about the cessation of any additional member material mailings.
Codifying our current policy for temporary absences from the plan service area, the sources of information on which plan sponsors may make related eligibility determinations, and the implications for disenrollment will provide transparency and stability for interested parties about the MA and Part D programs and about plan service area
These proposals are a codification of longstanding MA and Part D sub-regulatory guidance and there is no impact to the Medicare Trust Fund. Because an individual may elect an MA or Part D plan only during an election period and may continue enrollment in an MA or Part D plan only if the individual resides in the plan service area, or for some MA plans, the plan continuation area, MA organizations and Part D plan sponsors already have procedures in place to determine the election period(s) for which an applicant is eligible and to determine the point at which an enrollee is no longer eligible for the plan and must be disenrolled. Our proposal would not add to existing enrollment and disenrollment processes, so we believe any burden associated with these aspects of enrollment and disenrollment processing would remain unchanged from the current practices and would not impose any new requirements or burden. All information impacts related to the determination of eligibility for an election period and to the disenrollment of individuals who become ineligible for an MA or Part D plan based on the residency requirements have already been accounted for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D.
We received no comments on our proposal. Except for a minor change to the organization of the regulation text for 423.38(c)(7), we are finalizing the proposal without modification for the reasons outlined here and in the proposed rule.
Section 1851(g)(3)(B)(i) of the Act provides that an MA organization may involuntarily terminate an individual's election in an MA plan if monthly basic and supplemental beneficiary premiums are not paid timely and provides for a grace period for payment of such premiums. Consistent with this section of the Act, the Part C regulations set forth our requirements with respect to optional involuntary disenrollment procedures under § 422.74.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) enacted the Medicare Advantage (MA) program, which replaced the M+C program established under title XVIII of the Act and amended title XVIII of the Act to add a new Part D (Voluntary Prescription Drug Benefit Program). Section 1860D-1(b)(1)(B)(v) of the Act specifies that in establishing a process for Part D enrollment, disenrollment, termination, and change of enrollment of Part D eligible individuals in prescription drug plans, the Secretary shall use rules similar to (and coordinated with) the rules for an MA plan established under section 1851(g) (other than paragraph (2) of such section and clause (i) and the second sentence of clause (ii) of paragraph (3)(C) of such section) of the Act. Consistent with these sections of the Act, the Part D regulations set forth our requirements with respect to optional involuntary disenrollment procedures under § 423.44.
In 2010, CMS amended the Part C and Part D regulations regarding optional involuntary disenrollment for nonpayment of premiums to require a minimum grace period of 2 months before any disenrollment occurs. These requirements were codified at § 422.74(d)(1)(i)(B)(1) (75 FR 19804) and § 423.44(d)(1)(iii)(A) (75 FR 19816). CMS also revised these regulations to include the requirement that the grace period begin on the first day of the month for which the premium is unpaid or the first day of the month following the date on which premium payment is requested, whichever is later. These regulations were codified at § 422.74(d)(1)(i)(B)(2) (75 FR 19804) and § 423.44(d)(1)(iii)(B) (75 FR 19816).
In subsequent sub-regulatory guidance in section 50.3.1, Chapter 2 of the Medicare Managed Care Manual and section 50.3.1, Chapter 3 of the Medicare Prescription Drug Benefit Manual, we defined the grace period for nonpayment of plan premium as a
Plan sponsors that have chosen to disenroll individuals based on unpaid premiums already have procedures in place to implement a grace period that is a minimum of 2 months in length. Based on infrequent complaints or questions from MA organizations and Part D sponsors, we believe that plans are complying with this guidance, and we did not propose any changes to the requirements or process for involuntary disenrollment that plan sponsors have previously implemented and are currently following. All burden impacts of these provisions have already been accounted for under OMB control number 0938-0753 (CMS-R-267) for Part C and OMB control number 0938-0964 (CMS-10141). There is also no impact to the Medicare Trust Fund.
We received no comments on our proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal without modification.
As discussed in our proposal for Developing Addresses for Members Whose Mail is Returned as Undeliverable and SEP for Changes in Residence (§§ 422.62, 422.74, 423.38, 423.44), section 1851(b)(1)(A) of the Act provides that an individual is eligible to elect an MA plan only if the plan serves the geographic area in which the individual resides, and section 1860D-1(b)(1)(B) of the Act generally directs CMS to use rules related to enrollment, disenrollment, and termination for Part D sponsors that are similar to those established for MA organizations under section 1851(b)(1)(A) of the Act.
Pursuant to regulations at § 422.74(c) for MA and § 423.44(c) for Part D, MA organizations and Part D plan sponsors are currently required to issue a disenrollment notice when an enrollee is disenrolled for not residing in the plan service area. Existing sub-regulatory guidance includes a requirement that MA organizations and Part D plan sponsors issue the disenrollment notice within 10 days of the plan learning of the permanent move. See § 50.2.1.5 of Chapter 2 of the Medicare Managed Care Manual for MA and § 50.2.1.6 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, respectively. In the case of MA plan enrollees who are disenrolled because they are absent from the service area for more than six months, the disenrollment notice must be provided within the first ten calendar days of the sixth month of such absence. Individuals enrolled in MA plans that offer a visitor/traveler benefit are permitted an absence from the service area for up to 12 months; such individuals are disenrolled if their absence from the service area exceeds 12 months (or the length of the visitor/traveler program if less than 12 months). In this scenario, the MA organization must provide notification of the upcoming disenrollment to the enrollee during the first ten calendar days of the 12th month (or the last month of the allowable absence, per the visitor/
Although we have previously codified the requirement to issue a disenrollment notice when an individual is disenrolled due to an extended absence from the plan service area, or a change in residence to a location outside the service area, the 10-day timeframe for issuing that notice is reflected only in sub-regulatory guidance. We proposed to amend the MA and Part D plan disenrollment notification requirements to include the 10-day timeframe that is currently reflected in sub-regulatory guidance. Specifically, we proposed to codify at § 422.74(d)(4)(iv) and at § 423.44(d)(5)(i) and (d)(5)(ii) a timeliness requirement of 10 calendar days for issuing notices for disenrollments based on the residency requirements. Separate from the disenrollment notification requirements described in the preceding paragraphs is a documentation retention requirement currently reflected in § 50.2.1.3 of Chapter 2 of the Medicare Managed Care Manual for MA and in § 50.2.1.3 of Chapter 3 of the Medicare Prescription Drug Benefit Manual. It has been CMS policy that MA organizations and Part D plan sponsors document their efforts to determine whether an enrollee has relocated out of the plan service area or has been absent from the service for a period of time in excess of what is allowed; however, our expectation that plans document their research efforts, although outlined in sub-regulatory guidance, is not codified. As such, we proposed to amend the MA and Part D regulations to include the requirement that plans document their efforts to determine an enrollee's residency status.
We proposed to codify at § 422.74(d)(4)(i) and at § 423.44(d)(5)(i) and (d)(5)(ii) that MA organizations and Part D plan sponsors, respectively, must document the basis for involuntary disenrollment actions that are based on the residency requirements.
The intent of our proposal was to codify current disenrollment notice policy, as reflected in § 50.2.1.5 of Chapter 2 of the Medicare Managed Care Manual for MA and in § 50.2.1.6 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, and also codify the documentation policy that is reflected in § 50.2.1.3 of Chapter 2 of the Medicare Managed Care Manual for MA and in § 50.2.1.3 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, all of which are policies that are already being carried out by MA organizations and Part D plan sponsors. Codifying these policies regarding notification of disenrollment and document retention will provide transparency and stability for interested parties about the MA and Part D programs and about the nature and scope of these notification and retention policies.
These proposals are a codification of longstanding MA and Part D sub-regulatory guidance and there is no impact to the Medicare Trust Fund. MA organizations and Part D plan sponsors already have procedures in place to provide disenrollment notifications and to retain documentation related to such disenrollments. Our proposal would not add to existing processes, so any burden associated with this aspect of disenrollment processing and document retention would remain unchanged from current practices and would not impose any new requirements or burden. All information impacts related to these existing practices have already been accounted for under OMB control numbers 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D.
We received no comments on our proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal without modification.
Section 1860D-1(b) of the Act establishes the enrollment and disenrollment process for Part D-eligible individuals in prescription drug plans. This section of the Act grants the Secretary the authority to establish a process for the enrollment, disenrollment, termination, and change of enrollment of Part D eligible individuals in prescription drug plans. In January 2005, the Part D implementing regulations established the enrollment and disenrollment processes for Part D prescription drug plans. The enrollment and disenrollment processes for prescription drug plans are codified in regulation at §§ 423.32 and 423.36, respectively (70 FR 4525).
Section 1860D-1(b)(1)(B) of the Act directs the Secretary to adopt Part D enrollment rules “similar to,” and coordinated with, those under Part C. In 1998, Part C implementing regulations (and subsequent correcting regulations) added the requirement that allowed an exception for employer/union group health plan (EGHP) sponsors to process election forms for Medicare-entitled group members (63 FR 52612, 63 FR 35071). These requirements were codified in the Part C regulations but were not codified in the Part D regulations.
We proposed to codify this existing policy to provide transparency and ensure consistency between the Part C and Part D programs. Specifically, we proposed at new §§ 423.32(i) and 423.36(e) to permit a Part D plan sponsor that has a contract with an employer or union group to arrange for the employer or union to process enrollment and disenrollment elections for Medicare-entitled group members who wish to enroll in or disenroll from an employer or union sponsored Part D plan. As outlined in sections 60.5.1 and 60.5.2 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, retroactive enrollments and disenrollments are permitted for up to 90 days to conform to the payment adjustments described under §§ 422.308(f)(2) and 423.343(a). In addition, to obtain the retroactive effective date of the election, the individual must certify receipt of the group enrollment notice materials that include the summary of benefits offered under the PDP, as provided in sections 40.1.6 and 60.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual. Once the enrollment or disenrollment election is received from the employer, the Part D plan sponsor must submit the disenrollment to CMS within the specified timeframes described in section 60.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual.
Our intent is to align the Part D regulation with the requirements that MA organizations follow in existing Part C regulations at §§ 422.60(f) and 422.66(f) and codify existing policies in the sub-regulatory guidance in Chapter 3 of the Medicare Prescription Drug Benefit Manual. Under section 60.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual, retroactive transactions may be necessary and are permitted if a delay exists between the time the individual completes the enrollment or disenrollment request through the employer's election process and when the request is received by the Part D plan sponsor. Further, we state in current sub-regulatory guidance at section 60.5.1 of Chapter 3 of the
This is a codification of existing Part D sub-regulatory guidance and there is no impact to the Medicare Trust Fund. Based on infrequent complaints and questions from plans and beneficiaries related to current policies, which have been previously implemented and are currently being followed by plans, we concluded that there is no additional paperwork burden. All information impacts related to this provision have already been accounted for under OMB control numbers 0938-1378 (CMS-10718) for Part D enrollment requests and 0938-0964 (CMS-10141) for Part D disenrollment requests.
We did not receive comments related to this proposal. For the reasons outlined here and in the proposed rule, we are finalizing this proposal without modification.
We proposed a technical change at § 423.562(a)(1)(v) to remove discretionary language as it relates to a Part D plan sponsor's responsibility to establish a DMP under § 423.153(f) with appeal procedures that meet the requirements of subpart M for issues that involve at-risk determinations. This eliminates discretionary language and improves consistency with § 423.153(f), which requires each Part D plan sponsor to establish and maintain a DMP and include appeal procedures that meet the requirements of subpart M for issues involving at-risk determinations. This is strictly a technical change to the wording at § 423.562(a)(1)(v) and does not impact the underlying burden related to processing appeals of at-risk beneficiaries. This change is not expected to have an economic impact beyond current operating expenses, and there is no paperwork burden or associated impact on the Medicare Trust Fund.
We did not receive comments on this proposal. For the reasons outlined here and in the proposed rule, we are finalizing the proposal as proposed.
Section 4001 of the Balanced Budget Act of 1997 (Pub. L. 105-33) added sections 1851 through 1859 to the Social Security Act (the Act), establishing Part C of the Medicare program known originally as M+C and later as Medicare Advantage (MA). As enacted, section 1851(e) of the Act establishes specific parameters in which elections can be made and/or changed during enrollment and disenrollment periods under the MA program. Specifically, section 1851(e)(1) of the Act requires that the Secretary specify an initial coverage election period (ICEP) during which an individual who first becomes entitled to Part A benefits and enrolled in Part B may elect an MA plan. The statute further stipulates that if an individual elects an MA plan during that period, coverage under the plan will become effective as of the first day on which the individual may receive that coverage. Consistent with this section of the Act, in the “Medicare Program; Establishment of the Medicare+Choice Program” interim final rule with comment period which appeared in the
In order for an individual to have coverage under an MA plan, effective as of the first day on which the individual may receive such coverage, the individual must elect an MA plan before he or she is actually entitled to Part A and enrolled in Part B coverage. Therefore, in the June 1998 interim final rule CMS codified the ICEP to begin 3 months prior to the month the individual is first entitled to both Part A and enrolled in Part B and ends the last day of the month preceding the month of entitlement (63 FR 35072).
Section 102 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) revised section 1851(e)(1) of the Act to provide for an ICEP for MA that ends on the later of, the day it would end under pre-MMA rules as described above, or the last day of an individual's Medicare Part B Initial Enrollment Period (IEP). This approach extended an individual's ICEP which helped to ensure that an individual who uses their IEP to enroll in Medicare Part A and B has the opportunity to elect an MA or MA prescription drug (MA-PD) plan following their first entitlement to Part A and enrollment in Part B. Consistent with the revised provisions of section 1851(e)(1) of the Act, CMS codified this policy at § 422.62(a)(1) in the Medicare Program; Establishment of the Medicare Advantage Program final rule which appeared in the
As described in § 422.50(a)(1), eligibility for MA or MA-PD enrollment generally requires that an individual first have Medicare Parts A and B and meet all other eligibility requirements to do so. The ICEP is the period during which an individual newly eligible for MA may make an initial enrollment request to enroll in an MA or MA-PD plan. Currently, once an individual first has both Parts A and B, their ICEP begins 3 months immediately before the individual's first entitlement to Medicare Part A and enrollment in Part B and ends on the later of:
1. The last day of the month preceding entitlement to Part A and enrollment in Part B; or
2. The last day of the individual's Part B IEP.
Individuals who want to enroll in premium-Part A, Part B, or both, must submit a timely enrollment request during their IEP, the General Enrollment Period (GEP), or an existing special enrollment period (SEP) for which they are eligible. Eligible individuals may choose to enroll in both Part A and B during their first opportunity, that is, during their IEP. These individuals have an ICEP as described in § 422.62(a)(1)(ii), that is, they can choose to enroll in an MA plan (with or without drug coverage) at the time of, or after, they have both Part A and B, up until the last day of their IEP. However, not all individuals enroll in both Part A and B during their IEP. Other individuals, such as those who are working past age 65, may not have both Part A and B for the first time until after their IEP. These individuals may only have Part A and/or B for the first time when they use an SEP or a future GEP to enroll. To note, prior to January 1, 2023, individuals who enrolled in Part A and/or Part B during the GEP had a universal effective date of July 1st. These individuals had an ICEP as described in § 462.22(a)(1)(i), that is, the ICEP started April 1st and ended June 30th. Although these individuals had to decide whether to enroll in an MA or MA-PD plan prior to their July 1st effective date, they did have time to consider their options, as the GEP is January 1st-March 31st annually, and their enrollment in Part B, (and Part A if applicable), was not effective until July 1st. However, the Consolidated Appropriations Act, 2021, (CAA) (
Currently, the individuals described above have an ICEP as described in § 422.62(a)(1)(i) and can only enroll in an MA plan (with or without drug coverage)
Section 422.62(a)(1) was intended to provide beneficiaries who enroll in both Part A and Part B for the first time with the opportunity to elect an MA plan
To provide more flexibility, we proposed to revise the end date for the ICEP for those who cannot use their ICEP during their IEP. That is, we proposed in § 422.62(a)(1)(i) that an individual would have an opportunity to enroll in an MA plan (with or without drug coverage) using their ICEP until the last day of the second month after the month in which they are first entitled to Part A and enrolled in Part B. Under proposed § 422.62(a)(1)(i), the individual's ICEP would begin 3 months prior to the month the individual is first entitled to Part A and enrolled in Part B and would end on the last day of the second month after the month in which the individual is first entitled to Part A and enrolled in Part B. Using the example above, we are proposing that the individual's ICEP would be February 1st through June 30, 2023, instead of February 1st to April 30th. As described in § 422.68(a)(1), if an election is made prior to the month of entitlement in both Part A and Part B, the MA election would be effective as of the first date of the month that the individual is entitled to both Part A and Part B.
We believed that extending the timeframe for the ICEP under § 422.62(a)(1)(i) would provide beneficiaries that are new to Medicare additional time to decide if they want to receive their coverage through an MA plan. We believed that extending this timeframe would help those new to Medicare to explore their options and select coverage that best suits their needs and reduce the number of instances where an individual inadvertently missed their ICEP and has to wait until the next open enrollment period to enroll in MA or MA-PD plan. This also supports President Biden's April 5, 2022
This proposed change in the ICEP timeframe aligned with the SEP timeframe that we have established in § 422.62(b)(10), for individuals to enroll in an MA or MA-PD plan when their Medicare entitlement determination is made for a retroactive effective date, and the individual has not been provided the opportunity to elect an MA or MA-PD plan during their ICEP. It also aligned with the timeframe we have established in § 422.62(b)(26), effective January 1, 2024, for an individual to enroll in an MA plan when they enroll in Part A and/or Part B using an exceptional condition SEP, as described in §§ 406.27 and 407.23.
This final rule would extend the timeframe of an existing enrollment period, but we noted it would not result in a new or additional paperwork burden since MA organizations are currently assessing applicants' eligibility for election periods as part of existing enrollment processes. All burden impacts of these provisions have already been accounted for under OMB control number 0938-1378 (CMS-10718). Similarly, we did not believe the proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
The proposed timeframe to extend the ICEP will provide individuals a total of 5 months to consider how they want to receive their Medicare coverage. We believe this timeframe is adequate for beneficiaries to decide if they want to receive their coverage through Original Medicare or an MA plan and to select a plan that meets their needs. To note, individuals also have ample opportunities to change plans outside of the ICEP, including the MA OEP, the Annual Coordinated Election Period, or any SEP for which they are eligible.
After consideration of all public comments, we are finalizing our proposal to revise § 422.62(a)(1)(i) without modification.
Medicare Advantage (MA) enrollees have the right to a fast-track appeal by an Independent Review Entity (IRE) when their covered skilled nursing facility (SNF), home health, or comprehensive outpatient rehabilitation facility (CORF) services are being terminated. The regulations for these reviews at the request of an MA enrollee are located at 42 CFR 422.624 and 422.626. Section 422.624 requires these providers of services to deliver a standardized written notice to the enrollee of the MA organization's decision to terminate the provider's services for the enrollee. This notice, called the Notice of Medicare Non-Coverage (NOMNC), must be furnished to the enrollee before services from the providers are terminated. The NOMNC informs enrollees of their right to a fast-track appeal of the termination of these provider services and how to appeal to the IRE. CMS currently contracts with certain Quality Improvement Organizations (QIOs) that have contracts under Title XI, Part B and section 1862(g) of the Act to perform as the IRE for these specific reviews. Specifically, the Beneficiary and Family Centered Care QIOs (BFCC QIOs) are the type of QIO that currently performs these reviews. There is a parallel appeal process in effect for Medicare beneficiaries in Original Medicare (42 CFR Part §§ 405.1200 and 405.1202).
Presently, if an MA enrollee misses the deadline to appeal as stated on the NOMNC, the appeal is considered untimely, and the enrollee loses their right to a fast-track appeal to the QIO. Enrollees may, instead, request an expedited reconsideration by their MA plan, as described in § 422.584. The QIO is unable to accept untimely requests from MA enrollees but does perform appeals for untimely requests from Medicare beneficiaries in Original Medicare as described at § 405.1202(b)(4).
Further, MA enrollees forfeit their right to appeal to the QIO if they leave a facility or otherwise end services from one of these providers before the termination date listed on the NOMNC, even if their appeal requests to the QIO are timely. (The MA enrollee retains the right to appeal to their MA plan in such cases because the decision to terminate the services is an appealable organization determination per § 422.566(b)(3).) Beneficiaries in Original Medicare retain their right to appeal to the QIO, regardless of whether they end services before the termination date on the NOMNC.
We proposed to modify the existing regulations regarding fast-track appeals for enrollees when they untimely request an appeal to the QIO, or still wish to appeal after they end services on or before the planned termination date. As noted in the proposed rule, these changes would bring the MA program further into alignment with Original Medicare regulations and procedures for the parallel appeals process. Finally, these changes were recommended by interested parties in comments to a previous rulemaking (CMS-4201-P, February 27, 2022).
Specifically, the changes would (1) require the QIO, instead of the MA plan, to review untimely fast-track appeals of an MA plan's decision to terminate services in an HHA, CORF, or SNF; and (2) allow enrollees the right to appeal the decision to terminate services after leaving a SNF or otherwise ending covered care before the planned termination date. The proposed changes are modeled after the parallel process in effect for Original Medicare at 42 CFR 405.1200 through 405.1202.
To implement these changes, we proposed to revise § 422.626(a)(2) to specify that if an enrollee makes an untimely request for a fast-track appeal, the QIO will accept the request and perform the appeal. We also specified that the IRE decision timeframe in § 422.626(d)(5) and the financial liability provision in § 422.626(b) would not apply.
Secondly, we proposed removing the provision at § 422.626(a)(3) that prevents enrollees from appealing to the QIO if they end their covered services on or before the date on their termination notice, even in instances of timely requests for fast-track appeals. Removal of this provision preserves the appeal rights of MA enrollees who receive a termination notice, regardless of whether they decide to leave a provider or stop receiving their services.
This proposed expedited coverage appeals process would afford enrollees in MA plans access to similar procedures for fast-track appeals as for beneficiaries in Original Medicare in the parallel process. Untimely enrollee fast-track appeals would be absorbed into the existing process for timely appeals at § 422.626, and thus, would not necessitate additional changes to the existing fast-track process. The burden on MA plans would be minimal and would only require that MA plans provide notices as required at § 422.626(d)(1) for these appeals. Further, MA plans would no longer have to perform the untimely appeals as currently required at § 422.626(a)(2). Beneficiary advocacy organizations, in comments to previous rulemakings on this topic, supported changes that would afford enrollees more time to appeal and afford access to IRE appeals even for untimely requests.
We noted that the burden of conducting these reviews is currently approved under OMB collection 0938-0953. The proposed changes would require that untimely fast-track appeals would be performed by the QIO, rather than the enrollee's health plan; thus, any burden related to this proposal would result in a shift in fast-track appeals from health plans to QIOs.
We received the following comments, and our responses follow.
After consideration of all public comments and for the reasons outlined in the proposed rule and our response to public comments, we are finalizing without modification our proposals to amend § 422.626(a)(2) and to remove § 422.626(a)(3).
CMS has authority under sections 1857(e)(1) and 1860D-12(b)(3)(D) of the Act to require MA organizations and Part D plan sponsors to provide CMS “with such information . . . as the Secretary may find necessary and appropriate.” CMS also has authority, in section 1856(b) of the Act, to establish standards to carry out the MA program.
Likewise, existing CMS regulations cover a broad range of topics and data to be submitted to CMS. Under these authorities, CMS established reporting requirements at §§ 422.516(a) (Validation of Part C reporting requirements) and 423.514(a) (Validation of Part D reporting requirements), respectively. Pursuant to §§ 422.516(a) and 423.514(a), each MA organization and Part D plan sponsor must have an effective procedure to develop, compile, evaluate, and report information to CMS at the times and in the manner that CMS requires. In addition, §§ 422.504(f)(2) and 423.505(f)(2) require MA organizations and Part D plan sponsors, respectively, to submit to CMS all information that is necessary for CMS “to administer and evaluate” the MA and Part D programs and to facilitate informed enrollment decisions by beneficiaries. Part D plan sponsors are also required to report all data elements included in all its drug claims by § 423.505(f)(3). Sections 422.504(f)(2), 422.516(a), 423.505(f)(2), and 423.514(a) each list general topics of information and data to be provided to CMS, including benefits, enrollee costs, quality and performance, cost of operations, information demonstrating that the plan is fiscally sound, patterns of utilization, information about beneficiary appeals, and information regarding actions, reviews, findings, or other similar actions by States, other regulatory bodies, or any other certifying or accrediting organization.
For many years, CMS has used this authority to collect retrospective information from MA organizations and Part D plan sponsors according to the Parts C and D Reporting Requirements that we issue each year, which can be accessed on CMS's website.
Additionally, we proposed to amend §§ 422.516(a)(2) and 423.514(a)(2) to make an affirmative change regarding CMS's collection of information related to what occurs from beginning to end when beneficiaries seek to get coverage from their Medicare health and drug plans for specific services. Both §§ 422.516(a)(2) and 423.514(a)(2) currently require plans to report “[t]he patterns of utilization of services.” We proposed to amend both sections to read, “The procedures related to and utilization of its services and items” to clarify that these regulations authorize reporting and data collection about MA organizations and Part D plan sponsor procedures related to coverage, utilization in the aggregate, and beneficiary-level utilization, including the steps beneficiaries may need to take to access covered benefits. Such information will ensure that CMS may better understand under what circumstances plans choose whether to provide or pay for a service or item.
CMS did not propose to change specific current data collection efforts through this rulemaking. While §§ 422.516(a) and 423.514(a) provide CMS extensive flexibility in the time and manner in which we can collect data from MA organizations and Part D plan sponsors, we will continue to address future standardized information collection of the Parts C and D reporting requirements, as necessary, through the Office of Management and Budget (OMB) Paperwork Reduction Act (PRA) process, which would provide advance notice to interested parties and provides both a 60 and 30 day public comment period on drafts of the proposed collection.
We do not believe the proposed changes to §§ 422.516(a) and 423.514(a) have either paperwork burden or impact on the Medicare Trust Fund at this time. These proposed changes allow CMS, in the future, to add new burden to plans in collection efforts; however, any such new burden associated with a new data collection would be estimated through the PRA process, as applicable.
We received the following comments, and our responses follow.
While 42 CFR 422.516(a) and 423.514(a)
When creating any new data collection initiative, we will consider and account for the impact the initiative would have on plans and sponsoring organizations and will make an effort to avoid creating excessive burdens, both when necessary to comply with the PRA and as part of our administration of the programs even if the PRA is not applicable. Further, in developing additional meaningful future data collection changes, we are committed to obtaining input from all interested parties as necessary. As we stated in our proposal, the OMB PRA process provides advance notice to interested parties and provides both a 60- and 30-day public comment period on drafts of the proposed collection. Interested parties will have an opportunity to comment on specific guidelines for reporting requirements under consideration.
After consideration of all public comments and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing this provision as proposed, with a minor modification at § 422.516(a) to replace the term “doctor-patient relationship” with “provider-patient relationship”.
We proposed to amend the Parts C and D regulations at §§ 422.582(b), 422.584(b), 422.633(d)(1), 423.582(b), 423.584(b) and 423.600(a) with respect to how long an enrollee has to file an appeal with a plan or the Part D Independent Review Entity (IRE). These amendments were proposed to ensure consistency with the regulations at §§ 422.602(b)(2), 423.2002(d), 422.608, and 423.2102(a)(3), applicable to Administrative Law Judge (ALJ) and Medicare Appeals Council (Council) reviews. These ALJ and Council regulations state or cross-reference the Medicare FFS regulations at 42 CFR part 405 that prescribe that the date of
Pursuant to our authority under section 1856(b) and 1860D-12 of the Act to adopt standards to carry out the Part C and Part D programs, and in order to implement sections 1852(g)(2) and 1860D-4(g) and (h) of the Act regarding coverage decisions and appeals, CMS established procedures and minimum standards for an enrollee to file an appeal regarding benefits with an MA organization, Part D plan sponsor, and IREs. These requirements are codified in regulation at 42 CFR parts 422 and 423, subpart M. See also section 1876(c)(5) of the Act regarding cost plans' obligations to have appeal processes.
Specifically, section 1852(g)(2)(A) of the Act requires that an MA organization shall provide for reconsideration of a determination upon request by the enrollee involved. The reconsideration shall be made not later than 60 days after the date of the receipt of the request for reconsideration. Section 1860D-4(g)(1) of the Act requires that a Part D plan sponsor shall meet the requirements of paragraph (2)(A) of section 1852(g) with respect to providing for reconsideration of a determination upon request by the enrollee involved.
While section 1852 of the Act does not specify the timeframe in which an enrollee must request an appeal of an unfavorable organization determination, integrated organization determination or coverage determination, the timeframe for filing an appeal in the Part C and Part D programs is established in regulations. Sections 422.582(b), 422.633(d)(1), and 423.582(b) state that an appeal must be filed within 60 calendar days from the date of the notice issued as a result of the organization determination, integrated organization determination, coverage determination, or at-risk determination. Plans are permitted to extend this filing deadline for good cause.
As noted in the proposed rule, we continue to believe that a 60 calendar day filing timeframe strikes an appropriate balance between due process rights and the goal of administrative finality in the administrative appeals process. However, to establish consistency with the regulations applicable to ALJ and Council reviews with respect to receipt of the notice of decision or dismissal and how that relates to the timeframe for requesting an appeal, we proposed to account for a presumption that it will generally take 5 calendar days for a notice to be received by an enrollee or other appropriate party. Therefore, we proposed to revise §§ 422.582(b), 422.633(d)(1)(i), 423.582(b), and 423.600(a) to state that a request for a Part C reconsideration, Part D redetermination, Part D at-risk redeterminations and Part D IRE reconsiderations must be filed within 60 calendar days after receipt of the written determination notice. We also proposed to add new §§ 422.582(b)(1), 422.633(d)(1)(i), and 423.582(b)(1), to provide that the date of receipt of the organization determination, integrated organization determination, coverage determination, or at-risk determination is presumed to be 5 calendar days after the date of the written organization determination, integrated organization determination, coverage determination or at-risk determination, unless there is evidence to the contrary. Based on CMS's experience with audits and other similar review of plan documents, we realized that it was standard practice that the date of the written decision notice is the date the plan sends the notice. The presumption that the notice is received 5 calendar days after the date of the decision is a long-standing policy with respect to IRE appeals and has been codified in regulation at §§ 422.602(b)(2), 423.2002(d), and 423.2102(a)(3) regarding hearings before an ALJ and Council; further, § 422.608 regarding MA appeals to the Medicare Appeals Council provides that the regulations under part 405 regarding Council review apply to such MA appeals, which would include the provision at § 405.1102(a)(2) that applies the same 5 calendar day rule. To ensure consistency throughout the administrative appeals process, we proposed to adopt this approach for plan and Part D IRE appeals in §§ 422.582(b), 422.633(d)(1), 423.582(b), 423.584 and 423.600(a).
In addition to the aforementioned proposals related to when an organization determination, integrated organization determination, coverage determination, or at-risk determination is presumed to be received by an enrollee of other appropriate party, we also proposed adding language to §§ 422.582, 422.633, 423.582 and 423.600(a) that specifies when an appeal is considered filed with a plan and the Part D IRE. Specifically, we proposed to add new §§ 422.582(b)(2), 422.633(d)(1)(ii), 423.582(b)(2) and 423.600(a) to provide that for purposes of meeting the 60 calendar day filing deadline, the appeal request is considered filed on the date it is received by the plan, plan-delegated entity or Part D IRE specified in the written organization determination, integrated organization determination, coverage determination, at-risk determination, or redetermination. As stated in the proposed rule, inclusion of when a request is considered filed would codify what currently exists in CMS's sub-regulatory guidance and the Part D IRE procedures manual. CMS's sub-regulatory guidance indicates that a standard request is considered filed when any unit in the plan or delegated entity receives the request. An expedited request is considered filed when it is received by the department responsible for processing it. Pursuant to existing manual guidance, plan material should clearly state where requests should be sent, and plan policy and procedures should clearly indicate how to route requests that are received in an incorrect location to the correct location as expeditiously as possible.
These proposed revisions related to when a notice is presumed to have been received would ensure that the time to request an appeal is not truncated by the time it takes for a coverage decision notice to reach an enrollee by mail or other delivery method. We noted that if the proposals were finalized, corresponding changes would be made to the Part C and Part D standardized denial notices so that enrollees are accurately informed of the timeframe for requesting an appeal.
We also proposed clarifications to §§ 422.584(b) and 423.584(b) to explicitly state the timeframe in which an enrollee must file an expedited plan appeal for it to be timely. The current text of §§ 422.584 and 423.584 does not include the 60 calendar day timeframe for filing an expedited appeal request, but as noted in the proposed rule, CMS manual guidance for Part C and Part D appeals has long reflected this 60 calendar day timeframe. We also noted that this timeframe for filing an appeal is consistent with the current regulations at §§ 422.582(b) and 423.582(b) for filing a request for a standard appeal. Neither sections 1852 and 1860D-4 of the Act, nor §§ 422.584 and 423.584 specify the timeframe in which an enrollee must request an expedited appeal of an unfavorable organization determination, coverage determination or at-risk determination in the Part C and Part D programs. This provision would codify existing
If finalized, we believe these proposals will enhance consistency in the administrative appeals process and provide greater clarity on the timeframe for requesting an appeal and when an appeal request is considered received by the plan. Theoretically, the proposed amendments may result in a small increase in the number of appeals from allowing 65 versus 60 days to appeal an organization determination, integrated organization determination, coverage determination or at-risk determination. However, based on the low level of dismissals at the plan level due to untimely filing, we believe most enrollees who wish to appeal a denial do so immediately, thereby mitigating the impact of 5 additional days for a plan to accept an appeal request if this proposal is finalized. Consequently, we do not believe there is an impact to the Medicare Trust Fund. We solicited interested party input on the accuracy of this assumption.
We received the following comments, and our responses follow.
After consideration of the public comments, and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the revisions to §§ 422.582, 422.584, 422.633, 423.582, 423.584, and 423.600 as proposed.
Section 1851(c)(1) of the Act gives the Secretary the authority to establish a process through which MA elections, that is, enrollments and disenrollments, are made and changed. This authority includes establishing the form and manner in which elections are made. Section 1860D-1(b)(1)(A) of the Act gives the Secretary the authority to establish a process for enrollment, disenrollment, termination, and change of enrollments in Part D prescription drug plans. Likewise, section 1860D-1(b)(1)(B)(ii) of the Act directs CMS to use rules similar to those established in the MA context pursuant to 1851(c) for purposes of establishing rules for enrollment, disenrollment, termination, and change of enrollment with an MA-PD plan.
Consistent with these sections of the Act, Parts C and D regulations set forth our election processes under §§ 422.60 and 423.32. These enrollment processes require that Part C/D eligible individuals wishing to make an election must file an appropriate enrollment form, or other approved mechanism, with the plan. The regulations also provide information for plans on the process for accepting election requests, notice that must be provided, and other ways in which the plan may receive an election on behalf of the beneficiary.
Though the term “authorized representative” is not used in the context of the statutory provisions within the Act governing MA and Part D enrollment and eligibility (
In the June 1998 interim final rule that first established the M+C program, now the MA program (63 FR 34985), we acknowledged in Part C enrollment regulations at § 422.60(c) that there are situations where an individual may assist a beneficiary in completing an enrollment request and required the individual to indicate their relationship to the beneficiary. In the Medicare Program; Medicare Prescription Drug Benefit final rule which appeared in the
Historically, we have provided the definition and policies related to authorized representatives in our sub-regulatory manuals.
Current regulation in § 423.32(b)(i) acknowledges that an “authorized representative” may assist a beneficiary in completing an enrollment form, but it does not define who an “authorized representative” is. A similar term, “representative,” is currently defined under §§ 422.561 and 423.560; however, that definition is used only in the appeals context and applies only to subpart M of the MA and Part D regulations. Therefore, we proposed to define the term “authorized representative” for subpart B (eligibility, election, and enrollment).
Our proposal deferred to the law of the state in which the beneficiary resides to determine who is a legal representative. Deference to state law on these matters is consistent with other similar practices within CMS, including in the MA appeals definition of “representative” (§ 422.561) and Medicaid's definition of “authorized representative” (§§ 435.923; 438.402), as well as in the HIPAA Privacy Rule description of “personal representative” (45 CFR 164.502(g)).
For those with state legal authority to act and make health care decisions on behalf of a beneficiary, we proposed to codify at paragraph (h)(1) of § 422.60 and (h)(1) of § 423.32 that authorized representatives will constitute the “beneficiary” or the “enrollee” for the purposes of making an election, meaning that CMS, MA organizations, and Part D sponsors will consider the authorized representative to be the beneficiary/enrollee during the election process. Any mention of beneficiary/enrollee in our enrollment and eligibility regulations would be considered to also include “authorized representative,” where applicable. Our proposal at paragraph (h)(2) of § 422.60 and (h)(2) of § 423.32 clarified that authorized representatives under state law may include court-appointed legal guardians, durable powers of attorney for health care decisions and state surrogate consent laws as examples of those state law concepts that allow the authorized representative to make health care decisions on behalf of the individual. This is not a complete list; we would defer to applicable state law granting authority to act and make health care decisions on behalf of the beneficiary.
Codifying this longstanding guidance provides plans, beneficiaries and their caregivers, and other interested parties clarity and transparency on the requirements when those purporting to be the representatives of the beneficiary attempt to make election decisions on their behalf. We have not received negative public feedback on this longstanding policy. However, we have recently answered questions on plan procedures when dealing with authorized representatives. We proposed to codify this longstanding guidance in order to clarify our policy regarding the role of authorized representatives in the MA and Part D enrollment process, including the applicability of state law in this context.
This proposal codifies longstanding MA and Part D sub-regulatory guidance. Based on questions from plans and beneficiaries related to current guidance, we concluded that the guidance had been previously implemented and is currently being followed by plans. Therefore, we concluded there was no additional paperwork burden associated with codifying this longstanding sub-regulatory policy, and there would also be no impact to the Medicare Trust Fund. All information impacts related to the current process for determining a beneficiary's eligibility for an election period and processing election requests have already been accounted for under OMB control numbers 0938-0753 (CMS-R-267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141).
We received the following comments, and our responses follow.
We also clarify that assisting a beneficiary in the enrollment process is different from representing that beneficiary in a legal capacity. For example, a family member might help an individual read and fill out an enrollment application, but they are not completing the application on behalf of the individual. Assisting a family member is different from attesting that they are acting on their behalf as an authorized representative. If an individual is merely receiving assistance with the application, they would still complete and sign their own application. Whereas an authorized representative provides their signature and an attestation that they are authorized by law to act on the individual's behalf.
After consideration of all public comments and for the reasons discussed here and in the proposed rule, we are finalizing our proposal with a technical change to add the language as new paragraphs §§ 422.60(i) and 423.32(j) instead of §§ 422.60(h) and 423.32(h).
Section 1851(e) of the Act establishes the coverage election periods for making or changing elections in the M+C, later known as MA, program. Section 501(b) of the Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) amended Section 1851(e)(2) of the Act by adding a new subparagraph (D), which provides for continuous open enrollment for institutionalized individuals after 2001. CMS published a final rule with comment period (65 FR 40317) in June 2000 implementing section 1851(e)(2)(D) by establishing a new continuous open enrollment period for institutionalized individuals (OEPI) at then § 422.62(a)(6). In subsequent rulemaking (83 FR 16722), the OEPI regulations were further updated to reflect conforming changes related to implementation of Title II of The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) (70 FR 4717) and to redesignate this provision from § 422.62(a)(6) to (a)(4).
As noted above, the OEPI is continuous. Individuals may use the OEPI to enroll in, change, or disenroll from a plan. Individuals are eligible for the OEPI if they move into, reside in, or move out of an institution. Longstanding sub-regulatory guidance has stated that the OEPI ends 2 months after an individual moves out of an institution, but this has not been articulated in regulations.
To provide transparency and stability for plans, beneficiaries and their caregivers, and other interested parties about this aspect of MA enrollment, we proposed in the November 2023 proposed rule to codify current sub-regulatory guidance that defines when the OEPI ends. Specifically, we proposed to codify at new subparagraph § 422.62(a)(4)(ii) that the OEPI ends on the last day of the second month after the month the individual ceases to reside in one of the long-term care facility settings described in the definition of “institutionalized” at § 422.2.
This proposal defined when the OEPI ends and would not result in a new or additional paperwork burden since MA organizations are currently implementing the policy related to the OEPI end date as part of existing enrollment processes. All burden impacts related to an applicant's eligibility for an election period have already been accounted for under OMB control number 0938-0753 (CMS-R-267). Similarly, we stated in the proposed rule that we did not believe the proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
After consideration of all public comments and for the reasons described here and in the November 2023 proposed rule, we are finalizing our proposal to amend § 422.62(a)(4) without modification.
Section 1851(f) of the Act establishes the effective dates of elections and changes of elections for MA plans. In the June 1998 interim final rule, we specified the effective dates for elections and changes of elections of M+C (now MA) plan coverage made during various specified enrollment periods (63 FR 34968). The effective date requirements for the initial coverage election period (ICEP), annual election period (AEP), MA open enrollment period (MA-OEP), open enrollment period for institutionalized individuals (OEPI), and special election periods (SEP) are codified in regulation at § 422.68. For Part D plans, section 1860D-1(b)(1)(B)(iv) of the Act directs us to establish similar rules for effective dates of elections and changes of elections to those provided under the MA program statute at section 1851(f). In the January 2005 Part D final rule, we specified the effective dates for elections and changes of elections of Part D coverage made during various specified enrollment periods (70 FR 4193). The effective date requirements for the initial enrollment period (IEP) for Part D, AEP, and SEPs are codified in regulation at § 423.40.
Existing regulations at §§ 422.68 and 423.40 do not address what the MA organization or Part D plan sponsor should do when a beneficiary is eligible for more than one election period, thus resulting in more than one possible effective date for their election choice. For example, the beneficiary is eligible to make a change in their election choice during the MA-OEP, but they are also eligible for an SEP due to changes in the individual's circumstances. Current sub-regulatory guidance provides that the MA organization or Part D plan sponsor determine the proper effective date based on the election period for which the beneficiary is eligible before the enrollment or disenrollment may be transmitted to CMS.
Because a beneficiary must be entitled to Medicare Part A and enrolled in Medicare Part B in order to be eligible to receive coverage under an MA or MA-PD plan, CMS's sub-regulatory guidance
Furthermore, sub-regulatory guidance
To provide transparency and stability about the MA and Part D program for plans, beneficiaries, and other interested parties, we proposed at new §§ 422.68(g) and 423.40(f) that if the MA organization or Part D plan sponsor receives an enrollment or disenrollment request, determines the beneficiary is eligible for more than one election period and the election periods allow for more than one effective date, the MA organization or Part D plan sponsor must allow the beneficiary to choose the election period that results in the desired effective date. We also proposed at §§ 422.68(g)(1) and 423.40(f)(1) that the MA organization or Part D plan sponsor must attempt to contact the beneficiary and must document its attempt(s) to determine the beneficiary's choice. The plan may contact the beneficiary by phone, in writing, or any other communication mechanism. Plans would annotate the outcome of the contact(s) and retain the record as part of the individual's enrollment or disenrollment request. In addition, we proposed at §§ 422.68(g)(2) and 423.40(f)(2) to require that the MA organization or Part D plan sponsor must use the proposed ranking of election periods to assign an election period if the beneficiary does not make a choice. With the exception of the SEP EGHP noted earlier, if a beneficiary is simultaneously eligible for more than one SEP and they do not make a choice, and the MA organization or PDP sponsor is unable to obtain the beneficiary's desired enrollment effective date, the MA organization or PDP sponsor should assign the SEP that results in an effective date of the first of the month after the enrollment request is received by the plan. Finally, we proposed at §§ 422.68(g)(3) and 423.40(f)(3) to require that if the MA organization or Part D plan sponsor is unable to obtain the beneficiary's desired disenrollment effective date, they must assign an election period that results in the earliest disenrollment.
This proposal represented the codification of longstanding MA and Part D sub-regulatory guidance. Based on infrequent complaints and questions from plans and beneficiaries related to current guidance, we concluded that the guidance has been previously implemented and is currently being followed by plans. We concluded that there was no additional paperwork burden associated with codifying this longstanding sub-regulatory policy, and there was also no impact to the Medicare Trust Fund. All information impacts related to the current process for determining a beneficiary's eligibility for an election period and processing election requests have already been accounted for under OMB control number 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-10141) for Part D.
We received the following comments, and our responses follow.
After consideration of all public comments, for the reasons described here and in the November 2023 proposed rule, we are finalizing our proposal at §§ 422.68(g) and 423.40(f) without modification.
In the December 2022 proposed rule, CMS proposed to add a new paragraph (4) at §§ 422.2274(g) and 423.2274(g) to address issues with third party marketing organizations (TPMOs) distributing beneficiary contact information to other TPMOs, in any manner, including selling this information.
As discussed in the December 2022 proposed rule, CMS has learned through environmental scanning efforts that the selling and reselling of beneficiary contact information is happening as described here and that beneficiaries are unaware that by placing the call or clicking on the web-link they are unwittingly agreeing for their contact information to be collected and sold to other entities and providing consent for future marketing activities. We did not believe that beneficiaries knowingly gave their permission to receive multiple calls from multiple different entities based on a single call made by a beneficiary and that beneficiaries intended in these scenarios that their information would be received only by one entity, that being the plan or agent or broker that will ultimately receive the beneficiary's enrollment request. As another example of this type of behavior, we noted in the December 2022 proposed rule that CMS was aware of situations where entities require the beneficiary to agree to allowing their contact information to be resold or shared prior to speaking with a representative or having access to any information. In these situations, a beneficiary initiates contact with one entity and then ends up receiving calls from multiple other unrelated entities. Additionally, we asserted that providing a quickly read disclaimer or providing a disclaimer in very small print or placing a disclaimer in an inconspicuous place when that disclaimer indicates that a beneficiary's contact information may be provided or sold to another entity or party, are considered misleading marketing tactics because these entities are using beneficiary contact information in a manner in which the beneficiary did not intend.
In order to address this type of activity, we proposed to add a new paragraph (4) to §§ 422.2274(g) and 423.2274(g) that would prohibit TPMOs from distributing any personal beneficiary data that they collect to other TPMOs. In the December 2022 proposed rule, we noted that this proposal was consistent with the statutory prohibition on unsolicited contact contained within sections 1851(j)(1)(A) and 1860D-04(l)(1) of the Act, as well as the corresponding CMS regulations at 42 CFR 422.2264(a)(3) and 423.2264(a)(3). In addition, we note that CMS's authority to promulgate rules related to TPMOs in this circumstance also derives from sections 1851(h)(4)(C)
As noted above, CMS proposed in the December 2022 proposed rule to modify §§ 422.2274(g) and 423.2274(g) to prohibit TPMOs from distributing personal beneficiary data to other TPMOs. However, in light of the comments received on our proposal, which we discuss further below, and for the reasons discussed in our responses, we are instead finalizing § 422.2274(g)(4) and 423.2274(g)(4) with revisions compared to our proposal in the December 2022 proposed rule, which will permit TPMOs to share personal beneficiary data with other TPMOs for marketing or enrollment purposes only if they first obtain express written consent from the relevant beneficiary. In our below responses to comments received regarding the proposed changes to §§ 422.2274(g)(4) and 423.2274(g)(4), we further articulate what TPMOs will be required to do to conform with this consent requirement, including what should be included in a disclosure to beneficiaries.
We acknowledge that other agencies regulate certain types of information collection and sharing of personal information, such as the Department of Health and Human Services' Office for Civil Rights (OCR), the Federal Trade Commission (FTC), and the Federal Communications Commission (FCC). OCR administers and enforces the HIPAA Privacy Rule (45 CFR parts 160 and 164 subparts A and E) which provides standards for the use and disclosure of protected health information by HIPAA covered entities and business associates. A covered entity is a health care provider that conducts certain health care transactions electronically, a health plan, or a health care clearinghouse, while a business associate is a person or entity, other than a member of the workforce of a covered entity, who performs functions or activities on behalf of, or provides certain services to, a covered entity that involve access by the business associate to protected health information.
As such, it becomes relevant for this final rule whether TPMOs are covered entities or business associates that must comply with the HIPAA Privacy Rule. TPMOs (as defined at § 422.2260) have varying degrees of business and contractual arrangements with MA organizations and Part D sponsors (who are covered entities under the HIPAA Privacy Rule) and may or may not be considered business associates under the HIPAA Privacy Rule. It is the responsibility of the TPMO to understand whether they are a covered entity or acting as a business associate when collecting personal beneficiary data that meets the definition of protected health information. If the TPMO is a covered entity or business associate, the TPMO must ensure they are compliant with the HIPAA Privacy, Security, and Breach Notification Rules when using or disclosing an individual's protected health information.
On December 13, 2023, in the Second Report and Order
The FTC also enforces rules and regulations that apply to TPMOs, such as the Telemarketing Sales Rule (TSR)
We received the following comments on this proposal and our responses follow:
We are codifying the regulation text in a way that is generally consistent with the one-to-one consent structure announced by the FCC in the Second Report and Order
We believe that prior express written consent, one-to-one from person to seller, through a clear and conspicuous disclosure to share personal beneficiary data with another TPMO, is a reasonable and less restrictive standard than a “complete prohibition” on the sharing of personal beneficiary data with other TPMOs. This consent and disclosure are necessary to provide beneficiaries with the information they need to understand where their personal data is going, what they are consenting to being contacted about, and who will be contacting them for health care options. Prior express
In addition, this rule will prevent the sharing of personal beneficiary data with another TPMO unless expressly authorized by the beneficiary, which means beneficiaries will not be called by TPMOs with whom they have not given permission to be called, even when the new FCC rule does not apply (
We understand that sometimes a beneficiary can be connected to another TPMO in real time. For example, a beneficiary may call a TPMO seeking to get information about Medicare plan options and that TPMO, in order to assist the beneficiary, may be able to
Our final rule applies when personal beneficiary data is collected by a TPMO for purposes of marketing or enrolling them into an MA plan or Part D plan. Therefore, if a TPMO collects a beneficiary's personal beneficiary data with the purpose of eventually marketing or enrolling that beneficiary into an MA or Part D Plan, it would be inappropriate for that TPMO to share the beneficiary's data with a second TPMO without the beneficiary's consent, even if that second TPMO does not plan to conduct any marketing or enrollment activities. If the beneficiary's data was collected and sold with the purpose of eventually marketing to the person or enrolling them into an MA or Part D plan (
As a commenter pointed out, the statute that prohibits certain marketing practices at § 1851(h)(4)(C) applies to MA organizations or
TPMOs that engage in the marketing and enrollment of Medicare beneficiaries must also comply with other rules that govern telephonic marketing and communication. The TCPA, governed by the FCC, restricts making telemarketing calls and texts with automatic telephone dialing systems or artificial or prerecorded voice. Similarly, the TSR, governed by the FTC, generally prohibits initiating any outbound telephone call that delivers a prerecorded message unless the seller has obtained from the recipient of the call an express agreement, in writing, that the seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person.
As described at §§ 422.2264(a)(2)(iv) and 423.2264(a)(2)(iv), an MA organization, Part D sponsor or its agents and brokers may not make unsolicited telemarketing calls, and §§ 422.2264(a)(3) and 423.2264(a)(3) explains that calls are not considered unsolicited if the beneficiary provides consent or initiates contact with the plan. By requiring TPMOs to obtain a beneficiary's consent to be contacted along with their consent to share their personal data for purposes of marketing or enrollment, we are ensuring that any entity that receives the lead information that includes personal beneficiary data, has appropriate permission by way of one-to-one consent from the beneficiary to contact them in accordance with §§ 422.2264(a)(3) and 423.2264(a)(3). We note that rules at §§ 422.2264(b) and 423.2264(b) describe when MA organizations or Part D sponsors may contact current and former enrollees to discuss plan business. Calls that qualify as “plan business” are not considered “unsolicited” but in accordance with §§ 422.2264(b)(2) and 423.2264(b)(2), MA organizations and Part D sponsors must provide notice to all beneficiaries whom the plan contacts as least once annually, in writing, of the individual's ability to opt out of future calls regarding plan business.
A commenter pointed out that TPMOs share beneficiary data for reasons unrelated to direct contact with beneficiaries. For example, a TPMO could collect a beneficiary's personal data and have no intention of directly contacting them. They could sell it, use it for modeling or technology development, or for some other purpose. Ultimately, that information was provided by the beneficiary to assist in helping them select a health plan, and therefore prior express written consent to share that data with another TPMO must be given by the beneficiary under this rule. Our primary justification for imposing these data restrictions is to reduce or eliminate unwanted calls that potential enrollees are receiving from agents and brokers or other TPMOs. Therefore, if the data is de-identified or redacted in a way where the data cannot be used to contact the beneficiary as a potential sales lead, and the purpose of the data sharing is not related to marketing or enrollment, a TPMO can share the de-identified data with other TPMOs without prior express written consent. We are concerned that allowing the sharing of the full data under the guise of “modeling” or technology development” could be abused by TPMOs as a means to move potential sales leads without consent. We reiterate that it makes no difference if the TPMO collects the personal beneficiary data without any intention of directly contact that person. It would be non-compliant with this rule to share the personal beneficiary data with another TPMO without prior express written consent from the beneficiary.
CMS understands the important role TPMOs can play in determining which is the best plan to meet a beneficiary's health needs. In this final rule, the beneficiary can still opt in to having their information shared with as many TPMOs as they'd like. A clear and conspicuous disclaimer will ensure that for each authorization for contact a beneficiary provides, they have full knowledge of who is receiving their information and the ability to knowingly and clearly consent to being contacted by this entity. We agree with commenters that beneficiaries should be able to easily and simply access information about plan options but disagree that putting some safeguards on how a beneficiary's personal data is shared will put a greater burden on beneficiaries. This final rule ensures that the beneficiary has the choice and ability to decide whether and who can contact them, while allowing TPMOs to continue supporting consenting beneficiaries by connecting them to the appropriate people that can help the beneficiary enroll in a plan that best meets their health care needs.
We believe TPMOs and beneficiaries will benefit from this rule because it will ensure that beneficiaries are receiving information and being contacted by the entities they explicitly consent to speaking with and TPMOs will be better able to support the individual beneficiary. The clear and conspicuous disclaimer will allow TPMOs to further educate beneficiaries about who they need to be connected with in order to find the best plan for their healthcare needs while ensuring a safer and more engaging environment for beneficiaries. Additionally, this rule applies solely to sharing personal beneficiary data for the purposes of marketing or enrollment and ensures that TPMOs are still able to share this data for other activities, provided they are compliant with other agencies that govern personal information and data sharing (such as the OCR).
We acknowledge that this may shift how some TPMOs currently share personal beneficiary data but there are a variety of approaches that TPMOs can use to ensure obtaining a beneficiary's one-to-one consent is easy, accessible and straightforward for beneficiaries. For example, through a clear and conspicuous disclosure on a website, a TPMO could provide a check box list that allows the beneficiary to choose each TPMO that they want to hear from. We believe beneficiaries are best served by having the ability to affirmatively consent to who is contacting them.
Under amended regulations that CMS is adopting in this final rule at §§ 42 CFR 422.2274(g)(4) and 423.2274(g)(4), a TPMO may not share any personal beneficiary data with a TPMO that is a different legal entity unless prior express written consent has been given by the beneficiary. This includes sharing information with another legal entity that shares the same parent organization or has a contract to perform a downstream function of the organization; prior express written consent from the beneficiary is required under both circumstances. We do not believe that just because another entity is “affiliated” with an organization, that the organization has the right to share a beneficiary's information with that other entity without the knowing consent of the beneficiary. This includes the sharing of beneficiary data among two
In summary, we are not finalizing the rule as proposed at §§ 422.2274(g)(4) and 423.2274(g)(4) that personal beneficiary data collected by a TPMO may not be distributed to other TPMOs. After considering the comments received in response to this proposal, and for the reasons that we have discussed in our responses, we are finalizing §§ 422.2274(g)(4) and 423.2274(g)(4) with revisions that provide that personal beneficiary data collected by a TPMO for marketing or enrolling them into an MA or Part D plan may only be shared with another TPMO when prior express written consent is given by the beneficiary. Also, we explain that prior express written consent from the beneficiary to share the data and be contacted for marketing or enrollment purposes must be obtained through a clear and conspicuous disclosure that lists each entity receiving the data and allows the beneficiary to consent or reject to the sharing of their data with each individual TPMO. To align with our other marketing changes for agent broker compensation, and to coincide with the beginning of marketing and enrollment activities for the 2025 contract year, we are delaying the applicability of these changes to §§ 422.2274(g) and 423.2274(g) October 1, 2024. Therefore, any personal beneficiary data shared by a TPMO with another TPMO for purposes of marketing or enrollment must have prior express written consent by the beneficiary beginning on October 1, 2024. This includes beneficiary data that is collected prior to October 1, 2024, but will be transferred or shared with another TPMO on or after October 1, 2024. Simply put, TPMOs must have prior express written consent to share a beneficiary's personal data on or after October 1, 2024.
Section 1851(h) and (j) of the Act provide a structural framework for how MA organizations may market to beneficiaries and direct CMS to set standards related to the review of marketing materials and establish limitations on marketing activities, as part of the standards for carrying out the MA program under section 1856(b) of the Act. In the January 2021 final rule, CMS used this statutory authority to codify guidance from the Medicare Communications & Marketing Guidelines (MCMG) into subpart V of part 422 (86 FR 5864). Several commenters in that prior rulemaking urged CMS to add specific provisions in the marketing and communications regulations regarding how MA organizations may market SSBCI described in § 422.102(f). In response, CMS established a new requirement for a disclaimer to be used when SSBCI are mentioned. The SSBCI disclaimer was originally codified at § 422.2267(e)(32), and it currently appears at paragraph (e)(34). Currently, that regulation requires MA organizations to: (i) convey that the benefits mentioned are a part of special supplemental benefits, (ii) convey that not all members will qualify for these benefits; and (iii) include the model content in the material copy which mentions SSBCI benefits. Section 422.2267(e)(34) does not explicitly state that it applies to both marketing and communications materials, but our sub-regulatory guidance is clear that it applies whenever SSBCI are mentioned; the disclaimer is required regardless of whether the material that mentions the benefits is a marketing or communications material. The purpose of the SSBCI disclaimer is to ensure that beneficiaries are aware that SSBCI are not available to all plan enrollees and that the eligibility for these benefits is
Per the January 2021 final rule, MA organizations were required to comply with the new SSBCI disclaimer requirement for coverage beginning January 1, 2022. Since MA organizations had over a year to implement their use of the SSBCI disclaimer at the time of the November 2023 proposed rule, we took an opportunity to reevaluate the requirement at § 422.2267(e)(34), considering our observation of its actual implementation.
MA organizations market SSBCI by advertising various benefits, including coverage of groceries, pest control, prepared meals, household items, gasoline, utility bills, auto repair, pet supplies or grooming, and more. Although some of these SSBCI items and services may be available under a given plan, the enrollee must meet the criteria established to receive a particular SSBCI. In many instances, MA organizations have been found to use marketing to potentially misrepresent the benefit offered, often not presenting a clear picture of the benefit and limits on eligibility. In a May 2022 letter sent to Congress, the National Association of Insurance Commissioners (NAIC) detailed its findings from surveys with state departments of insurance, showing “an increase in complaints from seniors about confusing, misleading and potentially deceptive advertising and marketing of these plans.”
CMS has seen multiple examples of such misleading SSBCI ads among MA organizations. We have seen ads (for example, online, billboards, television) in which the MA organization presents an extensive list of benefits that are available, with this list being displayed prominently in large font and the SSBCI disclaimer appearing in very small font at the end of the ad. Often the disclaimer is brief, merely stating that the enrollee must have one of the identified chronic conditions in order to receive the benefit and that eligibility will be determined after enrollment, with no other information provided. A beneficiary reading such an ad could easily miss the small-size disclaimer at the end because their attention is immediately drawn to the long, attractive list of appealing benefits prominently displayed in large, bold font. This type of SSBCI marketing is potentially misleading because, at face value, it might appear to a beneficiary that if they enroll in the advertised plan, they can receive all the highlighted benefits, without any question as to the beneficiary's eligibility, what an eligibility determination entails, or when eligibility is assessed.
Based on our findings, we proposed to expand the current required SSBCI disclaimer to include more specific requirements, with the intention of increasing transparency for beneficiaries and decreasing misleading advertising by MA organizations. Our proposed expansion of the SSBCI disclaimer included a clarification of what must occur for an enrollee to be eligible for the SSBCI. That is, per § 422.102(f), the enrollee must first have the required chronic condition(s), then they must meet the definition of a “chronically ill enrollee” at section 1852(a)(3)(D)(iii) of the Act and § 422.102(f)(1)(i)(A), and finally the MA organization must determine that the enrollee is eligible to receive a particular SSBCI under the plan's coverage criteria. (See section IV.C. of this final rule for a more detailed discussion of the requirements for SSBCI.) An MA organization designs and limits its SSBCI to target specific chronic conditions. An enrollee might meet the definition of “chronically ill enrollee” but nonetheless be ineligible for the MA organization's advertised SSBCI because they do not have the specific chronic condition(s) required for the particular SSBCI being advertised. Taking these important SSBCI eligibility requirements into account, we proposed to amend the required SSBCI disclaimer content to clearly communicate the eligibility parameters to beneficiaries without misleading them. Specifically, at § 422.2267(e)(34), we proposed three key changes to the regulation and two clarifications.
First, we proposed to redesignate current paragraph (e)(34)(ii) as paragraph (e)(34)(iii) and add a new paragraph (e)(34)(ii), in which we proposed to require MA organizations offering SSBCI to list, in their SSBCI disclaimer, the chronic condition or conditions the enrollee must have to be eligible for the SSBCI offered by the MA organization. Per § 422.102(f)(1)(i)(A), a “chronically ill enrollee” must have one or more comorbid and medically complex chronic conditions to be eligible for SSBCI. (See section IV.C. of this final rule for a more detailed discussion of the definition of “chronically ill enrollee” and eligibility for SSBCI as part of our finalized provision to strengthen the requirements for how determinations are made that a particular item or service may be offered as SSBCI and eligibility determinations for SSBCI.) We proposed that if the number of condition(s) is five or fewer, then the SSBCI disclaimer must list all condition(s), and if the number of conditions is more than five, then the SSBCI disclaimer must list the top five conditions, as determined by the MA organization. For this top five list, we proposed that the MA organization has discretion to determine the five conditions to include. In making this determination, an MA organization might consider factors such as which conditions are more common or less obscure among the enrollee population the MA organization intends to serve. We explained that five was a reasonable number of conditions for the MA organization to list, so that a beneficiary might have an idea of the types of conditions that might be considered for eligibility for the SSBCI, without listing so many conditions that a beneficiary ignores the information.
Second, we proposed to revise newly redesignated paragraph (e)(34)(iii). Section 422.2267(e)(34)(ii) currently requires that MA organizations that offer SSBCI convey that not all members will qualify. We proposed to expand this provision to require that the MA organization must convey in its SSBCI disclaimer that even if the enrollee has a listed chronic condition, the enrollee may not receive the benefit because coverage of the item or service depends on the enrollee being a “chronically ill enrollee” as defined in § 422.102(f)(1)(i)(A) and on the MA organization's coverage criteria for a specific SSBCI item or service required
The SSBCI disclaimer is model content, so each MA organization may tailor their disclaimer's language to convey that, in addition to having an eligible chronic condition, the enrollee must also meet other eligibility requirements (
Third, at new proposed paragraph (e)(34)(iv), we proposed specific formatting requirements for MA organizations' SSBCI disclaimers in ads, related to font and reading pace. These proposed formatting requirements would apply to SSBCI disclaimers in any type of ad, whether marketing or communications. For print ads, we reiterated our existing requirement under paragraph (a)(1) that MA organizations must display the disclaimer in 12-point font, Times New Roman or equivalent. For television, online, social media, radio, or other-voice-based ads, we proposed that MA organizations must either: (1) read the disclaimer at the same pace as the organization does for the phone number or other contact information mentioned in the ad, or (2) display the disclaimer in the same font size as the phone number or other contact information mentioned in the ad. For outdoor advertising (ODA)—which is defined in § 422.2260 and includes billboards—we proposed that MA organizations must display the disclaimer in the same font size as the phone number or other contact information appearing on the billboard or other ODA. The specific font and reading pace requirements for the SSBCI disclaimer in ads would appear at new proposed paragraphs (e)(34)(iv)(A) and (B).
Finally, in revisiting the requirement at § 422.2267(e)(34), we explained that additional clarification of current requirements was appropriate. In the introductory language at paragraph (e)(34), we proposed a minor addition to clarify that the SSBCI disclaimer must be used by MA organizations who offer CMS-approved SSBCI (as specified in § 422.102(f)). Also, we proposed to revise current paragraph (e)(34)(iii) (requiring the MA organization to include the SSBCI disclaimer in the material copy which mentions SSBCI benefits) and move it to new proposed paragraph (v). In this newly redesignated paragraph (v), we proposed to clarify that MA organizations must include the SSBCI disclaimer in all marketing and communications materials that mention SSBCI. We also proposed a slight adjustment in this paragraph to delete the redundant word “benefits” after “SSBCI.”
In summary, we stated in the proposed rule that this proposal would expand upon the current SSBCI disclaimer requirements at § 422.2267(e)(34) in several important ways. Requiring a more robust disclaimer with specific conditions listed would provide beneficiaries with more information to determine whether a particular plan with SSBCI is appropriate for their needs. We explained that the revised disclaimer would diminish the ambiguity of when SSBCI are covered, thus reducing the potential for misleading information or misleading advertising. We also stated that our goal was to ensure that beneficiaries enrolling in MA choose a plan that best meets their health care needs. Transparency and precision in marketing and communications to current and potential enrollees was of utmost importance in our proposal.
We did not score this provision in the COI section since we believe all burden impacts of this provision have already been accounted for under OMB control number 0938-1051 (CMS-10260). In addition, this provision is not expected to have any economic impact on the Medicare Trust Fund.
We solicited comment on this proposal, including on the accuracy of our assumptions regarding information collection requirements and regulatory impact. We did not receive comment on our information collection requirements nor regulatory impact analyses for the proposed revisions to § 422.2267(e)(34) regarding the SSBCI disclaimer. We thank commenters for their input on CMS's proposed amendments to § 422.2267(e)(34). We received the following comments on this proposal, and our response follows:
We reiterate that the SSBCI disclaimer, currently and as revised in this rule, is model content, and MA organizations are not required to conform with a standardized template or model format provided by CMS, so long as the MA organization's materials accurately convey the required materials' vital information.
However, as provided earlier, some example SSBCI disclaimer language that MA organizations might use includes, “Eligibility for this benefit cannot be guaranteed based solely on your condition. All applicable eligibility requirements must be met before the benefit is provided. For details, please contact us.” We believe this example language is clear and simple. To address commenters' concerns about using simple, straightforward, and plain language, we offer here another example of some SSBCI disclaimer language that MA organizations might use: “Eligibility is determined by whether you have a chronic condition associated with this benefit. Standards may vary for each benefit. Contact us to confirm your eligibility for these benefits.” Again, we believe this additional example language is clear and easy to understand, which is vital to allowing beneficiaries to make informed health care decisions. We note that these examples of SSBCI disclaimer language capture only the requirements at § 422.2267(e)(34)(iii) and not paragraphs (e)(34)(i) or (ii). In addition to the information required at paragraph (e)(34)(iii), MA organizations must also provide the list of chronic conditions as required by paragraph (e)(34)(ii) as finalized.
MA organizations may decide how to present the SSBCI disclaimer and make the information within it more digestible so long as the content and formatting requirements in § 422.2267(e)(34), as finalized, are met. There is nothing precluding MA organizations from using visual aids or bullet points, provided they comply with the minimum requirements at § 422.2267(e)(34) as finalized. Regarding the comment recommending CMS test the communication with beneficiaries, we appreciate this recommendation and will take it under consideration for the future. We agree with commenters that the SSBCI disclaimer language should be clear for varying literacy levels, and we encourage MA organizations to consider these things as they develop their own unique disclaimers. We also encourage MA organizations to consult with health literacy experts as necessary to ensure the information contained in their SSBCI disclaimers is accessible and inclusive for all beneficiaries.
We disagree with commenters that there should be a separate link for the full SSBCI disclaimer and are finalizing the formatting requirements as proposed. The disclaimer needs to be on the ad itself because a link would not make it clear to the beneficiary that there are specific chronic conditions and other eligibility requirements associated with being able to access a particular advertised SSBCI. The SSBCI disclaimer ensures that beneficiaries are immediately aware of the eligibility criteria for an advertised SSBCI and can make informed decisions about their health care coverage options. From a beneficiary's perspective, linking elsewhere would not make the information clear and more accessible, but would instead lead to an unnecessary delay in the amount of time it takes for the beneficiary to receive the information by adding a burdensome extra step of clicking on a link or QR code. Realistically, most beneficiaries would probably not click on such a link. Regarding character limits or any other text limitations in a specific modality, if the disclaimer does not fit, then it is likely not the most suitable modality for an SSBCI marketing ad given the nature of these benefits and nuances that are necessary for a beneficiary to make an informed choice when considering SSBCI. Our requirement is that the disclaimer must be included in all marketing and communications materials that mention SSBCI and must follow all content requirements as specified in the finalized regulatory text. If an ad mentions an SSBCI without the required disclaimer, then it is out of compliance with CMS rules.
Regarding the comment about differences between VBID and SSBCI disclaimer requirements and potential beneficiary confusion, we note that the VBID model is administered under section 1115A of the Act, and there is authority to waive certain program requirements if necessary to test the payment or service model; we refer readers to the web page for the VBID model at:
First, we are changing the reference in paragraph (e)(34)(ii) from “MA organization” to “applicable MA plan(s)” to clarify that the SSBCI the MA organization advertises must be
Next, we are clarifying the requirements for the chronic conditions list in the SSBCI disclaimer by outlining several different scenarios and the requirements associated with each. Specifically, we are finalizing the regulation text with revisions to address: (1) when only one type of SSBCI is mentioned, and (2) when multiple types of SSBCI are mentioned. When only one type of SSBCI is mentioned, the regulation addresses two scenarios: (1) If the number of condition(s) is five or fewer, then the MA organization must list all condition(s); and (2) If the number of conditions is more than five, then the MA organization must list the top five conditions (as determined by the MA organization). When multiple types of SSBCI are mentioned, the regulation addresses two scenarios: (1) If the number of condition(s) is five or fewer, then the MA organization must list all condition(s), and if relevant, state that these condition(s) may not apply to all types of SSBCI mentioned; and (2) If the number of condition(s) is more than five, then the MA organization must list the top five conditions (as determined by the MA organization) for which one or more listed SSBCI is available.
We believe that making these modifications to clearly outline the different scenarios achieves the goal of limiting ambiguity for MA organizations, while simultaneously preserving our intention to ensure that SSBCI marketing and communications is transparent and not misleading for beneficiaries. Additionally, we believe an alternate approach of tying each listed chronic condition to each type of SSBCI mentioned would have been overly burdensome and resulted in a long, complex SSBCI disclaimer. Lastly, we would like to address the comment that listing only five chronic conditions may inadvertently lead enrollees with eligible conditions not listed to believe that they are not eligible for the SSBCI because it may give the impression that the five conditions listed are the only ones that are eligible. We agree that this is a valid concern, therefore, we are finalizing § 422.2267(e)(34)(ii) with a revision which requires that, in instances where the MA organization lists the top five conditions, but there are more than five conditions that may be eligible for the benefit, MA organizations must convey that there are other eligible conditions not listed. We believe that all these modifications are responsive to comments and further strengthen and clarify our SSBCI disclaimer requirements.
Regarding the concern about MA organizations potentially selecting conditions in a way that increases racial health disparities, we note that MA organizations are subject to anti-discrimination provisions under 45 CFR Part 92. Therefore, an MA organization that is found to be deliberately selecting chronic conditions for the list in their SSBCI disclaimer in a discriminatory manner, including a racially discriminatory manner, may face compliance action.
Regarding comments about the disclaimer content (specifically proposed § 422.2267(e)(34)(iii)) being potentially confusing to beneficiaries, we clarify here that MA organizations should not cite the CMS regulatory definition of “chronically ill enrollee” in their actual SSBCI disclaimer, as this would not make sense to beneficiaries. In addition, MA organizations must not simply state that if a beneficiary has an eligible chronic condition, then they
Therefore, we decline commenters' suggestions to withdraw this proposal. We note that we will continue to provide guidance to MA organizations and answer questions about the requirements for the SSBCI disclaimer and compliance with our other regulatory requirements. Lastly, we agree with commenters that agents and brokers, sales representatives, and customer service representatives play a critical role in communicating with beneficiaries and explaining SSBCI in a way that is easy for beneficiaries to understand.
Sections 1851(h) and 1852(j) of the Act provide CMS with the authority to review marketing rules, develop marketing standards, and ensure that marketing materials are accurate and not misleading. Additionally, these provisions provide CMS with the authority to prohibit certain marketing activities conducted by MA organizations and, when applicable, agents, brokers, and other third parties representing these organizations. Pursuant to section 1851(h)(1) and (2) of the Act and CMS's implementing regulations, MA organizations may not distribute any marketing material to MA-eligible individuals (including dually eligible individuals, when applicable) unless the material has been submitted to CMS for review and CMS has not disapproved such material. CMS's regulations at § 422.2262 provide, among other things, that MA organizations may not mislead, confuse, or provide materially inaccurate information to current or potential enrollees, or engage in activities that could misrepresent the MA organization. Section 422.2262 applies to all MA communications and marketing materials, including advertising on behalf of MA organizations. In accordance with regulations at § 422.2261, MA organizations must submit all marketing materials for CMS review and may not distribute or otherwise make available any marketing materials unless CMS has reviewed and approved the material, the material has been deemed approved, or the material has been accepted via CMS's File and Use process. Additionally, CMS routinely monitors MA marketing materials and may take compliance action if we determine that an MA organization is out of compliance with our rules. Considering the existing authority CMS has for oversight and enforcement, we believe this is sufficient to address commenters' concerns regarding dually eligible individuals and the SSBCI disclaimer.
We expect and require MA organizations whose audience may include dually eligible individuals to craft their ads and their SSBCI disclaimers in a way that is accurate and not misleading or confusing, in accordance with CMS rules. We recognize that partial-benefit dually eligible individuals and full-benefit dually eligible individuals have different levels of access to Medicaid benefits. For example, while full-benefit dually eligible individuals would generally have access to non-emergency transportation (NEMT) through their Medicaid coverage, partial-benefit dually eligible individuals generally would not. An MA organization advertising SSBCI that include NEMT would offer a new benefit for partial-benefit dually eligible individuals, but the NEMT generally would not be a new benefit for full-benefit dually eligible individuals. Given that both categories of dually eligible individuals may enroll in almost any non-SNP, it does not seem practical for MA organizations to tailor the SSBCI disclaimer in a way that describes which SSBCI would be covered under Medicaid, depending on the eligibility category of the dually eligible individual. In some states, Medicaid benefits may be limited to certain waiver participants or only covered in specific situations. At this time, we will not be modifying the SSBCI disclaimer further, but we understand commenters' concerns and will consider this for future rulemaking.
CMS disagrees with the commenter that the disclaimer should also include details about how a beneficiary can obtain the specific SSBCI eligibility criteria used by the MA organization. We agree that the potential eligibility criteria restrictions should be transparent and straightforward for beneficiaries, but the disclaimer is model content that is intended to ensure beneficiaries are aware that there are eligibility criteria and to understand some of the eligible conditions that apply. This will ensure beneficiaries are informed that there are SSBCI restrictions and to notify the beneficiary that they may inquire further with the MA organization about the details of these restrictions if they so choose. We would also like to clarify that the disclaimer is meant to be easy to read and understand, and to quickly alert beneficiaries that they may not be eligible for certain listed benefits. Adding additional information or a hyperlink would further lengthen the disclaimer, so we are not requiring that. We are also not prohibiting MA organizations from electing to provide additional information not required by § 422.2267(e)(34) as finalized in this rule. There are ways that MA organizations can help guide beneficiaries in their SSBCI education. As mentioned earlier, an MA organization can encourage a beneficiary to reach out to them, using simple language such as, “For details, please contact us” which would offer beneficiaries an easy and straightforward way to learn more about whether they are eligible for a specific SSBCI. The SSBCI disclaimer requirements, as finalized, are designed to ensure that beneficiaries are immediately aware that SSBCI is not a guaranteed benefit, and they may inquire further with the MA organization if they want to learn more about the eligibility restrictions.
CMS engages in various enforcement efforts across the MA program to help ensure the health and wellbeing of MA enrollees. The Office of Program Operations and Local Engagement (OPOLE) routinely monitors MA organizations, with dedicated CMS account managers across ten regions of the country assigned to each MA organization. CMS also maintains MA organization marketing monitoring projects which consist, as provided in § 422.2261, of reviewing and approving (if in accordance with CMS regulations) marketing materials produced by MA organizations and their TPMOs.
Through routine oversight and monitoring, CMS may take compliance actions if it determines that an MA organization is out of compliance with the terms of its contract with CMS. Based on an assessment of the circumstances surrounding non-compliance, CMS may issue a compliance action such as a notice of non-compliance, warning letter, or corrective action plan. As described in § 422.504(m)(3), a notice of non-compliance may be issued for any failure to comply with the requirements of the MA organization's current or prior contract with CMS; a warning letter may be issued for serious and/or continued non-compliance with the MA organization's current or prior contract with CMS; and a corrective action plan may be issued for repeated, not corrected, or particularly serious non-compliance. CMS's criteria for issuing a compliance action depends on six key factors listed at § 422.504(m)(2).
In addition to account management, routine monitoring efforts, auditing, and compliance actions, CMS also has the authority to impose financial penalties, marketing and enrollment sanctions, or contract terminations against MA organizations whose non-compliance meets certain statutory thresholds. CMS evaluates circumstances of documented non-compliance against those thresholds in determining an appropriate action. In circumstances when non-compliance by an MA organization is pervasive, ongoing, and may require significant time and resources to identify and correct, CMS might require a corrective action plan or, if the statutory threshold for non-compliance is met, impose enrollment and marketing sanctions in an effort to protect additional beneficiaries from enrolling in the plan until the MA organization can demonstrate that their issues have been sufficiently corrected and no longer likely to recur. If, however, it is determined that an MA organization's non-compliance has already been corrected by the time it
In summary, we believe that the above outlined procedures for enforcement of marketing regulations that CMS currently has in place are appropriate and effective. We are confident that these procedures will sufficiently address any potential non-compliance with the SSBCI disclaimer rule by MA organizations.
We received a range of comments pertaining to this proposal, the majority of which reflected support for the regulation. After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are amending § 422.2267(e)(34) largely as proposed, but with modifications. We are finalizing paragraph (e)(34)(ii) with revisions to adopt more specific requirements for when and how an MA organization must list up to five chronic conditions used to determine eligibility for SSBCI identified in marketing and communications materials. These requirements specify how an MA organization must structure its list of chronic conditions in the SSBCI disclaimer when only one type of SSBCI is mentioned and when multiple types of SSBCI are mentioned. Modifications in paragraph (e)(34)(ii) also include changing “MA organization” to “applicable MA plan” and requiring, where there are more than five eligible conditions, a note indicating that there are other eligible conditions not listed. We are finalizing paragraph (e)(34)(iii) with modifications to ensure that the specific coverage criteria of the MA plan that offers the SSBCI are referenced as additional eligibility requirements. We are also finalizing paragraph (e)(34)(iii) without the phrase “items and services” to avoid any implication that SSBCI that are reductions in cost sharing are not included in the SSBCI disclaimer requirement. The SSBCI disclaimer is required for all marketing and communications materials that mention SSBCI of any type. The new SSBCI disclaimer requirements, as finalized here, will apply to all contract year 2025 marketing and communications beginning October 1, 2024, and in subsequent years.
Agents and brokers are an integral part of the MA and Part D industry, helping millions of Medicare beneficiaries to learn about and enroll in Medicare, MA plans, and PDPs by providing expert guidance on plan options in their local area, while assisting with everything from comparing costs and coverage to applying for financial assistance. Pursuant to section 1851(j)(2)(D) of the Act, the Secretary has a statutory obligation to establish guidelines to ensure that the use of agent and broker compensation creates incentives for agents and brokers to enroll individuals in the MA plan that is intended to best meet beneficiaries' health care needs. In September 2008, we published the Revisions to the Medicare Advantage and Prescription Drug Benefit Programs interim final rule (73 FR 54237), our first regulation to establish requirements for agent and broker compensation, which included certain limitations on agent and broker compensation and other safeguards. In that rulemaking, we noted that these reforms addressed concerns that the previously permitted compensation structure resulted in financial incentives for agents to only market and enroll beneficiaries in some plan products and not others due to larger commissions. These incentives potentially resulted in beneficiaries being directed towards plans that were not best suited to their needs.
In that interim final rule, we noted that depending on the circumstances, agent and broker relationships can be problematic under the federal anti-kickback statute if they involve, by way of example only, compensation in excess of fair market value, compensation structures tied to the health status of the beneficiary (for example, cherry-picking), or compensation that varies based on the attainment of certain enrollment targets. These and other fraud and abuse risks exist among the current agent and broker relationships. We note that the HHS Office of the Inspector General (OIG) advisory opinion process is available to parties seeking OIG's opinion as to the legality of a particular arrangement. Information about this process remains available on the OIG's website at
It has become apparent that the growth of MA and changes in MA marketing warrant further updates to ensure the appropriate guardrails are in place to protect beneficiaries and support competition. For example, shifts in the industry and resulting changes in contract terms offered to agents and brokers and other third-party marketing organizations (TPMOs) for enrollment-related services and expenses warrant further action to ensure compliance with statutory requirements and that the compensation paid to agents and brokers incentivizes them to enroll individuals in the MA plan that is intended to best meet their health care needs. CMS has also observed that the MA marketplace, nationwide, has become increasingly consolidated among a few large national parent organizations, which presumably have greater capital to expend on sales, marketing, and other incentives and bonus payments to agents and brokers than smaller market MA plans. This provides a greater opportunity for these larger organizations, either directly or through third parties, to use financial incentives outside and potentially in violation of CMS's rules to encourage agents and brokers to enroll individuals in their plan over a competitor's plan. For example, CMS has seen web-based advertisements for agents and brokers to work with or sell particular plans where the agents and brokers are offered bonuses and perks (such as golf parties, trips, and extra cash) framed as allowable administrative add-ons in exchange for enrollments. These payments, while being presented to the agents and brokers as bonuses or incentives, are implemented in such a way that allows the plan sponsor, in most cases, to credibly account for these anti-competitive payments as “administrative” rather than “compensation” and these payments are therefore not limited by the existing regulatory limits on compensation. We note these payments may implicate and, depending on the facts and circumstances, potentially violate the Federal anti-kickback statute.
CMS has also received complaints from a host of different organizations, including state partners, beneficiary advocacy organizations, and MA plans, among others. A common thread to the complaints is that agents and brokers are being paid, typically through various purported administrative and other add-on payments, amounts that cumulatively exceed the maximum compensation allowed under the current regulations. Moreover, CMS has observed that such payments have
We believe these financial incentives are contributing to behaviors that are driving an increase in beneficiary marketing complaints received by CMS in recent years. As was discussed in our most recent Medicare Program Contract Year 2023 Rule, based on the most recent data available at that time, in 2021, CMS received more than twice the number of beneficiary complaints related to marketing of MA plans compared to 2020, and for some states those numbers were much higher (87 FR 27704 through 27902). These complaints are typically filed by enrollees or their caregivers with CMS through 1-800-Medicare or CMS regional offices, and generally allege that a beneficiary was encouraged or pressured to join an MA plan, and that once enrolled, the plan was not what the enrollee expected or what was explained to them when they spoke to an agent or broker.
In the Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly final rule (88 FR 22234 through 22256), which appeared in the
At the same time, these types of complaints have escalated at a pace that mirrors the growth of administrative or add-on payments, which we contend are being misused to pay agents and brokers over and above the CMS-set compensation limits on payment to agents and brokers. CMS is concerned that when the value of administrative payments offered to agents and brokers reaches the levels that CMS has observed in recent years, these payments may distort the process that agents and brokers are expected to engage in when they assist beneficiaries in weighing the merits of different available plans. This distortion disadvantages beneficiaries who enroll in a plan based on the recommendation or encouragement of an agent or broker who may be influenced by how much or what kind of administrative payment the agent or broker expects to receive, rather than enrolling the beneficiary in an option that is intended to best meet the beneficiary's health care needs.
Consequently, the rise in MA marketing complaints noted previously suggests that agents and brokers are being influenced to engage in high pressure tactics, which may in turn cause beneficiary confusion about their enrollment choices, to meet enrollment targets or earn “administrative payments,” either directly or on behalf of their employer or affiliated marketing organization, in excess of the capped compensation payment set by CMS. Although CMS' existing regulations already prohibit plans, and by extension their agents and brokers, from engaging in misleading or confusing communications with current or potential enrollees, in the proposed rule we noted that additional limitations on payments to agents and brokers may be necessary to adequately address the rise in MA marketing complaints described here.
Additionally, while our proposed rule largely focused on payments and compensation made to agents and brokers, we noted that CMS is also concerned about how payments from MA plans to TPMOs may further influence or obscure the activities of agent and brokers. In particular, CMS expressed interest in the effect of payments made from MA plans to Field Marketing Organizations (FMOs), which is a type of TPMO that employs or is affiliated with agents and brokers to complete MA enrollment activities, which have increased in influence in recent years. FMOs may also conduct additional marketing activities on behalf of MA plans, such as lead generating and advertising. In fact, at the time of our first agent and broker compensation regulation, CMS expressed concern about amounts paid to FMOs for services that do not necessarily relate directly to enrollments completed by the agent or broker who deals directly with the beneficiary (73 FR 54239). Some examples of such services are training, material development, customer service, direct mail, and agent recruitment.
As we noted in the preamble to the two interim final rules published in 2008 (73 FR 67406 and 73 FR 54226), all parties should be mindful that their compensation arrangements, including arrangements with FMOs and other similar type entities, must comply with the fraud and abuse laws, including the federal anti-kickback statute. Beginning as early as 2010, an OIG report indicated that “plan sponsors may have created financial incentives that could lead FMOs to encourage sales agents to enroll Medicare beneficiaries in plans that do not meet their health care needs. Because FMOs, like sales agents, may influence Medicare beneficiaries' enrollment in MA plans, CMS should issue additional regulations more clearly defining how and how much FMOs should be paid for their services.”
Finally, in addition to the undue influence that perks, add-on payments, volume bonuses and other financial incentives that are paid by MA organizations to FMOs may have on agents and brokers, they also create a situation where there is an unlevel playing field among plans. Larger, national MA plans are likely able to more easily shoulder the added costs paid to FMOs, as compared to smaller, more locally based MA plans. Furthermore, we have received reports that some larger FMOs are more likely to contract with large national plans rather than smaller regional plans, negatively impacting competition. On July 9, 2021, President Biden issued Executive Order (E.O.) 14036: “Promoting Competition in the American Economy,” (hereinafter referred to as E.O. 14036). E.O. 14036 describes the Administration's policy goals to promote a fair, open, competitive marketplace, and directs
CMS is concerned that the more recent increases in fees being paid to larger FMOs have resulted in a “bidding war” among MA plans to secure anti-competitive contract terms with FMOs and their affiliated agents and brokers. If left unaddressed, such bidding wars will continue to escalate with anti-competitive results, as smaller local or regional plans that are unable to pay exorbitant fees to FMOs risk losing enrollees to larger, national plans who can. In addition to seeking comment to help us develop additional regulatory action, we specifically requested comments regarding how CMS can further ensure that payments made by MA plans to FMOs do not undercut the intended outcome of the agent and broker compensation proposals included in this final rule; we thank commenters for the wealth of information they have shared and we will continue to integrate this new knowledge as we explore potential future rulemaking.
In addition, the comments that we received in response to the November 2023 proposed rule indicate that there is, in fact, an additional force at work in misaligning the incentives of agents and brokers enrolling Medicare beneficiaries into MA plans. Commenters brought to our attention that agents and brokers who are direct employees of FMOs, call centers, and other TPMOs typically receive an annual salary from their employer. We note that the salary received by employees of a TPMO from their employer does not currently fall under our regulatory definition of “compensation.” Commenters stated that an agent who is not directly employed by a call center may receive renewal payments for a beneficiary who remains enrolled in the plan that agent has helped the beneficiary select. By contrast, commenters also stated that a call center employee who is salaried may never be eligible to receive renewal payments and may only be incentivized to generate new enrollments. In this way, commenters expressed concerns that the incentives between the two types of agents and brokers may be different, and so a one-size fits all approach to regulating agent and broker compensation for all agents who enroll beneficiaries into MA plans has inherent limitations. This is an area of policy we will consider in future rulemaking.
As noted previously, sections 1851(j)(2)(D) and 1851(h)(4)(D) of the Act direct the Secretary to set limits on compensation rates to “ensure that the use of compensation creates incentives for agents and brokers to enroll individuals in the MA plan that is intended to best meet their health care needs,” and that the Secretary “shall only permit a Medicare Advantage organization (and the agents, brokers, and other third parties representing such organization) to conduct the activities described in subsection (j)(2) in accordance with the limitations established under such subsection.” In this final rule, we are focusing on current payment structures, including the use of administrative payments, among MA organizations and agents, brokers, and TMPOs, specifically FMOs, that may incentivize some agents or brokers to emphasize or prioritize one plan over another, irrespective of the beneficiary's needs, leading to enrollment in a plan that does not best fit the beneficiary's needs and a distortion of the competitive process.
Our regulations at § 422.2274 set out limitations regarding various types of payments and compensation that may be paid to agents, brokers, and third parties who represent MA organizations. Each of these limitations is intended to better align the professional incentives of the agents and brokers with the interests of the Medicare beneficiaries they serve. Our regulations specify maximum compensation amounts that may be paid to agents and brokers for initial enrollment and renewals. The regulations also currently allow for payment to agents and brokers for administrative costs such as training and operational overhead, as long as the payments are at or below the value of those services in the marketplace. The maximum compensation for initial and renewal enrollments and the requirement that administrative payments reflect fair market value for actual administrative services have been intended to ensure incentives for agents and brokers to help enroll beneficiaries into MA plans that best meet their health care needs.
However, while CMS has affirmatively stated the types of allowable payment arrangements and the parameters for those payments in regulations at § 422.2274, as previously discussed, some recent studies suggest that MA plans offer additional or alternative incentives to agents and brokers, often through third parties such as FMOs, to prioritize enrollment into some plans over others. These incentives are both explicit (in the form of higher payments purportedly for administrative services) and implicit (such as in the case of passing on leads, as discussed later in this section).
As previously mentioned, we believe payments categorized by MA organizations as “administrative expenses,” paid by MA organizations to agents and brokers, have significantly outpaced the market rates for similar services provided in non-MA markets, such as Traditional Medicare with Medigap. This is based on information shared by insurance associations and focus groups and published in research articles by groups such as the Commonwealth Fund, which found that “most brokers and agents in the focus groups recalled receiving higher commissions [total payments, including compensation and administrative payments]—sometimes much higher—for enrolling people in Medicare Advantage plans compared to Medigap.”
Similarly, some MA organizations are paying for things such as travel or operational overhead on a “per enrollment” basis, resulting in instances where an agent or broker may be paid multiple times for the same one-time expense, if the agent incurring the expense happened to enroll more than one beneficiary into the plan making the payment. For example, an agent could be reimbursed for the cost of traveling to an event where that agent enrolls a beneficiary into an MA plan; if the cost of travel is paid on a “per enrollment” basis, the agent would be reimbursed the price of the trip multiplied by the number of enrollments the agent facilitated while at that event. In this scenario, whichever MA organization reimburses for travel at the highest rates would effectively be offering a higher commission per enrollee, as the increased amount paid for travel, in additional to the allowable compensation, would be higher. While
We are also concerned that other activities undertaken by a TPMO, as a part of their business relationships with MA organizations, may influence the plan choices offered or how plan choices are presented by the agent or broker to a prospective enrollee. For example, we have learned of arrangements where a TPMO, such as an FMO, provides an MA organization with both marketing and brokering services. As part of the arrangement, the MA organization pays the FMO for leads generated by the FMO and then the leads are given directly to the FMO's agents instead of to the MA organization itself (or the MA organization's other contracted agents and brokers). When the FMO's agents then contact the individual and enroll the individual into an MA plan, the MA organization pays the agent or the FMO the enrollment compensation described in § 422.2274(d), separate and apart from any referral fee paid to the FMO under § 422.2274(f).
While MA organizations that are engaged in these types of arrangements (such as paying FMOs for lead generating activities and marketing, then giving the leads to the FMO's agents and then paying compensation for that same enrollment) might argue that they are not intending to influence an agent or broker in determining which plan “best meets the health care needs of a beneficiary,” we believe it is likely that these arrangements are having this effect. We believe that current contracts in place between FMOs and MA organizations can trickle down to influence agents and brokers in enrolling more beneficiaries into those plans that also provide the agents and brokers with leads, regardless of the appropriateness of the plan is for the individual enrollees. In fact, FMOs could leverage these leads as a form of additional compensation by “rewarding” agents who enroll beneficiaries into a specific plan with additional leads. Therefore, CMS is required under section 1851(j)(2)(D) of the Act to establish guidelines that will bring the incentives for agents and brokers to enroll individuals in an MA plan that is intended to best meet their health care needs, in accordance with the statute and as such is CMS' intention here.
In the proposed rule we proposed to: (1) generally prohibit contract terms between MA organizations and agents, brokers, or other TMPOs that may interfere with the agent's or broker's ability to objectively assess and recommend the plan which best fits a beneficiary's health care needs; (2) set a single agent and broker compensation rate for all plans, while revising the scope of what is considered “compensation;” and (3) eliminate the regulatory framework which currently allows for separate payment to agents and brokers for administrative services. We also proposed to make conforming edits to the agent broker compensation rules at § 423.2274. We will continue to monitor the MA marketing ecosystem and the influence of FMOs, lead generators, call centers, web-based sources, TV ads, and other fast-moving aspects of MA marketing to ensure beneficiaries are protected from misleading or predatory behavior while also having access to the information and support they need to make an informed decision about their Medicare coverage. For example, CMS will continue to monitor the behaviors addressed in this final rule at VI.A, which limit the distribution of personal beneficiary data by TPMOs (§§ 422.2274(g)(4) and 423.2274(g)(4)).
We proposed to add at § 422.2274(c)(13) that, beginning in contract year 2025, MA organizations must ensure that no provision of a contract with an agent, broker, or TPMO, including FMO, has the direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent's or broker's ability to objectively assess and recommend which plan best meets the health care needs of a beneficiary.
Examples of the anti-competitive contract terms we proposed to prohibit included, for instance, those that specify renewal or other terms of a plan's contract with an agent broker or FMO contingent upon preferentially higher rates of enrollment; that make an MA organization's contract with an FMO or reimbursement rates for marketing activities contingent upon agents and brokers employed by the FMO meeting specified enrollment quotas; terms that provide for bonuses or additional payments from an MA organizations to an FMO with the explicit or implicit understanding that the money be passed on to agents or brokers based on enrollment volume in plans sponsored by that MA organization; for an FMO to provide an agent or broker leads or other incentives based on previously enrolling beneficiaries into specific plans for a reason other than what best meets their health care needs.
As we explained in the November 2023 proposed rule, CMS believes that the proposed limitations on contract terms would give plans further direction as to the types of incentives and outcomes that must be avoided without being overly prescriptive as to how the plans should structure these arrangements.
We received the following comments on this proposal.
Relying on a “reasonableness standard,” we would not, for example, read our regulation to prohibit MA plans from contracting with independent agents who have not been appointed to represent all possible competitors in a market. In this case, an agent who does not represent all possible competitors is inherently more likely to enroll beneficiaries into the plan(s) with which he or she is contracted. However, provided there is no contractual or financial incentive that would prevent the agent from choosing to seek additional arrangements and sell competitors' plans, the agent and the MAO(s) with which it contracts would be in compliance with our rule.
If, by way of another example, a TPMO or agent was offered a bonus or other payment by a plan or a TPMO
Similarly, depending on the facts and circumstances, bonuses for hitting volume-based targets for sales of a plan may not be directly anti-competitive if they do not outwardly discourage or preclude a TPMO from marketing other plans, but it would likely have the indirect effect of creating an incentive for the TPMO to prioritize sales of one plan over another based on those financial incentives and not the best interests of the enrollees. Because the indirect effect of volume-based bonuses of this kind would be anti-competitive in nature, they would likely run afoul of the provision, and, like other potential scenarios described herein, could implicate fraud and abuse laws as well.
CMS expects to review contracts as part of routine monitoring, as well as relying on complaints and other methods of investigation, and work conducted by the Office of the Inspector General, to enforce this regulation. We also may pursue additional data collection regarding these contract arrangements as part of our established Part C reporting requirements process in future years.
After considering public comments, and the overwhelming support for this proposal, and for the reasons described in the November 2023 proposed rule and in our earlier responses, we are finalizing the policy as proposed at § 422.2274(c)(13) requiring that MA organizations must ensure that no provision of a contract with an agent, broker, or TPMO has the direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent's or broker's ability to objectively assess and recommend which plan best meets the health care needs of a beneficiary; we are including one modification to the regulatory text to make clear that this requirement is applicable beginning with marketing and communications activities related to the 2025 contract year. We are continuing to consider whether additional guidance in this space may be necessary in future rulemaking.
Under current regulations, compensation for agents and brokers (described at § 422.2274(d)(2) and excluding administrative payments as described in § 422.2274(e)) may be paid at a rate determined by the MA organization but may not exceed caps that CMS calculates each year, based on fair market value (FMV) as specified at § 422.2274(a). For example, the CY2024 national agent/broker FMV compensation caps are $611 for each MA initial enrollment, $306 for a MA renewal enrollment, $100 for each Part D initial enrollment, and $50 for a Part D renewal enrollment.
We have learned that overall payments to agents and brokers can vary significantly depending on which plan an individual enrolls in. In the November 2023 proposed rule, we expressed concern that the lack of a uniform compensation standard across plans can encourage the types of arrangements that provide strong financial incentives for agents and brokers to favor some plans over others and that these incentives could result in beneficiaries enrolling in plans that do not best fit their needs. To eliminate this potential for bias and make certain that CMS' regulations governing agent and broker compensation ensure that agents and brokers are incented to enroll individuals in the MA plan that is intended to best meet their health care needs, we proposed to amend our regulations to require that all payments to agents or brokers that are tied to enrollment, related to an enrollment in an MA plan or product, or are for services conducted as part of the relationship associated with the enrollment into an MA plan or product must be included under compensation, as defined at § 422.2274(a), including payments for activities previously excluded under the definition of compensation at § 422.2274(a)(ii), and are regulated by the compensation requirements of § 422.2274(d)(1) through (3). We also proposed to make conforming amendments to the regulations at § 422.2274(e)(2) to clarify that all administrative payments are included in the calculation of enrollment-based compensation; this proposal is further discussed in section VI.B. (X)(c) of this final rule, “Administrative Payments.”
Further, we proposed to change the caps on compensation payments that are currently provided in § 422.2274 to set fixed rates that would be paid by all plans across the board. As proposed, agents and brokers would be paid the same amount either from the MA plan directly or by an FMO. We noted that our proposal does not extend to payments for referrals as described at § 422.2274(f); we believe the cap set on referral payments is sufficient to avoid the harms described previously, and that a referral payment is often made in lieu of a compensation payment, and so it does not provide the same incentives as compensation payments.
We believe that this approach may help level the playing field for all plans represented by an agent or broker and promotes competition. In addition, by explicitly saying that compensation extends to additional activities as a part of the relationship between the agent and the beneficiary, we reinforce CMS' longstanding understanding that the initial and renewal compensation amounts are based on the fact that additional work may be done by an agent or broker throughout the plan year, including fielding follow-up questions from the beneficiary or collecting additional information from a beneficiary.
After considering feedback in public comments, we are finalizing our policy to require that, beginning with contract year 2025, all payments to agents or
MA organizations are also currently required, under § 422.2274(c)(5), to report to CMS on an annual basis the specific rates and range of rates they will be paying independent agents and brokers. We proposed to remove the reporting requirement at § 422.2274(c)(5), as all agents and brokers would be paid the same compensation rate in a given year under our proposal.
We did not receive any comments on this aspect of our proposal and are finalizing it as proposed.
As discussed previously, CMS proposed that all payments to an agent or broker relating to the initial enrollment, renewal, or services related to a plan product would be included in the definition of compensation. For consistency with that proposed policy, we also proposed to incorporate “administrative payments” currently described at § 422.2274(e)(1) into compensation, and to amend § 422.2274(e)(2) to clarify that administrative payments would be included in the calculation of enrollment-based compensation beginning in Contract Year 2025. As we discussed in the proposed rule, we believe this step is necessary to ensure that MA organizations cannot utilize the existing regulatory framework allowing for separate payment for administrative services to effectively circumvent the FMV caps on agent and broker compensation. For instance, we stated in the November 2023 proposed rule that we understand that many plans are paying agents and brokers for conducting health risk assessments (HRAs) and categorize these HRAs as an “administrative service.” We understand the fair market value of these services, when provided by non-medical staff, to be approximately $12.50 per hour and the time required to complete an HRA is intended to be no more than twenty minutes.
Similarly, we explained in the November 2023 proposed rule that according to recent market surveys and information gleaned from oversight activities, payments purportedly for training and testing and other administrative tasks for agents and brokers selling some MA plans seem to significantly outpace payments for similar activities made by other MA plans, as well as payments for similar activities undertaken by insurance agents and brokers in other industries. The higher overall cost as compared to other industries, combined with the otherwise inexplicable difference in payments for administrative activities for some MA organizations compared to others, further points to the payment for these administrative activities being used as a mechanism to effectively pay agents and brokers enrollment compensation amounts in excess of the limits specified at § 422.2274(a) and (d).
By eliminating separate payment for administrative services, we stated that we expected that this proposal would eliminate a significant method which some plans may have used to circumvent the regulatory limits on enrollment compensation. Furthermore, we explained that we believed ensuring a fixed payment rate for agents will result in compensation greater than what is currently provided through typical contractual arrangements with FMOs, as there would no longer be a range of compensation rates at which the MA organizations could pay for agents and brokers' services. While our proposal would prohibit separate administrative payments, as described below, we proposed to adjust the FMV for compensation to take into account costs for certain appropriate administrative activities.
We recognized in the proposed rule that this approach could result in some agents and brokers being unable to directly recoup administrative costs such as overhead or lead purchasing from its compensation from Medicare health and drug plans, unless the agent has a certain volume of business. For instance, the cost of a customer relationship management (CRM) system (the software used to connect and log calls to potential enrollees) is estimated to be about $50 per month. Under our proposed rule, this expense would require at least one enrollment compensation per year to cover these costs, whereas under our current regulations it is currently permissible for an MA organization to pay for these costs directly, as administrative costs, leaving the entire compensation for enrollments as income for the agent or broker. However, we explained in the proposed rule that given the high volume of enrollees that use an agent or broker for enrollment services, we did
We also explained in the proposed rule that we considered an alternate policy proposal wherein we would maintain our current definitions of compensation and administrative payments but would remove the option for a plan to make administrative payments based on enrollment, as currently codified at § 422.2274(e)(2). We considered instead requiring that administrative payments be made a maximum of one time per administrative cost, per agent or broker. We considered the argument that these expenses, such as payments for training and testing, or nonmonetary compensation such as leads, should be paid at their FMV and not as a factor of overall enrollment because the value of such administrative tasks is usually a fixed rate, regardless of how many enrollments are ultimately generated by the agent or broker engaged in these administrative tasks.
We also considered whether, under this alternative policy approach, it would be best to require that each administrative expense be reimbursed at the same rate by each contracting MA organization as a means of encouraging agents and brokers to represent multiple plans at any given time. However, as we noted in the proposed rule, this alternative policy would, of necessity, be comparatively prescriptive and could present challenges for all parties as it relates to the tracking these expenses. We believe our proposal to include all payments to an agent or broker under the definition of compensation is likely to reduce the ability of plans and/or TPMOs to circumvent the maximum compensation rates defined by CMS via the annual FMV determination.
We sought comment on this proposal.
However, we do not believe that the possibility that our policy may not reach a subset of the agents and brokers in this ecosystem is a reason not to finalize it. We believe this policy will have the desired effect of better aligning incentives for agents and brokers to ensure that they are enrolling beneficiaries in the MA plan that best meets the beneficiaries' health care needs, and not the plans that offer the agents and brokers the highest payments per enrollee. We also note that the policy to generally prohibit certain types of contract terms being finalized in this final rule at § 422.2274(c)(13), will afford a level of protection with regard to contract terms between MA organizations and TPMOs that direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent or broker, including salaried agents and brokers, from being able to objectively assess and recommend which plan best fits the health care needs of a beneficiary. Importantly, MA organizations, agents, brokers, and other TPMOs also must comply with all applicable fraud and abuse laws including, but not limited to, the Federal anti-kickback statute.
After considering public comments, we are generally finalizing our substantive proposal to include all payments to an agent or broker under the definition of compensation as proposed; in recognition of the timing considerations related to the 2025 contract year on the effective date of this final rule, we are clarifying that the applicability of this and all marketing provisions begins on October 1, 2024, per § 422.2263(a). To memorialize this updated policy, we are finalizing our policy to incorporate “administrative payments” currently described at § 422.2274(e)(1) into compensation, and to amend § 422.2274(e)(2) to clarify that administrative payments would be included in the calculation of enrollment-based compensation beginning in Contract Year 2025. This means that that MAOs and the TPMOs that they contract or work with will need to begin to comply with these updated standards beginning on October 1, 2024, when marketing activities for contract year 2025 begin, per § 422.2263(a). We are also adopting language to the existing regulatory text to make clear that this definition will apply to contract years through contract year 2024, meaning that MAOs and TPMOs should continue to comply with CMS's existing agent and broker compensation policies until the date that marketing activities for contract year 2025 begin.
We also proposed to increase the compensation rate described at § 422.2274(a) to add certain appropriate administrative costs. In particular, we indicated that we believed that the administrative cost associated with the licensing, training and testing, and recording requirements at §§ 422.2274(b) and 422.2274(g)(2)(ii) may warrant an increase in the rate of compensation, given the significant and predictable cost of these mandatory activities.
When proposed, we believed it was necessary to increase the rate for compensation by $31, based on the estimated costs for licensing, training, testing, and call recording that would need to be covered by this single enrollment-based payment. We proposed to begin with a one-time $31 increase, including various locality-specific adjustments, with annual FMV updates to this amount as described by the regulation, including “adding the current year FMV and the product of the current year FMV and MA Growth Percentage for aged and disabled beneficiaries.” In the November 2023 proposed rule, we also noted that we did not explicitly propose a proportionate increase to compensation for renewals and that we considered this in determining the amount by which we proposed to increase the rate for compensation for enrollments.
We sought comment on our proposal to increase the rate of compensation to account for necessary administrative costs that would be incorporated into this rate under our previous proposal. Specifically, CMS requested comment on the administrative costs that should be considered, and how else we might determine their value, as we consider the future of the compensation structure.
In recognition of the timing considerations related to the 2025 contract year on the effective date of this final rule, we are clarifying that the applicability of this and all marketing provisions begins on October 1, 2024, per § 422.2263(a).We believe that implementing these payment guardrails as soon as possible, will enhance the beneficiary experience with agents and brokers during the 2025 AEP. The benefit of this implementation date offsets any concerns about complexity or potential extra payment generated by this implementation framework.
Commenters argued that these activities, and the fair market value of the tools and services agents and brokers need to perform their jobs, warranted a significantly higher per-enrollee compensation rate. Some commenters suggested figures for a more appropriate compensation increase ranging from $50 to $500 more, per new enrollee, while others recommended that the increase be a percentage of the base compensation amount.
Commenters suggested that without sufficient compensation, many agents and brokers would no longer be able to serve the MA market, and new agents and brokers would not have the resources to enter the market in the first place.
However, we do believe it is important to ensure that, while we support agents and brokers and the services they provide, the MA program and its funds are not being used to subsidize other programs and industries. For example, we understand that in the proposed rule we may have undervalued the cost of CRM (customer-relationship management) tools which provide call recording software. However, it is our understanding that these tools serve additional functions beyond the mandatory call recording and transcription, and that this functionality may be used by an agent or broker when soliciting an enrollment for a non-Medicare, private market plan. Therefore, we believe that it is reasonable for MA compensation rates to reflect less than 100 percent of the cost of purchasing or licensing these tools.
After considering what we have learned and the many responses we received through public comment, we have concluded that our original proposed increase to compensation was too low. Commenters' feedback, both general and specific, was closely considered and we believe it is necessary to update the compensation rate increase to better reflect the costs of MA agent or broker services. Commenters suggested many different figures and means of calculating an appropriate amount. As discussed previously, the true cost of most administrative expenses can vary greatly from one agent or broker to another and is based in data and contracts that CMS does not have access to, so it would be extremely difficult for us to accurately capture, making a line-item calculation not practicable. This was further reflected in the wide variation among alternate rates posed by commenters, with a few commenters suggesting an alternate rate increase of $50, another $75, while the majority recommended higher rates beginning at $100 and some going as high as $500. Some commenters suggested that we should calculate the compensation increase as a percentage of the base rate, such as 30% or 33% of the current $611 compensation figure.
Considering the complexities involved, we believe that choosing a flat rate for calculating the increase is an appropriate path forward to create parity among agents, regardless of which plan, plan type, or type of Medicare enrollment they effectuate on behalf of the beneficiary. Administrative payments are intended to cover administrative costs faced by the agent or broker and those costs should be the same regardless of the type of plan in which a beneficiary enrolls, including a standalone PDP. Therefore, there is no need to vary administrative payments based on plan type and a flat rate approach is the most appropriate way to achieve our goal of eliminating financial incentives in the form of larger, purported administrative payments which are over and above FMV from a particular plan or plans, that may have the effect of encouraging agents and brokers to steer enrollment in one plan
Several commenters suggested that an increase of $100 would be an appropriate starting point and reflects the minimum monthly costs of necessary licensing and technology costs. We understand that other commenters recommended an increase of more than $100, including some commenters that suggested an increase of $200 or more. However, we believe, based on the totality of comments that recommendations for an increase above $100 may have been inflated to include the full price of all technology and systems that are also utilized to effectuate sales in other markets or for different product types other than MA or PDP products. In addition, it appears that these higher dollar recommendations may reflect the agent and brokers' loss of “bonus payments” and other purported “administrative payments” they may previously have received, some of which were always beyond the scope and FMV of the services involved in enrolling beneficiaries into MA and PDP plans and therefore should not have been included under compensation or administrative payments.
We believe that increasing the FMV rate for new enrollments by a total of $100, and therefore applied to renewals at a maximum amount of 50 percent of the total compensation amount, should provide agents and brokers with sufficient funds to continue to access necessary administrative tools and trainings, to offset appointment fees and encourage the representation of multiple plans, and therefore to continue providing adequate service to Medicare beneficiaries. Accordingly, based on the information provided in comments and for the reasons discussed in this final rule, we are finalizing a policy to make a one-time $100 increase to the FMV compensation rate for agents and brokers for initial enrollments into MA plans for the 2025 plan contract year.
By way of example, if we were to assume that the FMV increase in years 2025 and 2026 is 2.5 percent, the payment rates for those years would be as follows:
After considering public comments on this proposal, for the 2025 contract year, we are finalizing at § 422.2274(a) a one-time FMV increase of $100, which will then be added to the base compensation rate for 2025; the sum of the 2025 compensation rate and the $100 will form a new base compensation rate that will be updated annually according to our FMV updates described in § 422.312. We are also finalizing changes to § 422.2274(d)(1)(ii) that beginning with contract year 2023, MA organizations are limited to the compensation amounts outlined in § 422.2274(a).
We received many out-of-scope comments related to agent and broker compensation as part of this rulemaking. We received many comments indicating the need for a regulatory distinction between agents employed by call centers and those who are truly independent and only contract with TPMOs. We appreciate these comments and will continue to explore ways in which further regulation in this space may further our goals of ensuring that the use of compensation creates incentives for agents and brokers to enroll individuals in the MA plan that best meets their health care needs.
We also received many comments encouraging more robust enforcement of our current regulations, and comments encouraging CMS to relax our rules somewhat to ensure that all agents have the ability to effectuate sales for all plans. We received feedback asking for more regulation in this policy space, and comments asking us to slow regulatory action to give the policies finalized in the past few years, time to mature. We have read and considered all comments and will consider these suggestions as we contemplate future rulemaking.
Finally, we also are finalizing our proposal to apply each of the policies described previously, governing agent and broker compensation for the sale of MA plans, to also apply to compensation for agents and brokers that market PDP plans, as codified at § 423.2274.
Pursuant to sections 1851(j)(2)(D) and 1860D-4(l) of the Act, the Secretary has a statutory obligation to establish guidelines to ensure that the use of agent and broker compensation creates incentives for agents and brokers to enroll individuals in the MA and Part D prescription drug plans that are intended to best meet beneficiaries' health care needs.
As we explained in the November 2023 proposed rule, because the same agents and brokers are often licensed to sell both MA plans and PDPs, we believe it is necessary under our statutory authority to apply the same compensation rules to the sale of both MA plans and PDPs in order to ensure that both plan types are being held to the same standards and are on a `level playing field' when it comes to incentives faced by agents and brokers. This includes increasing the FMV rate compensation rate.
In the November 2023 proposed rule we also stated that we think it is necessary to extend these regulations to the sale of PDPs to avoid shifting the incentives discussed at length previously, such as the incentive for agents to favor one plan over another based upon bonuses or other payments that are not currently accounted for under the definition of “compensation.” If conforming changes are not made to the sale of PDP plans, the PDP plans may have an unfair advantage in that they have the opportunity to offer additional payments and perks to FMOs and agents, while MA plan sponsors are limited by the policies proposed previously. Therefore, for the same reasons that we described in the proposed rule for adopting the proposed changes to § 422.2274, we also proposed to make conforming amendments to § 423.2274.
We sought comment on this proposal, and specifically whether and to what extend modifications to these proposals should be made to account for differences between MA and Part D plan types.
We did not receive any comments on the proposal to extend these changes to the sale of PDP plans. Thus, we are finalizing updates to 42 CFR 423.2274 (a), (c), (d), and (e) largely as proposed. However, in light of the changes to the MA compensation rate described in section X.C.3. of this final rule and the need for parity between MA and PDP plan sales discussed in this section, we are conforming changes to the PDP compensation rates at § 423.2274 (to increase the PDP compensation rate for initial enrollments by $100. Likewise, where CMS is finalizing the regulation text in § 422.2274(a), (c), and (d) with minor organizational and editorial changes for clarity, we are adopting conforming changes to the regulation text that we are finalizing in § 423.2274(a), (c), and (d). Our policies are in alignment with the rules being finalized for MA agents and brokers, with an applicability date for these rules on October 1, 2024, for the 2025 plan contract year.
We are finalizing the following policies with regard to agent and broker compensation:
• For contract year 2025 and subsequent contract years, generally prohibit contract terms between MA organizations and agents, brokers, or other TMPOs that may directly or indirectly interfere with the agent's or broker's ability to objectively assess and recommend the plan which best fits a beneficiary's health care needs, as reflected in § 422.2274(c)(4) of this final rule.
• Set a single agent and broker compensation rate for all plans, as reflected in § 422.2274(d)(2), while revising the scope of what is considered “compensation,” applicable to contract year 2025 and subsequent contract years, as reflected in § 422.2274(a) and (e).
• Eliminate the regulatory framework which currently allows for separate payment to agents and brokers for administrative services, applicable to contract year 2025 and subsequent contract years, as reflected in § 422.2274(e).
• Make conforming edits to the PDP agent broker compensation rules at § 423.2274.
CMS develops and publicly posts a 5-star rating system for Medicare Advantage (MA)/Part C and Part D plans as part of its responsibility to disseminate comparative information, including information about quality, to beneficiaries under sections 1851(d) and 1860D-1(c) of the Act and based on the collection of different types of quality data under section 1852(e) of the Act. The Part C and Part D Star Ratings system is used to determine quality bonus payment (QBP) ratings for MA plans under section 1853(o) of the Act and the amount of MA beneficiary rebates under section 1854(b) of the Act. We use multiple data sources to measure quality and performance of contracts, such as CMS administrative data, surveys of enrollees, information provided directly from health and drug plans, and data collected by CMS contractors. Various regulations, including §§ 417.472(j) and (k), 422.152(b), 423.153(c), and 423.156, require plans to report on quality improvement and quality assurance and to provide data which help beneficiaries compare plans. The methodology for the Star Ratings system for the MA and Part D programs is codified at §§ 422.160 through 422.166 and 423.180 through 423.186, respectively, and we have specified the measures used in setting Star Ratings through rulemaking. In addition, the cost plan regulation at § 417.472(k) requires cost contracts to be subject to the Parts 422 and 423 Medicare Advantage and Part D Prescription Drug Program Quality Rating System. (83 FR 16526-27). As a result, the policies and regulatory changes finalized here will apply to the quality ratings for MA plans, cost plans, and Part D plans. We generally use “Part C” to refer to the quality measures and ratings system that apply to MA plans and cost plans.
We have continued to identify enhancements to the Star Ratings program to ensure it is aligned with the CMS Quality Strategy as that Strategy evolves over time. To support the CMS National Quality Strategy, CMS is moving towards a building-block approach to streamline quality measures across CMS quality and value-based care programs. Across our programs, where applicable, we are considering including the Universal Foundation
In the December 2022 proposed rule, in addition to the policies addressed in the April 2023 final rule,
• Remove the stand-alone Part C Medication Reconciliation Post-discharge measure;
• Add the updated Part C Colorectal Cancer Screening measure with the National Committee for Quality Alliance (NCQA) specification change;
• Add the updated Part C Care for Older Adults—Functional Status Assessment measure with the NCQA specification change;
• Add the Part D Concurrent Use of Opioids and Benzodiazepines measure;
• Add the Part D Polypharmacy Use of Multiple Anticholinergic Medications in Older Adults measure; and
• Add the Part D Polypharmacy Use of Multiple Central Nervous System Active Medications in Older Adults measure.
We also proposed a series of technical clarifications of the existing rules related to Quality Bonus Payment (QBP) appeals processes and weighting of measures with a substantive specification change.
In the December 2022 proposed rule, we proposed these changes to apply to the 2024 measurement period and the 2026 Star Ratings, but as discussed in and given the timing of this final rule, we are finalizing these policies (that is, data would be collected, and performance measured) for the 2025 measurement period and the 2027 Star Ratings unless otherwise stated.
In the November 2023 proposed rule, we proposed to update the Medication Therapy Management (MTM) Program Completion Rate for Comprehensive Medication Review (CMR) measure (Part D). We also proposed the following methodological enhancements, clarifications, and operational updates:
• Revise the process for identifying data completeness issues and calculating scaled reductions for the Part C appeals measures.
• Update how the Categorical Adjustment Index (CAI) and health equity index (HEI) reward are calculated in the case of contract consolidations.
• Revise an aspect of the QBP appeals process.
• Add that a sponsor may request CMS review of its contract's administrative claims data used for the Part D Patient Safety measures no later than the annual deadline set by CMS for the applicable Star Ratings year.
Unless otherwise stated, finalized changes would apply (that is, data would be collected and performance measured) for the 2025 measurement period and the 2027 Star Ratings.
CMS appreciates the feedback we received on our proposals in both proposed rules. In the sections that follow, which are arranged by topic area, we summarize each proposal and comments we received and provide our responses.
The regulations at §§ 422.164 and 423.184 specify the criteria and procedures for adding, updating, and removing measures for the Star Ratings program. In the “Medicare Program; Contract Year 2019 Policy and Technical Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit Programs, and the PACE Program” final rule which appeared in the
We are committed to continuing to improve the Part C and Part D Star Ratings system by focusing on improving clinical and other health outcomes. Consistent with §§ 422.164(c)(1) and 423.184(c)(1), we continue to review measures that are nationally endorsed and in alignment with the private sector. For example, we regularly review measures developed by
We proposed to remove the Medication Reconciliation Post-Discharge (MRP) measure as it would be duplicative of the MRP component of the Transitions of Care (TRC) measure included beginning with the 2024 Star Ratings. In the January 2021 final rule at 86 FR 5921-24, CMS finalized inclusion of the TRC measure (Part C) in the 2024 Star Ratings. The TRC measure includes four indicators: MRP, Notification of Inpatient Admission, Patient Engagement After Inpatient Discharge, and Receipt of Discharge Information. Currently, MRP appears in both the Medicare Part C Star Ratings as a stand-alone measure and as one of the four indicators included in the TRC measure. As discussed at 86 FR 5921-24, transitions from an inpatient stay back to home often result in poor care coordination, including communication gaps between inpatient and outpatient providers; planned and inadvertent medication changes; incomplete diagnostic work-ups; and insufficient understanding of diagnoses, medication, and follow-up care needs. Although at this time CMS is only implementing the TRC measure in the Part C Star Ratings program, it is a HEDIS measure and over time, it may be used in other programs. Based on the importance of care coordination in the Part C program and how the TRC measure provides a more comprehensive picture of how plans manage transitions across settings for care, we believe its inclusion in the Part C Star Ratings is appropriate.
For measurement year 2020, NCQA provided multiple updates to the TRC measure as described at 86 FR 5921-22. In one of these updates, NCQA revised the requirement of using one medical record from a specific provider to, instead, allow numerator information to be captured from additional communication forms accessible to the primary care provider or ongoing care provider (for example, admissions, discharges, and transfers (ADT) feeds, shared electronic medical records (EMRs)) that occur regularly in the field and meet the intent of the measure. This change also ensured that scores for the MRP indicator in the TRC measure and the stand-alone MRP measure would match. Currently, the MRP measure for the Part C Star Ratings comes from the MRP indicator collected through the TRC measure. This is because NCQA decided that the stand-alone MRP measure no longer needed to be separately reported since it could be pulled from the medication reconciliation indicator in the TRC measure.
CMS proposed to remove the stand-alone MRP measure from the Part C Star Ratings since the same information about medication reconciliation is now also incorporated as a component of the TRC measure and, consequently, it is duplicative to have MRP as a stand-alone measure and as a component of the TRC measure for Part C Star Ratings. We solicited comments on this proposal.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the removal of the MRP measure from the Part C Star Ratings starting with the 2025 measurement year and the 2027 Star Ratings.
In the April 2018 final rule, we specified at §§ 422.164(d) and 423.184(d) rules for measure updates based on whether they are substantive or non-substantive. (83 FR 16534 and 16535). Where an update is substantive within the scope of §§ 422.164(d)(2) and 423.184(d)(2), CMS will initially solicit feedback on whether to make substantive measure updates through the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act and then engage in rulemaking to make substantive changes to a Star Ratings measure. Per §§ 422.164(d)(2) and 423.184(d)(2), CMS will place the updated measure on the display page for at least 2 years prior to using the updated measure to calculate and assign Star Ratings. This 2-year period for the updated measure to be on the display page may overlap with the period during which CMS solicits comment and engages in rulemaking. Further, the legacy measure may continue to be used in the Star Ratings during this period.
CMS proposed a substantive update to the existing colorectal cancer screening measure because of changes in the applicable clinical guidance and by the measure steward. In May 2021, the U.S. Preventive Services Task Force (USPSTF) released updated guidance for the age at which colorectal cancer screenings should begin. Subsequently, NCQA, the measure steward, has updated its colorectal cancer screening measure to include a rate for adults 45-49 years of age for measurement year 2022. Therefore, CMS proposed expanding the age range for the Colorectal Cancer Screening measure to adults aged 45-49, for an updated age range of 45-75, for the 2024 and subsequent measurement years. The expanded age range for this screening measure significantly increases the size of the population covered by this measure and is therefore a substantive measure specification change within the scope of § 422.164(d)(2). Other CMS programs, such as for the qualified health plans (QHPs) that participate in Exchanges
CMS solicited feedback on making this substantive update to the measure in the Advance Notice of Methodological Changes for Calendar Year (CY) 2023 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, and most commenters supported this change. As described in the April 2018 final rule (83 FR 16534), we may keep a legacy measure in the Star Ratings during the period that an updated version of the measure is on the display page. The legacy measure with the narrower age range of 50-75 years will remain available and be used in Star Ratings until the updated measure has been adopted through rulemaking and has been on the display page for 2 years. We first displayed the updated measure for the 2022 measurement year, on the 2024 display page.
We solicited comments on this proposal.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing expanding the age range for the Colorectal Cancer Screening measure. Given the timing of the finalization of this rule, we are finalizing the addition of the Colorectal Cancer Screening measure with the expanded age range starting with the 2025 measurement year and the 2027 Star Ratings. Table VII.1 summarizes the updated Colorectal Cancer Screening measure finalized in this rule. The measure description listed in this table is a high-level description.
We proposed to add the Care for Older Adults (COA)—Functional Status Assessment measure back to the Star Ratings after it has been on the display page following a substantive measure specification change. The COA measure is collected for Special Needs Plans (SNPs) and includes three indicators—Medication Review, Functional Status Assessment, and Pain Assessment.
For HEDIS data reported in 2021, based on the 2020 measurement year, NCQA implemented a change for the COA—Functional Status Assessment.
The measure change for the COA—Functional Status Assessment measure is a substantive update under § 422.164(d)(2) because removal of a mechanism for positive performance on the measure may meaningfully impact the numerator. The updated measure was moved to the display page starting with the 2022 Star Ratings.
CMS proposed to return this updated measure to the Star Ratings, beginning with the 2026 Star Ratings and 2024 measurement period. With the updated specification, documentation of a complete functional status assessment must include: (1) notation that ADLs were assessed; (2) notation that IADLs were assessed; or (3) result of assessment using a standardized functional assessment tool.
We solicited comments on this proposal.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing adding back the COA—Functional Status Assessment measure to the Star Ratings. Given the timing of the finalization of this rule, we are finalizing the addition of the COA—Functional Status Assessment measure starting with the 2025 measurement year and the 2027 Star Ratings. Table VII.1 summarizes the updated COA—Functional Status Assessment measure finalized in this rule. The measure description listed in this table is a high-level description.
Section 1860D-4(c)(2) of the Act requires all Part D sponsors to have an MTM program designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use and to reduce the risk of adverse events, including adverse drug interactions. Section 1860D-4(c)(2)(A)(ii) of the Act requires Part D sponsors to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. CMS codified the MTM targeting criteria at § 423.153(d)(2).
CMS also uses the MTM Program Completion Rate for CMR measure, which is defined as the percent of MTM program enrollees who received a CMR during the reporting period to show how many members in a plan's MTM program had an assessment from their plan by a pharmacist or other health professional to help them manage their medications. As part of the completion of a CMR, a Part D enrollee receives a written summary of the discussion in CMS's Standardized Format, including an action plan that recommends what the member can do to better understand and use their medications.
In the December 2022 proposed rule, CMS proposed changes to the MTM program targeting criteria, including: (1) requiring plan sponsors to target all core chronic diseases identified by CMS, codifying the current 9 core chronic diseases
As noted in the April 2023 final rule, we did not address comments received on the provisions of the proposed rule that were not finalized in that rule, such as the proposed MTM program targeting criteria changes, and stated that they would be addressed at a later time, in a subsequent rulemaking document, as appropriate. If those proposed changes were to be finalized, the number of Part D enrollees eligible for MTM programs would increase, and the denominator of the MTM Program Completion Rate for CMR measure would expand accordingly; therefore, such changes in the targeting criteria would be substantive updates to the Star Rating measure per § 423.184(d)(2). Specifically, the proposed changes to the targeting criteria would not update the actual measure specifications but would meaningfully impact the number of Part D enrollees eligible for MTM services from 9 percent to an estimated 23 percent and, thus, substantially increase the number of enrollees included in the denominator of the MTM Program Completion Rate for CMR measure, if finalized.
Accordingly, CMS proposed that if the changes to eligibility for the MTM program in the December 2022 proposed rule (as previously described) are finalized, we would move the MTM Program Completion Rate for CMR measure to the display page for at least 2 years due to substantive measure updates associated with the change in MTM program eligibility criteria (88 FR 78558). Since there is no change to the measure specifications other than the eligibility for the MTM program, there would be no legacy measure to calculate while the updated measure is on the display page. The MTM-eligible denominator population would have meaningfully increased due to changes in the program requirements, and CMS would not have the means to calculate the measure using the previous MTM eligibility criteria. Therefore, we proposed that the measure would be removed from the Star Ratings entirely for the 2025 and 2026 measurement years and would return to the Star Ratings program no earlier than the 2027 measurement year for the 2029 Star Ratings. CMS did not anticipate any additional burden associated with the measure update, as burden tied to the changes in the MTM eligibility criteria was already considered in estimates for the December 2022 proposed rule. Under our proposal for the MTM Program Completion Rate for CMR measure, if the proposed changes to eligibility for MTM programs were not finalized, CMS would not make any substantive changes to the measure—that is, we would also not finalize the proposal in this rule to update the Star Rating measure. Readers should refer to section III.E. of this final rule for discussion of proposal to change the MTM program eligibility criteria.
We invited public comment on this proposal to update the MTM Program Completion Rate for CMR measure and received several comments. A discussion of these comments, along with our responses follows.
We understand the concerns raised by commenters that there would be one less Part D measure included in the calculations to determine the overall Star Rating for MA-PD plans and/or the Part D summary Star Rating; however, there is no legacy measure to include in the Star Ratings because the MTM-eligible population for the denominator would change. Due to these substantive increases to the MTM-eligible measure denominator population, and the rules for substantive measure updates per § 423.184(d)(2), the MTM Program Completion Rate for CMR measure must move to the display page for at least 2 years before using the updated measure in the Star Ratings. While on the display page, CMS will continue to monitor the rates as the MTM program eligibility criteria changes are implemented.
After consideration of the comments received, we are finalizing the proposed update to move the MTM Program Completion Rate for CMR measure to the display page for at least two years before adding it to the Star Ratings. As discussed in section III.E. in this final rule, CMS is finalizing changes to the targeting criteria at § 423.153(d)(2) that will be effective on January 1, 2025. Therefore, the MTM Program Completion Rate for CMR measure will move to the display page entirely for the 2025 and 2026 measurement years and would return as a new measure to the Star Ratings program for the 2027 measurement year for the 2029 Star Ratings. Table VII.1 summarizes the updated MTM Program Completion Rate for CMR measure finalized in this rule.
We are committed to continuing to improve the Part C and Part D Star Ratings system by focusing on improving clinical and other health outcomes. Consistent with §§ 422.164(c)(1) and 423.184(c)(1), we continue to review measures that are nationally endorsed and in alignment with the private sector. 83 FR 16521, 16533. For example, we regularly review measures developed by NCQA and the PQA.
CMS proposed to add the following three Part D measures to the 2026 Star Ratings (2024 measurement year), which are measures developed by the PQA: COB, Poly-ACH, and Poly-CNS. The new Part D measures are calculated from Prescription Drug Event (PDE) or CMS administrative data, so they do not require any new data collections. Additionally, as announced in the Advance Notice of Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies
These measures reflect the following performance:
• Concurrent Use of Opioids and Benzodiazepines (COB) (Part D)—analyzes the percentage of Medicare Part D beneficiaries 18 years and older with concurrent use of prescription opioids and benzodiazepines during the measurement period.
• Polypharmacy Use of Multiple Anticholinergic Medications in Older Adults (Poly-ACH) (Part D)—analyzes the percentage of Medicare Part D beneficiaries, 65 years or older, with concurrent use of two or more unique anticholinergic medications during the measurement period.
• Polypharmacy Use of Multiple Central Nervous System-Active Medications in Older Adults (Poly-CNS) (Part D)—analyzes the percentage of Medicare Part D beneficiaries, 65 years or older, with concurrent use of three or more unique CNS-active medications during the measurement period.
These measures help plans identify enrollees who are at risk of respiratory depression or fatal overdoses, cognitive decline, or falls and fractures, respectively, and help plans encourage appropriate prescribing when medically necessary.
Per § 423.184(c)(3) and (4), new Part D measures added to the Star Ratings program must be on the display page for a minimum of 2 years prior to becoming Star Ratings measures. In addition, these measures were submitted through the 2021 Measures Under Consideration (MUC) process, a pre-rulemaking process for the selection of quality and efficiency measures under section 1890A of the Act, and were reviewed by the Measure Applications Partnership (MAP) for input and recommendations to HHS on measure selection for CMS programs.
These three measures have been on the display page on
In this section of this rule, we summarize the comments we received on adding the COB, Poly-ACH, and Poly-CNS measures to the Star Ratings, with the non-substantive updates, and provide our responses and final decisions.
We conducted additional data analyses on overlap across the three measures from both medication specification and beneficiary-level perspectives based on public comments we received. We found that the COB and Poly-ACH measures do not have duplicative medication classes or overlapping NDCs. However, the Poly-CNS measure includes medication classes and NDCs that overlap with both the Poly-ACH and COB measures.
Also, we identified Part D beneficiaries who met the numerator inclusion criteria in each of the three measures and evaluated if they had overlapping contract enrollment periods (“enrollment episodes”) across the measures. Note, if a beneficiary has multiple enrollment episodes in the same Part D contract or different contracts, they must meet the numerator criteria separately for each episode. The highest percent of overlapping numerator beneficiary enrollment episodes was between the COB and Poly-CNS measures but below 50 percent (approximately 26.8 percent of the numerator beneficiary enrollment episodes in the COB measure were found in the Poly-CNS measure and 40.9 percent of the numerator beneficiary enrollment episodes in Poly-
Based on these comments and data analysis on overlap rates, at this time we are only adding the COB and Poly-ACH measures to the Star Ratings; the Poly-CNS measure will not be added to the Star Ratings at this time due to concerns raised about overlapping medication classes and to monitor for potential duplicative medication therapy classes across the three measures. Because the Poly-CNS measure is a clinically relevant measure for the Part D population, we will retain this measure on the display page. Similar to the Star Ratings, measures on the display page and their numeric measure scores are publicly reported for information purposes. However, unlike the Star Ratings, measures on the display page are not assigned a star and are not associated with QBPs for MA organizations. We may reconsider adding the Poly-CNS to the Star Ratings in the future through rulemaking.
We do not expect a zero-percentage measure rate for these measures as, in some rare cases, it may be medically necessary for beneficiaries to take multiple anticholinergics. Additionally, CMS does not establish a pre-determined threshold to assign stars to these measures and uses the clustering methodology. Therefore, CMS does not have specific cut points or thresholds for performance of Part D contracts in the Star Ratings. Rather, for these measures, contracts are compared based on their contract type and how beneficiaries enrolled in the contracts are taking multiple concurrent prescriptions. In light of the clinical considerations, including the Poly-ACH and the COB measure in the Star Ratings is appropriate as a means to ensure that these important areas of focus are reflected in the overall measure of quality and performance provided by the Star Ratings. We will also share the specification comments with the PQA, the measure steward.
Furthermore, these three measures are not duplicative of existing policies in Part D which are complementary tools to target specific types of concurrent use of medications among Medicare Part D enrollees and drive quality improvement. The COB and Polypharmacy measures are intended as retrospective plan performance measures; concurrent drug utilization reviews, as required under § 423.153(c)(2), and opioid safety edits are reviews at POS to proactively engage beneficiaries and prescribers to address prescription opioid overuse; DMPs are required statutorily in section 1860D-4(c)(5)(A) of the Act for plans to monitor beneficiaries who are at-risk for misuse or abuse of frequently abused drugs. Frequently abused drug, as defined at 42 CFR 423.100, is a controlled substance that the Secretary determines, based on several factors, is frequently abused or diverted. CMS has determined that opioids (except buprenorphine for opioid use disorder and injectables) and benzodiazepines are frequently abused drugs for purposes of Part D DMPs. MTM helps beneficiaries and their caregivers improve their medication use and optimize therapeutic outcomes.
As a reminder, sponsors may apply UM controls to reduce inappropriate use of concurrent therapies. UM controls must be submitted and approved by CMS through HPMS formulary submissions, unless they are POS safety related edits that can be implemented without submission or approval by CMS pertaining to duplicative therapy or when FDA labeling clearly indicates the dispensing is unsafe, duplicative, or contraindicated, such as edits regarding specific age-related contraindications. Edits based upon warnings and precautions in the label, as opposed to contraindications or doses that exceed those supported by the label, must be submitted to CMS for approval. Sponsors that implement unapproved edits for these medications may be found to have data integrity issues. Per §§ 422.164(g) and 423.184(g), CMS may reduce a contract's measure rating to 1 star for concerns such as data inaccuracies, partiality, or incompleteness. Such determinations may be based on a number of reasons, including mishandling of data, inappropriate processing, or implementation of incorrect practices that have an impact on the accuracy, impartiality, or completeness of the data used for one or more specific measure(s). Implementation of unapproved edits for these measures may bias sponsors' PDE data used for these measures and thus be subject to this policy. Inclusion of polypharmacy medications in the measures is not a contraindication to use, but rather an opportunity to evaluate the use of concurrent polypharmacy medications in Medicare Part D beneficiaries 65 years and older.
For the COB and Polypharmacy measures, since there are no dosage thresholds, a beneficiary would be potentially eligible for the COB and polypharmacy measures once they have overlapping days supply for concurrent use of unique target medications included in these measures. Specifically, the COB measure evaluates the percentage of beneficiaries 18 years of age or greater with concurrent use of prescription opioids and benzodiazepines. The COB numerator is defined as the number of beneficiaries from the denominator with 2 or more prescription claims for any benzodiazepines with different dates of service and concurrent use of opioids and benzodiazepines for 30 or more cumulative days. The COB denominator is defined as beneficiaries with 2 or more prescription claims for opioid prescriptions on different dates of service and with 15 or more cumulative days' supply during the measurement year. The Poly-CNS measure evaluates the percentage of beneficiaries 65 years of age or older with concurrent use of 3 or more unique CNS-active medications. The numerator is defined as the number of beneficiaries from the denominator with concurrent use of 30 or more cumulative days of 3 or more unique CNS-active medications, each with 2 or more prescription claims on different dates of service during the measurement year. The denominator is defined as beneficiaries with 2 or more prescription claims for the same CNS-active medication on different dates of service during the measurement year.
We will share measure specification comments for expanding the exclusions and the methodology considerations with the PQA, the measure steward for the COB and polypharmacy measures.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing the addition of the Poly-ACH and COB measures in the Star Ratings program beginning with the 2025 measurement year for the 2027 Star Ratings. The Poly-CNS measure will remain on the display page and not be added to the Star Ratings.
In addition, we announced the non-substantive updates to the Poly-CNS, Poly-ACH, and COB measures to align with the PQA measure specifications to use CE and no longer adjust for MYs in the Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies as required by § 423.184(d)(1). CMS will make the update to change from MYs to CE for the 2024 measurement year for all three measures. The Poly-ACH and COB measures will be added to the Star Ratings program beginning with the 2025 measurement year for the 2027 Star Ratings with these updates.
Table VII.1 summarizes the additional and updated measures addressed in this final rule, beginning with the 2027 Star Ratings. The measure descriptions listed in this table are high-level descriptions. The annual Star Ratings measure specifications supporting document, the
We proposed to add collection of survey data through another mode of survey administration to the non-exhaustive list of non-substantive measure updates that can be made without rulemaking. This proposal was only adding another example to the non-exhaustive list of non-substantive measure changes that the current regulations permit to be done through the Advance Notice/Rate Announcement process. For example, as described in the CY 2024 Rate Announcement, we are implementing the web-based mode (as an addition to the current mixed mode protocol) for the 2024 Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey implementation used for the 2025 Star Ratings. The rules CMS adopted to address measure updates based on whether an update is substantive or non-substantive are specified at §§ 422.164(d) and 423.184(d). As described at 83 FR 16534 when §§ 422.164(d) and 423.184(d) were initially adopted, we incorporate updates without rulemaking for measure specification changes that do not substantively change the nature of the measure. In paragraphs (d)(1)(i)-(v) of §§ 422.164 and 423.184, we provided a non-exhaustive list of circumstances that would constitute a non-substantive update. Currently, paragraph (d)(1)(v) of each regulation identifies the addition of an alternative data source as a non-substantive update; the proposed additional example is the collection of
We proposed to revise the regulation text at §§ 422.164(d)(1)(v) and 423.184(d)(1)(v) by adding that another example of a non-substantive change would include a new mode of data collection.
We solicited comments on this proposal.
For example, for the survey administration for CAHPS and HOS measures used as the example in the proposed rule, the denominator for the measures continues to include plan enrollees. The addition of web surveys to the mail-phone survey protocol in no way changes the numerator or denominator of the measure. Further, our study of using web surveys as well as mail-phone surveys did not indicate any significant change in the resulting data or measure scores, consistent with other studies.
The use of a three-phase sequential multimode approach, web followed by mail followed by telephone, allows MA enrollees choices about how to respond. It maintains or increases response rates for all groups of MA enrollees and is available to those with or without broadband or telephone access. While the increases in response rates vary slightly by enrollee characteristics, this does not create bias, as scores from those randomized for the web-mail-phone protocol were similar to those randomized for the mail-phone protocol in our field test. Of 39 items compared between the web-mail-phone and mail-phone protocols, none differed in case-mix adjusted mean score at p<0.01 and only two differed at p<0.05, a pattern consistent with chance. Thus, there is no evidence of a mode effect on scores from the web-mail-phone protocol relative to the mail-phone protocol.
While different plan rates of email availability may influence response rates gains, they do not bias plan scores because response by web results in scores similar to those obtained under the mail-phone protocol. Similarly, no overall effect on scores over time is anticipated with the addition of the web mode.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing the clarification to the regulation text at §§ 422.164(d)(1)(v) and 423.184(d)(1)(v). As this clarification is consistent with current practice and policy, CMS is applying it immediately on the effective date of the final rule and for measures in the 2025 Star Ratings where CMS has complied with §§ 422.164(d)(1) and 423.184(d)(1) in adopting the non-substantive change.
We proposed to adopt regulation text clarifying how we treat measures with substantive updates when they return to the Star Ratings program. The general rules that govern updating measures are specified at §§ 422.164(d) and 423.184(d), including rules for non-substantive and substantive measure updates. As described at 83 FR 16534 when these regulations were first adopted, the process for adopting substantive measure specification updates is similar to the process for adopting new measures. Historically, we have treated measures with substantive updates as new measures when they are added back to the Star Ratings following two or more years on the display page and adoption through rulemaking.
Currently, new measures receive a weight of 1 for their first year in the Star Ratings program as specified at §§ 422.166(e)(2) and 423.186(e)(2). We proposed to add language to §§ 422.166(e)(2) and 423.186(e)(2) to clarify that when a measure with a substantive update moves back to Star Ratings from the display page following rulemaking, it is treated as a new measure for weighting purposes and therefore would receive a weight of 1 for its first year back in the Star Ratings program. This is consistent with our current and prior practice and with the explanation provided in the January 2021 final rule about the weight provided to substantively updated measures for the first year they are returned to the Star Ratings (86 FR 5919). In the second and subsequent years after the measure returns to the Star Ratings after being on the display page with a substantive update, the measure would be assigned the weight associated with its category, which is what happens with new measures as
We solicited comments on this proposal.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing the additional language added to §§ 422.166(e)(2) and 423.186(e)(2) with a slight clarification that in subsequent years, a new or substantively updated measure will be assigned the weight associated with its category, and we are finalizing the update to the heading for paragraph (e)(2). As this clarification is consistent with current practice and policy, CMS is applying it immediately on the effective date of the final rule and to the 2025 Star Ratings.
We currently have rules specified at §§ 422.164(g) and 423.184(g) to reduce a measure rating when CMS determines that a contract's measure data are incomplete, inaccurate, or biased. For the Part C appeals measures, we have statistical criteria to reduce a contract's appeals measures for missing Independent Review Entity (IRE) data. Specifically, these criteria allow us to use scaled reductions for the appeals measures to account for the degree to which the data are missing. See 83 FR 16562 through 16564. The data underlying a measure score and Star Rating must be complete, accurate, and unbiased for them to be useful for the purposes we have codified at §§ 422.160(b) and 423.180(b). In the April 2018 final rule (83 FR 16562), CMS codified at §§ 422.164(g)(1)(iii) and 423.184(g)(1)(ii) a policy to make scaled reductions to the Part C and D appeals measures' Star Ratings when the relevant IRE data are not complete based on the Timeliness Monitoring Project (TMP) or audit information. Following the process in § 423.184(e)(2) and for the reason specified in § 423.184(e)(1)(ii), we removed the two Part D appeals measures (Appeals Auto-Forward and Appeals Upheld) beginning with the 2020 measurement year and 2022 Star Ratings in the 2020 Rate Announcement
Because the Part D appeals measures are no longer part of the Star Ratings, we proposed to remove and reserve the paragraphs at §§ 422.164(g)(1)(iii)(B), (1)(iii)(F), (1)(iii)(I), and 423.184(g)(1)(ii). Paragraphs (B), (F), and (I) of § 422.164(g)(1)(iii) all address how the error rate on the TMP for the Part D appeals measures had been used in calculating scaled reductions for MA-PDs that are measured on both Part C and Part D appeals. Currently, § 423.184(g)(1)(ii) addresses the scaled reductions for Part D appeals measures based on the TMP. Given the removal of the Part D appeals measures from the Star Ratings, these provisions are moot. We proposed to reserve the relevant paragraphs to avoid the risk that redesignating the remaining paragraphs would cause unintended consequences with any existing references to these provisions.
The completeness of the IRE data is critical to support fair and accurate measurement of the two Part C appeals measures. Since the 2019 Star Ratings we have used data from the TMP, which uses the Part C audit protocols for collecting Organization Determinations, Appeals and Grievances (ODAG) universes, to determine whether the IRE data used to calculate the Part C appeals measures are complete. As described at § 422.164(g)(iii), we use scaled reductions to account for the degree to which the IRE data are missing. The current regulations describe how scaled reductions are based on the TMP. However, due to a change in the Part C audit protocols for collecting universes of ODAG data, we proposed to modify, and in one case reserve, paragraphs (g)(1)(iii), (g)(1)(iii)(A)(
Part C contracts are required to send partially favorable (partially adverse) and unfavorable (adverse) decisions to the IRE within applicable timeframes as specified at § 422.590(a) through (e). In order for the existing Part C appeals measures (Plan Makes Timely Decisions
To determine if a contract may be subject to a potential reduction for the Part C appeals measures' Star Ratings, we proposed to compare the total number of appeals received by the IRE that were supposed to be sent to the IRE per regulations as specified at § 422.590(a) through (e) and (g) (which are explained in guidance at section 50.12.1 of the Parts C & D Enrollee Grievances, Organization/Coverage Determinations, and Appeals Guidance
We proposed to remove and reserve § 422.164(g)(1)(iii)(J) because we intend to calculate the Part C error rate based on 12 months rather than a projected number of cases not forwarded to the IRE in a 3-month period as has historically been done with the TMP data. Currently, a contract is subject to a possible reduction due to lack of IRE data completeness if the calculated error rate is 20 percent or more and the projected number of cases not forwarded to the IRE is at least 10 in a 3-month period as described at § 422.164(g)(1)(iii)(K). We proposed to modify § 422.164(g)(1)(iii)(K)(
We proposed at § 422.164(g)(1)(iii)(O) that the two Part C appeals measure Star Ratings be reduced to 1 star if CMS does not have accurate, complete, and unbiased data to validate the completeness of the Part C appeals measures. For example, the data collected in the Part C Reporting Requirements go through a data validation process (§ 422.516(a)). CMS has developed and implemented data validation standards to ensure that data reported by sponsoring organizations pursuant to § 422.516 satisfy the regulatory obligation. If these data are used to validate the completeness of the IRE data used to calculate the Part C appeals measures, we would reduce the two Part C appeals measure Star Ratings to 1 star if a contract fails data validation of the applicable Part C Reporting Requirements sections for reconsiderations by not scoring at least 95 percent or is not compliant with data validation standards (which includes sub-standards as applicable), since we cannot confirm the data used for the Part C appeals measures are complete.
We also proposed to update § 422.164(g)(1)(iii)(A)(
We did not propose to update the steps currently described at § 422.164(g)(1)(iii)(C), (D), (E), (G), K(
CMS has also addressed and explained the obligation of an MA plan to send cases to the IRE in current Medicare guidance in the
For the updates to the scaled reductions methodology, which we are finalizing as proposed with one clarification, we are examining all cases that were sent to the IRE that should have been sent versus the ones that were supposed to be sent per regulation and guidance. The denominator would include the number of level 1 appeals where the plan made an unfavorable or partially favorable decision for the appeal. The numerator would include all the cases that the IRE received regardless of the disposition the IRE subsequently gave the case (
As a reminder, Part C sponsors are required to send all adverse or partially adverse cases to the IRE. In some cases, the IRE could dismiss the appeal or the appeal (that is, reconsideration request) could be withdrawn after the appeal is sent to the IRE. Cases may be dismissed for a variety of reasons under § 422.590(d). For example, if the enrollee requested a pre-service appeal but then passes away before the appeal process is complete, the case is dismissed. If a plan processed an appeal, but the plan should not have because a proper party did not file the appeal request, such as an individual who is not the enrollee and who does not have a valid power of attorney or appointment of representation form, the IRE will also dismiss it. Cases can be withdrawn when the appellant contacts the IRE directly and advises them that they no longer wish to proceed with their appeal.
Per § 422.164(g)(1)(ii), CMS has a different downgrade policy for Star Ratings measures based on whether the data that an MA organization must submit to CMS under § 422.516 do not pass data validation. Since we will use data submitted under § 422.516 to evaluate data completeness of the cases submitted to the IRE for the Part C appeals measures, we will use similar rules to evaluate the quality of the appeals information submitted that is used to determine data completeness of the Part C appeal measures that is described at § 422.164(g)(1)(iii)(O).
Per § 422.164(g)(1)(ii) (which we did not propose to amend and are not revising in this final rule), if a contract fails data validation of the applicable Part C Reporting Requirements sections (that is, the reporting required under § 422.516) for reconsiderations by not scoring at least 95 percent or is not compliant with data validation standards, we proposed to reduce the appeals measures' Star Ratings to 1 star. Our longstanding policy has been to reduce a contract's measure rating if we determine that a contract's data are inaccurate, incomplete, or biased. The validation score of 95 percent on Part C and Part D Reporting Requirements is an existing data integrity policy that applies to other measures. CMS finalized these data integrity policies at §§ 422.164(g)(1)(ii) and 423.184(g)(1)(i) to distinguish between occasional errors and systematic issues. (see
Since we will be using the Part C Reporting Requirements data to calculate scaled reductions, we proposed to reduce the Part C appeals measures to 1 star if we do not have data that passed the Part C Reporting Requirements data validation audit to validate the data completeness of these measures. Plan size should not affect accuracy of data validation for the reporting sections. Additionally, as established under §§ 422.164(g)(2) and 423.184(g)(2), CMS can reduce a measure Star Rating to 1 for additional issues related to data accuracy not described in §§ 422.164(g)(1)(i) through (iii) or 423.184(g)(1)(i).
After consideration of the public comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing as proposed this updated approach for making scaled reductions at § 422.164(g)(1)(iii), (1)(iii)(A)(
Currently, §§ 422.164(h) and 423.184(h) provide that an MA organization (and a cost plan organization as the regulations are applied under § 417.472(k)) and a Part D plan sponsor may request a review of certain administrative data (that is, the contracts' appeals data and Complaints Tracking Module data) before Star Ratings are calculated. The regulations provide for CMS to establish an annual deadline by which such requests must be submitted. In the November 2023 proposed rule, CMS proposed to expand the policy for requests that CMS review certain data used for Star Ratings to include administrative data used for their contract's Part D Star Rating Patient Safety measures by adding new §§ 422.164(h)(3) and 423.184(h)(3). These requests would also have to be received by the annual deadline set by CMS. We intended that the requests could include CMS's review of PDE, diagnosis code, and enrollment data that are used for the Part D Star Rating Patient Safety measures, but the requests are not necessarily limited to these specific data.
CMS reports and updates the rates for the current Part D Star Ratings Patient Safety measures (that is, Medication Adherence for Cholesterol (Statins) (ADH-Statins), Medication Adherence for Hypertension (RAS Antagonists) (ADH-RAS), Medication Adherence for Diabetes Medications (ADH-Diabetes), and Statin Use in Persons with Diabetes (SUPD) measures) via the Patient Safety Analysis Web Portal for sponsors to review and download. Part D sponsors can use the Patient Safety reports to compare their performance to overall averages and monitor their progress in improving their measure rates. In the April 17, 2023, HPMS memorandum titled,
Reviewing administrative data for the Patient Safety measures is a time-consuming process. In addition, once CMS implements SDS risk adjustment for the three Medication Adherence measures, as finalized in the April 2023 final rule (88 FR 22265 through 22270), the final measure rates, which are calculated in July after the end of the measurement period, would require increased processing time to calculate. To allow enough time for CMS to review a sponsor's administrative data and ensure the accuracy of the final calculated Patient Safety measure rates, we proposed that sponsoring organizations' requests for CMS review of administrative data must be received no later than the annual deadline set by CMS.
Beginning with the 2025 measurement year (2027 Star Ratings), we proposed at §§ 422.164(h)(3) and 423.184(h)(3) that any requests by an MA organization or Part D sponsor to review its administrative data for Patient Safety measures be made by the annual deadline set by CMS for the applicable Star Ratings year. We stated in the November 2023 proposed rule that, similar to the implementation of §§ 422.164(h)(1) and (2) and 423.184(h)(1) and (2), to provide flexibility to set the deadline contingent on the timing of the availability of data for plans to review, we intend to announce the deadline in advance either through the process described for changes in and adoption of payment and risk adjustment policies section 1853(b) of the Act (that is, the annual Advance Notice and Rate Announcement) or an HPMS memorandum.
Given the timing of the publication of the Advance Notice of Methodological Changes for Calendar Year (CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies and of this proposal, we stated that we would announce the deadline for measurement year 2025 in the final rule that addresses proposed §§ 422.164(h)(3) and 432.184(h)(3). In subsequent years, we would announce annual deadlines in advance via annual Advance Notice and Rate Announcement, or by a HPMS memorandum. For the 2025 measurement year (2027 Star Ratings), we stated that we expected this deadline to be May 18, 2026. In establishing this deadline, we factored in data completeness along with operational deadlines to produce the final Star Ratings. These requests may be time-consuming to review, and it is beneficial to receive the requests before the final rates are calculated and before the first plan preview. Historically, we find that PDE data for performance measurement are complete by April of the following year (that is, PDE data for Year of Service (YOS) 2025 is generally complete by April of 2026) even though the PDE submission deadline is established at the end of June following the payment year.
We invited public comment on this proposal and received several comments. A discussion of these comments, along with our responses follows.
After reviewing the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposal at §§ 422.164(h)(3) and 423.184(h)(3) that any requests by an MA organization or Part D sponsor to review its administrative data for Patient Safety measures be made by the annual deadline set by CMS for the applicable Star Ratings year. For the 2025 measurement year (2027 Star Ratings) the deadline will be May 18, 2026. For subsequent years, we intend to announce the annual deadlines via the annual Advance Notice and Rate Announcement or by an HPMS memorandum.
We proposed to calculate the percentage of LIS/DE enrollees and percentage of disabled enrollees used to determine the CAI adjustment factor in the case of contract consolidations based on the combined contract enrollment from all contracts in the consolidation beginning with the 2027 Star Ratings. The methodology for the CAI is codified at §§ 422.166(f)(2) and 423.186(f)(2). The CAI adjusts for the average within-contract disparity in performance associated with the percentages of LIS/DE and disabled enrollees within that contract. Currently, the percentage of LIS/DE enrollees and percentage of disabled enrollees for the surviving contract of a consolidation that are used to determine the CAI adjustment factor are calculated using enrollment data for the month of December for the measurement period of the Star Ratings year for the surviving contract as described at §§ 422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B). To more accurately reflect the membership of the surviving contract after the consolidation, we proposed to determine the percentage of LIS/DE enrollees and percentage of disabled enrollees for the surviving contract by combining the enrollment data across all contracts in the consolidation.
We proposed to modify §§ 422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B) to calculate the percentage of LIS/DE enrollees and the percentage of disabled enrollees for the surviving contract for the first 2 years following a consolidation by combining the enrollment data for the month of December for the measurement period of the Star Ratings year across all contracts in the consolidation. Once the enrollment data are combined across the contracts in the consolidation, all other steps described at §§ 422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B) for determining the percentage LIS/DE enrollees and percentage disabled enrollees would remain the same, but we proposed to restructure that regulation text into new paragraphs (f)(2)(i)(B)(
We invited public comment on this proposal and received several comments. A discussion of these comments, along with our responses follows.
Data and information related to the CAI are shared publicly in multiple ways. The CAI adjustment categories are shared each year on
Regarding the commenter's concern about this adjustment potentially favoring larger entities and making
After consideration of the public comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the revision at §§ 422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B) to calculate the percentage LIS/DE enrollees and the percentage disabled enrollees for the surviving contract for the first 2 years following a consolidation by combining the enrollment data for the month of December for the measurement period of the Star Ratings year across all contracts in the consolidation as proposed without modification.
We proposed how to calculate the HEI reward in the case of contract consolidations beginning with the 2027 Star Ratings. (The 2027 Star Ratings would be the first Star Ratings to include the HEI.) The methodology for the HEI reward is codified at §§ 422.166(f)(3) and 423.186(f)(3). The HEI rewards contracts for obtaining high measure-level scores for the subset of enrollees with the specified social risk factors (SRFs). The goal of the HEI reward is to improve health equity by incentivizing MA, cost, and PDP contracts to perform well among enrollees with specified SRFs. In calculating the HEI reward for the surviving contract of a consolidation, we want to avoid masking the scores of contracts with low performance among enrollees with the specified SRFs under higher performing contracts. We also want to avoid masking contracts that serve relatively few enrollees with the specified SRFs under contracts that serve relatively many more of these enrollees.
For the first year following a consolidation, we proposed to add new paragraphs §§ 422.166(f)(3)(viii)(A) and 423.186(f)(3)(viii)(A) to assign the surviving contract of a consolidation the enrollment-weighted mean of the HEI reward of the consumed and surviving contracts using enrollment from July of the most recent measurement year used in calculating the HEI reward; the existing rules laid out at §§ 422.162(b)(3)(iv) and 423.182(b)(3)(iv) address how CMS handles combining measures scores for consolidations, but do not address how CMS would handle the calculation of the HEI when contracts consolidate since the HEI is not a measure. We proposed that contracts that do not meet the minimum percentage of enrollees with the specified SRF thresholds or the minimum performance threshold described at §§ 422.166(f)(3)(vii) and 423.186(f)(3)(vii) would have a reward value of zero used in calculating the enrollment-weighted mean reward. For the second year following a consolidation, we proposed at new paragraphs §§ 422.166(f)(3)(viii)(B) and 423.186(f)(3)(viii)(B) that, when calculating the HEI score for the surviving contract, the patient-level data used in calculating the HEI score would be combined across the contracts in the consolidation prior to calculating the HEI score. The HEI score for the surviving contract would then be used to calculate the HEI reward for the surviving contract following the methodology described in §§ 422.166(f)(3)(viii) and 423.186(f)(3)(viii).
We invited public comment on this proposal and received several comments. A discussion of these comments, along with our responses follows.
In the second year following a consolidation, patient-level data for the measurement years used in calculating the HEI will be combined across contracts in the consolidation by assigning members from the consumed contract(s) to the surviving contract. These combined patient-level data will be used to calculate the HEI score and reward for the surviving contract, including the calculation of the percentage of enrollees with the specified SRFs for the surviving contract and the surviving contract's measure scores for the subset of enrollees with the specified SRFs following the methodology at §§ 422.166(f)(3) and 423.186(f)(3).
For example, if Contract A is consolidating into Contract B as of January 1, 2027, the first year following the consolidation is 2027. Therefore, the HEI reward for the 2027 Star Ratings will be calculated for Contract A and Contract B separately using data from measurement years 2024 and 2025. The final HEI reward for Contract B (the surviving contract) will then be calculated as the enrollment-weighted mean of the HEI rewards for Contracts A and B using enrollment from July 2025. If Contract A had an HEI reward of 0.066667 and July 2025 total enrollment of 10,000 and Contract B had an HEI reward of 0.235897 and July 2025 total enrollment of 5,000, then the final HEI reward for Contract B would be 0.123077 ((0.066667 * 10,000 + 0.235897 * 5,000)/(10,000 + 5,000)).
Continuing this example when calculating the HEI reward for the 2028 Star Ratings for Contract B (that is, the surviving contract), the patient-level data from measurement years 2025 and 2026 will be combined for Contracts A and B. That is, the patient-level data from measurement years 2025 and 2026 used to calculate the HEI score and reward for Contract B will contain all enrollees from Contracts A and B.
After consideration of the public comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the addition of §§ 422.166(f)(3)(viii)(A) and (B) and 423.186(f)(3)(viii)(A) and (B) as proposed with a modification to clarify that total contract enrollment from July of the most recent measurement year is used in calculating the enrollment weights in the first year following the consolidation.
Sections 1853(n) and 1853(o) of the Act require CMS to make QBPs to MA organizations that achieve at least 4 stars in a 5-star quality rating system. In addition, section 1854(b)(1)(C) of the Act ties the share of savings that MA organizations must provide to enrollees as the beneficiary rebate to the level of an MA organization's QBP rating. The administrative review process for an MA contract to appeal its QBP status is laid out at § 422.260(c). As described in the final rule titled “Medicare Program; Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs for Contract Year 2012 and Other Changes,” which was published in the
In the November 2023 proposed rule, we proposed to revise the language at § 422.260(c)(2)(vii) to provide the CMS Administrator the opportunity to review and modify the hearing officer's decision within 10 business days of its issuance. We proposed that if the Administrator does not review and issue a decision within 10 business days, the hearing officer's decision is final and binding. Under this proposal, if the Administrator does review and modify the hearing officer's decision, a new decision would be issued as directed by the Administrator. This proposed amendment would be implemented for all QBP appeals after the effective date of the final rule.
We invited public comment on this proposal and received several comments. A discussion of these comments, along with our responses follows.
After consideration of the public comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing as proposed the revision of § 422.260(c)(2)(vii) to state that the CMS Administrator has the discretion to review and modify the hearing officer's decision on a QBP appeal within 10 business days of its issuance by the hearing officer.
Historically, every November CMS has released the preliminary QBP ratings for MA contracts to review their ratings and to submit an appeal request under § 422.260(c) if they believe there is a calculation error or incorrect data are used. In the December 2022 proposed rule, we proposed to clarify in § 422.260(c)(3)(iii) some additional aspects of that administrative review process for appeals of QBP status determinations that are consistent with how we have historically administered the appeals process.
When an MA organization requests an administrative review of its QBP status, permissible bases for these requests include a calculation error (miscalculation) or a data inaccuracy (incorrect data). A calculation error could impact an individual measure's value or the overall Star Rating. Historically, if an MA organization believes the wrong set of data was used in a measure (for example, following a different timeframe than the one in the measure specifications as adopted in the
Currently, § 422.260(c)(3)(i) provides that CMS may limit the measures or bases for which an MA organization may request an administrative review. As described in 76 FR 21490, the appeals process is limited to data sets that have not been previously subject to independent validation. We proposed to add a new paragraph in § 422.260(c)(3)(iii) to clarify that certain data sources would not be eligible for requesting an administrative review. We proposed to clarify at § 422.260(c)(3)(iii) that an administrative review cannot be requested based on data accuracy for the following data sources: HEDIS, CAHPS, HOS, Part C and D Reporting Requirements, PDE, Medicare Plan Finder (MPF) pricing files, data from the Medicare Beneficiary Database Suite of Systems, Medicare Advantage Prescription Drug (MARx) system, and other Federal data sources. The listed data sources have already been validated or audited or come from the CMS system of record for that type of data such as enrollment data, which make it inappropriate to use the QBP appeal process to challenge the accuracy of the data. For example, HEDIS measures and measures using data collected through the Part C and D Reporting Requirements have previously been audited or validated for accuracy; NCQA has a formal audit process for all HEDIS measures to check for accuracy, and MA plans sign off on the accuracy of the data following the audit and prior to the data being submitted to NCQA. Similarly, data from the Part C and D Reporting Requirements are validated through an independent contractor (see 42 CFR 422.516(g) and § 423.514(j)) before the data are submitted by MA organizations and Part D plan sponsors to CMS and used for Star Ratings measures. (With regard to Part D data and measures, the MA organization offering an MA-PD must comply with the applicable Part D regulations per § 422.500.) Because the MA organization bears the responsibility of data accuracy as well as signs off on audit findings in these situations, it is inappropriate to use the QBP appeal process to challenge the accuracy of these data. Organizations would have ample opportunity to raise any concerns about these data prior to submission to CMS for use in the Star Ratings.
We also proposed that MA organizations cannot appeal measures that are based on feedback or surveys that come directly from plan enrollees. Measures derived from CAHPS and HOS data are not appealable because plans cannot challenge the validity of an enrollee's response since that is the enrollee's perspective. MA and PDP contracts contract with the CMS-approved vendor of their choice to conduct CAHPS and HOS, and these independent survey vendors conduct the surveys for contracts using detailed specifications provided by CMS and in some cases contract-specific information such as telephone numbers and language preference information provided directly by the MA and PDP contract. There are detailed specifications for data collection
Measures derived from PDE data, Medicare Beneficiary Database Suite of Systems, enrollment data from the MARx system, and other Federal data sources (for example, FEMA disaster designations) also cannot be appealed for data accuracy because we are pulling data from the system of record or authoritative data source. Part D sponsors submit PDE to CMS via the Drug Data Processing System (DDPS), which processes and validates the data with extensive system edits.
Further, in conducting the reconsideration under § 422.260(c), the reconsideration official reviews the QBP determination, the evidence and findings upon which it was based, and any other written evidence submitted by the organization or by CMS before the reconsideration determination is made. Currently, § 422.260(c)(1)(i) provides that the request for reconsideration must specify the given measure(s) in question and the basis for the MA organization's reconsideration request; the alleged error could impact a measure-level score or Star Rating, or the overall Star Rating. The request must include the specific findings or issues with which the MA organization disagrees and the reason for the disagreement, as well as any additional evidence that the MA organization would like the reconsideration official to consider, as the basis for reconsideration. We proposed to modify § 422.260(c)(2)(v) so that the MA organization must provide a preponderance of evidence that CMS's calculations of the measure(s) and value(s) in question were incorrect; in other words, the burden is on the MA organization to prove an error was made in the calculation of their QBP rating. We also proposed to add language at § 422.260(c)(2)(v) clarifying that the burden of proof is on the MA organization to prove an error was made in the calculation of the QBP status.
If the reconsideration official or hearing officer's decision is in favor of the MA organization, the MA organization's QBP status is recalculated using the corrected data and applying the rules at §§ 422.160 through 422.166. Under our current implementation of § 422.260, recalculation could cause the requesting MA organization's QBP rating to go higher or lower. In some instances, the recalculation may not result in the Star Rating rising above the cut-off for the higher QBP rating. We proposed additional language at § 422.260(c)(1)(i) to clarify that ratings can go up, stay the same, or go down
Under § 422.260(d), CMS may revise an MA organization's QBP status at any time after the initial release of the QBP determinations through April 1 of each year on the basis of any credible information, including information provided during the administrative review process by a different MA organization, that demonstrates that the initial QBP determination was incorrect. CMS issues annual guidance to MA organizations about the QBP appeal process available under § 422.260 each November titled, for example, “Quality Bonus Payment Determinations and Administrative Review Process for Quality Bonus Payments and Rebate Retention Allowances.” We interpret and implement § 422.260 through this guidance and our administration of the annual administrative review process.
When the reconsideration official or hearing officer's decision for a particular appeal or other credible information suggests that there was a systematic error impacting all or a subset of contracts, the QBP status of all contracts is re-calculated using the corrected data and applying the rules at §§ 422.160 through 422.166. If the re-calculated QBP rating for a contract other than the appealing contract results in a lower rating, the original preliminary QBP rating will be used. Thus, a contract's QBP rating will not be decreased by CMS as a result of a systematic recalculation for the current Star Ratings and associated QBP year to correct a systematic calculation error; however, the issue identified will be addressed in the next year's Star Ratings. However, if the QBP rating is higher for a contract after the systematic recalculation, the new rating will be used. For example, if CMS has to do a systematic recalculation for the 2024 Star Ratings following the release of the preliminary 2025 QBP ratings, a contract's 2024 Star Ratings used for the 2025 QBP ratings will not be decreased but the change that caused a systematic recalculation will be addressed when the 2025 Star Ratings are calculated (
We solicited comments on this proposal.
As we stated in the proposed rule, CMS validates the PDE data submitted by the Part D sponsors. Part D sponsors submit PDE records to CMS through DDPS which performs detailed validation, reports processing outcomes, and stores PDE records. Through the PDE edit or error code process, DDPS performs checks of the PDE records for format, integrity, and validity before storing the data for future payment calculations. There are numerous checks that could trigger PDE error codes related to missing/invalid data, beneficiary eligibility, low-income eligibility, benefit phase, NDC-level validity and coverability, basic costs accounting, detailed financial field calculations, among others.
We have historically not allowed sponsors to appeal Part D Star Rating measures based on incorrect PDE data because there is already an alternative process to help sponsors identify issues through the PDE error code process, as well as a process in place for sponsors to make PDE data corrections prior to the PDE submission deadline for the Part D payment reconciliation. However, there are many opportunities for sponsors to review their data to ensure accurate data are used in the Star Ratings program. CMS annually reminds sponsors of the various datasets and reports available to review their underlying measure data that are the basis for the Part C and D Star Ratings and display measures. Every April, we remind sponsors to alert CMS of potential errors or anomalies in advance of CMS's plan preview periods to allow sufficient time to investigate and resolve them before the release of the Star Ratings. Another memorandum, sent annually in April, outlines updates to the Medicare Part D Patient Safety measures and reports. In addition, Patient Safety User Guides and monthly reports are available for Patient Safety measures through the Patient Safety Analysis Web Portal. Revising the QBP appeal process from how it is currently administered to provide additional opportunities for sponsoring organizations to retroactively challenge their PDE data would unnecessarily burden the QBP appeal process, undermine the existing PDE submission, review, and correction processes, and eliminate the incentive of plans to ensure that CMS has accurate data on which to calculate the Star Ratings.
We received no comments on the additional language at § 422.260(c)(2)(v) clarifying that the burden of proof is on the MA organization to prove an error was made in the calculation of the QBP status, § 422.260(c)(1)(i) clarifying that ratings can go up, stay the same, or go down based on an appeal of the QBP determination, and § 422.260(d) clarifying that a reopening of a QBP determination to address a systemic calculation issue that impacts more than the MA organization that submitted an appeal would only be updated if it results in a higher QBP rating for other MA organizations that did not appeal.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to the comments, we are finalizing the proposed clarifications at § 422.260(c)(1)(i), (c)(2)(v), (c)(3)(iii), and (d) with a small revision to paragraph (d) to clarify that information provided during the administrative review process may include information from other MA organizations and slight reorganization to § 422.260(c)(3)(iii) to improve the clarity of the regulation. As these clarifications and revisions to the regulation are consistent with current practice and policy and do not substantively change the appeal rights of an MA organization, CMS is applying these changes immediately on the effective date of the final rule and to the 2025 Star Ratings.
Under section 1859(b)(6)(B) and (f)(2) of the Act, Institutional Special Needs Plans (I-SNPs) are MA special needs plans (SNPs) that restrict enrollment to MA-eligible individuals who meet the definitions of “institutionalized” or “institutionalized-equivalent” in § 422.2, which are based on section 1859(b)(6)(B)(i) and (f)(2)(A) of the Act. “Institutionalized” is defined, for the purposes of defining a special needs individual and for the open enrollment period for institutionalized individuals at § 422.62(a)(4), as an MA-eligible individual who continuously resides or is expected to continuously reside for 90 days or longer in one of the following long-term care facility settings: skilled nursing facility (SNF) as defined in section 1819 of the Act (Medicare); nursing facility (NF) as defined in section 1919 of the Act (Medicaid); intermediate care facility for individuals with intellectual and developmental disabilities as defined in section 1905(d) of the Act; psychiatric hospital or unit as defined in section 1861(f) of the Act; rehabilitation hospital or unit as defined in section 1886(d)(1)(B) of the Act; long-term care hospital as defined in section 1886(d)(1)(B) of the Act; hospital which has an agreement under section 1883 of the Act (a swing-bed hospital); and last, subject to CMS approval, a facility that is not explicitly listed as part of the definition of “institutionalized” at § 422.2 but meets both of the following criteria: (i) it furnishes similar long-term, healthcare services that are covered under Medicare Part A, Medicare Part B, or Medicaid; and (ii) its residents have similar needs and healthcare status as residents of one or more facilities listed in the definition of “institutionalized” at § 422.2. We define, at § 422.2, the term “institutionalized-equivalent,” for the purpose of identifying a special needs individual as an MA-eligible individual who is living in the community but requires an institutional level of care; in addition, the definition of the term “institutionalized-equivalent” includes specific limitations on how an assessment is made whether an individual meets the definition.
Per the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173), I-SNPs, along with C-SNPs and D-SNPs, are MA plans that are specifically designed to provide targeted care and limit enrollment to special needs individuals.
We proposed to add four definitions at § 422.2: a definition of I-SNPs, and three additional definitions for each of the current I-SNP types that correspond to CMS's current MA application process. In addition, we proposed to codify, as part of the definitions for I-SNPs that enroll special needs individuals who are institutionalized, current policies that address the need for the I-SNP to contract with the institutions where such special needs individuals reside. We explained that adding these four definitions would clarify the specific standards that are applicable to I-SNPs, as distinguished from other MA plans and from other MA SNPs. The proposed revisions to the definitions include tying the definitions of “institutionalized” and “institutionalized-equivalent” in § 422.2 and the list of eligible institutions set forth in that definition to the proposed definition of I-SNP. In addition, our proposed definitions of the terms “facility-based institutional special needs plan (FI-SNP)” and “hybrid institutional special needs plan (HI-SNP)” included specific performance requirements tied to the type of special needs individual enrolled in the plan, while the proposed definition of “institutional-equivalent special needs plan (IE-SNP)” focused on how IE-SNPs restrict enrollment to MA-eligible individuals who meet the definition of “institutionalized-equivalent.” Specifically, we proposed that the definition of the term facility-based institutional special needs plan (FI-SNP) would include that such plans own or contract with at least one institution in each county in the plan's service area and with each institution that serves enrollees in the plan. This approach of specifying certain requirements as part of the definition of a specific type of plan is consistent with how CMS has adopted regulatory definitions for D-SNPs, FIDE SNPs, and HIDE SNPs in § 422.2. The proposed definitions clarified that MA organizations may offer I-SNPs that are: exclusive to beneficiaries meeting the definition of “institutionalized” under § 422.2; are exclusive to beneficiaries meeting the definition of “institutionalized-equivalent” under § 422.2; or are exclusive to beneficiaries who meet either of those definitions. Our proposed language linking I-SNP enrollment to the definitions noted here codifies our current sub-regulatory guidance and those practices CMS has historically used during the MA application process and would not change current or future eligibility and enrollment requirements for I-SNP plan subtypes. In addition, adopting regulatory definitions that are specific to the type of I-SNP and the populations served by the I-SNPs allows clearer distinctions and rules about regulatory requirements that are applicable to a specific type of I-SNP. For example, we proposed in the Medicare Program; Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications (the “November 2023 proposed rule”)
Lastly, we proposed to amend § 422.101(f)(2) to add a requirement that the models of care for I-SNPs ensure that contracts with long-term care institutions (listed in the definition of the term “institutionalized” at § 422.2) contain requirements allowing I-SNP clinical and care coordination staff access to enrollees of the I-SNP who are institutionalized. The proposed new § 422.101(f)(2)(vi) would codify longstanding sub-regulatory guidance in section 20.3 of Chapter 16B of the Medicare Managed Care Manual (MMCM) that is designed to provide I-SNP enrollees protections regarding access to care coordination and communication between providers and I-SNP staff. Under our proposal, access would be assured for I-SNP enrollees to care coordination services from I-SNP clinical and care coordination staff that are employed by the MA organization offering the I-SNP or under contract with the I-SNP to furnish healthcare, clinical or care coordination services. As we noted in the December 2022 proposed rule, I-SNP clinical and care coordination staff may be employed by the MA organization offering the I-SNP or be under contract with the I-SNP to furnish healthcare, clinical, or care coordination services. CMS has received feedback in the past that institutional providers sometimes fail to share relevant information regarding an I-SNP enrollee's health status or need for care or services with I-SNP staff. In the proposed rule, we explained that codifying this requirement for I-SNP MOCs to ensure that the contracts between the I-SNP and these institutions where I-SNP enrollees reside would include provisions allowing access for ISNP staff would better protect beneficiaries.
We received the following comments on our proposals, and our responses follow:
In CMS's experience, I-SNPs have been able to successfully comply with this requirement to own or contract with the necessary institutions. CMS will continue to monitor compliance with this requirement in reviewing applications for I-SNPs and in monitoring and overseeing the MA program. In addition, we are adopting a slight clarification to the definition of FI-SNP, which will also apply to HI-SNPs, to use the phrase “in the plan's service area” Instead of the proposed phrase “within the plan's county-based service area.” This revision better aligns with the definition of Service Area in 42 CFR 422.2 “Service area.” This revision does not change the substance of the requirement that each FI-SNP and HI-SNP own or have a contract with at least one institution in each county of the plan's service area.
As far as evaluating whether an institutionalized individual is better served by a D-SNP, I-SNP, or Traditional Medicare, Medicare beneficiaries are free to make their own enrollment decisions regarding how to receive Medicare benefits; section 1851 of the Act provides that each MA-eligible beneficiary is entitled to elect to receive Part A and B benefits through the Traditional Medicare program or enrollment in an MA plan for which the individual is eligible. We encourage all beneficiaries to review their coverage options whether it be Traditional Medicare or Medicare Advantage and believe that the educational tools and materials we make available on
We also share the commenter's concern that beneficiaries may be prescribed inappropriate medications. We note that MedPAC acknowledges in their report that this particular finding may be a result of monitoring practices among I-SNPs. MedPAC noted in 2013 that “[a]lthough I-SNPs also have higher rates than regular MA plans for the use of potentially harmful drugs among the elderly and the use of drug combinations with potentially harmful interactions, their higher rates of monitoring of persistently used drugs suggest that drugs with potential interactions or adverse effects are also being closely monitored.”
Another commenter expressed support for the proposed clarification of I-SNP types and requested that CMS report enrollment in the different types of I-SNP in the CMS MA monthly publicly available enrollment reports to better understand the growth in these plans.
All MA SNPs must cover the Medicare Part D benefit per the definition of specialized MA plans for special needs individuals in § 422.2; therefore, the individual care plan for all I-SNP enrollees should address Part D benefits as well as MA basic benefits (that is, Part A and B benefits) and MA supplemental benefits.
After considering all the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing definitions of the terms Facility-based Institutional special needs plan (FI-SNP), Hybrid Institutional special needs plan (HI-SNP), Institutional special needs plan (I-SNP), and Institutional-equivalent special needs plan (IE-SNP) at § 422.2 largely as proposed. In the definitions of FI-SNP, HI-SNP, and I-SNP, we are slightly reorganizing the definitions to improve their readability. We are modifying the definition of FI-SNP to more clearly provide how FI-SNPs must own or contract with institutions as described in the definition. Finally, we are also revising the definition of FI-SNP by replacing “with the plan's county-based service area” with “in the plan's service area.” This revision better aligns with the definition of Service Area in 42 CFR 422.2 “Service area.”
In addition, after considering all the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing revisions to § 422.101(f) to add a new paragraph (f)(2)(vi) as proposed to require the model of care for each I-SNP (regardless of the type of I-SNP) to ensure that contracts with long-term care institutions (listed in the definition of the term “institutionalized” in § 422.2) contain requirements allowing I-SNP clinical and care coordination staff access to enrollees of the I-SNP who are institutionalized.
Congress first authorized special needs plans (SNPs) to exclusively or disproportionately serve individuals with special needs through passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (hereinafter referred to as the MMA) (Pub. L. 108-173). The law authorized CMS to contract with Medicare Advantage (MA) coordinated care plans that are specifically designed to provide targeted care to individuals with special needs. Originally, SNPs were statutorily authorized for a limited period, but after several extensions of that authority, section 50311(a) of the BBA of 2018 permanently authorized SNPs. Under section 1859(f)(2) through (4) of the Act, SNPs are required to restrict enrollment to Medicare beneficiaries who are: (1) Institutionalized individuals, who are currently defined in § 422.2 as those residing or expecting to reside for 90 days or longer in a long-term care facility, and institutionalized equivalent individuals who reside in the community but need an institutional level of care when certain conditions are met; (2) individuals entitled to medical assistance under a State plan under Title XIX; or (3) other individuals with certain severe or disabling chronic conditions who would benefit from enrollment in a SNP. Section 1859(f)(5)(A) of the Act, added by Section 164 of the Medicare Improvements for Patients and Providers Act (hereinafter referred to as MIPPA) (Pub. L. 110-275), imposes specific care management requirements for all SNPs effective January 1, 2010. As a result, all SNPs are required to implement care management requirements which have two explicit components: an evidence-based model of care (MOC) and a series of care management services. For more discussion of the history of SNPs, please see Chapter 16B of the Medicare Managed Care Manual (MMCM).
In the December 2022 proposed rule, we proposed to codify certain sub-regulatory guidance from Chapters 5 and 16B of the MMCM about current SNP MOC scoring protocols; annual C-SNP MOC submissions as required by the BBA of 2018; and processes for amending SNP MOCs after National Committee for Quality Assurance (NCQA) approval.
We provide additional summaries of the proposed MOC provisions and responses to comments received below.
Section 1859(f)(7) of the Act requires that, starting in 2012, all SNPs be approved by NCQA based on standards developed by the Secretary. As provided under §§ 422.4(a)(iv), 422.101(f), and 422.152(g), the NCQA approval process is based on evaluation and approval of the SNP MOC. In the CMS final rule titled Medicare and Medicaid Programs; Contract Year 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (CMS-4190-F2) (hereinafter referred to as the January 2021 final rule), we adopted several regulatory amendments to implement requirements for the SNP MOC that were enacted as part of the BBA of 2018 and our extension of certain C-SNP specific standards to all SNP MOCs.
All SNPs must submit their MOCs to CMS for NCQA evaluation. An MA organization sponsoring multiple SNPs must develop a separate MOC to meet the needs of the targeted population for each SNP type it offers. MA organizations that wish to offer a SNP must submit an application, as required under part 422, subpart K, to demonstrate that they meet SNP specific requirements, including the requirements in § 422.101(f) that MA organizations offering a SNP implement an evidence-based MOC to be evaluated by the NCQA; in § 422.107 that D-SNPs have a contract with the State Medicaid agencies in the states in which they operate; and in § 422.152(g) that SNPs conduct quality improvement programs. SNP applicants follow the same process in accordance with the same timeline as applicants seeking to contract with CMS to offer other MA plans. In the January 2021 final rule, CMS revised and amended § 422.101(f) to improve plan implementation of enrollee care management practices and to strengthen the review process by establishing a minimum benchmark score of 50 percent for each element of a plan's MOC (§ 422.101(f)(3)(iii)).
Since the beginning of the MOC approval process, CMS has developed, issued, and updated guidance on the MOC to improve plan performance and beneficiary care. Section 1859(f)(5) of the Act outlines requirements for an evidence-based model of care that include—(1) an appropriate network of
In the December 2022 proposed rule, we proposed to codify the SNP MOC scoring protocols by amending § 422.101(f)(3)(iii) to include the current sub-regulatory scoring protocols. This proposal, and these scoring protocols, align with the minimum benchmark for each element of the SNP MOC of a plan that is currently reflected at § 422.101(f)(3)(iii), as added by the January 2021 final rule. Our adoption of these scoring standards is authorized by section 1859(f)(7) of the Act for NCQA review and approval to be based on standards established by the Secretary and our authority in section 1856(b) of the Act to establish standards to carry out the MA program.
First, we proposed to amend § 422.101(f)(3)(iii) to add the minimum overall score requirement for approval of a SNP's MOC, using the term aggregate minimum benchmark; we proposed to use the same minimum standard for the aggregate minimum benchmark as is currently used by NCQA in reviewing and approving MOCs. Currently, SNP MOCs are approved for 1, 2, or 3-year periods. Each element of the SNP's submitted MOC is reviewed and scored. As provided in § 422.101(f)(3)(iii), the minimum benchmark for each element is 50 percent. The MOC is scored by NCQA based on the review of four elements: Description of the SNP Population; Care Coordination; SNP Provider Network; and MOC Quality Measurement & Performance Improvement. Each of these four elements has a number of sub-elements and factors to address the necessary scope and detail of the MOCs. Currently, each of the four SNP model of care elements is valued at 16 points. The aggregate total of all possible points across all elements equals 64, which is then converted to percentage scores based on the number of total points received. CMS provides additional information regarding MOC scoring criteria in Section 20.2.2 of Chapter 5 of the MMCM. A full list of the most recent elements and factors used in evaluating and scoring the MOCs is in the Model of Care Scoring Guidelines for Contract Year 2025; CMS also includes the list of elements as part of attachment A (or the MOC Matrix) of the “Initial and Renewal Model of Care Submissions, and Off-cycle Submission of Model of Care Changes.”
We proposed to codify this current practice by amending § 422.101(f)(3)(iii) to add that, in addition to the current requirement that all SNPs must meet a minimum benchmark score of 50 percent on each element, each SNP's MOC must meet an aggregate minimum benchmark of 70 percent. As reflected in the proposed revision to paragraph (f)(3)(iii), a SNP's model of care will only be approved if each element of the model of care meets the minimum benchmark and the entire model of care meets the aggregate minimum benchmark.
Second, we proposed to codify at § 422.107(f)(3)(iii)(A) the requirement, from section 1859(f)(5)(B) of the Act, that C-SNP MOCs are annually reviewed and evaluated. Beginning in 2020, under the MOC review process, C-SNPs are only eligible to receive a MOC approval for 1-year and therefore are subject to annual review and approval processes. Specifically, we proposed at paragraph (f)(3)(iii)(A) to codify that an MOC for a C-SNP that receives a passing score is approved for 1 year. We also proposed, at new paragraph (f)(3)(iii)(B), to codify different the approval time limits for the MOCs of I-SNPs and D-SNPs, basing the approval period on the final score of the MOC on the aggregate minimum benchmark. We proposed that: (1) an MOC for an I-SNP or D-SNP that receives an aggregate minimum benchmark score of 85 percent or greater is approved for 3 years; (2) an MOC for an I-SNP or D-SNP that receives a score of 75 percent to 84 percent is approved for 2 years; and (3) an MOC for an I-SNP or D-SNP that receives a score of 70 percent to 74 percent is approved for 1 year. This proposed scoring process matches the current process NCQA uses to score initial and annual MOCs. We believe it is prudent to maintain the current scoring process as it has worked well to incentivize improvements in MOCs and strikes a balance with respect to the burden associated with reviews and approvals for all stakeholders by allowing higher scoring MOCs remain in place longer.
Third, we proposed a new paragraph (f)(3)(iii)(C) to provide an opportunity for a SNP to cure deficiencies in its MOC if the MOC fails to meet any minimum element benchmark or the aggregate minimum benchmark when reviewed and scored by NCQA. Currently, the review and evaluation process includes a second opportunity to submit an initial or renewal MOC, known as “the cure process.” Regardless of the final score by NCQA of an MOC resubmitted using the cure process (provided the MOC has the minimum scores to be approved), SNPs that need to use the cure process to reach a passing aggregate minimum and/or minimum element benchmark score will receive only a 1-year approval under this proposal. This policy provides added incentive for SNPs to develop and submit comprehensive and carefully considered MOCs for initial NCQA approval and rewards those SNPs that have demonstrated ability to develop quality MOCs without requiring additional time. We also proposed that the opportunity to cure deficiencies in the MOC is only available once per scoring cycle for each MOC submission. We noted that under this proposal, a MA organization that fails to meet either the minimum element benchmark for any MOC element or the aggregate minimum benchmark for the entire MOC after having an opportunity to cure deficiencies will not have its MOC approved for a contract year. MOCs that do not receive NCQA approval after the cure review will not have a third opportunity for review. As a result, the SNP(s) that use that MOC would need to be nonrenewed by the MA organization or terminated by CMS for
We received the following comments regarding the aforementioned provisions and provide our responses later in this section.
After consideration of the comments and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposed amendments to § 422.101(f)(3)(iii) substantially as proposed but with minor grammatical and organizational changes. As finalized, § 422.101(f)(3)(iii) establishes the aggregate minimum benchmark score for a MOC to be approved, the time period of approval, and the opportunity for an MA organization to submit a corrected MOC for re-evaluation if the MOC is scored below
CMS also proposed to codify current policies and procedures for an MA organization to amend its MOCs after NCQA approval. CMS has labeled this the “off-cycle MOC submission process.” CMS has acknowledged in the past that in order to more effectively address the specific needs of its enrollees, a SNP may need to modify its processes and strategies for providing care in the midst of its approved MOC timeframe. CMS announced a process for SNPs to submit MOC changes for review in the CY 2016 Final Call Letter. Currently, a DSNP or I-SNP that decides to make substantive revisions to their existing approved MOC may submit a summary of their off-cycle MOC changes, along with the red-lined MOC, in the Model of Care module in HPMS for NCQA review and approval. Substantive revisions are those that have a significant impact on care management approaches, enrollee benefits, and/or SNP operations. These kinds of MOC changes are at the discretion of the applicable MA organization offering the SNP and it is the responsibility of the MA organization to notify CMS of substantive changes and electronically submit their summary of changes to their MOC in HPMS for review and approval. However, beginning with CY 2020, C-SNPs were required to submit MOCs annually, and thus, their MOCs receive approvals for a period of one-year. As a result of the annual review and approval of C-SNP MOCs, C-SNPs were not permitted to submit a revised MOC through an off-cycle submission.
At the time of the CY 2016 Final Call Letter, based on our previous experience with the small number of SNPs seeking to amend their MOCs, we expected that mid-cycle amendments to MOCs would be relatively rare, and CMS did not anticipate that the off-cycle process would result in a higher incidence of such MOC changes. We believed that only relatively unusual circumstances would require SNPs to make changes to their MOCs that are so substantive that notification to CMS and review of the changes to the MOC by NCQA and CMS would be warranted. However, CMS and NCQA have seen the number of off-cycle MOC submissions steadily rise over the past four years, and plans have expressed frustration and confusion over what plan changes merit or require submission to NCQA for an off-cycle approval. The proposed adoption of § 422.101(f)(3)(iv) was intended to address stakeholder feedback regarding the off-cycle review process and to mitigate the SNP community's concerns regarding continued plan burden in this area.
In general, CMS intends the MOC review and approval process to include an MA organization's submission of a MOC only in the following scenarios: the MA organization seeks to offer a new SNP; the MA organization's SNP's MOC approval period ends; or CMS deems revision and resubmission of the MOC necessary to ensure compliance with the applicable standards and requirements, such as a change in applicable law or when CMS discovers a violation. We explained in the proposed rule that for this the last scenario, an off-cycle MOC submission may be necessary if, during an audit, it appears that the MOC (including in practice as the SNP applied the MOC) is not meeting applicable standards. In such cases, CMS may ask the SNP to correct and resubmit the MOC. Other examples include regulatory changes or when a State Medicaid agency requires changes to the MOC of a D-SNP to meet State-specific requirements.
In order to ensure a stable care management process and to ensure appropriate oversight by CMS of SNPs and their operation, SNPs may not implement any changes to a MOC until NCQA has approved the changes. Based on our experience, additional situations may justify the submission of a revised MOC for review and approval. As part of the December 2022 proposed rule, we proposed to establish when an MA organization may submit updates and corrections to its approved MOC.
First, we proposed to codify the off-cycle process at § 422.101(f)(3)(iv). We proposed that MA organizations offering SNPs that need to revise their MOC mid-cycle during their MOC approval period may submit the revised MOC for review by NCQA at specific times. CMS has historically restricted the period that SNPs can submit an off-cycle submission from June 1st to November 30th of any contract year, which is meant to allow for the efficient and prudent administration of the annual initial and review MOC process, with the exception of C-SNPs which are prohibited from submitting off-cycle submissions. However, CMS has also allowed SNPs to submit off-cycle MOCs outside of this window when CMS deems it necessary to ensure the SNP or its MOC was meeting statutory or regulatory requirements, to guarantee the safety of enrollees, or to meet State Medicaid requirements. Although we did not propose to codify this specific language in the December 2022 proposed rule nor are we finalizing it here, CMS will continue to use this discretion when reviewing applicable submission requests. We proposed to maintain this process and codify it at § 422.101(f)(3)(iv)(A). We proposed that SNPs may submit updates and corrections to their NCQA-approved MOC between June 1st and November 30th of each calendar year or when CMS requires an off-cycle submission to ensure compliance with applicable law.
We stated in the proposed rule that we were proposing to use the phrase “applicable standards and requirements” to encompass the situations described here in the preamble or similar situations where a potential or existing violation needs to be addressed. We also stated that we were proposing, in an effort to ensure consistent application of this standard and demonstrate our intent, that these be limited situations where a revision is truly necessary, the finalized regulation text would provide that CMS would make this determination and provide directions to the MA organization. We also stated in the proposed rule that if an MA organization believed that this standard for when revision is necessary to ensure compliance by the SNP and its MOC is met, the MA organization should contact CMS for guidance and approval to submit a revision. However, the proposed regulation text did not include this standard and proposed paragraph (f)(iv)(A) stated that D-SNPs and I-SNPs may submit updates and corrections to their NCQA-approved MOC any number of times between June 1st and November 30th of each calendar year or when CMS requires an off-cycle submission to ensure compliance with applicable law. We read the phrase “to ensure compliance with applicable law” to encompass the situations described in the preamble of the proposed rule (and here in the final rule) or similar situations where CMS has determined that a potential or existing violation needs to be addressed. “Applicable law” encompasses MA regulations and statutes, and for D-SNPs, certain Medicaid regulations and statutes; where a MOC would potentially result in harm to enrollees or changes to a MOC are necessary to ensure the safety of enrollees, we view these changes as changes required by applicable law, because the fundamental nature and purpose of the MOC is to ensure that the SNP addresses the needs of the special needs individuals enrolled in the SNP. We also stated in the proposed rule that if an MA organization believed that this standard for when revision is necessary to ensure compliance by the SNP and its
Since the beginning of the off-cycle submission process, CMS has provided guidance clarifying which MOC changes require submission to CMS and how SNPs should submit their MOC changes to CMS. We have previously said that SNPs that make significant changes to their MOCs must submit (in HPMS) a summary of the pertinent modifications to the approved MOC and a redlined version of the approved MOC with the revisions highlighted. However, given the level of questions we have received over the years regarding what constitutes a significant change, we proposed to codify a list of reasons for when a SNP must use an off-cycle submission of a revised MOC for review and approval. Proposed § 422.101(f)(3)(iv)(B) provided that an MA organization must submit updates or corrections to a SNP's MOC to reflect the following:
• Changes in policies or procedures pertinent to:
++ The health risk assessment (HRA) process;
++ Revising processes to develop and update the Individualized Care Plan (ICP);
++ The integrated care team process;
++ Risk stratification methodology; or
++ Care transition protocols;
• Target population changes that warrant modifications to care management approaches or changes in benefits. For example, we intend this to include situations like adding Diabetes to a Cardiovascular Disease and Congestive Heart Failure C-SNP;
• Changes in a SNP's plan benefit package between consecutive contract years that can considerably impact critical functions necessary to maintain member well-being and are related SNP operations. For example, changes in Medicaid services covered by a HIDE SNP or FIDE SNP through its companion Medicaid managed care plan or changes in Medicaid policy (such as benefits or eligibility) that require changes to an ICP for coordinating Medicare and supplemental benefits with the new Medicaid policy;
• Changes in level of authority or oversight for personnel conducting care coordination activities (for example, medical provider to non-medical provider, clinical vs. non-clinical personnel);
• Changes to quality metrics used to measure performance.
The proposed regulation text did not include examples of the type and scope of MOC policy changes that may be made by an MA organization to the SNP's approved MOC without any review or approval by CMS or NCQA. Changes to the MOC that are permitted but that do not need to be submitted through HPMS include but are not limited to:
• Changes in legal entity, parent organization, and oversight (novation/mergers, changes to corporate structure);
• Changes to delegated providers and agreements;
• Changes in administrative staff, types/level of staff that do not affect the level of authority or oversight for personnel conducting care coordination activities;
• Updates on demographic data about the target population;
• Updates to quality improvement metric results and technical quality measure specification updates;
• Additions/deletions of specific named providers;
• Grammatical and/or non-substantive language changes; and
• For D-SNPs, minor changes to Medicaid benefits.
We also proposed, § 422.101(f)(3)(iv)(D), that SNPs may not implement any changes to a MOC until NCQA has approved the changes. We explained in the proposed rule that NCQA will continue to review the summary of changes and a redlined copy of the revised MOC submitted in HPMS to verify that the revisions are consistent with the previously detailed list of applicable submissions and in line with acceptable, high-quality standards, as included in the original, approved MOC, but that the revised MOCs would not be rescored. We proposed to codify this policy at § 422.101(f)(3)(iv)(E), which provides that the successful revision of the MOC under proposed (f)(3)(iv) does not change the MOC's original period of approval original approval period (that is, 1-year or multi-year) by NCQA. Therefore, changes made to MOC cannot be used to improve a low score. We stated how we anticipate that the current procedures and documentation processes used to implement the requirements would continue under our proposal and explained our position that such procedures and operational practices do not require rulemaking and that CMS may change procedures as necessary (for example, use of HPMS as the system for submission, the mechanism for providing notice to MA organizations of the review of the MOC initially or any revisions, etc.). We stated that we intended that the current procedures will continue for NCQA reviewers to designate the summary as “Acceptable” or “Non-Acceptable,” and enter the findings in the HPMS character text box and that we would continue the current process in which a system-generated email is sent to the designated SNP Application Contact and the MA Quality Contact, as well as to the individual who submitted the revised MOC summary.
If NCQA determines that revisions to an initial or renewal MOC, as delineated in the MOC summary, do not reflect the quality standards as demonstrated by the original MOC and its associated score/approval period, the SNP will be notified via email with a “Non-Acceptable” determination and a list of all deficiencies. If the summary and redlined version is not acceptable after the second review, the SNP must continue implementing its approved MOC without any revisions for the remainder of its MOC approval period. We did not include NCQA's off-cycle scoring policy and the implications in the proposed regulation text, but we are clarifying in this final rule at § 422.101(f)(3)(iv)(D) to note that all changes, as applicable under § 422.101(f)(3)(iv)(B), that are part of a SNP's off-cycle submission are reviewed by NCQA as “Acceptable” or “Non-acceptable.” By “Acceptable,” we mean that the changes have been approved by NCQA and the MOC has been updated; whereas by “Non-acceptable” we mean that the changes have been rejected by NCQA and the MOC has not been changed.
We proposed under § 422.101(f)(3)(iv)(F) to codify existing operational practices with respect to off-cycle submissions by C-SNPs. As previously discussed, currently, C-SNPs are prohibited from submitting off-cycle MOC submissions. We proposed to codify that C-SNPs are prohibited from submitting an off-cycle MOC submission except when CMS requires an off-cycle submission to ensure compliance with the applicable regulations. Otherwise, C-SNPs must wait until the annual MOC submission period to make changes to their MOC. SNPs have one opportunity to correct (“cure”) deficiencies, as noted in our proposed rule § 422.101(f)(3)(iv)(G) to confirm that the revised MOC is consistent with the standards outlined in the original MOC. We proposed, at § 422.101(f)(3)(iv)(G), to permit a single opportunity for a SNP to revise its off-cycle submission to revise a MOC if there is a deficiency in the submission. The cure process proposed, which is the current operational process use by NCQA, would permit SNPs to resubmit a single revised off-cycle submission or cure until the end of the Off-cycle submission period to an Off-cycle MOC that was deemed unacceptable during
We also found that SNPs have sought to modify an initial or renewal MOC shortly after NCQA approval and before the MOC has gone into effect. We have generally rejected these submissions as the MOC has yet to go into effect. Under the proposal, we stated that we would continue to prohibit an off-cycle submission until the approved MOC has gone into effect. For example, if NCQA approved a SNP's MOC on April 1, 2022, the plan would be prohibited from submitting an off-cycle submission until the effective date of the MOC, which would be January 1, 2023, and then the start of the off-cycle submission window on June 1, 2023. In order to clarify this process, we proposed to codify this guidance at § 422.101(f)(3)(iv)(C). We proposed that NCQA will only review off-cycle submissions after the start of the effective date of the current MOC unless it is deemed necessary to ensure compliance with the applicable regulations or State Medicaid agency requirements for D-SNPs.
Finally, we reiterated in the proposed rule that we still believe that to substantively revise an MOC should be a rare occurrence rather than an eventuality. These proposed processes and procedures were intended to make certain that CMS and NCQA are apprised of up-to-date information regarding the MOC; strengthen our ability to adequately monitor the approved MOCs; and guarantee that SNPs continue to provide high quality care to enrollees. We sought comment on the codification of the current off-cycle MOC submission process.
We reiterated in the proposed rule that the proposed regulations reflect and would codify current policy and procedures. While we proposed that the regulations would be applicable beginning with a future year, we stated our intent to continue our current policy as reflected in the proposed rule. We also stated in the December 2022 proposed rule that the proposed changes carried no burden because the proposal was a codification of previously issued sub-regulatory guidance in Chapter 5 and other CMS transmittals to impacted MA organizations. We also explained that the proposed provisions are already captured under the PRA package “Initial and Renewal Model of Care Submissions, and Off-cycle Submission of Summaries of Model of Care Changes (CMS-10565, OMB 0938-1296). As part of the PRA approval package, CMS reviews public comments directed towards the initial and renewal MOC process, MOC trainings, and the off-cycle MOC submission system. This position continues and we believe that this final rule, which finalizes § 422.101(f)(3)(iv) generally as proposed (with several modifications to clarify the regulation) is consistent with current procedures and the approved PRA package.
We received comments to these proposed provisions regarding off-cycle revisions to approved MOCs and our responses follow.
As proposed in new paragraphs (f)(3)(iv)(A) and (B), an MA organization that offers a D-SNP or I-SNP that seeks to revise the MOC before the end of the MOC approval period may submit changes to the MOC as off-cycle MOC submissions for review by NCQA as follows:
• D-SNPs and I-SNPs may submit updates and corrections to their NCQA approved MOC any number of times between June 1st and November 30th of each calendar year or when CMS requires an off-cycle submission to ensure compliance with applicable law.
• D-SNPs and I-SNPs are required to submit updates or corrections as part of an off-cycle submissions based on:
○ Substantial changes in policies or procedures pertinent to: the health risk assessment (HRA) process; revising processes to develop and update the Individualized Care Plan (ICP); the integrated care team process; risk stratification methodology; or care transition protocols;
○ Target population changes that warrant modifications to care management approaches;
○ Changes in a SNP's plan benefit package between consecutive contract years that can considerably impact critical functions necessary to maintain member well-being and are related SNP operations;
○ Changes in level of authority or oversight for personnel conducting care coordination activities (for example, medical provider to non-medical provider, clinical vs. non-clinical personnel); or
○ Changes to quality metrics used to measure performance.
We are making minor changes to proposed paragraphs (f)(3)(iv)(A) and (B) to increase the clarity of the regulation. We are finalizing paragraph (f)(3)(iv)(A) to provide that C-SNPs, D-SNPs and I-SNPs must submit updates and corrections to their NCQA-approved MOC when CMS requires an off-cycle submission to ensure compliance with applicable law. Finalizing new § 422.101(f)(3)(iv)(A) with these revisions makes it clear that when CMS requires an off-cycle submission, such as when CMS identifies an issue during an audit, the MA organization offering the C-SNP, D-SNP or I-SNP must submit off-cycle revision to NCQA for review and approval of the necessary changes to the MOC.
We are finalizing paragraph (f)(3)(iv)(B) to specify when D-SNPs and I-SNPs are permitted to use an off-cycle submission to submit updates and corrections to their MOCs to NCQA for review and approval. As we proposed, updates and revisions or corrections of this type are permitted only for certain reasons. As finalized, § 422.101(f)(3)(iv)(B) provides that D-SNPs and I-SNPs must submit updates and corrections to their NCQA-approved MOC between June 1st and November 30th of each calendar year if the I-SNP or D-SNP wishes to make any of the listed revisions. The list of revisions, at paragraphs (f)(3)(iv)(B)(
A D-SNP or I-SNP that decides to make significant revisions to their existing approved MOC must submit a summary of their off-cycle MOC changes, along with the red-lined MOC, in the Model of Care module in HPMS for NCQA review and approval, before implementing and using the changes to the MOC. As discussed in the preamble to the proposed rule, significant revisions within the scope of § 422.101(f)(3)(iv)(B) are those that have a significant impact on care management approaches, enrollee benefits, and/or SNP operations. The intent of the rule under § 422.101(f)(3)(iv)(B) is to codify and clearly delineate events that would be considered by CMS as significant revisions. We believe that this language is sufficient to direct plans; however, CMS will monitor the initial off-cycle period to review whether SNPs continue to submit changes that fail to meet the intent of the requirement and will provide additional examples of what is considered a significant revision within the scope of this rule, as necessary.
The proposed rule (87 FR 79575) provided examples of the type of non-significant changes that an MA organization may make
Lastly, although some comments expressed concern about alignment of audit standards with off-cycle review and approval of MOCs, we believe that the current audit process has consistently reviewed and treated approved off-cycle changes to MOCs (that is, off-cycle changes marked as approved or acceptable by NCQA) as acceptable. CMS will review and update our SNP audit protocols as warranted and CMS will consider feedback from stakeholders when determining if additional revisions are needed to ensure that CMS audits hold SNPs to their approved MOCs, including any approved changes to the MOCs.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing new paragraph (f)(3)(iv) (for requirements on off-cycle changes to an approved MOC) largely as that regulation text was proposed but with modifications compared to our proposed regulation text. The modifications, listed here, are primarily to clarify and improve paragraph (f)(3)(iv):
In paragraph (f)(3)(iv), we are adding the text “organization sponsoring” between the proposed language “An MA” and “a SNP that. . .” for additional clarity. As finalized, the introductory language in paragraph (f)(3)(iv) reads: “An MA organization sponsoring a SNP that seeks to revise the MOC before the end of the MOC approval period may submit changes to the MOC as off-cycle MOC submissions for review by NCQA as follows:” This revision is clearer that the MA organization that offers the SNP is the legal entity responsible for the submissions.
In paragraphs (f)(3)(iv)(A) and (f)(3)(iv)(B), we are finalizing the paragraphs with revisions (described in more detail in a response to public comments earlier in this section) to clarify when off-cycle changes to an MOC must be submitted because CMS has directed the change to comply with applicable law and when off-cycle changes to an MOC must be submitted because of changes in how a D-SNP or I-SNP is administered or operates. As we noted earlier in this preamble, these changes are for additional clarity in the regulation.
We are also finalizing paragraph (f)(3)(iv)(B)(
In paragraph (f)(3)(iv)(C), we have corrected the verb tense from “will only review” to “only reviews.”
In paragraph (f)(3)(iv)(D), we are finalizing several changes to increase clarity in the regulation text but have not made substantive changes in policy. As finalized, paragraph (f)(3)(iv)(D)—in four sentences—clearly states that changes may not be made until NCQA has reviewed and approved the off-cycle changes and addresses how NCQA will review the changes. The first sentence states that SNPs may not make changes until NCQA has reviewed and approved the off-cycle MOC changes. A new second sentence states that NCQA does not rescore the MOC during the off-cycle process, but changes are reviewed and determined by NCQA to be either “Acceptable” or “Non-acceptable.” Two additional sentences follow to explain that “Acceptable” means that the changes have been approved by NCQA and the MOC has been updated; “Non-acceptable” means the changes have been rejected by NCQA and the MOC has not been changed; and that if NCQA determines that off-cycle changes are unacceptable, the SNP must continue to implement the MOC as originally approved. These revisions are consistent with the proposal and the current process.
In paragraph (f)(3)(iv)(F), we are finalizing the provision to use “permitted” rather than “eligible” as it better reflects our current policy so that it now reads: “C-SNPs are only permitted to submit an off-cycle MOC submission when CMS requires an off-cycle submission to ensure compliance with applicable law.”
Finally, we are finalizing paragraph (f)(3)(iv)(G) to clarify the single opportunity for an SNP to submit a corrected off-cycle revision to the MOC if the initial off-cycle submission is not approved. The revisions generally use language that is consistent with § 422.101(f)(3)(iii)(C), which better signals that this part of the off-cycle revision process is similar to the cure period provided when the MOC submission is determined to have deficiencies. As finalized, paragraph (f)(3)(iv)(G) reads: “When a deficiency is identified in the off-cycle MOC revision(s) submitted by a SNP, the SNP has one opportunity to submit a corrected off-cycle revision between June 1st and November 30th of each calendar year.”
Although there were inadvertent differences in how the preamble of the proposed rule explained the proposed regulation text, we are finalizing the substance of our proposed policy for how off-cycle revisions to the MOCs of I-SNPs and D-SNPs could be requested and would be subject to review and approval before changes could be implemented.
A specialized MA plan for special needs individuals, generally known as a special needs plan or a SNP, is an MA plan specifically designed to provide targeted care and limits enrollment to special needs individuals. CMS defines Specialized MA Plans for Special Needs Individuals at § 422.2 as an MA coordinated care plan (CCP) that exclusively enrolls special needs individuals as set forth in § 422.4(a)(1)(iv) and that provides Part D benefits under part 423 to all enrollees; and which has been designated by CMS as meeting the requirements of an MA SNP as determined on a case-by-case basis using criteria that include the appropriateness of the target population, the existence of clinical programs or special expertise to serve the target population, and whether the proposal discriminates against sicker members of the target population. As provided in section 1859(b)(6) of the Act and the definition in § 422.2, a special needs individual could be any one of the following: an institutionalized or institutionalized-equivalent individual; a dual eligible individual; or an individual with a severe or disabling chronic condition and who would benefit from enrollment in a specialized MA plan. Chronic Condition Special Needs Plans (C-SNPs) are SNPs that restrict enrollment to special needs individuals with specific severe or
The Bipartisan Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123) amended section 1859 of the Act to revise the definition of “severe or disabling chronic condition” for purposes of identifying the special needs individuals eligible to enroll in C-SNPs. The amendments had an effective date of January 1, 2022, and included the following related to the revision of this definition: a directing the Secretary to convene a Panel of clinical advisors to establish and update a list of severe or disabling chronic conditions that meet certain criteria; mandating the inclusion of several current C-SNP chronic conditions onto the list; and directing the Panel take into account the availability of benefits in the Medicare Advantage Value-Based Insurance Design model.
We proposed to codify the BBA of 2018's amendment to the definition of severe or disabling chronic condition; to codify the definition of C-SNP; to implement the BBA of 2018 by updating and codifying the recommended list of chronic conditions recommended by a Panel of clinical advisors as specified by the BBA; and to codify existing sub-regulatory guidance permitting the use of certain chronic condition combinations for the purposes of offering single standalone C-SNP plan benefit packages (PBPs).
Currently, § 422.2 defines “severe or disabling chronic condition” as meaning, for the purpose of defining a special needs individual, an MA eligible individual who has one or more co-morbid and medically complex chronic conditions that are substantially disabling or life-threatening, has a high risk of hospitalization or other significant adverse health outcomes, and requires specialized delivery systems across domains of care. As summarized in more detail in the December 2022 proposed rule this definition was adopted to track amendments to section 1859(b)(6)(B)(iii) of the Act made by section 164(e) of the Medicare Improvement for Patients and Providers Act of 2008 (MIPPA) to define special needs individuals eligible for C-SNPs beginning January 1, 2010. (87 FR 79560) Section 164(e) of MIPPA also directed the Secretary to convene a Panel of clinical advisors to determine the chronic conditions used to identify special needs individuals for C-SNP eligibility. CMS subsequently convened the Panel in October 2008 and implemented the fifteen SNP-specific chronic conditions recommended by the Panel that met the definition of severe or disabling and needed specialized care management. The list was later incorporated into Chapter 16-B of the Medicare Managed Care Manual (MMCM). Starting in 2010, CMS adopted sub-regulatory guidance whereby a C-SNP could only offer a plan benefit package (PBP) that covered one of the fifteen SNP-specific chronic conditions identified in the guidance. Several of the chronic condition categories include a list of sub-categorical conditions or disorders that provide further information regarding the types of diseases that qualify under the chronic condition categories. Examples of conditions with sub-categorical disorders include autoimmune disorders, cardiovascular disorders, severe hematologic disorders, chronic lung disorders, chronic disabling mental health conditions, and chronic disabling neurologic disorders. Currently, C-SNPs that target several of the severe or disabling chronic conditions listed in our guidance must enroll an eligible beneficiary who has one or more of the targeted conditions, including the sub-categorical disorders; the C-SNP is not permitted to exclude an eligible beneficiary having the covered condition or a covered sub-categorical condition. For example, a C-SNP that enrolls special needs individuals with a chronic and disabling mental health condition must enroll special needs individuals with one or more of the following sub-categorical conditions: bipolar disorders, major depressive disorder, paranoid disorder, schizophrenia, or schizoaffective disorder. Currently, C-SNPs may only cover one of the fifteen qualifying chronic conditions in a single PBP, unless the C-SNP receives approval from CMS to focus on a group of severe or disabling chronic conditions. Generally, CMS believes that structuring a C-SNP to target multiple commonly co-morbid conditions that are not clinically linked in their treatment would result in a general market product rather than an MA plan that is sufficiently tailored for special needs individuals. Therefore, CMS will approve targeting of multiple severe or disabling chronic conditions by a C-SNP only for: (1) one of the CMS-developed group of commonly co-morbid and clinically linked conditions listed in section 20.1.3.1 of Chapter 16-B where the special needs individuals may have one or more of the conditions in the grouping or (2) a MA organization-customized group of multiple co-morbid and clinically linked conditions where the special needs individuals served by the C-SNP have all of the specified conditions.
In 2018, the BBA of 2018 amended section 1859(b)(6)(B)(iii) of the Act by adding a new definition of special needs individuals to apply beginning January 1, 2022. Under the new definition of special needs individual, an eligible individual that the Secretary may determine would benefit from enrollment in such a specialized MA plan for individuals with severe or disabling chronic conditions must, on or after January 1, 2022, “have one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits overall health or function, have a high risk of hospitalization or other adverse health outcomes, and require intensive care coordination and that is listed under [section 1859(f)(9)(A) of the Act].” Section 1859(f)(9) of the Act, as added by the BBA of 2018, instructs the Secretary to convene the Panel of clinical advisors not later than December 31, 2020, and every 5 years thereafter, to establish and update a list of conditions that meet each of the following criteria:
• Conditions that meet the definition of a severe or disabling chronic condition under section 1859(b)(6)(B)(iii)(II) of the Act on or after January 1, 2022; and
• Conditions that require prescription drugs, providers, and models of care that are unique to the special needs individuals with several or disabling chronic conditions as defined in subsection (b)(6)(B)(iii)(II) of section 1859 of the Act as of that date and:
++ As a result of access to, and enrollment in, such a specialized MA plan for special needs individuals, individuals with such conditions would have a reasonable expectation of slowing or halting the progression of the disease, improving health outcomes and decreasing overall costs for individuals diagnosed with such condition compared to available options of care other than through such a specialized MA plan for special needs individuals; or
++ Have a low prevalence in the general population of beneficiaries under this title or a disproportionally high per-beneficiary cost under title XVIII of the Act.
In addition, sections 1859(f)(9)(B) and (C) of the Act require that:
• The list of severe or disabling chronic conditions used for C-SNPs include: HIV/AIDS, end stage renal disease (ESRD), and chronic and disabling mental illness.
• The Panel consider the availability of varied benefits, cost-sharing, and supplemental benefits under the Medicare Advantage Value-Based Insurance Design (VBID) model being tested by the Center for Medicare and Medicaid Innovation (CMMI).
In meeting its obligation under section 1859(f)(9)(A) of the Act to convene a Panel of clinical advisors not later than December 31, 2020, to establish the list of conditions that meet the statutory criteria, CMS was committed to engaging the public—industry, advocates, beneficiaries, and medical professional societies—in the discussion about appropriate SNP-specific chronic conditions. Panel members were tasked with assessing the statutory criteria for reviewing the appropriateness of potential conditions as required by section 1859(f)(9)(A) of the Act.
On August 8, 2019, CMS announced a Request for Information (RFI) related to the review of C-SNP specific chronic conditions as mandated by the BBA of 2018 to solicit comments from the public to assist the Panel of advisors convened by CMS under section 1859(f)(9)(A) of the Act. The 2019 SNP Chronic Condition Panel met for three sessions between September 9 and September 23, 2019. CMS provided panelists with a summary of comments received in response to the RFI. The panelists reviewed and discussed the written public comments from 14 stakeholders representing the industry, advocacy groups, medical societies, and beneficiaries. The panelists also examined the chronic conditions already covered by existing C-SNPs. They employed their collective national and international experience with chronic condition research and clinical practice to weigh inclusion of chronic conditions on the list. As in 2008, the panelists also considered the condition's prevalence in the Medicare population, a factor that would potentially affect the capacity of an MA organization to attract eligible enrollees and be viable in a given service area as well as being identified in section 1959(f)(9)(A)(ii)(II) of the Act as a criterion to be considered. The panelists were sensitive to the reality that C-SNPs require sufficient disease prevalence and access to a specialized provider network within a marketable service area to manage risk under a capitated payment system (even with risk-adjustment of those capitated payments), and effectively and efficiently serve the targeted special needs beneficiaries. The panelists also reflected on the need for beneficiaries, health care practitioners, and the health care industry to recognize the SNP-specific chronic conditions and consider them appropriate for a specialized service delivery system in order to stimulate participation. While the Panel did consider a condition's prevalence in the Medicare population as required by section 1859(f)(9)(A) of the Act, it was not charged with and did not make any additional judgments based on business considerations (that is, the potential profitability of the selected chronic conditions) as CMS expects interested MA organizations to reach their own conclusions about product offerings and markets in which they wish to operate.
Upon review and deliberation, the Panel identified the following 22 chronic conditions as meeting the statutory criteria:
1. Chronic alcohol use disorder and other substance use disorders;
2. Autoimmune disorders:
• Polyarteritis nodosa,
• Polymyalgia rheumatica,
• Polymyositis,
• Dermatomyositis
• Rheumatoid arthritis,
• Systemic lupus erythematosus,
• Psoriatic arthritis, and
• Scleroderma;
3. Cancer;
4. Cardiovascular disorders:
• Cardiac arrhythmias,
• Coronary artery disease,
• Peripheral vascular disease, and
• Valvular heart disease;
5. Chronic heart failure;
6. Dementia;
7. Diabetes mellitus;
8. Overweight, Obesity, and Metabolic Syndrome;
9. Chronic gastrointestinal disease:
• Chronic liver disease,
• Non-alcoholic fatty liver disease (NAFLD),
• Hepatitis B,
• Hepatitis C,
• Pancreatitis,
• Irritable bowel syndrome, and
• Inflammatory bowel disease;
10. Chronic kidney disease (CKD):
• CKD requiring dialysis/End-stage renal disease (ESRD), and
• CKD not requiring dialysis;
11. Severe hematologic disorders:
• Aplastic anemia,
• Hemophilia,
• Immune thrombocytopenic purpura,
• Myelodysplastic syndrome,
• Sickle-cell disease (excluding sickle-cell trait), and
• Chronic venous thromboembolic disorder;
12. HIV/AIDS;
13. Chronic lung disorders:
• Asthma,
• Chronic bronchitis,
• Cystic Fibrosis,
• Emphysema,
• Pulmonary fibrosis,
• Pulmonary hypertension, and
• Chronic Obstructive Pulmonary Disease (COPD);
14. Chronic and disabling mental health conditions:
• Bipolar disorders,
• Major depressive disorders,
• Paranoid disorder,
• Schizophrenia,
• Schizoaffective disorder,
• Post-traumatic stress disorder (PTSD),
• Eating Disorders, and
• Anxiety disorders;
15. Neurologic disorders:
• Amyotrophic lateral sclerosis (ALS),
• Epilepsy,
• Extensive paralysis (that is, hemiplegia, quadriplegia, paraplegia, monoplegia),
• Huntington's disease,
• Multiple sclerosis,
• Parkinson's disease,
• Polyneuropathy,
• Fibromyalgia,
• Chronic fatigue syndrome,
• Spinal cord injuries,
• Spinal stenosis, and
• Stroke-related neurologic deficit;
16. Stroke;
17. Post-organ transplantation care;
18. Immunodeficiency and Immunosuppressive disorders;
19. Conditions that may cause cognitive impairment:
• Alzheimer's disease,
• Intellectual and developmental disabilities,
• Traumatic brain injuries,
• Disabling mental illness associated with cognitive impairment, and
• Mild cognitive impairment;
20. Conditions that may cause similar functional challenges and require similar services:
• Spinal cord injuries,
• Paralysis,
• Limb loss,
• Stroke, and
• Arthritis;
21. Chronic conditions that impair vision, hearing (deafness), taste, touch, and smell;
22. Conditions that require continued therapy services in order for individuals to maintain or retain functioning.
We proposed to codify the list of chronic conditions created by the Panel as part of the definition of severe or disabling chronic condition at § 422.2. The proposal took into account the changes recommended by the Panel to the list of chronic conditions that are currently used by CMS to approve C-SNPs. These changes include:
• Removing the term “limited” in listing the severe or disabling chronic conditions that make an individual eligible to enroll in a C-SNP. The Panel chose this revision so that unlisted chronic conditions will not disqualify the enrollee from plan eligibility even if the unlisted or another listed condition is not the targeted condition that qualifies the beneficiary for a specific C-SNP. In other words, the beneficiary could have other conditions beyond the index condition (which is required to be present) and still be permitted to enroll in a specific C-SNP. For example, a beneficiary with heart failure could also have psoriasis or epilepsy and not be excluded from the Chronic Heart Failure C-SNP. Because our proposal would not exclude a beneficiary from being a special needs individual or eligibility for an applicable C-SNP if the beneficiary has conditions in addition to a severe or disabling chronic condition, we did not propose to use the word “including” in the proposed definition. We proposed to codify the list of specific conditions (and subconditions) that have been identified as meeting the statutory criteria and avoid ambiguity regarding related but unlisted conditions;
• Renaming “Chronic alcohol and other drug dependence” to “Chronic alcohol use disorder and other substance use disorders;”
• Adding dermatomyositis, psoriatic arthritis, and scleroderma to the Autoimmune disorders chronic condition category;
• The Panel recommended changing title of “Cancer, excluding pre-cancer conditions or in-situ status” to “Cancer;” however; they did not recommend altering the current limitations to the chronic condition category, only a clerical change to the title;
• Adding valvular heart disease to the Cardiovascular disorders chronic condition category;
• Adding new chronic condition category, “Overweight, Obesity, and Metabolic Syndrome;”
• Adding new chronic condition category, “Chronic gastrointestinal disease” with the following conditions: chronic liver disease, non-alcoholic fatty liver disease (NAFLD), hepatitis B, hepatitis C, pancreatitis, irritable bowel syndrome, and inflammatory bowel disease;
• Renaming the “End Stage Renal Disease (ESRD) requiring dialysis” condition category to “Chronic kidney disease (CKD)” with the following conditions: CKD requiring dialysis/end-stage renal disease (ESRD), and CKD not requiring dialysis;
• Adding Cystic Fibrosis and Chronic Obstructive Pulmonary Disease (COPD) to the Chronic lung disorders chronic condition category;
• Adding post-traumatic stress disorder (PTSD), eating disorders, and anxiety disorders to the Chronic and disabling mental health conditions category;
• Adding fibromyalgia, chronic fatigue syndrome, and spinal cord injuries to the Neurologic disorders conditions category;
• Adding post-organ transplantation care and immunodeficiency and immunosuppressive disorders as new chronic condition categories;
• Creating new chronic condition category “Conditions that may cause cognitive impairment,” including the following sub-conditions: Alzheimer's disease, intellectual disabilities, developmental disabilities, traumatic brain injuries, disabling mental illness associated with cognitive impairment, and mild cognitive impairment;
• Creating new chronic condition category “Conditions that may cause similar functional challenges and require similar services,” including the following sub-conditions: spinal cord injuries, paralysis, limb loss, stroke, arthritis, and chronic conditions that impair vision, hearing (deafness), taste, touch, and smell; and
• Creating new chronic condition category “Conditions that require continued therapy services in order for individuals to maintain or retain functioning.”
As demonstrated in the last three bullets, the Panel recommended the creation of several new chronic condition categories that differ from how the current list of severe or disabling chronic conditions uses categories as a single condition or set of related diseases. By including these new categories, we proposed that C-SNPs would be permitted to create benefit packages and care coordination services to address the needs of beneficiaries who share the same functional needs even if their specific disease or chronic condition may differ. For example, using the condition categories “Conditions associated with cognitive impairment;” “Conditions associated with similar functional challenges and require similar services;” “Chronic conditions that impair vision, hearing (deafness), taste, touch, and smell;” and “Conditions that require continued therapy services in order for individuals to maintain or retain functioning;” MA organizations would have the opportunity to propose C-SNPs that seek to ameliorate specific disease outcomes such as impaired vision without having to target one specific chronic condition. In another example, MA organizations would be permitted to create specific care coordination services and benefit packages to address the functional challenges facing beneficiaries with spinal cord injuries and those suffering paralysis from stroke. The challenge for SNPs would be to address the needs not of enrollees who share the same disease or chronic condition, but those diagnosed with different diseases and chronic conditions that share similar impacts on health and functionality.
The proposed categories as finalized will apply the same statutory and regulatory considerations per the parameters of a severe or disabling chronic condition and as noted in Title XVIII of the Act and 42 CFR part 422. In finalizing the three categories that are focused on impacts on health and functionality rather than underlying disease or condition, we are not eliminating the need for the effect on the enrollee to meet the statutory criteria in section 1859(f)(9) of the Act. As we noted in the December 2022 proposed rule, we believe this new approach to creating a C-SNP is in line with types of services and benefits required of current C-SNPs in operation, and beneficiaries facing similar challenges would benefit from coordination of care among multiple providers for services found in a variety of settings appropriate for the enrollee's health challenges.
We received the following comments, and our responses follow:
While we agree that the use ADLs and IADLs can assist health care providers and payers determine the health needs of patients, the Panel did not specifically create a chronic condition category around these measurements. As noted earlier in the preamble, the 2019 chronic condition Panel was limited to using these criteria when determining the content of the chronic conditions list. The Panel did recommend some function-based additions to the list that may be associated with conditions leading to deterioration of abilities, such as chronic condition (20) “Conditions with functional challenges and require similar services including the following: spinal cord injuries, paralysis, limb loss, stroke, and arthritis.” Because of these requirements, CMS does not have the authority to establish C-SNPs as suggested by the commenter at this time.
As defined in section 1852(a)(3)(D)(iii) of the Act, for the purposes of SSBCI, a chronically ill enrollee means an enrollee in an MA plan that the Secretary determines:
• has one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee;
• has a high risk of hospitalization or other adverse health outcomes; and
• requires intensive care coordination.
CMS added this definition to our regulations at § 422.102(f)(1)(i)(A).
As we noted in the preamble to this final rule, the BBA of 2018 amended section 1859(b)(6)(B)(iii)(II) of the Act by adding a new definition of special needs individuals means an MA eligible individual who meets such requirements as the Secretary may determine would benefit from enrollment in such a specialized MA plan described in subparagraph (A) for individuals with severe or disabling chronic conditions who on or after January 1, 2022, have one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits overall health or function, have a high risk of hospitalization or other adverse
The definition of chronically ill enrollee for the purposes of SSBCI is not specifically tied to the set of chronic conditions established by the Panel of clinical advisors under section 1859(f)(9)(A) as is the case for the definition of special needs individuals with “severe or disabling chronic conditions” that must be used in determining eligibility for C-SNPs. In addition, the definition of “chronically ill enrollee” in section 1852(a)(3)(D) of the Act does not include an assessment whether the Secretary determines the individual would benefit from enrollment in a specialized MA plan. CMS did not propose to specifically align eligibility for SSBCI with eligibility for C-SNPs and is not finalizing such a limitation for SSBCI in this rule. Rather, CMS proposed and finalized in the 2020 Final Rule (85 FR 33796) that for the purposes of SSBCI, the chronic conditions established by the Panel may be used to meet the statutory criterion of having one or more comorbid and medically complex chronic conditions that is life threatening or significantly limits the overall health or function of the enrollee as required at 422.102(f)(1)(i)(A)(1). In the case of determining eligibility for SSBCI, MA plans are permitted to use other conditions not on the updated chronic condition list provided the condition is life threatening or significantly limits the overall health or function of the enrollee.
CMS recognizes that MA organizations have chosen to utilize a small subsegment of chronic conditions when establishing C-SNPs since the inception of the program. However, we believe following the Panel's recommendations of increasing the number of severe or disabling chronic conditions may encourage MA organizations to establish innovative approaches to comprehensive care for those with other severe or disabling chronic conditions.
We acknowledge that MA plans should be able to manage most of the clinical conditions on the list without the need to sponsor a disease-specific C-SNP. However, we reiterate the unique statutory and regulatory SNP care management and quality improvement requirements that are expected of C-SNPs established under section 1859(f) of the Act, and §§ 422.101(f) and 422.152(g). Currently, non-SNP MA plans are not required to meet these same standards. For example, the requirement at § 422.101(f)(1) that SNPs must implement a MOC and the requirements at § 422.101(f)(1)(ii) and (iii) to develop and implement an individualized care plan and interdisciplinary team, respectively, are not required of all MA plans (or even all MA coordinated care plans) and provide important additional benefits for the beneficiaries who are eligible for and enroll in C-SNPs.
With respect to the comment that C-SNPs are only warranted for a small number of conditions such as HIV/AIDS, ESRD, and chronic and disabling
Finally, we proposed in the December 2022 proposed rule that this new definition of severe or disabling chronic condition (that is, the new chronic condition list) would be applicable for plan years that begin on or after January 1, 2025, a delay of one additional year beyond the proposed applicability for most of the policies in that proposed rule. We proposed a delayed implementation of this for operational considerations and to allow plans and CMS to put in the place the necessary operational steps to permit transition from the current list of chronic conditions (and C-SNPs offered using that list) to the new definition and list of severe or disabling chronic conditions. Part of these considerations included the timing of MOC creation for C-SNPs that are due to CMS the February prior to upcoming contract year in which the MOC would take effect. After considering the gap in time between the issuance of the December 2022 proposed rule and the finalization of these provisions in the April 2024 final rule, we decided that it not necessary to delay the applicability of the new definitions for C-SNP and severe or disabling chronic condition under § 422.2 and the finalized rule at § 422.4 regarding groups of chronic conditions. This means that these rules will take effect with the effective date of this rule and be applicable beginning January 1, 2025. We acknowledge that C-SNP approval processes and MOC approval timelines mean that C-SNPs will not be able to effectively use this new definition to offer new C-SNPs until CY 2026 coverage. With the implementation of the new definition, several current chronic conditions would transition to new chronic condition categories, such as End Stage Renal Disease (ESRD) and End Stage Liver Disease. MA organizations seeking to establish a plan covering End Stage Liver Disease for CY 2026 would be able to do so under the new category of Chronic Gastrointestinal Disease. We also proposed a delay implementing the proposed new definition of severe or disabling chronic condition in order to give CMS time to collect data and information related to the structuring of the proposed CKD C-SNP plan bids. Per section 1853(a)(1)(H) of the Act, the capitation rates paid to MA plans for enrollees with ESRD are set separately from the capitation rates and bidding benchmarks applicable for other enrollees, which may complicate the transition to using this specific severe or disabling chronic condition category. We will move forward with the codification of the new definition of severe or disabling chronic conditions effective with the April 2024 final rule; however, CKD C-SNPs (like other conditions in the new list) will only be available starting with CY 2026. This allows CMS and plans time to review operational and bid considerations. At the time this final rule is issued, the MA rates for 2025 will have been (or will shortly be) released because MA rates for the next calendar year must be released the first Monday in April of the calendar year. Current ESRD C-SNPs plan bids are based on a distinct bidding methodology. CMS will provide additional bid pricing information to MA organizations consistent with current procedures.
After review of the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposed definition for the term “severe or disabling chronic condition” as proposed with minor modifications to the formatting of the regulatory text to improve the clarity of the definition.
A C-SNP must have specific attributes and meet certain standards that go beyond the provision of basic benefits (as defined in § 422.100(c)) and care coordination required of all coordinated care plans; such additional standards include the enrollment limitations, model of care, and care management requirements set forth in section 1859(f) of the Act and codified in the regulations at §§ 422.52(a) and (b), 422.101(f), and 422.152(g). While C-SNPs must generally meet requirements that are specified to all SNPs, we believe it is important to codify a definition of C-SNP that reflects how they are limited to serving special needs individuals who have a severe or disabling chronic condition, as defined in § 422.2. See section HC.1 of this final rule regarding our finalization of a revised definition for the term severe or disabling chronic condition. Adopting a definition of C-SNP in § 422.2 would be consistent with how we have previously adopted definitions for the term dual eligible special needs plan (D-SNP) and specific types of D-SNPs. We believe adopting a specific definition will help to clarify how C-SNP specific requirements and policies are distinguishable from requirements and policies for D-SNPs and I-SNPs as well as different from general MA coordinated care plans. As we explained in the proposed rule, because the proposed definition was intended to provide clarification for MA organizations and providers regarding the meaning and scope of C-SNPs, we believe this codification will have little to no impact on MA enrollees nor accrue operational or other costs to MA organizations. The December 2022 proposed rule generally reflected current policy and practice, with a few modifications as discussed where applicable. As part of current C-SNP sub-regulatory guidance and during the MA plan application process, MA organizations may apply to offer a C-SNP that targets any one of the following:
• A single CMS-approved chronic condition (selected from the list in section 20.1.2 of Chapter 16B);
• A CMS-approved group of commonly co-morbid and clinically-linked conditions (described in section 20.1.3.1 of Chapter 16B); or
• An MA organization-customized group of multiple chronic conditions
CMS recognizes that there is value for C-SNPs to use groupings of severe or disabling chronic conditions in identifying their focus and limiting enrollment, and our proposals reflect how the MA organizations that offer C-SNPs must choose a single chronic condition from the definition of severe or disabling chronic condition or choose from a list of permitted multiple chronic conditions found in in the new subparagraphs (A) and (B) under § 422.4(a)(1)(iv).
First, we proposed, as part of the definition of C-SNP at § 422.2 and in the description of special needs plans at § 422.4(a)(1)(iv), to codify current guidance regarding the ability of MA organizations to offer a C-SNP that focuses on single or multiple chronic conditions. The proposed definition of a C-SNP provides that C-SNPs are SNPs that restrict enrollment to MA special needs eligible individuals who have a severe or disabling chronic condition as defined in § 422.2 under this section. In other words, the chronic conditions on which a C-SNP may focus are limited to those conditions listed in the definition of severe or disabling chronic condition. When a C-SNP focuses on one chronic condition, enrollees must have that severe or disabling chronic condition in order to enroll in the C-SNP. In addition to single chronic condition category PBPs, CMS currently permits MA organizations to apply to offer a C-SNP that includes specific combinations of CMS-approved group of commonly co-morbid and clinically linked conditions, as described in section 20.1.3.1 of Chapter 16B of the MMCM. We proposed to codify how a C-SNP may focus on multiple chronic conditions in two ways. The proposed definition of C-SNP provided that the restricted enrollment to individuals with severe or disabling chronic conditions includes restricting enrollment based on the multiple commonly co-morbid and clinically linked conditions groupings specified in § 422.4(a)(1)(iv).
Currently, CMS has identified five combinations of commonly co-existing chronic conditions that may be the focus of a C-SNP based on our data analysis and recognized national guidelines. The current set of combinations include:
• Diabetes mellitus and chronic heart failure;
• Chronic heart failure and cardiovascular disorders;
• Diabetes mellitus and cardiovascular disorders;
• Diabetes mellitus, chronic heart failure, and cardiovascular disorders; and
• Stroke and cardiovascular disorders.
Considering the established clinical connection between these conditions and the interest among plans and beneficiaries, we proposed to maintain the current policy. We proposed to codify this current list of combinations of chronic conditions that may be used by a C-SNP at § 422.4(a)(1)(iv)(A)(1) through (5).
A C-SNP may not be structured around multiple commonly co-morbid conditions that are not clinically linked in their treatment because such an arrangement results in a general market product rather than one that is tailored for a particular population. As part of its review, the 2019 clinical advisor Panel convened in accordance with section 1859(f)(9)(A) of the Act recommended the continuation of the current Chapter 16B linked conditions plus three additional groups. The Panel considered several relevant factors, including all statutory criteria required under the Act, when determining the appropriateness of additional pairings, including clinical considerations and the potential of these conditions to be successfully managed by a specialized provider network. The Panel recommended the following additional groupings conditions were as follows:
• Anxiety associated with COPD.
• CKD and post-renal organ transplantation.
• Substance Use Disorder (SUD) and Chronic and disabling mental health conditions.
In addition to our proposal to codify the current approved set of commonly co-morbid and clinically linked conditions, we proposed to add the three recommended pairings as permissible groupings of severe or disabling chronic conditions that may be used by C-SNPs at new § 422.4(a)(1)(iv)(B)(6) through (8). Under this proposal, a C-SNP may focus on one of the commonly co-morbid and clinically linked conditions specified in these eight specific combinations of co-morbid condition groupings upon CMS approval. We proposed to add a new § 422.52(g) to clarify that enrollees need only have one of the qualifying conditions for enrollment listed in the approved groupings in proposed § 422.4(a)(1)(iv).
Lastly, CMS did not propose to codify a C-SNP plan application option that is currently available under sub-regulatory guidance in section 20.1.3.2 of Chapter 16B of the MMCM. In effect, this would remove this approach as an option for C-SNPs beginning 2025. Under the current guidance, we permit MA organizations seeking to sponsor a C-SNP to apply for an MA organization-customized group of multiple chronic conditions. If a C-SNP uses such a customized group of conditions, enrollment in that C-SNP is limited to special needs individuals who have all of the severe or disabling conditions in the group. CMS has reviewed only a few SNP plan application proposals since the initial implementation of the C-SNP program and has not granted any applications for this type of C-SNP either due to the lack of clinical connection between the proposed conditions or because the MA organization failed to meet other conditions of the application process. No C-SNPs of this type have been approved nor will be operational in CY 2023. We proposed to remove this option from the C-SNP application process beginning in CY 2024. Given the historical lack of interest from MA organizations, beneficiaries, or patient advocacy groups, we explained in the proposed rule that we believed there will be minimal impact on stakeholders associated with the elimination of this current flexibility. In addition, with the addition of three new groupings and the ability to establish a C-SNP that is based on functional limitations that we are proposing with paragraphs (20) through (21) of the proposed definition of severe or disabling chronic condition, we believe that there is adequate flexibility for MA organizations to develop C-SNPs that meet the needs of the Medicare population.
We received the following comments, and our responses follow:
After considering the comments received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the revised definition of the term “chronic condition special needs plan (C-SNP)” at § 422.2, the revisions to § 422.4(a)(1)(iv) to establish how C-SNPs may target specific and specific groupings of severe or disabling chronic conditions, and the special eligibility rule for C-SNPs at § 422.52(g) as proposed.
Section 1859(b)(6) of the Act defines specialized MA plans for special needs individuals, as well as the term “special needs individual.” Section 1859(f)(1) of the Act provides that notwithstanding any other provision of Part C of the Medicare statute and in accordance with regulations of the Secretary, an MA special needs plan (SNP) may restrict the enrollment of individuals under the plan to individuals who are within one or more classes of special needs individuals. The regulation governing eligibility for MA SNPs is at § 422.52. In addition to meeting the definition of a special needs individual in § 422.2 and the general eligibility requirements for MA enrollment in § 422.50, an individual must meet the eligibility requirements for the specific MA SNP in which the individual seeks to enroll. Currently, § 422.52(f) provides that each MA SNP must employ a process approved by CMS to verify the eligibility of each individual enrolling in the SNP. CMS adopted this provision in paragraph (f) in the final rule with comment period “Medicare Program; Medicare Advantage and Prescription Drug Benefit Programs: Negotiated Pricing and Remaining Revisions,” which appeared in the
We proposed to revise paragraph § 422.52(f) to codify, with minor modifications and clarifications, our longstanding guidance on procedural steps MA plans must take to verify an individual's eligibility for enrollment in a chronic condition SNP (C-SNP). C-SNPs are SNPs that restrict enrollment to special needs individuals with specific severe or disabling chronic conditions, defined at § 422.2. By codifying the verification requirements, we intend to provide transparency and stability for MA organizations offering C-SNPs and other interested parties about this aspect of the MA program. It will also clarify the SNP's roles and responsibilities and further assist MA organizations in meeting the requirements pertaining to verification of eligibility for C-SNPs.
Specifically, we proposed in new § 422.52(f)(1) to codify existing guidance stating that for enrollments into a C-SNP, the MA organization must contact the individual applicant's current physician to confirm that the enrollee has the specific severe or disabling chronic condition(s). Although the current sub-regulatory guidance in chapter 16B, section 40.2.1 refers only to the applicant's existing provider, we believe that a physician—either the applicant's primary care physician or a specialist treating the qualifying condition(s)—should provide the required verification of the applicant's condition to ensure the accuracy and integrity of the verification process. Therefore, we proposed to use the term “physician” throughout proposed new § 422.52(f).
To further clarify the verification process, we also proposed in new § 422.52(f)(1)(i) that the physician must be the enrollee's primary care physician or specialist treating the chronic condition, or conditions in the case of an individual seeking enrollment in a multi-condition C-SNP. The MA organization may either 1) as proposed at new § 422.52(f)(1)(i), contact the applicant's physician or physician's office and obtain verification of the condition prior to enrollment, or 2) as proposed at new § 422.52(f)(1)(ii), use a Pre-enrollment Qualification Assessment Tool (PQAT) prior to enrollment and subsequently (which can be after enrollment) obtain verification of the condition(s) from the enrollee's physician no later than the end of the individual's first month of enrollment in the C-SNP.
As part of this process, we proposed at new § 422.52(f)(1)(i) that verification of the chronic condition(s) from the applicant's primary care physician or treating specialist must be in a form and manner authorized by CMS. Existing guidance states that this verification can be in the form of a note from a provider or the provider's office or documented telephone contact with the physician or physician's office confirming that the enrollee has the specific severe or disabling chronic condition. These would remain acceptable under this proposal. Performing this pre-enrollment verification with the applicant's primary care physician or specialist treating the qualifying condition will mean that the C-SNP may process the enrollment promptly.
Use of the PQAT requires both pre-enrollment and post-enrollment actions by the C-SNP to conduct an assessment and subsequently confirm the information. The PQAT, per existing
• As proposed at § 422.52(f)(1)(ii)(A)(
• As proposed at § 422.52(f)(1)(ii)(A)(
• As proposed at § 422.52(f)(1)(ii)(A)(
• As proposed at § 422.52(f)(1)(ii)(A)(
• As proposed at § 422.52(f)(1)(ii)(B), the C-SNP must conduct a post-enrollment confirmation of each enrollee's information and eligibility using medical information (medical history, current signs and/or symptoms, diagnostic testing, and current medications) provided by the enrollee's primary care physician or the specialist treating the enrollee's chronic condition.
• As proposed at § 422.52(f)(1)(ii)(C), the C-SNP must include the information gathered in the PQAT and used in this verification process in the records related to or about the enrollee that are subject to the confidentiality requirements in § 422.118.
• As proposed at § 422.52(f)(1)(ii)(D), the C-SNP must track the total number of enrollees and the number and percent by condition whose post-enrollment verification matches the pre-enrollment assessment and the data and supporting documentation must be made available upon request by CMS.
In addition, we proposed to codify at § 422.52(f)(1)(ii)(E) our longstanding guidance
Lastly, we proposed to codify at § 422.52(f)(1)(iii) that the C-SNP is required to have the individual's current physician (primary care physician or specialist treating the qualifying condition) administer the PQAT directly with the enrollee or provide confirmation (with or without the presence of the enrollee) that the information in the document supports a determination that the individual is eligible for the C-SNP. Once the physician has confirmed that the PQAT contains information that supports the applicant's chronic condition and signs it, the PQAT is complete. Without a physician's signature, the process is incomplete, and thus, the applicant must be denied enrollment if the enrollment has not yet happened or disenrolled by the end of the second month if the applicant had been enrolled. If the individual is disenrolled because the person's eligibility cannot be verified, SNPs must recoup any agent/broker compensation consistent with § 422.2274(d)(5)(ii).
These proposals represent the codification of existing guidance outlining the procedural steps MA organizations currently take to verify an individual's eligibility for enrollment in a C-SNP, with minor modifications and clarifications. Therefore, we believe that this proposal would not result in a new or additional paperwork burden, as the policy to verify eligibility for C-SNPs has been in existence for some time. All burden impacts related to the SNP eligibility verification procedures have already been accounted for under OMB control number 0938-0753 (CMS-R-267). These requirements have been previously implemented and are currently being followed by MA organizations. Similarly, we do not believe the proposed changes would have any impact to the Medicare Trust Fund.
We received the following comments, and our responses follow.
Commenters suggested that CMS codify a sufficiently broad term to allow a variety of healthcare professionals with requisite qualifications to confirm the applicant's specific severe or disabling chronic condition(s). Examples include the following terms: “health care provider” or “practitioner” to include those who work in clinic environments and any clinical staff in the physician's office, (
The definition of physician in section 1861(r)(1) of the Act is defined to mean a doctor of medicine or osteopathy legally authorized to practice medicine and surgery by the State in which the individual performs such functions or actions. Although CMS proposed that all physicians within the scope of the definition of section 1861(r) of the Act would qualify for purposes of the proposed requirements for verifying eligibility to enroll in a C-SNP, we believe it is more appropriate to limit this to physicians as defined in section 1861(r)(1) to be more consistent with and reflect our current subregulatory policies regarding chronic condition verification and our intent with codification of this policy. Because section 1861(r)(1) of the Act includes all doctors of medicine or osteopathy who are legally authorized to practice medicine and surgery by the State in which the individual performs such functions or actions, using “physician” as meaning this group is sufficiently broad for purposes of verifying that an individual has a specified severe or disabling chronic condition. Per section 1861(aa)(5)(A) of the Act, the terms “physician assistant” and “nurse practitioner” mean a physician assistant or nurse practitioner who performs such services as such individual is legally authorized to perform (in the State in which the individual performs such services) in accordance with State law (or the State regulatory mechanism provided by State law), and who meets such training, education, and experience requirements (or any combination thereof) as the Secretary may prescribe in regulations. Therefore, in addition to citing section 1861(aa)(5)(A) of the Act, we are also cross-referencing the additional Medicare regulations (§§ 410.74(c) and 410.75(b)(1)(i) and (ii)) that specify the qualifications for a physician assistants and nurse practitioners to define these providers.
In addition to these changes we are finalizing in § 422.52(f)(1), we are also finalizing changes throughout § 422.52(f) to replace the term “physician” with the phrase “health care provider” or “health care provider specified in paragraph (f)(1)” to be consistent with our final policy that physicians, physician assistants, and nurse practitioners may furnish the necessary verification. We use the term “health care provider” to avoid unintended ambiguity or confusion that § 422.52(f) is using the term “provider” as it is defined broadly in § 422.2. In addition, we are finalizing paragraph (f)(1)(iii) with revisions to specify that the PQAT must be signed by the enrollee's current health care provider as verification and confirmation that the enrollee is eligible for the C-SNP, especially as a provider employed or contracted by the plan may administer the PQAT with the enrollee. We believe allowing a SNP to use a provider employed or contracted by the plan permits operational flexibility without jeopardizing the independent verification of the applicant's condition. For example, a SNP may employ a registered nurse to administer the PQAT with the applicant that will then receive independent verification from the applicant's health care provider. CMS understands that establishing the same criteria for administering the PQAT under 422.52(f)(1)(ii)(B), as we propose under § 422.52(f)(1) for health care provider verification, would likely create operational burdens for SNPs. We are finalizing the revised process at paragraph (f)(1)(iii) that both acknowledges the potential burden to plans, but also ensures that the applicant's health care provider is still verifying of the existence of the chronic condition.
After consideration of all public comments and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing our proposal to add new paragraph (f)(1) to § 422.52 largely as proposed, but with modifications to specify that an applicant's current health care provider, who may be a physician, nurse practitioner or physician's assistant, provides the verification of the applicant's chronic condition. In addition, as described in our responses to public comments, we are finalizing revisions in paragraphs (f)(1)(i), (f)(1)(ii)(A)(4), (f)(1)(ii)(B) and (f)(1)(iii) to be consistent with the revisions in paragraph (f)(1) and to clarify the post-enrollment verification process when the C-SNP uses the PQAT.
In accordance with § 422.116, CMS conducts evaluations of the adequacy of provider networks of all MA coordinated care plans to ensure access to covered benefits for enrollees. For MA coordinated care plans, which generally base coverage or cost sharing on whether the provider that furnishes services to an MA enrollee is in-network or out-of-network, these evaluations are particularly important. All MA special needs plans (SNP) are coordinated care plans and subject to the current requirements for network adequacy. Within the MA program, SNPs are classified into three distinct types: Chronic Care special needs plan (C-SNP), dual eligible special needs plan (D-SNP), and Institutional special needs plan (I-SNP). An I-SNP is a SNP that restricts enrollment to MA-eligible individuals who meet the definition of institutionalized and institutionalized-equivalent. One specific subtype of I-SNP is the facility-based I-SNP. Here, we use the term (“facility-based I-SNP”) to refer to an I-SNP that restricts enrollment to MA-eligible individuals who meet the definition of institutionalized; owns or contracts with at least one institution, specified in the
In the December 2022 proposed rule, we explained in detail how I-SNPs restrict enrollment to MA-eligible individuals who are institutionalized or institutionalized-equivalent, as those terms are defined in § 422.2 and proposed new definitions for the different types of I-SNPs. As a result, the enrollees in I-SNPs are individuals who continuously reside in or are expected to continuously reside for 90 days or longer in one of the specified facilities listed in the definition of “institutionalized” at § 422.2 or individuals (“institutionalized-equivalent”) who are living in the community but require an institutional level of care. We refer readers to the December 2022 proposed rule (87 FR 79566 through 79568) and to section VIII.A of this final rule for a more detailed discussion of the eligibility requirements for I-SNPs and the final rule definitions for the different type of I-SNPs. See also Chapter 16b Section 20.3 of the Medicare Managed Care Manual.
Per section 1859(f)(2) of the Act, I-SNPs restrict enrollment to MA-eligible individuals who, for 90 days or longer, have had or are expected to need the level of services provided in a long-term care (LTC) facility, which includes: a skilled nursing facility (SNF), a nursing facility (NF), an intermediate care facility for individuals with intellectual disabilities (ICF/IDD), an inpatient psychiatric hospital, a rehabilitation hospital, an LTC hospital, or a swing-bed hospital. See § 422.2 for the definition of “institutionalized” for the details of the types of facilities. Facility-based I-SNPs (FI-SNPs) serve a vulnerable cohort of Medicare beneficiaries with well over 95 percent of FI-SNP enrollees being eligible for both Medicare and Medicaid. Generally, FI-SNP enrollees reside either temporarily or permanently in an institution, therefore, these enrollees typically receive most of their health care services through or at the facility in which they reside, most often a SNF. As a result of the way that these enrollees receive covered services, CMS's established network adequacy time and distance standards under § 422.116 may not be a meaningful way to measure provider network adequacy for and ensure access to covered benefits for enrollees of this plan type. Time and distance standards are created using several factors, including pattern of care. In order to comply with the network evaluation requirements in § 422.116, a FI-SNP must contract with sufficient providers of the various specialties within the time and distance requirements specified in that regulation. The I-SNP industry has indicated through public comments and in prior correspondence to CMS that many FI-SNPs have difficulty contracting with providers outside their facilities, due to their model of care. This is because these providers know that enrollees of the I-SNP will not routinely seek care with these providers since they generally do not travel away from the facility for care.
The MA organizations offering and those that are interested in offering FI-SNPs have raised questions about whether our network standards are appropriate considering the nature of the FI-SNP coverage model. The residential nature of this model creates inherent differences in patterns of care for FI-SNP enrollees as compared to the prevailing patterns of community health care delivery in other MA plan types. For example, most residents of a facility receive their care from a provider at the facility rather than traveling to a provider outside the facility whereas individuals who live at home in the community will need to travel to a provider to receive health care services.
To address these concerns, CMS proposed to adopt a new exception for FI-SNP plans from the network evaluation requirements. This provision will apply only to FI-SNPs.
CMS adopted minimum access requirements for MA coordinated care plans (which include all SNPs) in § 422.112 and network evaluation criteria in § 422.116 as means to implement and ensure compliance with section 1852(d)(1)(A) of the Act, which permits MA plans to limit coverage to items and services furnished by or through a network of providers subject to specific exceptions (such as emergency medical services) and so long as the MA organization makes benefits available and accessible to their enrollees. Currently, § 422.116(f) allows an MA plan to request an exception to network adequacy criteria when both of the following occur: (1) certain providers or facilities are not available for the MA plan to meet the network adequacy criteria as shown in the Provider Supply file (that is, a cross-sectional database that includes information on provider and facility name, address, national provider identifier, and specialty type and is posted by state and specialty type); and (2) the MA plan has contracted with other providers and facilities that may be located beyond the limits in the time and distance criteria, but are currently available and accessible to most enrollees, consistent with the local pattern of care. In evaluating exception requests, CMS considers whether: (i) the current access to providers and facilities is different from the Health Service Delivery (HSD) reference file (as defined at 42 CFR 422.116(a)(4)(i)) and Provider Supply files for the year; (ii) there are other factors present, in accordance with
CMS has provided examples of situations that meet the first requirement for an exception to be requested in sub-regulatory guidance, specifically the Medicare Advantage and Section 1876 Cost Plan Network Adequacy Guidance.
• Provider is no longer practicing (for example, deceased, retired),
• Provider does not contract with any organizations or contracts exclusively with another organization,
• Provider does not provide services at the office/facility address listed in the supply file,
• Provider does not provide services in the specialty type listed in the supply file,
• Provider has opted out of Medicare, or
• Provider is sanctioned and on the List of Excluded Individuals and Entities.
In addition, the use of Traditional Medicare telehealth providers or mobile providers and the specific patterns of care in a community that currently are
With respect to the exceptions from the network adequacy process for FI-SNPs, CMS proposed to broaden the acceptable rationales for an exception from the requirements in § 422.116(b) through (e) for FI-SNPs. We proposed that a FI-SNP may request an exception from the network adequacy requirements in § 422.116 when one of two situations occurs. To add these proposed new rationales to § 422.116(f)(1), we proposed to reorganize the current regulation text; the two current requirements for an exception request will be moved to new paragraphs (f)(1)(i)(A) and (B) and the proposed new rationales for an exception request will be in new paragraphs (f)(1)(ii)(A) and (B). Next, we proposed additional considerations CMS will use when determining whether to grant an exception under § 422.116(f) that are specific to the additional acceptable rationales we proposed for an exception request. We proposed to add a new paragraph (f)(2)(iv) to specify the proposed new considerations that will apply to the new exceptions for FI-SNPs, which will be added to the existing considerations in § 422.116(f)(2).
This provision includes new bases on which only FI-SNPs may request an exception from the network adequacy requirements, additional considerations for CMS when deciding whether to approve an exception request from a facility-based I-SNP, and a new contract term for FI-SNPs that receive the exception from the § 422.116 network adequacy evaluation. Because we evaluate network adequacy and grant an exception at the contract level, this new exception is limited to contracts that include only FI-SNPs.
The first new basis on which we proposed a FI-SNP could request an exception from § 422.116(b) was that the FI-SNP is unable to contract with certain specialty types required under § 422.116(b) because of the way enrollees in FI-SNPs receive care. For purposes of this first proposed new basis for an exception, the inability to contract means the MA organization offering the FI-SNP could not successfully negotiate and establish a contract with a provider, including individual providers and facilities. This new basis is broader than the existing condition for an exception that certain providers are unavailable for the MA plan (see current § 422.116(f)(1)(i), which we are redesignating to § 422.116(f)(1)(A) in this final rule). The non-interference provision at section 1854(a)(6) of the Act prohibits CMS from requiring any MA organization to contract with a particular hospital, physician, or other entity or individual to furnish items and services or require a particular price structure for payment under such a contract. As such, CMS cannot assume the role of arbitrating or judging the bona fides of contract negotiations between an MA organization and available providers or facilities. CMS does not regard an MA organization's inability to contract with a provider as a valid rationale for an exception from the network adequacy evaluation, but interested parties have indicated through public comments and in prior correspondence to CMS outside this particular rulemaking process that, historically, FI-SNPs have encountered significant struggles contracting with the necessary number of providers to meet CMS network adequacy standards due to their unique care model. In the proposed rule, we explained that we would add this new basis for an exception request to § 422.116(f)(1)(ii)(A). CMS also proposed that its decision whether to approve an exception for a FI-SNP on this specific basis (that the I-SNP is unable to contract with certain specialty types required under § 422.116(b) because of the way enrollees in FI-SNPs receive care) will be based on whether the FI-SNP submits evidence of the inability to contract with certain specialty types required under § 422.116 due to the way enrollees in FI-SNPs receive care. For example, an organization could submit letters or emails to and from the providers' offices demonstrating that the providers were declining to contract with any FI-SNP. CMS proposed to add this requirement in a new paragraph (f)(2)(iv)(A). CMS will also consider the existing factors in addition to the new factors proposed here that are unique to the specific new exception proposed for FI-SNPs. In the proposed rule, we solicited comment on this proposed new rationale for an exception from the network adequacy requirements in § 422.116(b) through (e) and on the type of evidence we should consider in determining whether to grant an exception.
We also proposed a second basis on which a FI-SNP may request an exception from the network adequacy requirements in § 422.116(b) through (e) if:
(1) A FI-SNP provides sufficient and adequate access to basic benefits through additional telehealth benefits (in compliance with § 422.135 of this chapter) when using telehealth providers of the specialties listed in paragraph (d)(5) in place of in-person providers to fulfill network adequacy standards in paragraphs (b) through (e); and
(2) Substantial and credible evidence that sufficient and adequate access to basic benefits is provided to enrollees using additional telehealth benefits (in compliance with § 422.135 of this chapter) furnished by providers of the specialties listed in paragraph (d)(5) of this section and the FI-SNPs covers out-of-network services furnished by a provider in person when requested by the enrollee as provided in § 422.135(c)(1) and (2) of this chapter, with in-network cost sharing for the enrollee.
We believe it is appropriate to permit exceptions to the network evaluation standards in § 422.116(b) through (e) in these situations because enrollees in FI-SNPs do not generally travel to receive care, so the time and distance standards that apply to other plan types are not appropriate for I-SNP plans. As part of this proposal, we proposed to add to the factors that CMS will consider whether to approve the exception request a new factor specifically related to this type of exception.
Finally, we proposed new regulation text to ensure that the exception for FI-SNPs is used by and available only to FI-SNPs. We proposed a new paragraph (f)(3) at § 422.116 to require any MA organization that receives the exception provided for FI-SNPs to agree to offer only FI-SNPs on the contract that receives the exception. To support the provision outlined at § 422.116(f)(3), CMS also proposed to add, at § 422.504(a)(21), a new contract provision that MA organizations must not establish additional plans (or plan benefit packages, called PBPs) that are not facility-based I-SNPs to a contract that is within the scope of proposed § 422.116(f)(3). This will ensure MA organizations that have received the exception do not submit additional PBPs that are not FI-SNPs to their FI-SNP only contracts. CMS reviews
Under our proposal, FI-SNPs will still be required to adhere to § 422.112 regarding access to covered benefits. For example, § 422.112(a)(1)(iii) requires an MA coordinated care plan to arrange for and cover any medically necessary covered benefit outside of the plan provider network, but at in-network cost sharing, when an in-network provider or benefit is unavailable or inadequate to meet an enrollee's medical needs. Because all SNPs, including FI-SNPs, are coordinated care plans, this beneficiary protection applies to them. Similarly, the timeliness of access to care requirements newly adopted at § 422.112(a)(6)(i) will apply. We believe that our proposal, as specified in the proposed rule, appropriately balanced the need to ensure access to covered benefits for enrollees in FI-SNPs while recognizing the unique way this type of MA plan furnishes benefits and how enrollees generally receive services at the institution where the enrollee resides. Expanding this proposed new exception from the § 422.116 network adequacy requirements to other I-SNPs that enroll special needs individuals that reside in the community or other SNPs or MA plans that are not designed to furnish services to institutionalized special needs individuals will not be appropriate or serve the best interests of the Medicare program or Medicare beneficiaries.
Summaries of the comments we received on this proposal to amend § 422.116(f) and our responses to them follow.
After careful consideration of all comments received, and for the reasons set forth in the proposed rule and in our responses to the related comments, we are finalizing the revisions to § 422.116(f) as proposed.
Dually eligible individuals face a complex range of enrollment options based on MA plan types (that is, HMOs, PPOs, private fee-for-service plans, MA special needs plans, etc.), enrollment eligibility, and plan performance, but which do not consider the enrollee's Medicaid choice. Further, many of the coverage options available to dually eligible individuals—even including many dual eligible special needs plans (D-SNP)—do not meaningfully integrate Medicare and Medicaid, chiefly because the parent organization of the D-SNP does not also provide the enrollee's Medicaid services. The current managed care enrollment and eligibility policies have resulted in a proliferation of such D-SNPs and leave dually eligible individuals susceptible to aggressive marketing tactics from agents and brokers throughout the year.
Over the last decade, we have taken numerous steps to improve the experiences and outcomes for dually eligible individuals through various forms of Medicare-Medicaid integrated care. Despite progress, there remain a significant number of enrollees who receive Medicare services through one managed care entity and Medicaid services through a different entity (misaligned enrollment), rather than from one organization delivering both Medicare and Medicaid services (aligned enrollment
Longer term, for dually eligible individuals who are in Medicare and Medicaid managed care, we believe that we should continue to drive toward increasing aligned enrollment until it is the normative, if not only, managed care enrollment scenario. Our proposals represented an incremental step toward increasing aligned enrollment, balancing our long-term policy vision with our interest in limiting disruption in the short term. For dually eligible individuals that elect MA plans, we are focused on increasing enrollment in integrated D-SNPs: fully integrated dual eligible special needs plans (FIDE SNPs),
In the November 2023 proposed rule, we described interconnected proposals that would (1) replace the current quarterly special enrollment period (SEP) with a one-time-per month SEP for dually eligible individuals and other LIS eligible individuals to elect a standalone PDP, (2) create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis, (3) limit enrollment in certain D-SNPs to those individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO), and (4) limit the number of D-SNPs an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, can offer in the same service area as an affiliated Medicaid MCO in order to reduce “choice overload” of D-SNP options in certain markets. Affiliated Medicaid MCOs are Medicaid MCOs offered by the MA organization, the same parent organization, or another subsidiary of the parent organization. We noted that, in combination, our proposals would create more opportunities for dually eligible individuals to elect integrated D-SNPs, more opportunities to switch to Traditional Medicare, and fewer opportunities to enroll in MA-PD plans that do not integrate Medicare and Medicaid services. Table HC1 summarizes the combined effects of these proposals, then we describe each proposal in greater detail.
Section 1860D-1(b)(3)(D) of the Act directs the Secretary to establish an SEP for full-benefit dually eligible individuals under Part D. The SEP, subsequently referred to as the continuous dual/LIS SEP, codified at § 423.38(c)(4), was later extended to all other subsidy-eligible beneficiaries by regulation. The continuous dual/LIS SEP allowed eligible beneficiaries to make Part D enrollment changes (that is, enroll in, disenroll from, or change Part D plans, including Medicare Advantage Prescription Drug (MA-PD) plans) throughout the year, unlike other Part D enrollees who generally may switch plans only during the AEP or via other applicable SEPs each year.
In the April 2018 final rule, we cited concerns with usage of the continuous dual/LIS SEP related to enrollees changing plans frequently, hindering care coordination efforts by D-SNPs; plans having less incentive to innovate and invest in serving high-cost enrollees who may disenroll at any time; and agents and brokers targeting dually eligible individuals due to their ability to make enrollment elections throughout the year (83 FR 16514). Ultimately, the April 2018 final rule amended the continuous dual/LIS SEP to allow usage once per calendar quarter during the first nine months of the year (that is, one election during each of the following time periods: January-March, April-June, July-September).
The quarterly dual/LIS SEP reduced individuals moving from one Part D plan (including an MA-PD) to another Part D plan (including an MA-PD) as frequently. However, in the November 2023 proposed rule we discussed the ongoing concerns with the quarterly dual/LIS SEP:
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To further protect Medicare beneficiaries, reduce complexity for States and enrollment counselors, and increasingly promote integrated care, we proposed two SEP changes. Section 1860D-1(b)(3)(D) of the Act requires the Secretary to establish SEPs for full-benefit dually eligible individuals, although it does not specify the frequency or mechanics of those SEPs. Further, section 1860D-1(b)(3)(C) of the Act grants the Secretary the authority to create SEPs for individuals who meet other exceptional circumstances.
We noted that, functionally, the proposed revised dual/LIS SEP would mean that such individuals could, in any month, switch PDPs or leave their MA-PD for Traditional Medicare plus a standalone PDP (plans that only offer prescription drug coverage). However, as proposed, the dual/LIS SEP would no longer permit enrollment into MA-PD plans or changes between MA-PD plans, although such options would still be available where another election period permits.
In conjunction, based on the statutory authorities described above, we also proposed to create a new integrated care SEP at § 423.38(c)(35) for dually eligible individuals. This new integrated care SEP would allow enrollment in any month into FIDE SNPs, HIDE SNPs, and AIPs for those dually eligible individuals who meet the qualifications for such plans.
For dually eligible individuals, our two SEP proposals would allow a
• Leave an MA-PD plan for Traditional Medicare by enrolling in a standalone PDP,
• Switch between standalone PDPs, or
• Enroll in an integrated D-SNP such as a FIDE, HIDE, or AIP.
If an eligible individual attempts to use, or uses, both the monthly dual/LIS SEP and the integrated care SEP within the same month, the application date of whichever SEP is elected last in time is the SEP effectuated the first of the following month.
As a result of these proposals, dually eligible and other LIS-eligible individuals, like other Medicare beneficiaries, would be able to enroll into non-AIP coordination-only D-SNPs
In the November 2023 proposed rule we stated our belief that the proposed SEP changes would create more opportunity for dually eligible or LIS individuals to leave MA-PD plans if
We also noted some potential challenges of our proposal, including limiting dually eligible individuals' ability to change MA-PD plans outside of the AEP, MA-OEP, or other available SEPs in States with few or no integrated D-SNPs; less incentive for MA plans to innovate and invest in meeting the needs of high-cost dually eligible enrollees because such individuals can disenroll at any time; and dually eligible individuals changing between integrated care plans monthly, potentially hindering care coordination and case management efforts. In addition, since LIS individuals without Medicaid are ineligible for integrated D-SNPs, our proposal limits how the dual/LIS SEP can be used for these individuals compared to the current scope of the SEP.
Section 423.40(c) currently provides that the effective date of an enrollment change in Part D during a special enrollment period specified in § 423.38(c), including the existing SEP for dually eligible and other LIS-eligible individuals, will be the first day of the calendar month following the month in which the election is made, unless otherwise noted. In the November 2023 proposed rule, we requested comments on using flexibilities at section 1851(f)(4) of the Act and at § 423.38(c) to establish a Medicare enrollment effective date for the integrated care SEP at § 423.38(c)(35) that differs from the effective date in the current quarterly dual/LIS SEP to better align with Medicaid managed care enrollment cut-off dates, as some States do not enroll individuals on the first of the month following an enrollment request after a certain cut-off date and delay the effective date until the first of the following month.
Aligned enrollment is a key feature of the FAI, PACE, and other long-standing integrated care programs such as the Massachusetts' Senior Care Options and Minnesota's Senior Health Options that started as demonstration programs that were precursors to D-SNPs. Individual States may also use their State Medicaid agency contracts (SMAC) to limit enrollment in a D-SNP to the enrollees in an affiliated Medicaid MCO. Further, we have adopted, as part of the definition in § 422.2, enrollment limits for FIDE SNPs that require, beginning January 1, 2025, FIDE SNPs to have exclusively aligned enrollment.
Separate from contracting with D-SNPs via SMACs, States have discretion in how they arrange their Medicaid managed care programs and may use Medicaid MCOs to cover a comprehensive scope of Medicaid benefits or use prepaid health plans to cover a smaller scope of Medicaid benefits.
In many service areas, dually eligible individuals face complicated enrollment policies, overwhelming marketing, and an increasingly complex array of plans purportedly designed especially for them but that do not offer meaningful Medicare and Medicaid integration due to service area and enrollment misalignment.
We noted in the November 2023 proposed rule that some States have utilized SMACs and selective contracting to limit the availability of D-SNPs in the State to those MA organizations that also have contracts with the State to cover Medicaid services. However, other D-SNP markets have grown without any limitations on non-integrated plans. In some markets, parent organizations of MA organizations have acquired multiple D-SNPs by purchasing smaller plans and have not consolidated the various plans, resulting in one parent organization operating multiple D-SNPs within a single State, often with overlapping service areas. For States that do not require parent organizations to consolidate their plans, multiple D-SNPs of this type may continue to operate indefinitely. This creates a market with a large number D-SNP options that often do not offer significantly different benefits or networks, which creates confusion for plan selection and could lead to individuals choosing unaligned Medicare and Medicaid plans.
We recognize that States have policy interests and goals that shape their Medicaid managed care programs, and our intent is to help further support States interested in implementing EAE. We have historically deferred to States to use SMACs to align Medicare and Medicaid plan offerings consistent with State policy priorities. However, as the number of dually eligible individuals with misaligned enrollment and sheer number of D-SNPs have grown, we noted in the November 2023 proposed rule that we now believe that Federal rulemaking is warranted to promote greater alignment of D-SNPs and Medicaid MCOs and to begin to simplify the array of choices.
We have authority, per section 1857(e)(1) of the Act, to add MA contract terms and conditions not inconsistent with the MA statute (that is, Part C of Title XVIII of the Act) as the Secretary may find necessary and appropriate. Given how section 1859(f)(8) of the Act reflects a goal of furthering the integration of D-SNPs and how our proposal is designed to reduce choice overload situations for dually eligible individuals while furthering opportunities for enrollment in integrated D-SNPs (that is, FIDE SNPs, HIDE SNPs, and AIPs), we believe that the standard in section 1857(e)(1) is met. Further, section 1854(a)(5) of the Act is clear that we are not obligated to accept any and every MA plan bid. Based on this, we proposed new regulations §§ 422.503(b)(8), 422.504(a)(20), 422.514(h), and 422.530(c)(4)(iii).
At § 422.503(b)(8), we proposed to establish a new qualification for an MA organization (or new applicant to be an MA organization) to offer D-SNP(s) while at § 422.504(a)(20) we proposed to establish a new contract term for certain MA organizations. At § 422.514(h), we proposed to establish conditions for how certain MA organizations and D-SNPs may enroll dually eligible individuals and limit the number of D-SNPs that may be offered by certain MA organizations. Finally, at § 422.530(c)(4)(iii), we proposed to establish a new crosswalk exception to authorize MA organizations that are subject to these new enrollment limitations to crosswalk their enrollees to a single D-SNP to accomplish aligned enrollment.
Together, our proposals at §§ 422.503(b)(8), 422.504(a)(20), and 422.514(h)(1) and (2) would require the following:
• Beginning in plan year 2027, when an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, also contracts with a State as a Medicaid MCO that enrolls dually eligible individuals in the same service area, D-SNPs offered by the MA organization, its parent organization, or
• Beginning in 2030, such D-SNPs must only enroll (or continue to enroll) individuals enrolled in (or in the process of enrolling in) the affiliated Medicaid MCO. Therefore, by 2030, integrated D-SNPs would be required to disenroll individuals who are not enrolled in both the D-SNP and Medicaid MCO offered under the same parent organization (that is, offered by the parent organization or any subsidiary), except that D-SNPs would still be able to use a period of deemed continued eligibility to retain enrollees who temporarily lost Medicaid coverage as described in § 422.52(d). This also means that where an enrollee is temporarily disenrolled from the affiliated Medicaid MCO but is expected to be re-enrolled in the affiliated Medicaid MCO within the period of deemed continued eligibility, the D-SNP would not be required to disenroll that enrollee during that period.
Consistent with how we believe MA organizations under the same parent organization share operational and administrative functions, we proposed to apply the regulations at the parent organization level.
To minimize enrollment disruption associated with achieving compliance with our other proposals, we proposed a corresponding new provision at § 422.530(c)(4)(iii) that would provide a new crosswalk
In addition, we proposed to codify at § 422.514(h)(3) two exceptions to our new proposed requirements at § 422.514(h)(1) and (2) (the exceptions would carry over as part of the cross-references to compliance with § 422.514(h) in §§ 422.503(b)(8), 422.504(a)(20), and 422.530(c)(4)(iii)). In certain circumstances, State D-SNP policy may require the need for more than one D-SNP for full-benefit dually eligible individuals to operate in the same service area. Under § 422.514(h)(3)(i), we proposed to permit an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, offering more than one D-SNP for full-benefit dually eligible individuals in the same service area. For example, where a SMAC limits enrollment for certain groups into certain D-SNPs (such as by age group), the MA organization may offer additional D-SNPs for different groups of full-benefit dually eligible individuals in the same service area accordingly. As proposed, the exception would only be available where the SMAC requires different eligibility groups for the different D-SNPs that are offered by the same MA organization, its parent organization, or another MA organization that shares the parent organization; this proposed exception would allow States the flexibility to design future integrated D-SNP programs with eligibility nuances should they so choose.
To minimize enrollee disruption, our second proposed exception would not prohibit an MA organization, its parent organization, or another MA organization that shares a parent organization with the MA organization, from continuing to operate both an HMO D-SNP and a PPO D-SNP in a State where the proposed new policy applies. To achieve the goals of the new regulation, including simplification of the D-SNP market and promotion of integrated care through aligned Medicare and Medicaid products, we proposed at § 422.514(h)(3)(ii) that the MA organization, its parent organization, or another MA organization that shares a parent organization with the MA organization may offer (or continue to offer) both the HMO and PPO D-SNPs only if they no longer accept new full-benefit dually eligible enrollees in the same service area as the D-SNP affected by the new regulations at §§ 422.504(a)(20) and 422.514(h). Under this proposal, the MA organization, its parent organization, and another MA organization that shares a parent organization with the MA organization may only accept new enrollment in one D-SNP for full-benefit dually eligible individuals in the same service area as an affiliated Medicaid MCO, and such new enrollment is limited to the full-benefit dually eligible individuals who are enrolled (or are enrolling) in the affiliated Medicaid MCO.
We also proposed at § 422.503(b)(8) that in service areas in which a D-SNP limits enrollment to individuals enrolled in (or in the process of enrolling in) an affiliated Medicaid MCO, the MA organization, its parent organization, or entities that share a parent organization with the MA organization may not newly offer another D-SNP for full-benefit dually eligible individuals, if it would result in noncompliance with § 422.514(h). Additionally, we proposed at § 422.504(a)(20) to establish a new contract term for MA organizations that offer D-SNPs to require compliance with the enrollment limits we are proposing to add to § 422.514(h).
Table HC2 summarizes enrollment scenarios to illustrate the combined effects of our proposed SEP changes and enrollment limitations. The term “D-SNP's parent organization” as used in the table includes the MA organization that offers the D-SNP, the MA organization's parent organization, and any other entity (MA organization or otherwise) that shares the parent organization with the MA organization that offers the D-SNP.
We noted that our proposals on enrollment limitations for non-integrated D-SNPs would apply based on an MA organization having an affiliated Medicaid MCO. However, we noted that we considered whether our proposals should apply where an MA organization has other affiliated Medicaid managed care plan options as well, including prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). We expressed concern that applying our proposals to PIHPs and PAHPs could cause disruption without significantly furthering the goals of our proposals, but we solicited comments on the issue.
We noted that our proposals would require updates to the systems and supports designed to aid individuals in making Medicare choices. This includes MPF, HPMS, and other resources that help to outline available plan choices and is important where dually eligible individuals have choices that would vary based on the type of plan and time of year. We noted that we would welcome recommendations on how the choice architecture could best support the proposals or objectives described in the November 2023 proposed rule.
Overall, we noted our proposals at §§ 422.503(b)(8), 422.504(a)(20), 422.514(h), and 422.530(c)(4)(iii) would increase the percentage of D-SNP enrollees in aligned enrollment, and—over time—exclusively aligned enrollment (EAE), increasing access to the comprehensive coordination of care, unified appeal processes across Medicare and Medicaid, continuation of Medicare services during an appeal, and integrated materials that come with enrollment in one or more of the various types of integrated D-SNPs; prompt MA organizations to consolidate PBPs down to a single PBP for full-benefit dually eligible individuals that is aligned with their Medicaid MCO that fully or partially overlaps the D-SNPs service area; reduce the number of D-SNP options and reduce choice overload and market complexity where parent organizations offer multiple D-SNP options in the same or overlapping service areas; remove some incentives for agents and brokers to target dually eligible individuals lessening the assistance needed from advocates and SHIP counselors to correct enrollment issues; and simplify provider billing and lower the risk of inappropriate billing.
While noting many benefits to our proposals, we acknowledged certain challenges:
• Our proposals would reduce the number of D-SNP options for Medicaid MCO enrollees in some States. It is plausible that some dually eligible individuals could benefit from the unique combinations of provider networks and supplemental benefits that could be possible only by enrolling in misaligned Medicare and Medicaid plans.
• Making plan choices clear under our proposals to dually eligible individuals, SHIP counselors and others would require changes to MPF, HPMS, and other CMS public materials explaining Medicare coverage options. Systems changes often present unknown challenges and a learning curve for users while they become accustomed to new updates.
• It also may seem that our proposal on limiting enrollment in D-SNPs offered by MA organizations with affiliated Medicaid MCOs, in isolation, would disadvantage parent organizations that choose to offer Medicaid MCOs as well as D-SNPs because such organizations would be limited in the number of D-SNP offerings and would be required to align their enrollment between D-SNP and MCO for full-benefit dually eligible individuals. However, our SEP proposals would have the opposite effect by permitting enrollment into integrated D-SNP options that cover both Medicare and Medicaid benefits using the new one-time-per month SEP. Therefore, we believe our proposals, in combination, would maintain a high level of competition and choice, even while imposing some new constraints.
• MA organizations that operate both D-SNPs and Medicaid MCOs might elect to participate in fewer competitive Medicaid procurements (or exit Medicaid managed care in “any willing provider” States) to be exempted from the proposed restrictions on plan enrollment and number of plan offerings. This could adversely affect competition and the minimum choice requirements in § 438.52 for Medicaid managed care programs. However, our SEP proposals would have the opposite effect, since only integrated D-SNPs could benefit from the new integrated care SEP, and overall, we believe our proposals, in combination, maintain strong incentives for organizations to compete for Medicaid managed care contracts.
• The enrollment and eligibility restrictions—without the offsetting proposed SEP changes—could incentivize sponsors to create D-SNP look-alikes or other types of MA plans
We received the following comments on this proposal and respond to them below:
A number of commenters indicated that partial-benefit dually eligible enrollees in MA plans and D-SNPs benefit from lower cost sharing, greater coordination of care and services, and access to supplemental benefits that are not available in the Traditional Medicare environment, plus disease management for those with chronic illnesses. A few of these commenters stated that although these enrollees do not have access to and thus do not require coordination of Medicaid services, they can nevertheless benefit from the model of care provided by coordination-only D-SNP plans, which are not present in traditional MA-PD plans or Traditional Medicare. Another commenter requested that CMS reconsider how CMS's SEP proposals may result in greater dislocation, reduced care management, increased marketing, and reduced opportunities for partial-benefit dually eligible and LIS individuals.
Some commenters urged CMS to either retain the quarterly dual/LIS SEP or create a corresponding SEP allowing partial-benefit dually eligible individuals to enroll in coordination-only D-SNPs. A commenter noted that a quarterly SEP for coordination-only D-SNP enrollment would ensure equity and parity between partial-benefit and full-benefit dually eligible individuals.
A few commenters expressed concern about the impact of CMS's SEP proposal on dually eligible individuals who are not Qualified Medicare Beneficiaries (QMBs). The commenter noted that if these individuals needed to change coverage outside of the standard enrollment periods, due to the lack of comprehensive Federal Medigap protections, they may not be eligible for a Medigap plan. Even if they were able to enroll, most Medigap plans have unaffordable premiums or out-of-pocket costs making enrollment in Traditional Medicare unattractive.
We acknowledge the SEP proposals limit opportunities for partial-benefit dually eligible individuals and LIS eligible individuals to enroll in MA-PDs and coordination-only D-SNPs. Partial-benefit dually eligible individuals and LIS eligible individuals would still have the ability to make changes to their MA plan or non-integrated D-SNPs during the AEP, MA-OEP, or where another SEP permits.
With regard to retaining the quarterly dual/LIS SEP or creating a new SEP for partial-benefit dually eligible individuals to enroll in coordination-only D-SNPs, we direct the commenter's attention to the proposed rule (88 FR 78571), where we expressed our belief that the current managed care enrollment and eligibility policies have resulted in a proliferation of coordination-only D-SNPs and leave dually eligible individuals susceptible to aggressive marketing tactics from agents and brokers throughout the year. Adopting a new SEP for partial-benefit dually eligible individuals or extending the new integrated care SEP that we are adopting at § 423.38(c)(35) would not address that concern and would not further our goals of increasing aligned enrollment in integrated D-SNPs.
We recognize that non-QMB dually eligible individuals who enroll in Traditional Medicare may not be able to select a Medigap plan to cover cost-sharing, depending on the timing of that choice and State laws regarding Medigap enrollment. However, this is also true today, and we believe the benefits of the SEP proposals, including protecting Medicare enrollees from aggressive marketing tactics, reducing complexity for States and enrollment counselors, and promoting access to integrated care, outweigh the potential drawbacks.
In the proposed rule (88 FR 78567), we discussed the primary goals of the proposals to drive toward increasing aligned enrollment for dually eligible individuals who are in Medicare and Medicaid managed care. The SEP polices we proposed and are finalizing are intended to create more opportunities for enrollment in integrated D-SNPs so that dually eligible individuals can experience plans that more meaningfully integrate Medicare and Medicaid services. While the integrated care SEP, as proposed, would create more opportunities to elect integrated D-SNPs, it could potentially also allow opportunities to misalign enrollment to persist in limited situations, which is contrary to our policy goals or intent for this new SEP.
After considering the comments received, we are finalizing the integrated care SEP with a narrower scope so that dually eligible individuals may use the SEP to enroll in a FIDE SNP, HIDE SNP, or AIP if they are enrolled in or in the process of enrolling in the sponsor's affiliated Medicaid managed care plan. We are finalizing § 423.38(c)(35) largely as proposed but with a modification that the SEP is available only to facilitate aligned enrollment, as that term is defined in § 422.2. As a result of this limitation, this SEP will effectively be limited to full-benefit dually eligible individuals because “aligned enrollment” is defined by reference to full-benefit dual eligibility. Adding this limitation to the integrated care SEP creates less opportunity for full-benefit dually eligible individuals to misalign their Medicare and Medicaid plans. Because FIDE SNPs (starting in 2025) and AIPs feature exclusively aligned enrollment, the effect of this change from our
As discussed in the proposed rule (88 FR 78570), we believe the integrated care SEP at § 423.38(c)(35) will create more opportunities for full-benefit dually eligible individuals to enroll in integrated plans, promoting coordination of Medicare and Medicaid services from the same organization. This includes plans addressing enrollees' SDoH needs and ensuring effective MTM programs are in place. In addition, we noted in the proposed rule (88 FR 78570) that the dual/LIS SEP at § 423.38(c)(4)(i) allows dually eligible individuals to disenroll from their MA-PD plan if MA is not working well for them. This would allow individuals to access providers that accept Medicare FFS that may not be in the MA plan's network, including providers that may be able to better address SDoH needs. We also note that dually eligible individuals leaving MA-PDs for Traditional Medicare and a PDP would still have access to an MTM program as this is a requirement of Part D plans at § 423.153(d). We do not anticipate the SEP changes will lead to dually eligible individuals making continuous changes to their enrollment or a major increase in SEP usage overall.
We will continue to monitor dual/LIS SEP usage as it transitions to monthly once again and can revisit in future policy making if issues arise.
We will continue to monitor dual/LIS SEP usage as it transitions to once per month again and can revisit in future policy making if issues arise.
Individuals wishing to enroll in a plan with 5 Stars will continue to have access to the 5-Star SEP at § 423.38(c)(20).
We acknowledge that under our proposals dually eligible individuals would have more opportunities to enroll in Traditional Medicare compared to opportunities to change enrollment to non-D-SNP MA-PDs and non-integrated D-SNPs. As we noted in the proposed rule (88 FR 78570), the SEP proposal at § 423.38(c)(4)(i) could mean that MA plans have marginally less incentive to innovate and invest in meeting the needs of high-cost dually eligible enrollees when these enrollees may disenroll at any time, thus exacerbating the phenomenon of higher-cost dually eligible individuals disenrolling from MA. However, we believe the benefits of the SEP proposals
We acknowledge the concerns raised on enrollment effective date challenges and MA organizations having to manage a changing enrollment monthly. However, we do not anticipate the SEP changes, in combination with other policies finalized in this rulemaking, will cause a major increase in SEP usage, because, based on our review of 2023 information, only approximately 5 percent of the MA-PD plans that can currently enroll dually eligible individuals using the quarterly dual/LIS SEP would be available as options for full-benefit dually eligible individuals using the proposed new monthly integrated care SEP (88 FR 78750). Therefore, we do not believe our finalized changes will worsen existing challenges States and plans face around misaligned Medicare and Medicaid enrollment effective dates.
We will continue to monitor dual/LIS SEP usage and can consider future policy making if issues arise.
We recognize dually eligible individuals will not be able to use the integrated care SEP in States that currently do not have Medicaid managed care plans, carve dually eligible individuals out of Medicaid managed care, or do not have integrated D-SNPs (that is, do not have Medicaid MCOs that are affiliated with D-SNPs or opportunities for aligned enrollment). Allowing exceptions to the proposed SEPs for certain plans or on a State-by-State basis would increase complexity for dually eligible individuals and enrollment counselors in understanding eligibility for the SEP and pose challenges for CMS to monitor usage.
We are considering making updates to systems and supports, including MPF and HPMS, that help individuals make Medicare choices. One of the considerations is how to show plans available to individuals along with options that align with their Medicaid enrollment.
We will work with States on implementing the policies finalized in this rule and will continue to monitor all aspects and consider future updates as appropriate.
We acknowledge that the SEP changes will limit enrollment opportunities in MA-PDs and non-integrated D-SNPs during certain times of the year. We believe the benefits of the SEP proposals will do more to protect Medicare enrollees from aggressive marketing tactics, reduce complexity for States and enrollment counselors, and promote access to integrated care.
Expanding the definition of HIDE SNP is beyond the scope of this current rulemaking, and we believe that changes of the type recommended by the commenter should be carefully considered and subject to notice and an opportunity for comment by other interested parties, but we will consider the Oregon example for potential future rulemaking.
A commenter opposed the SEP changes and requested an exclusion for people who reside in institutions as their needs change frequently, as do the providers who see them. Another commenter suggested keeping the quarterly dual/LIS SEP but allowing individuals to use an SEP if they receive inaccurate information about a plan prior to enrollment or an agent enrolls them without their knowledge. Another commenter requested CMS confirm that D-SNPs with a 5-Star Rating will still be able to enroll individuals using the 5-Star SEP. Finally, a commenter supported the dual/LIS SEP and integrated care SEP and appreciated that CMS noted in the proposal that access to other SEPs will not change.
We appreciate the commenters' support for the SEP proposals and confirm that our decision to finalize these proposed revisions to the existing dual/LIS SEP and to adopt a new integrated care SEP will not affect the ability of individuals to access other applicable SEPs provided in CMS regulations.
As noted in the proposed rule (88 FR 78575), we believe the enrollment limitations will have the greatest impact in States that have Medicaid managed care but do not have EAE requirements already, as MA organizations operating D-SNPs in those States will likely choose to consolidate their PBPs down to a single PBP for full-benefit dually eligible individuals that is aligned with their affiliated Medicaid MCO (that is, the MCO that is offered by the MA organization, its parent organization, or any entity that shares a parent organization with the MA organization) that fully or partially overlaps the D-SNPs service area. We will work closely with States in the event they wish to adjust their State Medicaid agency contracts to require EAE as a result of these policies.
We acknowledge this final rule will limit an MA organization's ability to offer multiple PBPs with tailored benefits, unless one of the exceptions we are finalizing applies. (We discuss the exceptions in detail in response to other public comments later in this section.) We also recognize that plan sponsors offering D-SNPs may also choose to adjust their supplemental benefit offerings as a result of these policies, though we do not believe operating fewer plans to be more administratively burdensome relative to offering many plans. We will monitor the policies' impact to D-SNP supplemental benefits.
Finally, we note we are finalizing § 422.514(h)(1) with a technical modification to correct the terminology to use the term “full-benefit dual eligible individual(s)” instead of the more general “dually eligible individuals” to match the cross-reference to § 423.772.
While the proposals at §§ 422.503(b)(8), 422.504(a)(20), and 422.514(h)(1) and (2) apply (and therefore limit the ability of an MA organization to offer multiple D-SNPs) when an MA organization, its parent organization, or an entity that shares a parent organization also contracts with a State as a Medicaid MCO, the limitation in these regulations applies only when the affiliated Medicaid MCO enrolls dually eligible individuals. Medicaid MCOs that solely enroll other Medicaid populations will not be impacted by this rule. We proposed that dually eligible individuals for purposes of this provision means “dually eligible individuals as defined in § 423.772,” but in retrospect realized that we should have used the term “full-benefit dual eligible individuals” as defined in § 423.772. Therefore, we have revised § 422.514(h)(1) to clarify that this provision applies only when a Medicaid MCO enrolls full-benefit dual eligible individuals as defined in § 423.772. We have made similar edits to § 422.514(h)(3)(i) and (ii) to specify that we are referring to full-benefit dual eligible individuals as defined in § 423.772. These clarifying edits to the regulatory text have no impact to the enrollment limitations as originally proposed or finalized in this rulemaking at § 422.514(h).
We acknowledge that some Medicaid MCOs may enroll full-benefit dually eligible individuals even when certain Medicaid services, such as long-term supports and services, are carved out. In such scenarios, the rules we are finalizing here will apply, facilitating better access for full-benefit dually eligible individuals to care coordination, unified appeals processes across Medicare and Medicaid, continuation of Medicare services during an appeal, and integrated materials that come from aligned enrollment, even if some Medicaid benefits are carved-out. As such, we decline to incorporate these suggestions in the final rule.
We acknowledge, however, that there may be situations where a State Medicaid agency operates multiple Medicaid managed care programs that enroll full-benefit dually eligible individuals. For example, New York currently operates a fully integrated care program using Medicaid MCOs, plus a separate partially capitated program through which the State pays Medicaid capitation to PIHPs to cover long-term services and supports and ancillary benefits but not primary or acute care. If the MA organization, its parent organization, or any entity that shares a parent organization with the MA organization has a Medicaid MCO contract with the State, the provisions at §§ 422.503(b)(8), 422.504(a)(20), and 422.514(h)(1)(i) would apply in this example to limit the MA organization's ability to offer D-SNPs in that State to full-benefit dual eligible individuals. However, the exception proposed and finalized at § 422.514(h)(3)(i) would allow the MA organization in this example to offer one D-SNP for full-benefit dually eligible individuals affiliated with the Medicaid MCO and a second D-SNP for full-benefit dually eligible individuals affiliated with the partially capitated PIHP
Proposed § 422.514(h)(3)(i) established State flexibility to use the SMAC to “limit enrollment [into D-SNPs] for certain groups” based on “age group or other criteria.” However, upon reviewing comments, we believe the proposed exception at § 422.514(h)(3)(i) was insufficiently clear and warrants clarification for scenarios like those in New York. Therefore we are revising § 422.514(h)(3)(i) to clarify that we will allow an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, to offer more than one D-SNP for full-benefit dually eligible individuals in the same service area as that MA organization's affiliated Medicaid MCO only when a SMAC requires it in order to
Other policies designed to improve access to D-SNPs in rural communities are beyond the scope of this current rulemaking, but we will consider exploring opportunities for potential future rulemaking.
We do not expect our policies, as proposed or as finalized, to drive out high-performing D-SNPs or Medicaid MCOs with specialized experience. While §§ 422.503(b)(8), 422.504(a)(20), 422.514(h), and 422.530(c)(4)(iii), as finalized in this rule, in combination are intended to result in a reduction in the number of D-SNP options overall, we
As noted in the proposed rule (88 FR 78751), States have discretion in how they structure their Medicaid managed care programs. This includes whether and how they select Medicaid MCOs to participate in such programs, whether that is through competitive procurements or an “any willing provider” approach. As noted in prior response, under our proposals an MA organization, its parent organization or any entity that shares a parent organization with the MA organization that also contracts with a State as a Medicaid MCO could continue to offer one or more D-SNPs for partial-benefit dually eligible individuals.
Overall, we agree with commenters who stated that the impact will vary based on the market. As noted in the proposed rule (88 FR 78575), we believe the impact of these final policies will be concentrated in those States that have Medicaid MCOs but do not have EAE requirements already. We acknowledge that this rulemaking may impact organization decisions about whether and how to participate in certain markets but believe that, on the whole, the policies we are finalizing in this section of the final rule will better serve the dually eligible individuals by furthering opportunities for these individuals to enroll in integrated plans.
We acknowledge commenters' concerns about the applicability to partial-benefit dually eligible individuals and, as addressed in a previous response, we reiterate that the limitations proposed and finalized at §§ 422.514(h)(1)(ii) and 422.514(h)(2) are specific to enrollment of full-benefit dually eligible individuals and D-SNPs that are open to enrollment by full-benefit dually eligible individuals. An MA organization can continue to offer one or more D-SNPs for partial-benefit dually eligible individuals when it has a SMAC and meets all other applicable requirements even if the MA organization, its parent organization, or another entity (or entities) that share a parent organization with the MA organization offer an affiliated Medicaid MCO in the same service area. Therefore, we do not believe that an additional exception to the enrollment limitations in § 422.514(h)(1) and (2) is necessary to ensure D-SNP enrollment opportunities for partial-benefit dually eligible individuals.
• The restriction on an MA organization offering more than one D-SNP for full-benefit dual eligible individuals in the same area where the MA organization has an affiliated Medicaid MCO will apply to contract years beginning on and after January 1, 2027 under § 422.514(h)(1)(i) (see also §§ 422.503(b)(8) and 422.504(a)(20), which require compliance with § 422.514(h)).
• The limit on new enrollment in a D-SNP offered by an MA organization with an affiliated Medicaid MCO in the same service area to individuals who are enrolled in or in the process of enrolling in the affiliated Medicaid MCO will apply to contract years beginning on and after January 1, 2027 under § 422.514(h)(1)(ii) (see also §§ 422.503(b)(8) and 422.504(a)(20), which require compliance with § 422.514(h)). This provision will apply to new enrollments and will not require the D-SNP to disenroll previously enrolled individuals (whether partial-benefit dually eligible individuals or full-benefit dually enrolled individuals) who are not also enrolled in the affiliated MCO.
• The limit on enrollment and continued enrollment or coverage for a D-SNP that is subject to § 422.514(h)(1) to only full-benefit dual eligible individuals who are also enrolled in or in the process of enrolling in the affiliated Medicaid MCO will apply to contract years beginning on and after January 1, 2030 under § 422.514(h)(2) (see also §§ 422.503(b)(8) and 422.504(a)(20), which require compliance with § 422.514(h)). This provision will require the D-SNP to disenroll individuals who do not meet the enrollment limitation requirements beginning January 1, 2030.
• The exceptions in § 422.514(h)(3) will apply on the same schedule as the new limitations and restrictions in § 422.514(h)(1) and (2).
We believe these timelines give CMS, States, and MA organizations an appropriate amount of time to make necessary policy and operational updates.
We also clarify that we did not propose (and are not finalizing) any changes to the process or mechanism for how a dually eligible individual may elect a D-SNP. There is no passive enrollment of individuals into MA plans—including D-SNPs—aside from what is described at § 422.60(g). We did not propose (and are not finalizing) changes to default enrollment provisions or any other passive enrollment provisions for D-SNPs. In addition, we did not propose (and are not finalizing) any changes to the regulation at § 438.54 governing the enrollment process States must use for their Medicaid managed care plans (which may include passive and/or default enrollment procedures).
We clarify that our enrollment limitations at § 422.514(h) apply to D-SNPs regardless of integration status—including HIDE, FIDE, and coordination-only D-SNPs—so long as that D-SNP has an affiliated Medicaid MCO that serves full-benefit dually eligible enrollees in the same service areas as the D-SNP. We acknowledge that the policy will likely mostly apply to D-SNPs with HIDE and FIDE designations, but there are also examples of coordination-only D-SNPs achieving AIP status despite Medicaid benefit carve-outs, as is the case in California. See § 422.561, paragraph (2)(ii).
We understand commenters' concerns with respect to the potential need for States to change operations in reaction to the new D-SNP enrollment restrictions proposal, but we believe the requirements are broad enough that they may accommodate a variety of operational strategies for aligning enrollment between D-SNPs and Medicaid MCOs. For example, we do not believe changes to Medicaid auto-assignment processes will be uniformly required. However, because alignment of new enrollments is not required under § 422.514(h) until 2027 and full alignment is not required until 2030, we believe there is adequate lead time for States and D-SNPs to consider implications of the proposals and adjust operations as needed.
We acknowledge commenters' concerns with respect to the regulation's impact in 2030, when D-SNPs impacted by § 422.514(h) will only be permitted to cover enrollees who are full-benefit dually eligible individuals and enrolled in an affiliated Medicaid MCO. We clarify that there is no requirement that an unaligned enrollee be disenrolled
We also note that § 422.514(h) permits D-SNPs to implement periods of deemed continued eligibility to retain enrollees who temporarily lose Medicaid coverage as described in § 422.52(d). These deeming periods are optional unless a State directs a D-SNP to offer a minimum deeming period (which must not exceed 6 months) in the SMAC contract.
We appreciate the comments about States actively working to transition their FAI demonstrations to integrated D-SNPs in 2026. We are working closely with each of these States to keep as many Medicare-Medicaid Plan enrollees as possible connected with integrated care in 2026. Many of these States are currently working on operational processes for exclusively aligned enrollment for their new integrated D-SNP programs, and we do not expect that State operational choices for this program will conflict with any provisions at § 422.514(h). We do not agree that adjustments to the timeline of the D-SNP enrollment restrictions policy are necessary to effectively transition the demonstrations to integrated D-SNPs in 2026.
With respect to States that have already implemented EAE by “matching” Medicaid managed care plan enrollment to an enrollee's D-SNP selection, we confirm that this approach is compatible with the policies proposed and finalized at §§ 422.514(h)(1)(ii) and 422.514(h)(2). For States that have yet to implement EAE but wish to set up systems and operations that would allow their D-SNPs to operate with EAE, we are committed to collaborate on finding feasible operational processes that work best for them, with the aim of being as flexible as possible with the least disruption for dually eligible individuals.
We confirm there is no passive enrollment of individuals into MA plans—including D-SNPs—aside from what is described at § 422.60(g). We did not propose (nor are we finalizing) changes to default enrollment provisions at § 422.66(c) or any other passive provisions in conjunction with our proposals.
Finally, we confirm that no Medicare regulations prohibit D-SNPs from outreach to their current unaligned enrollees. However, there may be additional restrictions to this type of outreach regarding enrollment in a Medicaid managed care plan in State statute, regulations, or SMAC provisions.
We understand that Puerto Rico directly contracts with 26 AIP HIDE SNPs, operated by four parent organizations for 2024, with a great deal of service area overlap between these D-SNPs. As is the case in the Platino program, wherever an MA organization that offers a D-SNP, its parent organization, or any entity that shares a parent organization with the MA organization also contracts with a State as a Medicaid MCO for full-benefit dually eligible individuals and receives capitation payments from the State, we consider the D-SNP and Medicaid MCO to be “affiliated” under § 422.514(h). MA organizations that offer multiple D-SNPs participating in the Platino program in Puerto Rico will be required to only offer one D-SNP starting in 2027 for full-benefit dually eligible individuals in a service area where the MA organizations, their parent organizations, and entities that share parent organizations with the MA organizations also offer an affiliated Medicaid MCO unless those D-SNPs meet the exception proposed at § 422.514(h)(3)(i). We acknowledge that MA organizations operating in Puerto Rico may choose to consolidate D-SNPs in order to comply with § 422.514(h) and are finalizing the proposed crosswalk exception at § 422.530(c)(4)(iii) to minimize enrollee disruption in connection with such contract consolidations.
Provided that the preconditions for the crosswalk exception at § 422.530(c)(4)(iii) are met, enrollees may be crosswalked from HIDE SNPs to FIDE SNPs, for example. We would not allow a D-SNP to crosswalk unaligned enrollees, or partial-benefit dually eligible enrollees, into a D-SNP required to operate with EAE, or into a D-SNP subject to the enrollment alignment requirements at § 422.514(h). Additionally, while plan types are taken into account for the purposes of enrollee crosswalks, plan benefit nuances like cost-sharing and supplemental benefits are not considered. Enrollees who are crosswalked into a D-SNP PBP with more cost-sharing responsibilities or different supplemental benefits than their prior D-SNP PBP would be notified of this change through the plan's Annual Notice of Change.
We note that all crosswalk and crosswalk exception requirements in § 422.530 still apply to MA organizations. We believe the new crosswalk exception and current crosswalk requirements offer sufficient flexibility and incentive for D-SNP sponsors to consolidate plan offerings and promote continuity for enrollees in D-SNP types that best meet their needs.
Related to the CMS's proposed enrollment limitations, a commenter noted the need for adding language to MPF explaining why individuals cannot choose a D-SNP listed on MPF, citing Medicare's history of ensuring choice in the Medicare program. Another commenter noted that the enrollment limitation on certain D-SNPs could result in increased confusion among individuals and enrollment counselors. Another commenter emphasized that if CMS adopts the proposal restricting FIDE SNPs to only enroll individuals enrolled in the affiliated Medicaid plan, it is critical for MPF to indicate which benefits are available through the affiliated Medicaid plans.
As we discuss further in section VIII.G of this final rule on our comment solicitation regarding improvements in MPF, for contract year 2025 we are working to add specific Medicaid-covered benefits to AIPs displayed on MPF.
Another commenter acknowledged that the integrated model presents an opportunity for better outcomes and satisfaction but that isn't always the case. They cited MACPAC survey results conducted with enrollees in both integrated and coordination-only D-SNPs and found enrollees in “highly integrated plans” rated their plans slightly lower than those in the coordination-only D-SNPs and there were no meaningful differences between the experiences of dually eligible enrollees in plans with higher and lower levels of integration. The commenter added that there is a plethora of data to both support and refute integrated plans leading to better outcomes and without clear data, there can only be assumptions.
We look forward to more analysis on the experiences of dually eligible individuals and will continue to monitor the growing body of research, as well as continue to carry out our own monitoring, regarding integrated care so that dually eligible individuals have access to seamless, high quality health care.
A commenter cited MedPAC's 2013 report that noted I-SNPs perform better than other D-SNPs and other MA Plans on the majority of quality measures and had lower hospital re-admission rates that D-SNPs and C-SNPs. They recommend CMS consider I-SNPs when exploring opportunities for integration with a nursing facility population and provided several factors that could be attributed to I-SNPs achieving better outcomes compared to D-SNPs. Another commenter suggested CMS should enhance awareness of and access to PACE, which offers a truly integrated care option for dually eligible individuals. Another commenter encouraged States use LTSS accreditation programs to meet care coordination requirements for Medicare and Medicaid integration. A commenter recommended CMS implement process and outcome measures for D-SNP enrollee advisory committees (EAC), as increased transparency will help to ensure aspects of proposed regulations such as SSBCI and monthly SEPs have the impact they are intended to have. Another commenter expressed concern that there is a disparity in MA benchmark rates in Puerto Rico, as well as a lack of Medicare Savings Program and LIS benefits for dually eligible individuals in Puerto Rico.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing without modification our proposed amendment at § 423.38(c)(4) on the dual/LIS SEP. We are finalizing with modifications our proposed amendment at § 423.38(c)(35) to add a new integrated care SEP; based on the comments we received we are narrowing the scope so that the SEP is available only to facilitate aligned enrollment as defined at § 422.2 (this limitation is reflected in a new paragraph at § 423.38(c)(35)(ii)) and clarifying in § 423.38(c)(35)(i) that the SEP is available only for full-benefit dually eligible individuals. Table HC3 summarizes the combined effects of the final SEP proposals.
We are also finalizing without modification our proposed amendments at §§ 422.503(b)(8), 422.504(a)(20), and 422.530(c)(4)(iii) related to how MA organizations offer and enroll eligible individuals into D-SNPs. We are finalizing § 422.514(h)(1) with a modification to correct the terminology to use the term “full-benefit dual eligible individual(s)” where necessary. We are finalizing § 422.514(h)(2) with a modification to clarify that any D-SNP(s) subject to enrollment limitations in § 422.514(h)(1) may only enroll (or continue coverage of people already enrolled) individuals also enrolled in (or in the process of enrolling in) the Medicaid MCO beginning in 2030. We are finalizing with modifications our proposed amendment at § 422.514(h)(3)(i) to permit an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization,
Medicare Plan Finder (MPF) is an online searchable tool located on the Medicare.gov website that allows individuals to compare options for enrolling in MA or Part D plans. Medicare beneficiaries can also enroll in a plan using MPF. Each year, we work to improve its functionality by implementing enhancements to MPF. We solicited comment to inform our intent to improve MPF functionality in the future to make it easier for dually eligible MPF users to assess MA plans that cover their full array of Medicare and Medicaid benefits.
In the November 2023 proposed rule, we described at 88 FR 78576 how MPF displays benefits offered by MA and Part D plans, only displaying benefits that are included in the MA plan benefit package (PBP) (that is, Medicare Parts A and B benefits, Part D coverage, approved Medicare supplemental benefits, and Value Based Insurance Design (VBID)/Uniform Flexibility (UF)/Supplemental Benefits for Chronically Ill (SSBCI)). For most MPF users, this represents the totality of their coverage.
We noted that for applicable integrated plans (AIPs), as defined at § 422.561, D-SNP enrollment is limited to those individuals who also receive Medicaid benefits through the D-SNP or an affiliated Medicaid managed care organization (MCO) under the same parent organization. For these D-SNPs, the benefits listed in MPF accurately reflect those covered by Medicare but do not reflect all the benefits available to all enrollees in the D-SNP.
We provided an example that in most States, all dually eligible individuals who qualify to enroll in an AIP would have access to Medicaid-covered non-emergency medical transportation (NEMT). However, MPF currently only displays NEMT as a covered benefit for any MA plan if it is also covered as an MA supplemental benefit. As such, all other things equal, an MA plan that offers NEMT as an MA supplemental benefit appears in MPF to have more generous coverage than an AIP that does not cover NEMT as an MA supplemental benefit but does cover it under the affiliated Medicaid MCO contract.
We noted in the proposed rule that information about only Medicare benefits covered by MA plans available to the individual, although accurate, may not provide as much information to dually eligible MPF users as would be beneficial, since the combination of available Medicare and Medicaid benefits available through some integrated D-SNPs may be greater than the Medicare benefits reflected in MPF. It may also create a perverse incentive for D-SNPs to offer certain types of supplemental benefits for Medicare marketing purposes even when the same services are already available to all enrollees in the plan through Medicaid.
We described our belief that there is an opportunity to better inform dually eligible MPF users. For AIPs, we noted that we were considering adding a limited number of specific Medicaid-covered benefits (for example, dental, NEMT, certain types of home and community-based services, or others) to MPF when those services are available to enrollees through the D-SNP or the affiliated Medicaid MCO. We indicated that we would limit this functionality to AIPs, because in such plans all enrollees—by definition—receive Medicaid benefits through the AIP.
We noted that we would not include in the MPF display any Medicaid benefits that are available but only through a separate carve-out. Consider, for example, a State in which NEMT is available to dually eligible individuals but through a Statewide vendor separate from the AIP. In this instance, displaying NEMT in MPF would accurately represent that all D-SNP enrollees have coverage for NEMT in Medicaid, but it would not accurately characterize the D-SNP's role (or the role of the affiliated Medicaid MCO offered by D-SNP parent organization) in delivering the service.
We continue to consider whether to indicate which services are Medicare supplemental benefits and which are Medicaid, weighing whether the additional information would be worth the added complexity.
We noted at 88 FR 78576 that displaying Medicaid benefits in MPF, even with the limitations described above, would present new operational challenges for CMS. We have not historically captured the necessary information for AIPs or other D-SNPs in a systematic manner to populate MPF with information about Medicaid benefits covered by D-SNPs, although we could potentially capture the necessary information by providing a mechanism for States or D-SNPs to report it to us annually using HPMS. We solicited comment on the practicality and means for accomplishing this. We also expressed interest in stakeholders submitting comments about any features from the My Care My Choice website at
Such enhancements to MPF would not require rulemaking. We solicited comments on the concepts described above to inform our decision about whether and how to implement changes to MPF along these lines.
We are not responding to each specific comment submitted on this comment solicitation, but we appreciate all the comments and interest on this topic. We will continue to take all concerns, comments, and suggestions into account as we work to address and develop policies on these topics and may reach out to commenters for further discussion. We provide a high-level summary of comments submitted regarding key topics raised by commenters.
We also appreciate the commenters sharing their concerns about not displaying on MPF any carved out Medicaid benefits and including Medicaid FFS benefits. We will consider these suggestions as we discuss future updates to further enhance MPF functionality.
• Updating the search and filtering options/functionality in MPF to prioritize D-SNPs over non-D-SNP MA plans when displayed on MPF.
• That the level of integration for D-SNPs be designated, defined, and/or prioritized for dually eligible users when using MPF to search for plans.
• Adding the ability for users to select more than one option on the “Help with your costs” MPF web page and concern that the results page still displayed Part B premiums for which dually eligible users may not be responsible.
• Providing definitions or explanations of terms and/or using more simplified language in general on MPF and specifically when describing D-SNPs and integrated plans.
• That MPF include functionality for more information about cost sharing and protections for dually eligible beneficiaries, for example by including the State Pharmaceutical Assistance Program in MPF.
• Including information about provider networks, Medicaid eligibility for D-SNPs, home and community-based alternatives like PACE.
• Displaying SHIP and/or state Medicaid agency contact information.
We, along with our State partners, have worked to create integrated care options for dually eligible individuals. When individuals choose to enroll, we want the enrollment process to be easy to navigate. Unfortunately, there remain technical challenges that can impede the ease of enrollment in integrated D-SNPs, including misalignment of Medicare and Medicaid enrollment processes, start dates, and related operational challenges for States and plans, as well as potentially confusing non-integrated enrollee communication materials.
In the November 2023 proposed rule, we described at 88 FR 78576 how, in the FAI, CMS delegated eligibility and enrollment functions for Medicare-Medicaid Plans (MMPs) to States by waiving regulations at 42 CFR 422, Subpart B, and how many States have leveraged their State Medicaid enrollment vendors (including enrollment brokers subject to the limitations in section 1903(b)(4) of the Act) to operationalize enrollment, eligibility, or both. The proposed rule outlined the multiple purposes State enrollment vendors serve within the FAI, including effectuating Medicare and Medicaid enrollment simultaneously, serving as an unbiased source of information, and reducing the risk of real or perceived conflicts of interest when plans initiate enrollment directly.
We also described how, outside of the FAI, dually eligible individuals elect MA plans, including D-SNPs, by enrolling directly with the plan, or through agents or brokers, or via 1-800-Medicare and the Medicare Online Enrollment Center. We noted how this creates special challenges for D-SNPs that have exclusively aligned enrollment (EAE) with affiliated Medicaid MCOs because these D-SNPs then need to separately coordinate enrollment of the dually eligible individual into the D-SNP's affiliated Medicaid MCO. We described how some States have expressed interest in leveraging State enrollment vendors, including enrollment brokers as described in section 1903(b)(4) of the Act, to effectuate EAE for integrated D-SNPs and their affiliated Medicaid MCOs.
We noted that we are assessing ways to promote enrollment in integrated D-SNPs, work toward an integrated D-SNP enrollment process that is operationally practical for CMS and States, create alignment—to the extent feasible—between Medicare and Medicaid managed care enrollment start and end dates, protect beneficiaries from abusive enrollment practices, and streamline beneficiary messaging and communication related to enrollment.
In the proposed rule, we described at 88 FR 78577 how States can utilize Medicaid enrollment vendors for enrollment in integrated D-SNPs through requirements in the SMAC required by § 422.107. We use the term “enrollment vendor” as meaning
We described how States can implement, and require of D-SNPs, specific messaging directing dually eligible individuals to take enrollment actions via the State's enrollment vendor only, and how States could choose which functions to direct the D-SNPs to contract with the enrollment vendor for via the SMAC. We also described the process States could require of D-SNPs to verify eligibility and effectuate enrollment. We noted how requiring D-SNPs to contract with a State's enrollment vendor for enrollment and eligibility functions could create a simpler, streamlined enrollment experience for dually eligible individuals and may reduce the risk of misaligned Medicare and Medicaid enrollment. We described how, as in the FAI demonstrations, the State's enrollment vendor would need to implement Medicare managed care eligibility and enrollment policies. We also noted how, like the FAI demonstrations, States can prohibit D-SNPs, via SMACs, from using agents and brokers to perform the activities described in §§ 422.2274 and 423.2274.
We solicited comment on the feasibility of requiring integrated D-SNPs to contract with State enrollment brokers, as well as any specific concerns about States implementing it. We also solicited feedback on any concerns we should consider with States requiring (using the SMAC) D-SNPs to route enrollment through the State enrollment vendor, as well as whether there are any Federal regulations, other than or in addition to the limitations on enrollment brokers under section 1903(b)(4) and §§ 438.71(c) and 438.810, that interested parties view as an impediment to this option.
We are not responding to each specific comment submitted on this comment solicitation, but we appreciate all the comments and interest on this topic. We will continue to take all concerns, comments, and suggestions into account as we work to address and develop policies on these topics and may reach out to commenters for further discussion. We provide a high-level summary of comments submitted on a few key topics, including those we believe require clarification.
The proposed rule described a challenge of applying FAI enrollment processes outside the demonstration context: alignment of Medicaid and Medicare managed care enrollment start and end dates. Sections 1851(f)(2) and 1860D-1(b)(1)(B)(iv) of the Social Security Act, and regulations codified at §§ 422.68 and 423.40(c) respectively, generally require that Medicare enrollments become effective on the first day of the first calendar month following the date on which the election or change is made, although section 1851(f)(4) of the Act and §§ 422.68(d) and 423.40(c) allow CMS flexibility to determine the effective dates for enrollments that occur in the context of special enrollment periods. Medicaid managed care regulations at § 438.54 do not specify the timelines or deadlines by which any enrollment must be effective.
We described how some States have cut-off dates after which enrollment in a Medicaid managed care plan is not effectuated until the first calendar day of the next month after the following month. If a dually eligible individual is trying to enroll in an integrated D-SNP at the end of a month in a State with a Medicaid managed care enrollment cut-off date, there could be a monthlong lag between their Medicare managed care effective date and Medicaid managed care effective date. We noted how the lag in start dates between Medicare and Medicaid services for an integrated D-SNP can be confusing to enrollees, operationally challenging for integrated plans, and difficult to describe in plan materials.
We noted our interest in learning more about reasons for implementing Medicaid managed care enrollment cut-off dates and the barriers, as well as potential solutions, to aligning Medicare and Medicaid managed care enrollment start and end dates. We solicited comment from interested parties, including States, D-SNPs, and Medicaid managed care plans, about their specific operational challenges related to
We solicited comments on challenges individuals face when trying to enroll in integrated D-SNPs, as well as potential concerns stakeholders would have about CMS using flexibilities at section 1860D-1(b)(1)(B)(iv) of the Act and § 423.40(c) to determine effective dates for Medicare enrollments that occur in the context of our proposed special enrollment period for integrated care. We solicited comment on operational or systems barriers for States and Medicaid managed care plans to align disenrollment dates with Medicare. In addition to the above topics, we also solicited feedback on what type of technical assistance related to effectuating MA plan and D-SNP enrollment and eligibility processes would be helpful to States, what concerns should we consider about potential abusive enrollment practices, and on States' current requirements and policies related to agents and brokers. Finally, we solicited comments on whether other aspects of the integrated enrollment and disenrollment processes in FAI should apply to D-SNPs.
To elect a specialized MA plan for special needs individuals as defined at § 422.2 (special needs plans or SNPs), an individual must meet the eligibility requirements for the specific type of SNP in which the individual wishes to enroll. At § 422.52(b), we define the eligibility requirements for individuals to enroll in a SNP. These eligibility requirements indicate that an individual must meet the regulatory definition of a special needs individual at § 422.2, meet the eligibility requirements for the specific SNP they elect to enroll in, and be eligible to elect an MA plan under § 422.50. For D-SNPs, we also require at § 422.107(c)(2) that the categories and criteria for eligibility for dually eligible individuals to enroll in the SNP be included in the SMAC between the State and the D-SNP. D-SNPs must restrict enrollment eligibility categories or criteria consistent with the SMAC.
Currently, numerous States add eligibility categories and criteria to their SMACs that restrict new D-SNP enrollment to prioritize and promote integrated care. For example, some States only allow D-SNPs to enroll full-benefit dually eligible individuals. Other States only allow D-SNPs to enroll individuals who are also in an affiliated Medicaid managed care plan, creating exclusively aligned enrollment. State restrictions serve an important purpose in maximizing the number of dually eligible individuals who receive coordinated services through the same organization for both Medicare and Medicaid; minimizing disruption for enrollees currently served by existing D-SNPs; and allowing for the creation of D-SNP benefit packages that are tailored to certain subsets of dually eligible individuals.
State limitation of D-SNP enrollment to certain populations has been a feature throughout the history of D-SNPs. Nonetheless, we proposed regulatory amendments to further clarify our regulations.
We proposed to revise § 422.52(b)(2) to be explicit that to be eligible to elect a D-SNP, an individual must also meet any additional eligibility requirements established in the SMAC. We also proposed to revise § 422.60(a)(1) and add § 422.60(a)(3) to be more explicit that MA organizations may restrict enrollment in alignment with § 422.52(b)(2). Neither proposal is intended to change our longstanding policy. We do not expect any new burden associated with these proposed changes because States are already including eligibility categories and criteria in their SMACs and we are reviewing those accordingly.
We received the following comments on this proposal and respond to them below:
Another commenter noted that it did not object to CMS's proposal to make explicit that, to be eligible to elect a D-SNP, an individual must also meet any additional eligibility requirements established in the SMAC.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing without modification our proposed amendment at § 422.52(b)(2) to be explicit that, to be eligible to elect a D-SNP, an individual must also meet any additional eligibility requirements established in the SMAC. We are also finalizing without modification our proposed amendment to § 422.60(a)(1) and addition at § 422.60(a)(3) to be more explicit that MA organizations may restrict enrollment in alignment with § 422.52(b)(2).
In the final rule titled Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program which appeared in the
We established these contract limitations to address the proliferation and growth of D-SNP look-alikes, which raised concerns related to effective implementation of requirements for D-SNPs established by section 1859 of the Act (including amendments made by the Medicare Improvements for Patients and Providers Act of 2008 (Pub. L. 110-275) and the Bipartisan Budget Act of 2018 (Pub. L. 115-123)). We adopted the regulation to ensure full implementation of requirements for D-SNPs, such as contracts with State Medicaid agencies, a minimum integration of Medicare and Medicaid benefits, care coordination through health risk assessments (HRAs), and evidence-based models of care. In addition, we noted how limiting these D-SNP look-alikes would address beneficiary confusion stemming from potentially misleading marketing practices by brokers and agents that market D-SNP look-alikes to dually eligible individuals. For a more detailed discussion of D-SNP look-alikes and their impact on the implementation of D-SNP Medicare and Medicaid integration, we direct readers to the June 2020 final rule (85 FR 33805 through 33820) and the proposed rule titled Medicare and Medicaid Programs; Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (85 FR 9018 through 9021) (also known as the February 2020 proposed rule).
In the April 2023 final rule, we finalized amendments to close unforeseen loopholes in the scope of the regulation adopted to prohibit D-SNP look-alikes. Specifically, we finalized language at § 422.514(g) to apply the prohibitions on contracting with D-SNP look-alikes to individual segments of an MA plan. We also finalized language at § 422.514(d)(1) to apply the D-SNP look-alike contracting limitation to both new and existing (that is, renewing) MA plans that are not SNPs and submit bids with projected enrollment of 80 percent or more enrollees of the plan's total enrollment that are dually eligible for Medicare and Medicaid.
Our contracting limitations at § 422.514(d) mean that we do not contract with non-SNP MA plans that have enrollment consisting of 80 percent or more of enrollees who are entitled to Medicaid. We set the threshold at 80 percent or higher based on a 2019 MedPAC analysis that showed the proportion of dually eligible individuals in most geographic areas did not exceed the 80-percent threshold;
In the June 2020 final rule, we stated that we would monitor for potential gaming after implementation of the final rule by reviewing plan enrollment data and consider future rulemaking as needed (85 FR 33812).
In response to our proposals to close unforeseen D-SNP look-alike loopholes in the April 2023 final rule, some commenters again recommended we lower the threshold to less than 80 percent (88 FR 22131). A few commenters recommended we lower the threshold below 80 percent without recommending a specific percentage, and other commenters recommended we lower the threshold to 50 percent. The commenters suggested that lowering the threshold further would promote integrated care and minimize beneficiary confusion. As one of these commenters, MACPAC noted that it “remains concerned that while CMS's focus on plans where 80 percent or more of all enrollees are dually eligible addresses the most egregious instances, there could still be a real risk of growth in non-SNP MA plans falling below the 80-percent threshold and thus continuing to detract from Federal and State efforts to integrate care.” We analyzed the percentage of non-SNP MA plans' dually eligible enrollment as a percentage of total enrollment from plan years 2017 through 2023. Our analysis shows that the number of non-SNP MA plans with high levels of dually eligible individuals has grown substantially.
The rate of growth from 2017 to 2023 in the number of non-SNP MA plans with 50 to 60 percent (544 percent increase), 60 to 70 percent (900 percent), and 70 to 80 percent dually eligible individuals as a percent of total enrollment (1,400 percent)
We also conducted analysis with 2023 data mimicking MedPAC's 2019 analysis showing the share of dually eligible individuals enrolled in non-SNP MA plans against the share of beneficiaries in a plan service area who are dually eligible individuals.
To address the substantial growth in non-SNP MA plans with disproportionately high enrollment of dually eligible individuals, we proposed lowering the D-SNP look-alike threshold from 80 percent to 60 percent incrementally over a two-year period. We proposed to lower the threshold for dually eligible enrollment to 60 percent of a non-SNP MA plan's enrollment because it exceeds the share of dually eligible individuals in any given MA plan service area currently and, therefore, would not be the result for any plan that simply reflected the concentration of dually eligible enrollees in its service area.
We proposed a limitation on non-SNP MA plans with 70 or greater percent dually eligible individuals for contract year 2025. For contract year 2026, we proposed to reduce the threshold from 70 percent to 60 percent or greater dually eligible enrollment as a share of total enrollment. This incremental approach would minimize disruptions to dually eligible individuals and allow MA organizations and CMS to operationalize these transitions over a two-year period. As discussed in more detail below, we would maintain processes to minimize disruption for the enrollees in plans affected by this proposed change.
Based on 2023 data, we stated in the November 2023 proposed rule that we expect the lower threshold would impact 30 non-SNP MA plans with dually eligible individuals representing 70 to 80 percent of total enrollment and 40 non-SNP MA plans with dually eligible individuals representing 60 to 70 percent of total enrollment. Some of the plans that could be affected by our proposal are offered in States (that is, California, Massachusetts, Minnesota) that limit contracting to integrated D-SNPs, such as FIDE SNPs and AIPs. Based on 2023 plan data, 12 non-SNP MA plans in California, Massachusetts, and Minnesota have shares of dually eligible enrollment between 60 and 80 percent. These States have chosen to limit their markets to certain D-SNPs to integrate Medicare and Medicaid for dually eligible individuals. Lowering the D-SNP look-alike contracting limitation to 60 percent will help to simplify choices for dually eligible individuals in these States and promote Medicare and Medicaid integration objectives.
We proposed revisions to the rule on dually eligible enrollment at § 422.514(d)(1) to apply the lower thresholds to new and existing non-SNP MA plan bids. Specifically, we proposed amending paragraph (d)(1)(ii) such that CMS would not enter into or renew a contract for a new or existing non-SNP MA plan that projects enrollment in its bid of 80 percent or more dually eligible individuals for plan year 2024 (as is already the case under current regulations); 70 percent or more dually eligible individuals for plan year 2025; and 60 percent or more dually eligible individuals for plan year 2026 and subsequent years. Consistent with our current practice, we would apply the proposed changes at § 422.514(d)(1)(ii) to all bids for the next plan year, including any bids for non-SNP MA plans projected to exceed the threshold even if the actual enrollment for the current plan year is under the threshold at § 422.514(d)(1).
Similarly, we proposed revisions to paragraph (d)(2) to apply the lower thresholds to non-SNP MA plan enrollment. Specifically, we proposed to amend paragraph (d)(2)(ii) to state that we will not renew a contract with a non-SNP MA plan that has actual enrollment, using January enrollment of the current year, in which dually eligible individuals constitute 80 percent or more dually eligible individuals for plan year 2024 (as is already the case under current regulations); 70 percent or more dually eligible individuals for plan year 2025; or 60 percent or more dually eligible individuals for plan year 2026 or subsequent years. In operationalizing these proposed changes, for example, we would use January 2024 enrollment data to identify non-SNP MA plans that exceed the proposed 70-percent threshold, for purposes of determining whether to renew contracts with these plans for plan year 2025. We would use January 2025 enrollment data to identify non-SNP MA plans that exceed the proposed 60-percent threshold for purposes of determining whether to renew contracts with these plans for plan year 2026. Consistent with existing rules, we would not apply the contracting limitation in § 422.514(d)(2) to any non-SNP MA plan that has been active for less than one year and has enrollment of 200 or fewer individuals.
We solicited comments on whether an alternative to reduce the threshold to 50 percent is more appropriate to protect against plans circumventing the requirements for D-SNPs while enrolling a disproportionate number of dually eligible individuals.
Section 422.514(e) establishes parameters for transitioning individuals who are enrolled in a D-SNP look-alike to another MA-PD plan (or plans) offered by the MA organization to minimize disruption as a result of the prohibition on contract renewal for existing D-SNP look-alikes. Under the existing processes and procedures, an MA organization with a non-SNP MA plan determined to meet the enrollment threshold in proposed paragraph (d)(2) could transition enrollees into another MA-PD plan (or plans) offered by the same MA organization, as long as any such MA-PD plan meets certain proposed criteria. This transition process allows MA enrollees to be transitioned at the end of the year from one MA plan offered by an MA organization to another MA-PD plan (or plans) without having to complete an election form or otherwise indicate their enrollment choice as typically required, but it also permits the enrollee to make an affirmative choice for another MA plan or standalone Part D plan of his or her choosing during the annual election period (AEP) preceding the year for which the transition is effective. Consistent with our description of the transition process in the June 2020 final rule (85 FR 33816), if a transitioned enrollee elects to enroll in a different plan during the AEP, enrollment in the plan the enrollee selected would take precedence over the plan into which the MA organization transitioned the enrollee. Transitioned enrollees would also have additional opportunities to select another plan through the Medicare Advantage Open Enrollment Period described in § 422.62(a)(3) from January 1 through March 31. Affected individuals may also qualify for a SEP, depending on the circumstances.
Existing provisions at paragraphs (e)(1)(i) through (iv) outline specific criteria for any MA plan to receive enrollment through this transition process to ensure that enrollees receive coverage under their new MA plan that is similarly affordable as the plan that would not be permitted for the next year. At existing paragraph (e)(1)(i), we allow a non-renewing D-SNP look-alike to transition that plan's enrollment to another non-SNP plan (or plans) only if the resulting total enrollment in each of the MA plans receiving enrollment consists of less than the threshold established in paragraph (d)(2)(ii) (now, 80 percent but with the proposed amendment, this would refer to the scheduled change in the threshold). SNPs receiving transitioned enrollment are not subject to this proposed limit on dually eligible individual enrollment. Under existing paragraph (e)(1)(ii), we require that any plan receiving transitioned enrollment be an MA-PD plan as defined in § 422.2. Under existing paragraph (e)(1)(iii), any MA plan receiving transitioned enrollment from a D-SNP look-alike is required to have a combined Part C and D beneficiary premium of $0 after application of the premium subsidy for full subsidy eligible individuals described at § 423.780(a). Finally, paragraph (e)(1)(iv) requires that the receiving plan be of the same plan type (for example, HMO or PPO) of the D-SNP look-alike out of which enrollees are transitioned.
At existing paragraph (e)(2)(ii), the current transition process requires MA organizations to describe changes to MA-PD benefits and provide information about the MA-PD plan into which the individual is enrolled in the ANOC that the MA organization must send, consistent with § 422.111(a), (d), and (e) and § 422.2267(e)(3). Consistent with § 422.111(d)(2), enrollees receive this ANOC describing the change in plan enrollment and any differences in plan enrollment at least 15 days prior to the first day of the AEP.
At existing paragraph (e)(4), the regulation addresses situations where the prohibition on contracting or renewing a D-SNP look alike is applied and the D-SNP look alike is terminated. In such situations where an MA organization does not transition some or all current enrollees from a D-SNP look-alike to one or more of the MA organization's other plans as provided in proposed paragraph (e)(1), the MA organization is required to send affected enrollees a written notice consistent with the non-renewal notice requirements at § 422.506(a)(2).
This transition process is conceptually similar to “crosswalk exception” procedures at § 422.530(c). However, in contrast to the crosswalk exceptions, our transition process at § 422.514(e) permits transition across contracts and across MA organizations under the same parent organization, as well as from non-SNP plans to SNPs.
We proposed to apply the existing transition processes and procedures at § 422.514(e) to non-SNP MA plans that meet the proposed D-SNP look-alike contracting limitation of 70 percent or more dually eligible individuals effective plan year 2025 and 60 percent or more dually eligible individuals effective plan year 2026. Consistent with the initial years of implementation of the D-SNP look-alike contract limitations with the 80-percent threshold, maintaining these transition processes and procedures will help to minimize disruption as a result of the prohibition on contract renewal for existing D-SNP look-alikes. However, for plan year 2027 and subsequent years, we proposed to limit the § 422.514(e) transition processes and procedures to D-SNP look-alikes transitioning dually eligible enrollees into D-SNPs. Based on our experience with D-SNP look-alike transitions effective plan year 2023, the vast majority of enrollees are transitioned to other MA-PDs under the same parent organization as the D-SNP look-alike. Based on our review of D-SNP look-alike transition plans thus far, we expect the experience for transitions effective plan year 2024 to follow a similar pattern. We proposed this new limitation on the transition process at new paragraph (e)(1)(v).
MA organizations can utilize other CMS processes to transition D-SNP look-alike enrollees to non-D-SNPs. For a more detailed discussion of these other CMS processes, we direct readers to the November 2023 proposed rule (88 FR 78582 through 78583).
While multiple options exist for MA organizations to transition D-SNP look-alike enrollees to other non-SNP MA plans, these pathways are not available for moving enrollees from D-SNP look-alikes to D-SNPs. Consistent with the November 2023 proposed rule, we believe it is appropriate to limit the transition process in § 422.514(e) since although other options remain available to transition enrollees from the D-SNP look-alike, MA organizations do not have other options to transition D-SNP look-alike enrollees into D-SNPs, and movement into D-SNPs encourages enrollment in integrated plans. Furthermore, we are concerned that if D-SNP look-alikes continue to be allowed to transition enrollees into non-D-SNPs indefinitely, there is little incentive for MA organizations to avoid non-compliance with the D-SNP look-alike thresholds. Thus, for plan year 2027 and subsequent years, we proposed to add new paragraph § 422.514(e)(1)(v) to limit the existing D-SNP look-alike transition pathway to MA organizations with D-SNP look-alikes transitioning enrollees into D-SNPs.
We are solicited comment on an alternative to our proposal that would
• Apply the 60-percent threshold beginning in plan year 2026;
• Permit use of the transition authority into non-SNP MA plans (as currently permitted under § 422.514(e)) for plan year 2025; and
• Limit use of transition authority under § 422.514(e) to transition D-SNP look-alike enrollees into D-SNPs for plan year 2026 and beyond.
Relative to our proposal, this alternative would give plans with dually eligible individual enrollment between 70 and 80 percent of total enrollment (based on January 2024 enrollment data) one additional year to apply for a new D-SNP or service area expansion to an existing D-SNP, such that these plans could transition enrollees into a D-SNP for plan year 2026. The alternative would balance the additional year using the existing 80-percent enrollment threshold to identify prohibited D-SNP look-alikes with an earlier limitation on the § 422.514(e) transition authority to enrollees transitioning into non-SNPs. We solicited comment on whether this alternative is a better balance of the goals of our policy to prohibit circumvention of the requirements for D-SNPs and to encourage and incentivize enrollment in integrated care plans. Among the factors we that stated that we would consider in adopting the alternative instead of our proposal is the extent to which plans with between 70 and 80 percent dually eligible enrollment in plan year 2024 expect to be able to establish a D-SNP in the same service area as the D-SNP look-alike if given an additional year (that is, 2026) to transition enrollees.
We also proposed a technical edit at § 422.514(e)(1)(i) to make the term “specialized MA plan for special needs individuals” lowercase, consistent with the definition of D-SNPs at § 422.2.
We received the following comments on this proposal and respond to them below:
A number of commenters emphasized the importance of dually eligible individuals having access to integrated care and that the D-SNP look-alikes interfere with those efforts. MedPAC referenced their June 2018 and June 2019 reports that discussed D-SNP look-alikes and expressed concern that D-SNP look-alikes undermine efforts to develop integrated plans for dually eligible individuals by encouraging them to enroll instead in plans that provide many of the same extra benefits as D-SNPs but do not integrate Medicaid coverage. MACPAC articulated that D-SNP look-alikes act at cross purposes to State and Federal efforts to integrate care by drawing dually eligible individuals away from integrated products and avoiding the additional requirements that D-SNPs must meet. Other commenters conveyed similar points in favor of CMS's proposal; D-SNP look-alikes work against the promotion of Medicare and Medicaid integration for dually eligible individuals, thus inhibiting improvements in coordination of care and attracting dually eligible individuals away from coordinated plan options. Other commenters supported the CMS proposal because it would further incentivize the enrollment of dually eligible individuals into D-SNPs, which are specifically designed for the population. A commenter did not believe that D-SNP look-alikes were a widespread phenomenon across regions but characterized them as substantial barriers to coordination of care for individuals in those regions where they exist. Another commenter stated that D-SNP look-alikes place responsibility on an enrollee to navigate two separate delivery systems.
In outlining their support for CMS's proposal, a number of commenters noted that D-SNP look-alikes are designed to attract dually eligible individuals but are not subject to the same requirements as a D-SNP, such as the model of care, coordination of Medicare and Medicaid benefits, and requirements for enrollee advisory input, designed specifically for dually eligible individuals. A commenter indicated that the contracting standards for D-SNP look-alikes should be consistent with the requirements for D-SNPs.
A number of commenters based their support for the CMS proposal on the expectation that it would simplify choices for dually eligible individuals and reduce aggressive marketing of D-SNP look-alikes. A commenter stated that D-SNP look-alikes introduce another layer of complexity and confusion for dually eligible individuals when selecting their plans, while not providing the coordination necessary for their enrollees to navigate Medicare and Medicaid programs. Other commenters noted that the proposed additional contract limitations for D-SNP look-alikes would ultimately help reduce confusion over plan offerings. Another commenter shared anecdotal evidence that marketing of D-SNP look-alikes, especially in nursing facilities, is confusing to potential enrollees. The commenter noted that D-SNP look-alikes may use aggressive marketing tactics and have zero-premium plans with many supplemental benefits, and thus these plans can look like a good deal to individuals. A few commenters stated that dually eligible individuals are often the least informed about their health insurance and that MA organizations exploit these individuals with D-SNP look-alikes when they would qualify for a D-SNP, which provides more comprehensive coverage. In advocating its support for the CMS proposal, another commenter indicated it had assisted dually eligible individuals who were targeted by D-SNP look-alikes, many of whom experienced complications related to Medicaid payment and crossover billing issues. A commenter advocated that third-party marketing agencies should be banned from marketing to dually eligible individuals and State Medicaid programs should prohibit using the enrollee list from different products for sales and outreach within the same company.
Other commenters shared CMS's concerns regarding the rapid growth of non-SNP MA plans with high levels of dually eligible individuals. Referencing their review of MA bid data for 2020, MACPAC noted that enrollment in non-SNP MA plans with more than 50 percent projected dually eligible enrollment grew by 23.4 percent from 2019 to 2020, but enrollment in D-SNPs grew by 13.9 percent over the same period. MACPAC expressed concern that enrollment growth in D-SNP look-alikes exceeded that of D-SNPs because many States rely on D-SNPs aligned with Medicaid managed care plans to integrate care for dually eligible individuals. Another commenter suggested that CMS's proposal is an essential step toward directly addressing concerns over the substantial growth in non-SNP MA plans with disproportionately high enrollment of dually eligible individuals. Another commenter indicated MA plans have continued to target dually eligible individuals by retaining enrollment just below 80 percent dually eligible enrollment.
A commenter indicated that CMS's phased approach would provide plans a
A number of commenters suggested lowering the D-SNP look-alike threshold to 50 percent. A few commenters emphasized that a 50-percent threshold would be a more effective threshold for deterring MA plans from soliciting dually eligible individuals into non-SNP MA plans and ensure plans are not designed to target dually eligible individuals and circumvent statutory requirements for D-SNPs. Another commenter recommended the D-SNP look-alike threshold be lowered in subsequent years to 50 percent, with further reductions considered as the plan landscape and D-SNP integration continue to shift. Another commenter opined that any plan where more than 50 percent of the enrollment is comprised of people who are dually eligible should be subject to the same additional requirements and oversight as D-SNPs to protect enrollees. In referencing a recent study,
Several commenters suggested lowering the threshold to 40 percent. A commenter suggested that CMS lower the D-SNP look-alike threshold to 50 percent in plan year 2025 and 40 percent in plan year 2026 and subsequent years, noting that the lower thresholds would make it more difficult for an MA organization to create a PBP that could undermine Medicare-Medicaid integration. A commenter recommended that CMS reduce the D-SNP look-alike threshold to 40 percent by 2026, emphasizing that the establishment of D-SNP look-alikes does not appear to be unintentional because these plans are often in areas where their ratios of enrollees do not mirror the general population ratio and many of D-SNP look-alike enrollees were previously enrolled in integrated D-SNPs. The commenter further supported a reduction to 40 percent since D-SNP look-alike growth has continued despite CMS' previous efforts to curtail the growth in D-SNP look-alikes, and these plans seem to just come under the threshold CMS sets. Another commenter requested that CMS consider lowering the threshold to 40 percent by 2030.
A few other commenters recommended that CMS consider D-SNP look-alike thresholds below 70 percent in plan year 2025 and 60 percent in plan year 2026 and subsequent years but did not specify a percentage.
A commenter specifically noted that it did not support lowering the D-SNP look-alike threshold to 50 percent since plans at or near 50 percent dually eligible enrollment may reflect the distribution of eligibility in the service area which is outside of MA organization's control. The commenter emphasized that the plan may appeal to both dually and non-dually eligible individuals equally, indicating the plan is not intentionally designed to attract dually eligible enrollees while circumventing D-SNP requirements.
We agree that partial-benefit dually eligible individuals can benefit from enrollment in D-SNPs. As we stated in the June 2020 final rule (85 FR 33811 through 33812), partial-benefit dually eligible individuals benefit from the requirements that SNPs, including D-SNPs, have a MOC that addresses enrollees' needs and perform periodic HRAs precisely because these individuals have greater social, functional, and health needs than non-dually eligible Medicare beneficiaries. States, through their contracts with D-SNPs, can enhance these care coordination requirements, including for partial-benefit dually eligible individuals. Second, QMBs without full Medicaid benefits, who constitute roughly half of partial-benefit dually eligible individuals nationally, can benefit when D-SNPs, or the Medicaid managed care plans offered under the same parent company in which these individuals are enrolled, pay providers for Medicare cost sharing under a capitation agreement with the State. Such direct and seamless payment of cost sharing can result in an improved experience for providers serving these individuals, which itself may improve access to care for beneficiaries.
Of course, partial-benefit dually eligible individuals cannot benefit from these features of the D-SNP program if the State Medicaid agency contract with the D-SNP (that is, the SMAC) excludes these individuals from enrollment, and we recognize that some States using managed care as a platform for integration exclude partial-benefit dually eligible individuals from D-SNPs and other managed care plans. While some States are using the D-SNP platform for integration only to allow full-benefit dually eligible individuals to enroll in D-SNPs, others allow partial-benefit dually eligible individuals to enroll in separate D-SNP plan benefit packages.
Based on 2024 plan data, D-SNPs are widely available with 547 coordination-only D-SNP PBPs offered across 39 States,
As discussed in the November 2023 proposed rule (88 FR 78600), most of the non-SNP MA plans with dually eligible enrollment between 60 percent and 80 percent of total enrollment have a D-SNP within the same service area or nearly the same service area as the non-SNP MA plans, providing a potential opportunity for transitioning D-SNP look-alike enrollees. We reviewed a sample of the 70 non-SNP MA plans with dually eligible individuals representing 60 to 79.9 percent of total enrollment (based on January 2023 enrollment data). While some of these non-SNP MA plans have services areas composed of a majority of Counties with Extreme Access Considerations, rural, and or/micro counties, most of the enrollment in the
While coordination-only D-SNPs are widely available, we acknowledge they are not available in every market and there is potential that lowering the D-SNP look-alike threshold will result in some enrollees, including partial-benefit dually eligible individuals, not being able to transition into a D-SNP. Based on our experience with D-SNP look-alike transitions effective plan years 2023 and 2024 through MA organizations using the transition authority at § 422.514(e) or the crosswalk authority at § 422.530, in situations where the MA organization is not able to transition D-SNP look-alike enrollees into a D-SNP, the vast majority of enrollees transitioned to other MA-PDs under the same parent organization as the D-SNP look-alike.
Recognizing that some States choose not to contract with D-SNPs enrolling partial-benefit dually eligible individuals, a few commenters suggested that CMS not count partial-benefit dually eligible individuals toward the threshold in States that exclude partial-benefit dually eligible individuals from enrolling in D-SNPs. A commenter indicated that some States, like Massachusetts, limit D-SNP enrollment to full-benefit dually eligible enrollment, which restricts Medicare options to Traditional Medicare and regular MA plans. MA plans designed to support low-income Medicare beneficiaries by offering zero-dollar premiums and supplemental benefits that support functional and social needs risk meeting or exceeding the D-SNP look-alike threshold.
A commenter found CMS's proposal unclear regarding which enrollees—full-benefit dually eligible individuals, partial-benefit dually eligible individuals, and/or LIS eligible individuals—would count toward the D-SNP look-alike threshold under the proposed rule and recommended that only full-benefit dually eligible individuals be counted.
A commenter urged CMS to exclude partial-benefit dually eligible individuals who are not QMBs from the calculation of the D-SNP look-alike threshold since these beneficiaries do not qualify for full Medicaid benefits. The commenter believed that CMS's proposal, if applied strictly and rapidly, could stifle health plan efforts to create plans for the partial-benefit dually eligible individuals who are not QMBs.
Coordination-only D-SNPs are widely available with 547 such plans offered across 39 States in contract year 2024.
We recognize that some of the MA plans that could be affected by our proposal to lower the D-SNP look-alike threshold are offered in States that do not contract with D-SNPs that enroll partial-benefit dually eligible individuals. Such States include Arizona, California, Idaho, Massachusetts, Minnesota, and New Jersey. Based on January 2023 enrollment data, only ten of the 70 non-SNP MA plans with 60 to 79.9 percent dually eligible enrollment exist in States that only contract with D-SNPs that enroll full-benefit dually eligible individuals. These include five non-SNP MA plans in Arizona, three non-SNP MA plans in Massachusetts, and one non-SNP MA plan each in Idaho and Minnesota. These data indicate that partial-benefit dually eligible individuals are not congregating in non-SNP MA plans at high rates and do not suggest a need to remove partial-benefit dually eligible individuals from the D-SNP look-alike threshold calculation. We will monitor enrollment of partial-benefit dually eligible individuals, especially in service areas where they are not eligible for D-SNPs, to gauge whether enrollment of partial-benefit dually eligible individuals is causing non-SNP MA plans to cross the D-SNP look-alike threshold.
We acknowledge that the benefits provided under a D-SNP look-alike can be helpful to partial-benefit dually eligible individuals who do not have a D-SNP available to them. As articulated in the June 2020 final rule (85 FR 33805 through 33806), in contrast to non-SNP MA plans, D-SNPs and D-SNP look-alikes allocate a lower percentage of MA rebate dollars received under the bidding process at § 422.266 to reducing Medicare cost sharing and a higher percentage of rebate dollars to supplemental medical benefits such as dental, hearing, and vision services. However, because most dually eligible individuals are QMBs who are not required to pay Medicare cost sharing under sections 1848(g)(3) and 1866(a)(1)(A) of the Act, we believe they are not dissuaded from enrolling in these non-D-SNPs by the relatively higher cost sharing. A similar dynamic
As we outlined earlier in this section and in the November 2023 proposed rule, the rate of growth in non-SNP MA plans with 60 to 70 percent and 70 to 80 percent dually eligible individuals as a percent of total enrollment exceeded the rate of enrollment growth for all MA-PD plans over the same period of time. The increased growth in non-SNP MA plans with such levels of dually eligible individuals suggests to us that MA organizations are offering plans for dually eligible individuals but circumventing rules for D-SNPs, including requirements from the Bipartisan Budget Act of 2018, and detracting from Federal and State efforts to better integrate Medicare and Medicaid benefits. This growth in enrollment in these non-SNP plans is likely also drawing enrollment from integrated care D-SNPs and similar integrated programs.
Removing partial-benefit dually eligible individuals from the D-SNP look-alike threshold calculation would render our existing D-SNP look-alike policy less effective. For contract year 2023, only two of the 12 non-SNP MA plans that met the 80 percent threshold calculated based on all dually eligible individuals would have been identified as D-SNP look-alikes under the 80 percent threshold calculated with only full-benefit dually eligible individuals. For contract year 2022, 31 of the 47 non-SNP MA plans that met the 80 percent threshold calculated based on all dually eligible individuals would have been identified as D-SNP look-alikes under the 80 percent threshold calculated with only full-benefit dually eligible individuals. Of these 31 plans, 26 were in California, which has very few partial-benefit dually eligible individuals. Of the estimated 70 non-SNP MA plans with dually eligible enrollment of 60 percent to 79.9 percent that would be affected by our proposal, only 10 of those plans have full-benefit dually eligible individuals comprising 60 to 79.9 percent of their total enrollment. Changing the D-SNP look-alike threshold calculation to only include full-benefit dually eligible individuals would allow 60 of these non-SNP MA plans to continue, reducing the ability of CMS and States to meaningfully implement the BBA of 2018 requirements.
Consistent with our position articulated in the June 2020 final rule (85 FR 33811), our proposed regulatory language uses the terminology from section 1859(f) of the Act and in § 422.2 to define the population of special needs individuals that D-SNPs may exclusively enroll. This language includes both full- and partial-benefit dually eligible individuals. Exclusion of partial-benefit dually eligible individuals from the threshold would allow any MA organization to design a benefit package and target enrollment for an MA plan that exclusively enrolled partial-benefit dually eligible individuals. Section 1859 of the Act, however, only allows D-SNPs to exclusively enroll dually eligible individuals.
We appreciate the commenters' suggestions for CMS to encourage States to contract with D-SNPs that enroll partial-benefit dually eligible individuals. We reiterate that section 164(c)(4) of MIPPA does not in any way obligate States to contract with a D-SNP; therefore, CMS does not have the authority to mandate States to contract with D-SNPs, and States have significant control over the availability of D-SNPs in their State using the SMAC. Nonetheless, the number of partial-benefit-only D-SNPs is increasing, and we will provide technical assistance to States interested in developing SMACs for such plans.
Another commenter suggested that defining D-SNP look-alikes solely based on the percentage of dually eligible enrollees promotes continued evasion, even after lowering the D-SNP look-alike threshold to 60 percent. As an example, that commenter indicated that MA organizations could increase the number of PBPs within a contract while enrolling slightly lower percentages of dually eligible individuals in each. To address this concern, the commenter suggested that CMS consider: 1) the D-SNP look-alike threshold is met when dually eligible individual penetration rates exceed the designated threshold at either the contract number or at the PBP level; and 2) revise the definition of D-SNP look-alikes to be plans that exceed—or that exceed by a certain amount—the average dually eligible individual penetration rate across non-SNP MA plans in each State. The comment provides the example that as of September 2023, approximately 14 percent of Massachusetts non-SNP MA enrollment came from full-benefit dually eligible individuals. A threshold set at even twice this Statewide penetration rate would fall significantly below the 60-percent threshold CMS proposed for 2026. The commenter explained that since markets MA plan markets vary widely across the country, establishing a range based on Statewide averages for dually eligible individual penetration in non-SNP MA plans would more accurately identify outlier plans. The commenter suggested another alternative which would tie the D-SNP look-alike threshold to the percent of Medicare beneficiaries who are full-benefit dually eligible individuals in each State. The commenter noted that in Massachusetts, 25 percent of Medicare beneficiaries are full-benefit dually eligible individuals, and, of these, 15 percent of Massachusetts' full-benefit dually eligible individuals were enrolled in a non-SNP MA plan in September 2023.
As we stated earlier in this section, D-SNPs and D-SNP look-alikes allocate a lower percentage of MA rebate dollars received under the bidding process at § 422.266 to reducing Medicare cost sharing and a higher percentage of rebate dollars to supplemental medical benefits such as dental, hearing, and vision services. Because most dually eligible individuals are QMBs who are not required to pay Medicare cost sharing under sections 1848(g)(3) and 1866(a)(1)(A) of the Act, or other full-benefit dually eligible individuals who are protected under 42 CFR 422.504(g)(1)(iii) from paying any in-network cost sharing when the State is responsible for paying such amounts, we believe they are not dissuaded from enrolling in these non-D-SNPs by the relatively higher cost sharing. A similar dynamic exists for Part D premiums and high deductibles, both of which are covered by the Part D low-income subsidy that dually eligible individuals receive. We believe that such benefit designs are unattractive for Medicare beneficiaries who are not dually eligible individuals because they would need to cover these costs out-of-pocket. Thus, we do not believe that adding an additional criterion to the D-SNP look-alike definition of having a Part D basic premium set under the low-income premium subsidy amount as their only premium would be helpful or necessary in identifying D-SNP look-alikes.
While we appreciate the commenter's suggestion to revise the D-SNP look-alike threshold based on contract, PBP, and State dually eligible individual penetration rates, we believe it would be challenging for CMS to operationalize a D-SNP look-alike threshold that requires different dually eligible individual penetration rate across non-SNP MA plans in each State. As articulated earlier in this section, we believe a more complicated D-SNP look-alike threshold would require data analysis that could be less transparent and more challenging for MA organizations to replicate in making their business decisions about plan consolidations and bids.
We emphasize that nothing about the proposals would discourage States from contracting with D-SNPs that enroll partial-benefit dually eligible individuals. Section 164(c)(4) of MIPPA does not in any way obligate States to contract with a D-SNP; therefore, CMS does not have the authority to mandate States to contract with D-SNPs, and States have significant control over the availability of D-SNPs. Nonetheless, we will continue to provide technical assistance to States interested in establishing SMACs with D-SNPs that serve partial-benefit dually eligible individuals.
As we stated in the November 2023 proposed rule (88 FR 78580 through 78581) and earlier in this section, the rate of growth from 2017 to 2023 in the number of non-SNP MA plans below the 80-percent D-SNP look-alike threshold substantially exceeded the rate of enrollment growth for all MA-PD plans over the same period of time. The increased growth in non-SNP MA plans with dually eligible individuals between 50 and 80 percent of total enrollment suggests to us that MA organizations are offering plans for dually eligible individuals but circumventing rules for D-SNPs. As a result, we are finalizing, as proposed, a reduction in the D-SNP look-alike threshold at § 422.514(d) to 70 percent for plan year 2025 and 60 percent for plan year 2026 and subsequent years.
We clarify that the existing contracting limitations on D-SNP look-alikes at § 422.514(d) only apply in any State where there is a D-SNP or any other plan authorized by CMS to exclusively enroll individuals entitled to Medicaid, such as an MMP. This remains true despite the changes we are finalizing to the D-SNP look-alike threshold.
As we explained in the November 2023 proposed rule (88 FR 78583), while multiple options exist for MA organizations to transition D-SNP look-alike enrollees to other non-SNP MA plans, these pathways are not available for moving enrollees from D-SNP look-alikes to D-SNPs. We believe it is appropriate to limit the transition process in § 422.514(e) to D-SNPs since MA organizations do not have other options to transition D-SNP look-alike enrollees into D-SNPs and movement into D-SNPs encourages enrollment in integrated plans. We are also concerned that if D-SNP look-alikes continue to be allowed to transition enrollees into non-D-SNPs indefinitely under § 422.514(e), there is little incentive for MA organizations to avoid non-compliance with the D-SNP look-alike thresholds. Thus, for plan year 2027 and subsequent years, we are finalizing our proposal to add new paragraph § 422.514(e)(1)(v) to limit the existing D-SNP look-alike transition pathway to MA organizations with D-SNP look-alikes transitioning enrollees into D-SNPs.
Our proposal limits the transition pathway to D-SNP look-alike enrollees transitioning into D-SNPs in plan year 2027 and future years. Thus, MA organizations have time to execute SMACs for new D-SNPs in service areas where they anticipate their non-SNP MA plans may meet or exceed the revised D-SNP look-alike threshold at § 422.514(d). For D-SNP look-alike transitions in plan year 2027 and subsequent years, MA organizations could use the revised § 422.514(e) transition pathway to move eligible D-SNP look-alike enrollees into a D-SNP, and any remaining D-SNP look-alike enrollees would default into Traditional Medicare. Alternatively, MA organizations can continue to utilize CMS crosswalk and crosswalk exception processes at § 422.530 provided all requirements for a crosswalk or crosswalk exception are met. The provisions we are finalizing at § 422.514(d) and (e) do not change the existing crosswalk or crosswalk exception processes. We clarify that MA organizations cannot use the § 422.514(e) transition pathway concurrently with a crosswalk or crosswalk exception pathway at § 422.530.
Under the existing requirements at § 422.514(d)(2), we do not renew a contract with a D-SNP look-alike that meets or exceeds the 80-percent threshold. Thus, D-SNP look-alikes cannot retain any enrollment in the D-SNP look-alike. As we explained in the June 2020 and April 2023 final rules (85 FR 33812 and 88 FR 22130, respectively), where an MA plan is one of several offered under a single MA contract and the MA organization does not voluntarily non-renew the D-SNP look-alike, we will sever the D-SNP look-alike from the overall contract using our authority under § 422.503(e) to sever a specific MA plan from a contract and terminate the deemed contract for the D-SNP look-alike. This policy will remain in effect upon finalizing our proposals to reduce the D-SNP look-alike threshold to 60 percent over two years and limit the D-SNP look-alike transition process to D-SNPs starting in plan year 2027.
Under the existing provision at § 422.514(e), MA organizations can transition D-SNP look-alike enrollees into C-SNPs. The revisions we are
We clarify that none of the D-SNP look-alike transitions previously approved under § 422.514(e) were automatically approved or confer any automatic approvals by CMS for future transitions under § 422.514(e). CMS reviews all D-SNP look-alike transitions to ensure they meet the regulatory requirements.
Another commenter suggested that the ANOC language sent to dually eligible enrollees being transitioned into another MA plan should be plain and straightforward and include contact information for SHIPs.
Since November 2023, MA organizations have been aware of our proposal to lower the D-SNP look-alike threshold to 70 percent for plan year 2025 and 60 percent for plan year 2026 and subsequent years. We explained in the November 2023 proposed rule (88 FR 78581) that in operationalizing the proposed changes, we would use January 2024 enrollment data to identify non-SNP MA plans that exceed the proposed 70-percent threshold, for purposes of determining whether to renew contracts with these plans for plan year 2025. We articulated that we would use January 2025 enrollment data to identify non-SNP MA plans that exceed the proposed 60-percent threshold for purposes of determining whether to renew contracts with these plans for plan year 2026. Consistent with the existing rules, we will not apply the contracting limitation in § 422.514(d)(2) to any non-SNP MA plan that has been active for less than one year and has enrollment of 200 or fewer individuals. Thus, MA organizations have had time to start working with State Medicaid agencies on SMACs, and they have additional time to continue to work with State Medicaid agencies after this rule is finalized and before contract year 2025 SMACs are due in July 2024.
With respect to new plans, the current requirements at § 422.514(d)(2)(ii) already exempt any non-SNP MA plan that has been active for less than one year and has enrollment of 200 or fewer individuals at the time of such determination based on January enrollment. As stated earlier in this section, once this initial enrollment period has passed, we continue to believe the enrollment profile accurately reflects whether or not the plan was designed to attract enrollment of dually eligible individuals.
For these reasons, we are finalizing the reduction in the D-SNP look-alike threshold as proposed without delay in implementation.
We encourage stakeholders to contact 1-800-Medicare to report concerns about marketing behavior. We appreciate the suggestion that CMS share oversight responsibilities of the MA market with State regulators, but that issue is beyond the scope of this rulemaking.
As we described in the June 2020 final rule (85 FR 33817), the specifications for the Members Choosing to Leave the Plan Star Rating measure allow individuals transitioned because of a PBP termination to be excluded from the calculation of this Star Rating measure. The vast majority of D-SNP look-alike enrollees transitioned into another MA plan or plans, including a D-SNP, will be identified in MARx as disenrollment reason code 09, termination of a contract (CMS-initiated), or disenrollment reason code 72, disenrollment due to a plan-submitted rollover. Neither disenrollment reason code 72 nor 09 are counted toward the calculation of the Members Choosing to Leave the Plan Star Rating measure. As described in the Collection of Information section of this rulemaking, based on our experience with D-SNP look-alike transitions through plan year 2024, we estimate that 14 percent of transitioned D-SNP look-alike enrollees would make a Medicare choice other than the MA plan into which they are transitioned. MARx will identify these transitions as disenrollment code 13, disenrollment because of enrollment into another plan, and these transactions will be counted toward the calculation of the Members Choosing to Leave the Plan Star Rating measure. Since the measure specifications do not penalize a plan for
Per existing requirements at § 422.514(d)(2), we do not renew a contract for an MA plan that has
We currently obtain the January enrollment data through the February MMR, which reflects enrollment through early January. For example, we use the February 2024 MMR to reflect January 2024 enrollment in a non-SNP MA plan. We believe the MMR file accurately represents a plan's enrollment and includes necessary dually eligible status indicators. While we appreciate the suggestion to supplement the MMR data with real-time State data, we do not believe that the added benefit outweighs the operational complexity of obtaining such real-time data from States. We note that the MMR file is the data source that CMS currently uses to determine D-SNP look-alikes, but we may change the data source(s) as necessary to identify accurate and reliable information about January enrollment in plans. We will continue to assess the accuracy of the data we use to calculate the D-SNP look-alike threshold at § 422.514(d)(2)(ii), but we are not making any changes to the data or timing of these calculations in the final rule and are finalizing as proposed.
As discussed earlier in this section, we believe the exemption for an MA plan that has been active for less than one year and has enrollment of 200 or fewer individuals (based on January enrollment data of the current year) provides a new plan sufficient start-up time before being subject to the contracting limitation at § 422.514(d)(2). We decline to change the timing for determining D-SNP look-alike status based on actual enrollment because we believe clarifying D-SNP look-alike status and use of the transition process may affect the ways in which MA organizations structure their plan benefit packages; making such determinations later in the year would make it impractical to complete the determinations and ensure plans' requests to use the transition process meet the requirements of § 422.514(e) before bids are due on the first Monday in June.
Our reasons for not implementing the alternative are consistent with our reasons for not delaying implementation of our proposal. As we articulated earlier in this section, the D-SNP look-alike prohibition and contracting standard have been in place for several years at this point and MA organizations are familiar with it. We do not believe additional delay before implementing the lower threshold is necessary. We agree with the commenter about MA organizations having had time to apply for a D-SNP although—as discussed earlier in this section—we recognize that some States do not contract with D-SNPs that enroll partial-benefit dually eligible individuals. In our experience with implementation of the existing D-SNP look-alike prohibition and contracting standard, despite having additional time to establish D-SNPs MA organizations did not establish new D-SNPs as the replacements for existing D-SNP look-alikes. Since November 2023, MA organizations have been aware of our proposal to lower the D-SNP look-alike threshold to 70 percent for plan year 2025 and 60 percent for plan year 2026 and subsequent years. MA organizations have had time to start working with State Medicaid agencies on SMACs, and they have additional time to continue to work with State Medicaid agencies after this rule is finalized and before contract year 2025 SMACs are due in July 2024. We are not finalizing the alternative approach in this rulemaking.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing revisions to §§ 422.514(d)(1)(ii), 422.514(d)(2)(ii), and 422.514(e), as proposed.
MA organizations offer a range of health plan options including Medicare savings account (MSA) plans, private fee-for-service (PFFS) plans, preferred provider organizations (PPOs), health maintenance organizations (HMOs) and health maintenance organizations with point of services benefits (HMO/POS). (See § 422.4.) The most common health plan options are HMOs and PPOs. HMOs generally require enrollees to use network providers. PPOs have a network of providers but also pay for services delivered by providers not contracted with the MA organization as a network provider. PPOs can be attractive to Medicare beneficiaries who want a broader choice of providers than would be available through an HMO or who have a specific preferred provider, like a psychiatrist, who is not in network. MA organizations offer PPOs that are open to all Medicare beneficiaries as well as D-SNP PPOs that enroll only individuals dually eligible for Medicare and Medicaid.
We noted in the proposed rule that enrollment in D-SNP PPOs has increased in recent years, rising to approximately 925,000 enrollees as of May 2023, accounting for about 17 percent of total D-SNP enrollment. D-SNP PPO enrollment has increased by 38 percent from May 2022 to May 2023.
Like PPOs offered primarily to Medicare beneficiaries not entitled to Medicaid benefits, D-SNP PPOs generally have higher cost sharing for out-of-network services than for the same services obtained from network providers. For non-D-SNP PPOs, the higher out-of-network cost sharing is meant to incentivize use of in-network providers. In D-SNP PPOs, however, the large majority of enrollees are protected from being billed for covered Medicare services delivered by Medicare providers, including out-of-network providers. Instead, when these enrollees access services, either State Medicaid agencies pay the cost sharing or, if State payment of cost sharing is limited by a Medicaid rate for the service that is lower than the amount the D-SNP paid the provider, the provider must forego receipt of the cost sharing amounts.
Those cost sharing amounts for out-of-network services in D-SNP PPOs are often significantly higher than the cost sharing for the same services under original Medicare, including for physician services, Part B prescription drugs, DME, home health, dialysis, and stays in SNFs, acute and psychiatric inpatient hospitals.
This higher cost sharing for out-of-network services in D-SNP PPOs raises several concerns. First, when State Medicaid agencies pay the cost sharing for out-of-network services, these levels of cost sharing raise costs for State Medicaid programs.
Second, certain dually eligible enrollees, specifically full-benefit dually eligible enrollees who are not Qualified Medicare Beneficiaries (QMBs), are liable for cost sharing if they go out of network to providers not enrolled in Medicaid, as services from these providers are not covered by Medicaid unless the provider is enrolled in Medicaid.
Third, the higher out-of-network cost sharing disadvantages out-of-network safety net providers serving D-SNP PPO enrollees in States where limits established by Medicaid rates for the service result in no State payment of cost sharing.
In addition to the potential impact of this cost sharing structure on States, safety net providers, and dually eligible individuals, we believe such higher cost sharing for out-of-network services may result in situations that are inconsistent with the policy goals underlying section 1852(a)(2) of the Act. Section 1852(a)(2)(A) of the Act describes how MA organizations can satisfy the requirement to cover Traditional Medicare services (that is, Part A and B benefits, with limited exceptions) under section 1852(a)(1)(A) when covered services are furnished by non-contracted (that is, out-of-network) providers. This statute provides that the MA organization has satisfied its coverage obligation for out-of-network services if the plan provides payment in an amount “so that the sum of such payment and any cost sharing provided for under the plan is equal to at least the total dollar amount for payment for such items and services as would otherwise be authorized under parts A and B (including any balance billing permitted under such parts).”
For a non-D-SNP PPO, in which the majority of plan enrollees must pay plan cost sharing, the total dollar amount for a service paid at the Medicare rate will equal the total dollar amount under parts A and B, even if the cost sharing exceeds the cost sharing under Traditional Medicare.
For a D-SNP PPO, however, the vast majority of plan enrollees are not liable for cost sharing for out-of-network services, just as they are not liable for such cost sharing under Traditional Medicare.
This lesser net out-of-network provider payment in a D-SNP PPO undermines the balance of obligations and benefits among MA organizations and Medicare providers that the statute creates to regulate out-of-network payments and beneficiary access for the MA program. While section 1852(a)(2)(A) of the Act requires the total dollar amount to be at least as much as would be authorized under Traditional Medicare, Medicare providers are required by sections 1852(k)(1) and 1866(a)(1)(O) of the Act to accept such amounts as payment in full. When a D-SNP PPO imposes cost sharing greater than Traditional Medicare and that cost sharing is unpaid by the State and uncollectable from the beneficiary, the MA organization has, in effect, failed to fulfill the spirit of its side of this statutory scheme and the providers are in effect forced to accept less than they would receive under Traditional Medicare if they agree to treat the D-SNP PPO enrollee.
In a D-SNP PPO, therefore, we are concerned that the combination of these issues results in a situation frustrating the underlying intent of section 1852(a)(2)(A) of the Act because, for services furnished to many (if not all) enrollees in the D-SNP PPO, the out-of-network provider potentially receives a total payment that is less than the total payment available under Traditional Medicare. To address these concerns, we proposed new limits on out-of-network cost sharing under D-SNP PPOs. We have authority under section 1856(b)(1) of the Act to establish standards for MA organizations and MA plans to carry out the MA statute (that is, Part C of Title XVIII of the Act) in addition to authority, under section 1857(e)(1) of the Act, to adopt additional terms and conditions for MA contracts that are not inconsistent with the Part C statute and that are necessary and appropriate for the MA program. Further, CMS is not obligated to accept any and every bid from an MA organization and is authorized to negotiate MA bids under section 1854(a)(5)(C) and (a)(6)(B) of the Act. We proposed regulatory amendments that would establish minimum standards for D-SNP PPO plans that are consistent with and necessary and appropriate for the MA program to address our concerns.
We proposed at § 422.100(o)(1) that an MA organization offering a local PPO plan or regional PPO plan that is a dual eligible special needs plan (that is, a D-SNP) cap out-of-network cost sharing for professional services at the cost sharing limits for such services established at § 422.100(f)(6) when such services are delivered in network starting in 2026. The term “professional services” as used here means the same thing as it does in existing § 422.100(f)(6)(iii) and includes but is not limited to primary care services, physician specialist services, partial hospitalization, and rehabilitation services. Under this proposal, a D-SNP PPO with a catastrophic limit set at the mandatory MOOP limit in 2026 and subsequent years must have cost sharing for a visit with an out-of-network psychiatrist or other specialist (that is, cost sharing subject to paragraph (f)(6)(iii)) that is capped at 30 percent coinsurance. If the catastrophic limit is set at the intermediate MOOP limit in 2026 and subsequent years, the coinsurance cap would be set at 40 percent. If the catastrophic limit is set at the lower MOOP limit in 2026 and subsequent years, the coinsurance cap would be 50 percent. Under our proposal, the rules in § 422.100(f)(6) and (j)(1) about how we assess that copayments that are actuarially equivalent to coinsurance would apply to new § 422.100(o) as well.
Our proposal at § 422.100(o)(1) also would require that cost sharing for out-of-network acute and psychiatric inpatient services be limited by the cost sharing caps under § 422.100(f)(6) that now apply only to in-network benefits. Using the same methodology to calculate comparable FFS cost sharing in § 422.100(f)(6)(iv), the cost sharing limit for a D-SNP PPO with a catastrophic limit set at the mandatory MOOP limit could not exceed 100 percent of estimated Medicare FFS cost sharing, including the projected Part A deductible and related Part B costs, for each length-of-stay scenario in an out-of-network inpatient or psychiatric hospital. For catastrophic limits equivalent to the intermediate and lower MOOP amounts, higher cost sharing for out-of-network cost sharing for inpatient and psychiatric stays could be charged as described at § 422.100(f)(6)(iv)(D)(
We also proposed at § 422.100(o)(2), by cross-referencing § 422.100(j)(1), that cost sharing for out-of-network services under D-SNP PPOs be limited to the existing cost sharing limits now applicable to specific in-network services for all MA plans. For a more detailed discussion of these proposed limitations, which apply to chemotherapy/radiation services, Part B drugs, renal dialysis, SNF care, home
For regional PPO D-SNPs, we proposed to exclude paragraph (j)(1)(i)(C)(
We believe our proposed uniform application of out-of-network cost sharing limits for all PPO D-SNPs is the appropriate way to address our concerns about section 1852(a)(2)(A), the shifting of costs to States, the reduction in net payments to safety net providers, and the potential for excessive cost sharing for those dually eligible individuals, who, while low income, do not benefit from cost sharing protections out-of-network.
To provide the industry time to adjust to and for CMS to operationalize these new requirements, we proposed to implement these new limits starting for the 2026 plan year.
Currently, D-SNP PPOs already submit out-of-network benefits for a limited review to ensure that cost sharing does not exceed 50 percent of the costs (as required by § 422.100(f)(6)(i)) and in-network benefits for a review to ensure compliance with the cost sharing limits we propose to apply to out-of-network cost sharing. In the proposed rule (88 FR 78586), we stated that we do not believe this rule creates substantial information collection requirements. We received no comments on our burden estimates. In this final rule, we are finalizing, as proposed, that this rule does not create substantial information collection requirements.
In the proposed rule at 88 FR 78586, we discussed our burden estimate for this proposal, stating that we did not expect any new burden to be associated with these requirements. We did not receive any comments on burden estimates for this proposal and are finalizing the proposed burden estimates without change.
We received the following comments on this proposal and respond to them below:
Mathematically, under our final rule, the plan sponsor could increase the in-network cost sharing while decreasing the out-of-network cost sharing and still meet the actuarial equivalence requirements. However, there is a business disincentive associated with this action. If the in-network cost sharing were to increase, this could lead to lower payments for their network providers and future difficulties establishing networks. Therefore, we do not expect our proposed regulation limiting out-of-network cost sharing for D-SNP PPOs to increase in-network cost sharing.
In addition, section 1852(a)(1)(B)(ii) of the Act provides that in applying the requirement that MA plans cover Traditional Medicare benefits with
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing our proposed amendment at § 422.100(o)(1) that, starting in 2026, for an MA organization offering a local PPO plan or regional PPO plan, cost sharing for out-of-network services under D-SNP PPOs will be limited to the existing cost sharing limits now applicable to specific in-network services for all MA plans, as described in § 422.100(f)(6). We are also finalizing, with minor technical edits, our proposed amendment at § 422.100(o)(2) to limit out-of-network cost sharing to the cost sharing limits for such services established at § 422.100(j)(1) when such services are delivered in network by cross-referencing § 422.100(j)(1).
We also note that some of the public comments received for the provisions related to the integration of Medicare and Medicaid were outside of the scope of the proposed rule. These comments covered topics such as: opportunities for States to share in savings from integrated care and aligned enrollment; modernizing identification cards for dually eligible enrollees; impact of Medicare and Medicaid policies on rural areas; long term care pharmacy services for dually eligible enrollees eligible for institutional care; default enrollment; and private equity. We appreciate the input. However, as these comments are outside the scope of this rulemaking, they are not addressed in this final rule.
Sections 1894(e)(4) and 1934(e)(4) of the Act establish CMS's authority to oversee the PACE program. To strengthen CMS's oversight of the PACE program, we proposed to amend the PACE regulation at § 460.18 (CMS evaluation of applications) to incorporate an evaluation of past performance into the review of applications submitted by PACE organizations that seek to offer a PACE program or expand an approved program by adding a geographic service area and/or PACE center site or sites. Our evaluation of past performance will be a criterion CMS will use to review a PACE organization's application. The addition of this evaluation criterion at § 460.18(c) will permit CMS to deny applications from PACE organizations based on the organization's past performance. We also proposed to establish at § 460.18(d) that CMS may deny a PACE application if the PACE organization's agreement was terminated by CMS or not renewed during the 38 months preceding the date the application was first submitted to CMS.
The performance history of an organization is an important criterion for CMS to consider when evaluating a PACE application because the past performance of an organization may be a valuable predictor of an organization's ability to effectively operate a new PACE program or expand an existing program. Organizations that have performed well are more likely to continue their high performance while organizations that have not performed well may have even greater difficulty meeting regulatory requirements when operating a new or expanded PACE program in addition to their existing PACE program. CMS believes that adding the consideration of an organization's past performance will guard against poor-performing organizations expanding their footprint and putting the health and safety of future PACE participants they enroll at risk. It is important for CMS to ensure that the legal entities with whom we hold program agreements can safely, effectively, and appropriately provide health care services and benefits to PACE participants, who are frail and elderly and among the most vulnerable Medicare beneficiaries.
In the Medicare Advantage (MA) and Part D programs, CMS considers an organization's past performance during the evaluation of its application. We modeled the proposed PACE past performance review regulations after the MA and Part D past performance review regulations at 42 CFR parts 422 and 423, using applicable evaluation criteria. We believe modeling the PACE past performance review criteria after the criteria that appear in the MA and Part D regulations is appropriate given that consideration of past performance has been a long-standing part of application reviews under the MA and Part D programs, resulting in the denial of initial and expansion applications of poorly performing organizations. As with its reviews of MA and Part D applications, CMS seeks through its review of PACE applications to identify poorly performing organizations and to prevent such organizations from entering into new agreements or expanding their service area in the program.
As explained in the proposed rule, we believe modeling past performance
In the January 2021 final rule (86 FR 5864), we established in regulation the methodology and criteria used to decide to deny an MA or Part D application based on prior contract performance (§§ 422.502(b) and 423.503(b)). We noted in the final rule that we may deny applications based on past contract performance in those instances where the level of previous noncompliance is such that granting additional MA or Part D business opportunities to the responsible organization would pose a high risk to the success and stability of the MA and Part D programs and their enrollees (86 FR 5999). In the January 2021 final rule and through subsequent rulemaking, we adopted the following factors as the basis for denying an MA or Part D application: (A) the organization was subject to an intermediate sanction; (B) the organization failed to maintain a fiscally sound operation; (C) the organization filed for bankruptcy or is under bankruptcy proceedings; (D) the organization had low Star Ratings for two or more consecutive years; or (E) the organization exceeded CMS's threshold for compliance actions (
In the December 2022 proposed rule, we proposed to apply a past performance methodology to entities that seek to offer a new PACE program or expand an existing program. We proposed to modify the PACE regulations at 42 CFR part 460 to permit CMS to consider an entity's past performance in determining whether to approve or deny a new application or an application to expand a current program. Our proposed methodology for taking into account past performance when evaluating PACE applications is similar to the methodology we use when deciding whether to deny MA and Part D applications based on past performance. As with our MA and Part D past performance reviews, the purpose of the proposed PACE past performance reviews is to prevent organizations from expanding their PACE operations in circumstances where the organization's past conduct indicates that allowing the organization to expand would pose a high risk to the success and stability of PACE and the welfare of PACE participants. Like MA organizations and Part D sponsors, PACE organizations that have been under sanction, failed to meet fiscal soundness requirements, or been issued compliance actions above a certain threshold have demonstrated that they have had significant failures in operating their program. Consistent with the past performance standards for MA and Part D and discussed in the December proposed rule beginning on page 79637, we proposed that CMS would have the authority to deny an initial or service area expansion (SAE) application based on the same factors (other than low Star Ratings) that serve as the basis for denying an MA or Part D application. We did not propose to include Star Ratings in the past performance reviews for PACE because we do not calculate these measures for PACE organizations.
We accept applications on designated quarterly submission dates from entities seeking to either establish a PACE program or expand an existing program. Like MA applications, and in accordance with § 460.18, CMS evaluates a PACE application based on information contained in the application itself, as well as information obtained by CMS (or the applicable State Administering Agency (SAA), which serves as the designated State agency for PACE), through on-site visits, or any other means. If an organization meets all application requirements, we approve the application.
We proposed to incorporate past performance reviews into the PACE application process to safeguard the program and ensure PACE participants are protected from the expansion of poorly performing organizations. The PACE program has seen significant growth in recent years, with increased numbers of both initial and expansion applications and steady increases in overall enrollment. This growth can be attributed in part to the statutory not-for-profit restriction no longer being applied beginning in May 2015, which allowed for-profit entities to operate PACE programs (see sections 1894(h) and 1934(h) of the Act).
From 2012 to 2013, Mathematica Policy Research, under contract with CMS, conducted a study to address the quality of and access to care for participants of for-profit PACE programs. Based on the 2012 Mathematica study and a prior study in 2008, HHS prepared and submitted the report to the Congress on May 19, 2015. Based on the findings in the report to Congress, we determined that under sections 1894(a)(3)(B) and 1934(a)(3)(B) of the Act, the requirement that a PACE program be a not-for profit entity would no longer apply after May 19, 2015 (the submission date of the report to Congress).
Prior to that change, only not-for-profit entities were eligible to offer PACE programs. At the end of calendar year 2016, a total of 121 approved PACE organizations were in operation, serving 37,584 predominantly dually eligible participants. In calendar year 2022, we received 35 initial applications and 29 expansion applications. As of August 2023, there were 154 PACE organizations serving 70,209 participants in 32 States and the District of Columbia.
PACE participants are some of the most vulnerable Medicare beneficiaries. To enroll in a PACE program, the SAA must determine that the beneficiary needs the level of care required under the State Medicaid plan for coverage of nursing facility services (§ 460.150(b)(2)). Beneficiaries who need this level of care are generally frail, may have multiple chronic conditions, and require extensive assistance with activities of daily living. The PACE organization is responsible for providing care that meets the needs of each participant across all care settings, 24 hours a day, every day of the year (§ 460.98(a)). Each PACE organization must have a center, which PACE participants can visit weekly or even daily, based on each participant's needs and preferences. The PACE center must provide primary care services, nursing services, social services, restorative therapies (including physical therapy and occupational therapy), personal care and supportive services, nutritional counseling, recreational therapy, and meals (§ 460.98(c)).
As discussed in the proposed rule given the recent and anticipated future growth in PACE and the vulnerable populations that PACE organizations serve, we believe that the past performance of a PACE organization should be reviewed as part of the application process. Past performance evaluations ensure CMS only approves
The PACE application review process is unique, and we finalized rules with that process in mind. Per the regulations at § 460.20(a) and (c), upon receipt of a complete PACE application, CMS must: (1) approve the application; (2) deny the application; or (3) issue a request for additional information (RAI) in the event there are deficiencies. CMS's deadline for these actions is within 90 days of submission of an initial application or for a service area expansion (SAE) application that includes both a proposed geographic expansion and a new center site, or within 45 days of submission of an SAE application that includes either a proposed geographic expansion or a new center site. If CMS issues an RAI, the applicant must respond to the RAI only when ready and able to submit a complete response that addresses all deficiencies cited in the RAI, which includes a complete State readiness review (SRR) report, as applicable. If CMS issues an RAI, the first review clock ends and the second and final review clock does not begin until the applicant submits a complete RAI response, which starts the second and final 45- or 90-day review clock, as applicable. As part of the application process, the applicable SAA must conduct an SRR at the applicant's proposed PACE center site (if applicable) to ensure that the PACE center meets the State's regulatory requirements. Applicants are required to submit documentation of the completed SRR report to CMS for applications that include a new PACE center site (
We proposed to specify at § 460.18(c)(1)(i) that CMS would evaluate the following components of an applicant organization's past performance, starting with the March 2025 quarterly application submission cycle: whether the organization was subject to an enrollment or payment sanction under § 460.42(a) or (b) for one or more of the violations specified in § 460.40, even if the reasons for the sanction have been corrected and the sanction has been lifted; whether the organization failed to maintain fiscal soundness; whether the organization has filed for or is under State bankruptcy proceedings; and whether the organization has exceeded CMS's proposed 13-point threshold for compliance actions with respect to the PACE program agreement. We proposed that, if any of those circumstances applies to the applicant organization, CMS may deny its initial or expansion application.
Specifically, we proposed at § 460.18(c)(1)(i)(A) to include the imposition of enrollment or payment sanctions under § 460.42 for one of the violations listed in § 460.40 as a reason for which we may deny a PACE application, as noted in the previous paragraph. Currently, § 460.42 authorizes CMS to impose a suspension of enrollment or payment if a PACE organization commits one or more of the violations listed in § 460.40. Violations in § 460.40 include the failure of the PACE organization to provide medically necessary services, discrimination in enrollment or disenrollment of individuals eligible to enroll in a PACE program based on health status or need for health services, and involuntary disenrollment of a PACE participant in violation of § 460.164. These violations are serious and egregious actions by the PACE organization. Organizations that have been sanctioned (enrollment or payment) based on their failure to comply with CMS's regulations have either admitted they failed to comply with PACE requirements or have appealed and a third party has upheld CMS's determination that the PACE organization failed to comply with requirements. Because of the egregiousness of the actions that led to the PACE organizations' sanctions, we do not believe these organizations should be permitted to enter into new agreements, add new PACE sites, or expand their service area until the PACE organization corrects the issues that resulted in the sanction and ensures that such issues are not likely to recur.
We proposed at § 460.18(c)(1)(i)(B) to include, as a basis for application denial, the failure to maintain a fiscally sound operation after the end of the trial period. For purposes of fiscal soundness, the trial period ends when CMS has reviewed independently audited annual financial statements covering three full 12-month financial reporting periods. The regulation at § 460.80(a) requires a PACE organization to have a fiscally sound operation. Under § 460.80(a)(1), a PACE organization must have a positive net worth as demonstrated by total assets greater than total unsubordinated liabilities. To monitor compliance with § 460.80(a)(1), we require PACE organizations to submit certified financial statements on a quarterly basis during the trial period, and annually thereafter, unless CMS or the SAA determines that the organization requires more frequent monitoring and oversight due to concerns about fiscal soundness, in which case the organization may be required to submit certified financial statements on a monthly or quarterly basis (or both) (§ 460.208). Fiscal soundness is a key factor in our evaluation of past performance because we have a responsibility to ensure the organizations that provide health care services to Medicare beneficiaries have sufficient funds to allow them to pay providers and otherwise maintain operations. The failure of an organization to have a positive net worth puts PACE participants in
We proposed to establish at § 460.18(c)(1)(i)(C) that CMS may deny the application of an organization that has filed for or is currently in State bankruptcy proceedings. Like an organization that lacks fiscal soundness, an organization that has filed for or currently is in State bankruptcy proceedings is at great risk of having insufficient funds to cover costs associated with administering a PACE program. In circumstances where an organization has filed for bankruptcy or is currently in State bankruptcy proceedings, the outcome often results in the closure of an organization's operations, putting beneficiaries at great risk. Examples of participants being at risk may include the inability to find adequate and timely care, lack of care coordination, loss of access to providers (especially primary care providers who are employed by the PACE organization), and loss of the social and emotional support the PACE organization provides to participants. Thus, permitting an organization to expand while under bankruptcy proceedings is not in the best interest of the PACE program, and as CMS is responsible for oversight of PACE, we believe it is appropriate for us to have the authority to deny an application from any organization that has filed for or is in State bankruptcy proceedings.
Finally, we proposed to establish at § 460.18(c)(1)(i)(D) that CMS may deny an initial application or an expansion application for a PACE organization that exceeds the proposed 13-point threshold with respect to CMS-issued compliance actions. We proposed to specify at new § 460.19(a) that CMS may take compliance actions as described at § 460.19(c) (discussed in this section of this rule) if CMS determines that a PACE organization has not complied with the terms of a current or prior PACE program agreement with CMS and an SAA. PACE organizations are required to adhere to requirements in sections 1894 and 1934 of the Act and at 42 CFR part 460. As proposed, § 460.19(a)(1) would provide that CMS may determine that a PACE organization is noncompliant with requirements if the PACE organization fails to meet set performance standards articulated in sections 1894 and 1934 of the Act, regulations at 42 CFR chapter IV, and guidance. In addition, we proposed to establish at § 460.19(a)(2) that if CMS has not previously articulated a measure for determining compliance, CMS may determine that a PACE organization is non-compliant if its performance in fulfilling requirements represents an outlier relative to the performance of other PACE organizations.
Currently, we issue three types of compliance actions: Notices of Non-Compliance (NONCs), Warning Letters (WLs), and Corrective Action Plans (CAPs).
First, we proposed to specify that NONCs may be issued for any failure to comply with the requirements of the PACE organization's current or previously terminated program agreement. We typically use a NONC to document small or isolated compliance problems. NONCs represent the lowest level of compliance action issued by CMS. We typically issue NONCs for the least egregious failures, such as a first-time offense, a failure that affects only a small number or percentage of participants, or issues that have no participant impact. An example of a failure that would lead to an NONC would be a failure to upload marketing materials or incorrectly uploading these materials.
Second, we proposed to specify that a WL may be issued for a serious failure or continued failure to comply with the requirements of the PACE organization's current or previously terminated prior program agreement. WLs are typically issued as an intermediate level of compliance action and when discussing compliance actions on a continuum, would be issued for compliance issues that fall in terms of the level of their egregiousness between a NONC and a CAP. WLs are issued when an organization has already received a NONC and the problem continues to persist without correction, or they may be issued after a first offense when the offense concerns a larger or more concerning problem, such as failure to provide medically necessary services. Unlike NONCs, WLs contain language informing the PACE organization of the potential consequences to the organization should the non-compliant performance continue. An example of when a WL might be issued would be when, for example, a PACE organization has failed to have the full interdisciplinary team (IDT) involved in the review of participant care plans, which may result in participants not receiving necessary care. We might determine that the PACE organization's non-compliance in this regard warrants a higher level of compliance, such as a WL in place of a lower level of compliance. Our determination to issue a WL instead of a NONC, in this case, might be based on a review of factors, such as the type of care that was not received and the consequence of the care, not being properly provided, due to the PACE organization's failure to ensure that the IDT was reviewing all care plans.
Third, we proposed to specify that the last type of compliance action, the CAP, is the most serious type of compliance action and may be issued for particularly egregious or continued non-compliance. We may determine that the PACE organization has repeated, not corrected, or has a new deficiency which substantially impacts participants. In these types of scenarios, we require the PACE organization to implement a CAP. The CAPs contemplated here are not the same as corrective actions issued under § 460.194(a)(2). CAPs issued under § 460.194(a)(2) require PACE organizations to take action to correct deficiencies identified by CMS or the SAA through reviews and audits of the PACE organization (§ 460.194(a)(2)). We have a formal audit process, which separately identifies non-compliance. We issue CAPs under § 460.194(a)(2) resulting from finding of our reviews or audits. CMS routinely requests these CAPs and responses are submitted to CMS by PACE organizations as they address deficiencies identified during CMS reviews or audits. We expect to continue to request CAPs as necessary under § 460.194(a)(2) in response to deficiencies identified through reviews
Consistent with the past performance methodology applicable to MA, we proposed to assign points to each type of compliance action taken by CMS against PACE organizations. We then proposed to apply a compliance action threshold to determine if the PACE organization that submitted the application exceeds the threshold and should be denied. The following points would be assigned: CAP—6 points, WL—3 points, NONC—1 point. We will then sum the total of the points accrued by the applicant organization, and if the total meets or exceeds 13 points during the 12-month review period, we may deny the organization's new or expansion application on the basis of past performance.
With the addition of compliance actions as a basis for the denial of applications, we proposed to specify at new § 460.19(b) the factors we currently use to determine whether to issue a compliance action and the level of compliance action that should be issued.
At § 460.19(b)(1) through (6), we proposed to codify in regulation the factors CMS currently uses when determining whether and at what level of a compliance action should be issued. As discussed in the paragraphs that follow, we consider the following factors: the nature of the conduct; the degree of culpability of the PACE organization; the actual or potential adverse effect on participants, which resulted or could have resulted from the conduct of the PACE organization; the history of prior offenses by the PACE organization or PACE organization's contractors or subcontractors; whether the non-compliance was self-reported; and other factors which relate to the impact of the underlying non-compliance or to the PACE organization's inadequate oversight of the operations that contributed to the non-compliance.
We proposed to add § 460.19(b)(1) to establish that CMS considers the nature of the PACE organization's non-compliant conduct. The nature of the conduct is relevant to our determination of whether to issue a compliance action and the level of compliance action to take because failure to comply can range from an administrative issue to failure to provide necessary health care. Compliance issues that are less egregious in nature generally result in lower-level compliance actions.
We proposed to specify at § 460.19(b)(2) that CMS considers the degree of culpability of the PACE organization. This factor is relevant because the PACE organization's failure may have been avoided if the PACE organization had performed differently. For example, if the PACE organization failed to properly train or failed to hire properly trained staff to assist participants in activities of daily living, such as bathing, and a participant fell and injured themself in the shower, the PACE organization would be more culpable than if staff were properly trained and the participant still injured themself. The PACE organization has a responsibility to do everything possible to ensure the safety of the participants, and its failure, either intentional or unintentional (for example, lack of training, lack of oversight, lack of staff) would be a factor in our decision about the type of compliance action to take.
As proposed, § 460.19(b)(3) would provide that CMS considers the effects or potential effect of a PACE organization's conduct on PACE participants. This factor is relevant because a PACE organization's failure to comply may have very different effects (or potential effects) on PACE participants and may affect varying numbers of participants. For example, an organization's failure to timely arrange for primary care could affect many or all of the participants enrolled with that organization. However, an organization's failure to timely arrange for a very specific type of specialty care may affect only a few participants.
At § 460.19(b)(4), we proposed to specify that CMS considers the history of prior offenses of a PACE organization or its related entities. A PACE organization's (or its related entity's) failure to comply is relevant because the PACE organization should have ongoing processes in place to correct deficiencies as they occur and ensure that deficiencies are not likely to recur. As mentioned later in this section, organizations that have had recurrent compliance issues may be subject to a higher level of compliance action. For example, a PACE organization that failed to provide transportation for a period of time to participants one year ago may have received a NONC at that time. If the organization fails to correct this deficiency after first being cited with a NONC for the deficiency regarding the PACE organization's previous failure to provide transportation, we may escalate this continued failure to comply with CMS requirements by issuing a WL, based on the PACE organization's history and continued failure to correct the deficiency.
As proposed, § 460.19(b)(5) would provide that CMS considers whether an organization self-reported a compliance failure. A PACE organization that self-reports that the organization has found the deficiency, such as through an internal audit, generally indicates that the organization is actively engaged in identifying and correcting compliance issues, and likely has initiated the corrective action to address the deficiency prior to CMS being made aware of the matter. We do not consider issues to be self-reported if they are identified through specific requests made by CMS, the review of data CMS either has or has requested, complaints that have come into CMS through sources such as 1-800-Medicare, or complaints that CMS has asked the PACE organization to provide. If an organization has self-reported a compliance issue, we may decide to lower the level of non-compliance (for example, issuing a NONC instead of a WL) because of the organization's transparency with respect to the non-compliant behavior, since it is possible CMS would not have found the deficiency if not for the self-reporting. However, even if the organization did self-report the issue, CMS may decide against lowering the level of compliance action if, based on the factors identified previously, CMS determines that a higher-level compliance action is warranted.
Finally, we proposed to add § 460.19(b)(6) to provide that CMS considers the PACE organization's failure to adequately oversee its operations. For example, if an organization fails to properly pay claims, is aware of the issue, and fails to correct it (for example, by processing the claims accurately), or if the organization fails to do any monitoring or auditing of its own systems to ensure proper claims payment is occurring, CMS could take that into account in determining whether to issue a compliance action and, if so, the level of compliance action.
As previously mentioned, we proposed to establish at § 460.18(c)(1)(i)(D) that CMS would have authority to deny a new application or an expansion application if a PACE organization accumulates 13 or more compliance action points during the applicable proposed 12-month look-back period. This would be the equivalent of just over two CAPs. We believe an organization whose performance results in issuance of two CAPs and a NONC, or whose performance results in any combination of compliance actions that adds up to 13 points, should not be permitted to expand.
We proposed to specify at § 460.18(c)(1)(ii) that CMS could also
It would be especially important, when we review a new application from a legal entity that does not have activity that would constitute the past performance of that legal entity, as a PACE organization, to consider information from the current or prior PACE program agreement(s) of the parent organization of the applicant, and from members of the same parent organization as the applicant. As noted in the proposed rule, we are seeing initial PACE applications more frequently that represent unique and distinct legal entities that are part of a broader parent organization. In the December 2022 proposed rule at page 79642, we described an instance in which we reviewed an initial PACE application for a new legal entity under a parent organization that already had created a number of separate and unique legal sub-entities. In that case, in accordance with § 460.18(a) and (b), we considered the known adverse audit findings of other legal entities that were under the same parent organization, and which resulted in formal enrollment sanctions for the other legal entities. In the review of the new legal entity's application, we determined that the new legal entity was under the same “umbrella” as the legal entities that had been sanctioned because many of the key members of the executive leadership team were served in similar roles for both the sanctioned entities and the new applicant. We denied the application due to the nature of the deficiencies that led to formal sanctions for the related organizations.
We also proposed one exception to this policy. Specifically, we proposed that a PACE organization that acquires an organization that would have an application denied based on any of the factors in § 460.18(c)(i) would have a 24 month “grace” period that would extend only to the acquiring parent organization. This means that the acquiring organization would still be able to enter into new agreements or expand its programs under other agreements for which there are no performance issues for 24 months following the acquisition. It is in the best interest of the PACE program to allow PACE organizations that are meeting our requirements to acquire poorly performing PACE organizations without being penalized based solely on that acquisition. As stated in § 460.18(c)(ii), this “grace” period would be limited to 24 months from the date of acquisition. We believe this 24-month grace period would give an acquiring PACE organization sufficient time to “turn around” a poorly performing organization.
Finally, we proposed to add a new paragraph § 460.18(d) to provide CMS the explicit authority to consider prior termination history as part of the evaluation of an initial PACE or expansion application. Specifically, we proposed that if CMS has terminated a PACE organization's program agreement under § 460.50(a), or did not renew the program agreement, and that termination or non-renewal took effect within the 38 months prior to the submission of an application by the PACE organization, we would be able to deny the PACE organization's application based on the applicant's substantial failure to comply with the requirements of the PACE program, even if the applicant satisfies all other application requirements. The 38-month period is consistent with the Part D regulations at 42 CFR part 423. Because PACE organizations that offer Part D are subject to 42 CFR part 423, we believe a 38-month period is appropriate. This ensures PACE applicants are not unduly burdened by having two different sets of past performance requirements, resulting in two different timeframes. CMS does not unilaterally terminate PACE organizations' program agreements without significant failures, which are often failures affecting the furnishing or quality of care provided to PACE participants. Furthermore, a PACE organization whose program agreement has been terminated may appeal. If the PACE organization chooses to appeal and the termination is subsequently upheld through the appeals process, the organization has been found to have committed an action or actions that are egregious enough to warrant a termination. If the organization does not appeal, then the organization is acknowledging our ability to terminate its PACE program agreement. Allowing organizations to re-enter the PACE program when they have failed to adequately implement a prior agreement would be contrary to ensuring that high-quality care is provided to PACE participants. However, we believe that an organization, after a 38-month period, may have improved its operations sufficiently for us to consider its submission of an initial application.
We solicited comments on these proposals. We appreciate stakeholders' input on the proposed changes and have provided comment summaries and our responses later in this section.
With respect to the commenter's contention that we should delay the implementation to avoid issues that may have resulted from the COVID-19 Public Health Emergency, we disagree. The federal COVID-19 Public Health Emergency declaration ended May 11, 2023, and sufficient time has passed allowing PACE organizations an
Finally, the commenter suggested waiting so PACE organizations had time to train and educate their employees regarding past performance criteria. CMS's past performance measures do not require training or educating employees. Any training or educating would concern adhering to CMS regulations, which employees should already be trained on and educated about. Past performance only looks back at the actions of the organization and does not require the organization to do anything differently.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the rule as proposed.
As mentioned previously, we are working towards consistency within programs and across programs where applicable. PACE organizations are already subject to Part D regulations. Establishing a 6-month look-back period for PACE would be inconsistent with the 12-month look-back period in the Part D regulations.
For these reasons, we are finalizing as proposed.
Based on these reasons we are finalizing these requirements as proposed.
Sections 1894(e)(8) and 1934(e)(8) of the Act established CMS's authority regarding PACE provider application requirements. Based on this authority, we proposed to strengthen the PACE regulations at §§ 460.12(a) and (b) and 460.20(b), which pertain to application requirements, by further defining what constitutes a complete and valid application.
CMS accepts PACE applications from entities seeking to establish a PACE program (initial applicants) or to expand an existing PACE program's service area (including both expansion of a PACE program's geographic service area and/or the addition of a new PACE center), on designated quarterly submission dates.
To receive funds under Part D to provide prescription drug benefits, PACE organizations must qualify as Part D sponsors under § 423.502(c)(1) by submitting an application in the form and manner required by CMS. Therefore, as a matter of necessity, initial PACE applicants that provide the Part D benefit to eligible beneficiaries must submit a separate Part D application. Effective March 31, 2017, CMS requires organizations to submit all applications electronically via the Health Plan Management System (HPMS). The PACE application includes attestations and certain required documents to ensure compliance with established PACE regulations, including, but not limited to: policies and procedures related to enrollment, disenrollment, grievances and appeals; information regarding the legal entity and organizational structure; and State-based documents, including a State assurance document. The State assurance document is a template that includes standard statements regarding the State's roles and responsibilities and includes the physical address of the proposed PACE center, geographic service area, or both, as applicable, depending on the type of application. This document must be signed by an official within the applicable State Administering Agency (SAA) and the designated agency for the PACE program in the State in which the program will be located. The document confirms the State's support for the PACE application. It is imperative that the applicant demonstrate the State's support of the application because the State is an equal party to the PACE program agreement, which, once approved and finalized, establishes the 3-way contract between CMS, the State, and the PACE organization.
Section 460.12 sets forth the application requirements for an organization that wishes to qualify as a PACE organization, and for an active PACE organization that seeks to expand its geographic service area and/or add a new PACE center site. Paragraph (a) of § 460.12 states that an individual authorized to act for an entity that seeks to become a PACE organization or a PACE organization that seeks to expand its approved service area and/or add a new center site must submit a complete application to CMS in the form and manner specified by CMS. Furthermore, § 460.12(b)(1) specifies that an entity's application to become a PACE organization must include an assurance from the SAA of the State in which the program is to be located indicating that the State considers the entity qualified to be a PACE organization and is willing to enter into a PACE program agreement with the entity. Similarly, an existing PACE organization's application to expand its service area and/or add a PACE center site must include an assurance from the SAA of the State in which the program is located, indicating that the State is willing to amend the signed PACE program agreement to
We indicated in the final rule titled “Medicare and Medicaid Programs; Programs of All-Inclusive Care for the Elderly (PACE)”, which appeared in the June 3, 2019 issue of the
Section 460.20(a) provides that within 90 days, or 45 days in the case of an application to expand a service area or add a PACE center, after an entity submits a complete application to CMS, CMS takes one of the following actions in the form and manner specified by CMS: (1) approves the application or (2) denies the application and notifies the entity in writing of the basis for the denial and the process for requesting reconsideration of the denial. An application is considered complete only when CMS receives all information necessary to determine whether to approve or deny the application (§ 460.20(b)).
As part of annual training sessions and resources available at:
The application is not considered complete and valid without the required documentation from the applicable SAA that provides clear evidence of the State's support. However, in our experience, some PACE organizations submit a State assurance document that is not signed by the State, is provided after the designated submission date, or has changed the location of the proposed PACE center or included the corporate address as a placeholder. Should any of these aforementioned scenarios occur, CMS will instruct the applicant to withdraw the application.
In the December 2022 issue of the
In the June 2019 final rule, we amended § 460.12(a) by adding the phrase “in the form and manner specified by CMS” to describe the submission to CMS of a complete application, to allow for submission of applications and supporting information in formats other than paper, which was the required format at the time the proposed rule (84 FR 25671) was issued. We proposed to amend § 460.12(a), which states that an individual authorized to act for an entity that seeks to become a PACE organization or a PACE organization that seeks to expand its approved service area (through a geographic service area expansion and/or addition of a new center site) must submit a complete application to CMS “in the form and manner specified by CMS” by adding a parenthetical with the words “including timeframes for submission” after “manner,” in order to make it clear that CMS will only accept applications that are submitted within the timeframes established by CMS.
In the December 2022 proposed rule, we proposed to establish at § 460.20(c) that any application that, upon submission, is determined to be incomplete under proposed § 460.12(b)(3) because it does not include a signed and dated State assurance document with accurate service area information and the physical address of the PACE center, as applicable, would be withdrawn by CMS, and the applicant would be notified accordingly. We proposed § 460.20(b)(1) to further specify that the applicant would not be entitled to a hearing if the application is withdrawn based on that determination. Without the necessary evidence of support for the application by the SAA, the application would not be valid, and therefore not subject to reconsideration. This is consistent with how CMS addresses MA or Part D applicants that submit substantially incomplete applications. Such applications are considered invalid applications and applicant organizations are not entitled to a hearing per § 422.660 or § 423.650.
Finally, we proposed to establish at § 460.12(a)(2) that an individual authorized to act for an entity that seeks to become a PACE organization (initial PACE applicant) is required to submit a separate Part D application that complies with the applicable requirements under 42 CFR part 423 Subpart K. This is consistent with our current practice, under which initial PACE applicants must submit a Part D application. By contrast, existing PACE organizations seeking to expand their service area are not required to submit a Part D application. Therefore, consistent with current practice, we did not propose to establish Part D application requirements for PACE organizations seeking to expand their existing service area. As stated in the proposed rule, we will continue our current practice of following the timeframes for PACE applications, including submission deadlines and review periods, for Part D applications associated with PACE applications—that is, we will continue to accept Part D applications from initial PACE applicants on a quarterly basis. We believe it is important to continue to align application and review and submission deadlines for PACE applicants to the extent practicable to promote consistency.
Consistent with current practice, we proposed to treat an initial PACE application that does not include responsive materials for one or more sections of its Part D application as substantially incomplete, and those applications would not be reviewed or subject to reconsideration. If the Part D application associated with an initial PACE application is deemed substantially incomplete, that would render the PACE application incomplete and therefore not subject to review or reconsideration.
After considering the comments we received and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing the proposed requirements at §§ 460.12 and 460.20 to determine that a substantially incomplete PACE application without a State assurance document is a nonapplication. These provisions will strengthen the PACE regulations which pertain to application requirements, by further defining what constitutes a complete and valid application.
Sections 1894(f)(4) and 1934(f)(4) of the Act grant CMS broad authority to issue regulations to ensure the health and safety of individuals enrolled in PACE. The PACE regulations at §§ 460.64 and 460.71 protect participants' health and safety by requiring PACE staff to be medically cleared of communicable diseases before engaging in direct participant contact.
In the 1999 PACE interim final rule (64 FR 66242), we added § 460.64, which sets forth certain personnel qualification requirements for PACE staff. When drafting these regulations, we reviewed the personnel requirements of other Medicare and Medicaid providers that serve populations similar to PACE participants (for example, home health agencies, nursing facilities, intermediate care facilities) (
In the 2002 interim final rule, titled “Medicare and Medicaid Programs; Programs of All-inclusive Care for the Elderly (PACE); Program Revisions,” which appeared in the
The proposed rule at 87 FR 79643 discussed how we have seen as part of our audit and oversight activities that PACE organizations have an inconsistent approach to medical clearance. We further discussed how the COVID-19 pandemic impacted the population served by PACE and “demonstrated a need for a more comprehensive approach to infectious disease management and prevention” (
We proposed several modifications to the requirement at § 460.64(a)(5). Currently, the language states that staff must “be medically cleared for communicable diseases and have all immunizations up-to-date before engaging in direct participant contact.” First, we proposed to separate the requirement to be medically cleared for communicable diseases from the requirement to have all immunizations up to date. We believe these are two separate and distinct requirements, and each serves a unique and important purpose. Specifically, we proposed to create a new paragraph (a)(6) that would specify that each member of the PACE organization's staff (employee or contractor) who has direct contact with participants must have all immunizations up to date before engaging in direct participant contact. We proposed to include in paragraph (a)(6) language specifying that, at a minimum, vaccinations identified in § 460.74 must be up to date. As we discussed in the proposed rule at 87 FR 79644, CMS does not currently define what immunizations are included in the requirement that “all immunizations are up to date.” We considered defining all immunizations as including those recommended by the Advisory Committee on Immunizations Practices (ACIP) for health care workers, including when they are applicable based on individual criteria such as age or past infection. However, based on the PACE population we also considered limiting the required vaccinations for PACE staff with direct participant contact to the Flu vaccine, Measles, Mumps and Rubella (MMR); Varicella; Tetanus, Diphtheria, Pertussis (Tdap); and Hepatitis B. We solicited comment on whether any specific vaccinations other than the COVID-19 vaccination should be required for each member of a PACE organization's staff (employee or contractor) that has direct participant contact, with particular focus on commenters' views on vaccinations recommended by ACIP. We also solicited comment on whether we should use the ACIP list without modifications, or whether we should only require this subset of vaccines: Flu vaccine, Measles, Mumps and Rubella (MMR); Varicella; Tetanus, Diphtheria, Pertussis (Tdap); and Hepatitis B.
At § 460.64(a)(5), we proposed to require that each member of a PACE organization's staff (employee or contractor) who has direct participant contact be medically cleared of communicable diseases both before engaging in direct participant contact and on an annual basis. Requiring staff to be medically cleared of communicable diseases annually will ensure that medical clearance is not a one-time requirement, but rather an ongoing responsibility. We solicited comment on adding this annual
We also proposed adding requirements to define what would constitute an acceptable medical clearance process. As discussed in the proposed rule at 87 FR 79644, we considered many different provider types, including hospital systems, and what different States require for medical clearance. We also considered the PACE population, and its vulnerability to communicable diseases. Based on these factors, we proposed at § 460.64(a)(5)(i) to require that staff who engage in direct participant contact must be medically cleared for communicable diseases based on a physical examination performed by a licensed physician, nurse practitioner, or physician assistant acting within the scope of the practitioner's authority to practice. This exam could be done at the PACE center by the primary care provider already employed by the PACE organization; therefore, it would not be difficult to operationalize. We also proposed at § 460.64(a)(5)(ii) that as part of the initial physical examination, staff with direct participant contact must be determined to be free of active Tuberculosis (TB) disease. It is important for organizations to screen for TB because it is a deadly disease and baseline testing is recommended by the CDC for all health care professionals. We proposed to add “initial” into this regulation text, because annual TB testing is not recommended by the CDC unless a risk assessment is performed which indicates it is necessary.
However, we also understand that not all individuals who have direct participant contact have the same level of risk of having communicable diseases (through previous exposures) and requiring a physical examination may be overly burdensome. Therefore, we proposed that, as an alternative to medically clearing all staff with direct participant contact for communicable diseases based on a physical examination, the PACE organization could opt to conduct an individual risk assessment as allowed under proposed § 460.64(a)(5)(iii). If the results of the risk assessment indicate the individual does not require a physical examination in order to be medically cleared, then a physical examination would not be required.
We proposed at § 460.64(a)(5)(iii) to establish the minimum requirements that the PACE organization must satisfy if it chooses to conduct a risk assessment for medical clearance. First, we proposed to specify at § 460.64(a)(5)(iii)(A) that the PACE organization must develop and implement policies and procedures for conducting a risk assessment on each individual with direct participant contact based on accepted professional standards of care, for example, standards of care for screening influenza. While each organization should have the operational latitude to develop its own policies and procedures, consistent with these proposed requirements, to assess if an individual needs a physical examination, when drafting and implementing these policies and procedures, organizations should consider any applicable professional standards of care and/or any applicable State guidelines on medical clearance.
We proposed at § 460.64(a)(5)(iii)(B) to specify that the purpose of the risk assessment is to determine if, based on the assessment, a physical examination is necessary for an individual. As we discussed in the proposed rule at 87 FR 79645, we believe that the best practice for medical clearance is a physical examination by a physician, nurse practitioner, or physician assistant acting within the scope of their authority to practice. However, by allowing PACE organizations to conduct a risk assessment to determine if some individuals on a PACE organization's staff who engage in direct participant contact (employee or contractor) may not need a full physical exam would provide some administrative flexibility for organizations. We proposed at § 460.64(a)(5)(iii)(C) to establish a requirement that the results of the risk assessment be reviewed by a registered nurse, physician, nurse practitioner or physician assistant. We initially considered limiting these professions to primary care providers. However, we believe that because this risk assessment is used to screen staff to determine whether a physical exam is needed but is not itself a physical exam meant to diagnose an individual, it would be appropriate for a registered nurse to review those results and help triage staff that may need a more thorough exam. However, because registered nurses are not permitted to diagnose individuals, it would be inappropriate for a registered nurse to perform the physical examination.
Finally, we proposed to identify at § 460.64(a)(5)(iii)(D) the minimum requirements we would expect to be included in a PACE organization's risk assessment. First, we proposed to require that any risk assessment developed by a PACE organization would assess whether staff have been exposed to or have symptoms of the following diseases: COVID-19, Diphtheria, Influenza, Measles, Meningitis, Meningococcal Disease, Mumps, Pertussis, Pneumococcal Disease, Rubella, Streptococcal Infection, and Varicella Zoster Virus. We proposed to include the aforementioned diseases in the risk assessment because they are commonly reportable and transmissible via air or through droplets. In addition to the aforementioned specific diseases, we also proposed to include any other infectious disease noted as a potential threat to public health by the CDC in order to allow for situations such as the recent COVID-19 pandemic where a new communicable disease creates a situation that poses a threat to public health and is significant enough that the CDC notes the threat or determines that a threat exists and communicates that threat via an official mechanism such as the CDC's Health Alert Network mentioned above. We would expect in those situations for a PACE organization to update its risk assessment to include that new public threat in the screening process. As we discussed in the proposed rule at 87 FR 79645, we considered CDC's Health Alert Network, the agency's primary method of sharing cleared information about urgent public health incidents with public information officers; Federal, State, territorial, Tribal, and local public health practitioners; clinicians; and public health laboratories. It is likely that any threat to public health related to communicable diseases would be shared through this mechanism, but we solicited comment on whether this would be an appropriate source to consider, or whether there are other sources that CMS and PACE organizations should use. Because we recognize these sources may change over time, we were not inclined to add a specific source into regulation, but we solicited comment on that as well. We also proposed to require that a PACE organization's initial risk assessment must determine whether staff are free of active TB disease. We considered adding TB into the list of diseases in § 460.64(a)(5)(iii)(D)(1); however, we believe screening for this disease through a series of questions about exposure or symptomatology would not be sufficient to rule out this condition when conducting an initial evaluation of an individual. Although we proposed an alternative to requiring a physical examination for every employee or contractor with direct participant contact (that is, by allowing PACE organizations to conduct a risk assessment), we solicited comment on whether we should eliminate the risk assessment from this proposal and
As we previously discussed, the requirement for medical clearance with respect to communicable diseases resides both in §§ 460.64(a)(5) and 460.71(b)(4). In section § 460.71(b)(4), we proposed to amend the current language to state that all employees and contracted staff furnishing care directly to participants must be medically cleared for communicable diseases before engaging in direct participant contact and on an annual basis as required under § 460.64(a)(5). We also proposed to add language to a newly designated § 460.71(b)(5) to require all employees and contracted staff to have all immunizations up-to-date before engaging in direct participant contact. Under our proposal, current paragraphs (b)(5) and (b)(6) would be redesignated as paragraphs (b)(6) and (b)(7). As we stated in the proposed rule, we believe that modifying this provision as proposed would not increase the burden on PACE organizations as they are already required to ensure employees and contractors have all immunizations up-to-date (87 FR 79646).
We received the following comments related to this proposal:
We thank commenters for their concerns regarding PACE organizations' ability to staff due to the COVID-19 vaccination rule as well as our solicitation for comment relating to requiring a specific set of immunizations in the proposed rule. As we stated in the LTC 2023 final rule, “[S]taffing shortages peaked nationally during the Omicron wave, with nearly one in three facilities reporting a shortage in January 2022. Staffing shortage rates have fallen since then, and remained relatively stable through March 2022, even after the implementation of the staff vaccination IFC” (88 FR 36495). Based on the data available, we disagree with commenters that implementing additional vaccination requirements would adversely impact PACE organizations' ability to staff. However, we understand the concerns expressed by commenters that requiring a specific list of vaccinations for PACE organizations would potentially hold PACE organizations to a different standard regarding vaccinations than other Medicare programs. While we are not finalizing a specific list of vaccination requirements, and instead will leave the language in § 460.64(a)(6) that “all immunizations must be up to date”, we will continue to assess the need for vaccinations. We will consider moving forward with a vaccination requirement in the future if the need arises. We also encourage PACE organizations to consider resources such as the ACIP vaccination standards when determining which immunizations to require for their employees and/or contractors.
We recognize the concern commenters expressed of additional medical screening requirements putting PACE organizations at a disadvantage in contract negotiations with medical providers and/or facilities, including home health agencies, and as we discussed in our earlier responses, we are not finalizing our proposed requirements for annual medical clearance or a specific list of required vaccinations. We believe our decision not to finalize the annual physical screening requirement or the specific vaccination list will alleviate contracting concerns; however, PACE organizations can also take into consideration the processes they already have in place to demonstrate compliance with individual State requirements when they develop the risk assessment tool. Therefore, we are finalizing the requirement for a physical examination of direct care personnel with the risk assessment as an alternative provided the risk assessment meets the minimum requirements set forth in the proposed rule.
After considering the comments, and for the reasons set forth in the proposed rule and our responses to comments, we are finalizing the proposed changes to §§ 460.64(a) and 460.71(b)(4) in part, with a modification to remove the requirement to conduct medical clearance on an annual basis. We are finalizing the proposed changes to §§ 460.64(a)(6) and 460.71(b)(5) in part, with a modification to remove the reference to § 460.74.
As discussed in the December 2022 proposed rule, sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act specify that the PACE program provides comprehensive health care services to PACE participants in accordance with the PACE program agreement and regulations under those sections. Sections 1894(b) and 1934(b) of the Act set forth the scope of benefits and beneficiary safeguards under PACE. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in part that PACE organizations must provide participants, at a minimum, all items and services covered under titles XVIII and XIX of the Act without any limitation or condition as to amount, duration, or scope, and all additional items and services specified in regulations, based upon those required under the PACE Protocol. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act also specify that, under a PACE program agreement, a PACE organization must furnish items and services to PACE participants directly or under contract with other entities. Additionally, sections 1894(b)(1)(B) and 1934(b)(1)(B) of the Act require that a PACE organization must provide participants access to all necessary covered items and services 24
As discussed in the December 2022 proposed rule (87 FR 79648), previous rulemaking has highlighted the challenges of determining specific timeframes for delivering the varied and broad scope of services PACE organizations must provide to participants, which is further complicated by the many possible scenarios that are part of the multifaceted care needs of PACE participants. As required at the current § 460.98(b)(4), services must be provided as expeditiously as the participant's health condition requires. Determining how quickly a service must be provided would depend on more than the physical health of the participant, and PACE organizations must consider all aspects of the participant's condition, including their social, emotional, and medical needs when determining the provision of services. Although we continue to believe that a specific timeframe for service delivery would not be feasible, and that ultimately, a service delivery timeframe based on the needs of the participant's condition remains the best timeframe for service delivery, our monitoring and oversight efforts have demonstrated the need for additional participant protections regarding timely service delivery. For example, based on data collected through audits, in the past 4 years, over 80 percent of audited PACE organizations have been cited for a failure to provide services in a way that is necessary to meet participant needs.
In response to audit findings, in the December 2022 proposed rule (87 FR 79648), we proposed to strengthen participant protections and accountability for PACE organizations by amending the service delivery requirements at § 460.98 to establish maximum timeframes for arranging and scheduling IDT-approved services for PACE participants, allowing for certain exceptions. First, we proposed to amend § 460.98 by redesignating current paragraphs (c), (d), and (e) as paragraphs (d), (e), and (f), respectively. Next, we proposed to add a new paragraph (c) with the heading “Timeframes for arranging and providing services” and add 4 new subparagraphs. In addition, we proposed to move the requirement in current paragraph § 460.98(b)(4) to new paragraph (c)(4). We also proposed to redesignate paragraph (b)(5) as (b)(4).
Our proposal at the new section § 460.98(c) included four subparagraphs related to the timeframes for arranging and providing services. A “service” as defined in § 460.6 means all services that could be required under § 460.92, including items and drugs. We proposed at new § 460.98(c)(1) to require PACE organizations to arrange and schedule the dispensing of medications as expeditiously as the participant's condition requires, but no later than 24 hours after the primary care provider orders the medication. We explained that we consider the use of the words “arrange and schedule” to mean that the PACE organization has notified the participant's pharmacy or pharmacy service of the approved medication order and has provided all necessary information that would enable the pharmacy to fill the medication order and provide the participant with timely access to the medication. We explained that this timeframe would not require the medication to be delivered to the participant within those 24 hours, unless the participant's condition required delivery within that timeframe.
Next, we proposed to establish at new § 460.98(c)(2) the requirement that PACE organizations arrange or schedule the delivery of IDT-approved services, other than medications, as identified in the proposed § 460.98(c)(2)(i), as expeditiously as the participant's health condition requires, but no later than 7 calendar days after the date the IDT or a member of the IDT first approves the service, except as identified in § 460.98(c)(3). This requirement pertains to all IDT-approved services other than medications. We would expect PACE organizations to take affirmative steps to make sure the approved service was set up, scheduled, or arranged within the proposed timeframe, which may include scheduling appointments and/or purchasing the item the IDT approved. As with the proposal at § 460.98(c)(1), we noted that the proposed maximum timeframe to arrange or schedule the delivery of IDT-approved services, as we proposed at § 460.98(c)(2), does not apply a specific timeframe to the provision of the service.
We solicited comment on alternative maximum timeframes for arranging or scheduling IDT-approved services, particularly timeframes within 5 to 10 (that is, 5, 6, 7, 8, 9, or 10) calendar days after the date the IDT or a member of the IDT first approves the service. Additionally, we invited comment on whether there are additional definitions of “arrange or schedule” that we should consider. We requested that such comments address how the alternative timeframes they recommended would ensure participant health and safety, especially if commenters advocate for a timeframe longer than 7 calendar days.
We proposed at § 460.98(c)(2)(i)(A) through (D) to define which services are included in the definition of IDT-approved services. We proposed to specify at § 460.98(c)(2)(i)(A) that IDT-approved services include services approved by the full IDT. These services would typically be the ones discussed and approved during IDT meetings. This would be any service other than a medication. We proposed to specify at § 460.98(c)(2)(i)(B) that IDT-approved services also include services approved by a member of the IDT. We believe this is important to emphasize to ensure that service determination requests that are immediately approved by a member of the IDT under § 460.121(e)(2) are subject to this new timeframe. We proposed at § 460.98(c)(2)(i)(C) that IDT-approved services include services ordered by a member of the IDT. We would consider an IDT member ordering a service as approving that service for purposes of proposed § 460.98(c)(2). We explained that, under our proposal at § 460.98(c)(2), the timeframe to arrange or schedule a service begins when the IDT or a member of the IDT first approves the service. Therefore, when any one of these approvals at § 460.98(c)(2)(i)(A) through (D) occurs, on that first instance, the timeframe would be initiated.
We proposed at new § 460.98(c)(3) to exclude routine or preventative services from the timeframe requirement in § 460.98(c)(2) when certain requirements are met. We understand that PACE organizations may not be able to schedule every service within 7 calendar days, especially when the service is a routine service and not needed until a much later time. To satisfy this exception, we proposed at § 460.98(c)(3)(i) through (iii) three requirements that would all need to be met in order for a PACE organization to be exempt from the timeframe in § 460.98(c)(2). First, we proposed at § 460.98(c)(3)(i) that the PACE organization must document that it was unable to schedule the appointment for the routine or preventative service due to circumstances beyond the control of
We proposed to redesignate § 460.98(b)(4) as § 460.98(c)(4) without further modification, except to add a new paragraph heading “Providing approved services”. Thus, new § 460.98(c)(4) would maintain the requirement that PACE organizations provide services as expeditiously as the participant's health condition requires, taking into account the participant's medical physical, emotional, and social needs. Under redesignated § 460.98(c)(4), PACE organizations would continue to make determinations on how quickly to provide a service on a case-by-case basis, and we would expect PACE organizations to demonstrate that services were provided as expeditiously as the participant's medical, physical, emotional, and social needs require during monitoring efforts by CMS.
We estimated a one-time burden for PACE organizations to update their policies and procedures to reflect the proposed timeframes for arranging and providing services. We discuss and account for the one-time burden for their policies and procedures to reflect these proposed timeframes for arranging and scheduling services in the Collection of Information Requirements section.
In the paragraphs that follow, we summarize the comments received on the proposal at § 460.98(b)(4) and (c) and respond to those comments.
In the December 2022 proposed rule (87 FR 79649), we described some examples of how a PACE organization might comply with the requirement at § 460.98(c)(2). If the IDT approved increasing a participant's physical therapy frequency from two to three times per week, we would expect the PACE organization to conduct outreach to the participant's physical therapist or the physical therapist's administrative support to set up a third weekly appointment within the timeframe at § 460.98(c)(2). If the IDT determines that the participant should see an ophthalmologist, the PACE organization would be required to reach out to the ophthalmologist office to schedule the appointment within the timeframe at § 460.98(c)(2). We would not expect the delivery of the service (in this example, the actual appointment) to occur within the proposed timeframe, only that the PACE organization scheduled the appointment within that timeframe. Following the ophthalmologist appointment, if the IDT determines that eyeglasses were necessary upon review of the provider's recommendation, the PACE organization would then be required to arrange for the provision of the eyeglasses within the timeframes proposed at § 460.98(c)(2), which may include a purchase order for eyeglasses. During an audit or review, we would expect the PACE organization to have documentation to support compliance with the requirements in § 460.98(c). For example, a note that the appointment was scheduled or documentation that eyeglasses were purchased.
We believe that these explanations sufficiently establish how PACE organizations would comply with the proposed requirements at § 460.98(c), and do not believe codifying documentation standards or “reasonable efforts” at § 460.98(c) would enhance the provision's effectiveness. As per the current requirement at § 460.98(b)(4) (which we proposed to redesignate to § 460.98(c)(4)), PACE organizations must already document, track, and monitor the provision of services across all care settings. Since arranging and scheduling services are components of service delivery, we expect PACE organizations to maintain documentation of efforts to arrange and schedule services.
After consideration of the comments we received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.98(c) to establish timeframes for arranging and providing services without modification.
Additionally, we are not persuaded to implement two distinct maximum timeframes for arranging and scheduling the dispensing of emergency and non-emergency medications. We understand that PACE organizations prioritize the delivery of emergency and non-emergency provider medication orders differently, because participants must receive services as expeditiously as their condition requires, taking into account their medical, physical, social and emotional condition in accordance with § 460.98(c)(4). However, we disagree with creating a distinction in regulation for arranging and scheduling the dispensing of emergency versus non-emergency medications, because we believe doing so would be difficult and impractical. For example, a medication that may be emergent to one participant may not be emergent to another, depending on factors that may not be apparent without information specific to the individual participant's medical, physical, social, and emotional condition. We think it is a fair and reasonable expectation that all medications be arranged and scheduled with the pharmacy within 24 hours. As previously explained, the timeframe requirement at § 460.98(c)(1) pertains to arranging and scheduling the dispensing of medications, which is related to, but distinct from, the service delivery requirement at § 460.98(c)(4). Therefore, although PACE organizations must arrange and schedule the dispensing of a medication no later than 24 hours after a primary care provider orders the medication, PACE organizations may deliver or provide the medication to the participant at a later time, as long as the medication is provided to the participant as expeditiously as their condition requires. We also believe this requirement is more easily accomplished than commenters seem to think. The timeframe to arrange or schedule a medication begins when an IDT member first approves or orders the service. Therefore, when a primary care provider orders a medication, they can submit the order to the pharmacy at the same time and satisfy this requirement. Based on many of the electronic medical records we have seen during oversight efforts, we think many systems are set up to ensure this happens seamlessly.
After consideration of the comments received and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.98(c)(1) to require PACE organizations to arrange and schedule the dispensing of medications as expeditiously as the participant's condition requires, but no later than 24 hours after a primary care provider orders the medication, without modification.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to
These commenters made their maximum timeframe recommendation for services at § 460.98(c)(2) in consideration of potential delays in communication with provider offices. While a commenter cited general delays in communication from provider offices as another potential consideration for extending the maximum timeframe at § 460.98(c)(2), another commenter suggested that more time may be needed to coordinate scheduling appointments with providers whose offices may be closed on weekends and holidays. A commenter preferred a 10-calendar day maximum timeframe, in part, due to the time needed to coordinate with both the provider and participant based on provider availability and in consideration of participant preference. Additionally, some commenters suggested that the participant might not need certain services arranged or scheduled within the proposed timeframe to meet their care needs. One commenter did not specify a particular alternative maximum timeframe to arrange or schedule the delivery of all IDT-approved services other than medications. Rather, the commenter expressed that establishing a 7-calendar day maximum timeframe for scheduling or arranging specialty items such as power mobility devices and stair lifts would be challenging for the PACE organization to meet.
A few commenters expressed concerns with arranging and scheduling services with external providers, particularly specialists. A commenter that expressed this concern, suggested that delays in scheduling or arranging specialty services may not be within the PACE organization's control, and that ensuring compliance with the proposed requirements would be administratively burdensome and would divert resources from participant services. Another commenter recommended an exception to the proposed maximum timeframe and suggested up to 30 days for the PACE organization to schedule appointments with specialist providers.
Lastly, a commenter expressed that PACE organizations are unique with each participant requiring a personalized array of services, and that a single timeframe for service delivery could not meet all their needs.
Since PACE organizations are required to provide services through employees or contractors (see § 460.70(a)), they should have mechanisms in place to ensure that they are able to quickly schedule or arrange services. As explained in the December 2022 proposed rule (87 FR 79649) and reiterated in this rule, to comply with the proposal at § 460.98(c)(2), PACE organizations must take affirmative steps to make sure the IDT-approved service was set up, scheduled, or arranged within the proposed timeframe, which may include scheduling appointments and/or purchasing the item the IDT approved. This requirement does not pertain to the provision of services, only to scheduling and arranging the service. However, PACE organizations must continue to provide services as expeditiously as the participant's condition requires in accordance with the current requirement at § 460.98(b)(4), which we proposed to be redesignated as § 460.98(c)(4).
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.98(c)(2) to require PACE organizations to arrange or schedule the delivery of IDT-approved services, other than medications, as identified in paragraph § 460.98(c)(2)(i), as expeditiously as the participant's health condition requires, but no later than 7 calendar days after the date the IDT or member of the IDT first approves the service without modification.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.98(c)(3) to exclude routine or preventive services from the requirements in § 460.98(c)(2) when requirements in § 460.98(c)(3)(i) through (iii) are met without modification.
Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act require PACE organizations to provide comprehensive health care services to PACE participants in accordance with the PACE program agreement and regulations under those sections. Sections 1894(b) and 1934(b) of the Act set forth the scope of benefits and beneficiary safeguards under PACE. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in part that PACE organizations must provide participants, at a minimum, all items and services covered under titles XVIII and XIX of the Act without any limitation or condition as to amount, duration, or scope, and all additional items and services specified in regulations, based upon those required under the PACE protocol. Sections 1894(b)(1)(A) and
As discussed in the December 2022 proposed rule, changes to § 460.102 are the result of years of assessing PACE organizations' compliance with care coordination requirements established by the Act and our conclusion that further specification of these care coordination requirements in regulation would benefit participants and improve PACE organizations' understanding of how to comply with these requirements. In the December 2022 proposed rule, we proposed strengthening § 460.102 to identify the IDT's specific care coordination responsibilities, introduced maximum timeframes for the IDT's review of all recommendations from hospitals, emergency departments, urgent care providers, other employees, and contractors, and reiterated the IDT's role in timely service delivery.
Although the PACE organization is ultimately responsible for providing comprehensive, multidisciplinary care that meets the needs of each participant across all care settings, 24 hours a day, every day of the year, the IDT has a critical role in enabling the PACE organization to meet these responsibilities. As established in the 1999 PACE interim final rule (64 FR 66248), the IDT, then referred to as the multidisciplinary team, must comprehensively assess and meet the individual needs of each participant. In addition, the IDT is responsible for the initial assessment, periodic reassessments, the plan of care, and coordinating 24-hour care delivery (64 FR 66249). Through monitoring and oversight activities, CMS has determined that further specification of IDT responsibilities is necessary to ensure appropriate compliance with the program requirements. While many IDTs appropriately apply the multidisciplinary approach to providing care, our monitoring efforts have shown that some organizations do not ensure the IDT is fully involved in coordination of care for participants across all care settings. We have also seen organizations interpret IDT responsibilities to coordinate care narrowly. For example, an IDT may order care, but then fail to ensure that the care has been provided in accordance with those orders and that the participant's needs were met.
In the December 2022 proposed rule we proposed several amendments to § 460.102(d)(1). First, we proposed to redesignate current paragraph (d)(1)(ii) as paragraph (d)(1)(iii), and to add a new paragraph (d)(1)(ii). We also proposed to add a new paragraph (d)(1)(iv). We proposed to modify § 460.102(d)(1) to specify that the IDT is responsible for all activities as described at § 460.102(d)(1)(i) through § 460.102(d)(1)(iv) for each participant. The addition of “for each participant” emphasizes that these responsibilities are not general requirements the IDT must fulfill, but rather specific responsibilities the IDT must fulfill for each participant. Since the inception of PACE, CMS has considered the IDT responsibilities to apply to all participants at the individual level. The 1999 PACE interim final rule (64 FR 66288) established basic requirements for the IDT at § 460.102(a), including that the IDT must comprehensively assess and meet the individual needs of each participant and that each participant be assigned an IDT at the PACE center that they attend.
We proposed to modify the requirement at § 460.102(d)(1)(i) to include only the IDT's responsibility for the initial assessment, periodic assessment, and plan of care and to relocate the requirement pertaining to the IDT's responsibility to coordinate 24-hour care delivery to new § 460.102(d)(ii). We believe the responsibility to coordinate 24-hour care delivery is a separate and distinct requirement from the requirements to conduct assessments and create or revise a plan of care. Additionally, we proposed to add a paragraph heading at § 460.102(d)(1)(i) to read “Assessments and plan of care” in order to reflect the proposed modified content of the paragraph. We proposed to move IDT coordination of care requirements from § 460.102(d)(1)(i) to new § 460.102(d)(1)(ii), because separating IDT coordination of care responsibilities at § 460.102(d)(1)(ii) from the assessment and care planning responsibilities at § 460.102(d)(1)(i) improves the provision's readability. We also proposed to modify the language of § 460.102(d)(1)(ii) and to add 5 paragraphs at § 460.102(d)(1)(ii)(A) through (E) to further specify what coordination of 24-hour care delivery involves by defining what actions we consider care coordination to include.
We proposed at new § 460.102(d)(1)(ii) to require that the IDT coordinate and implement 24-hour care delivery that meets participant needs across all care settings. We added language into this requirement about meeting the participant's needs across all care settings in order to clarify the scope of the IDT's care coordination for all participants, including, but not limited to, participants residing in long-term care facilities. We also added “implementation” into the requirement at § 460.102(d)(1)(ii) because we have seen through audits and monitoring efforts that PACE organizations are interpreting “coordination” narrowly, and they do not consider it to include all necessary components of care coordination, such as ensuring the implementation of care. For example, we have seen problems with medication orders being implemented inappropriately, wound care not being done in accordance with orders, and other necessary services not being provided to the participant.
We have received requests to explain the difference between the PACE organization's responsibility to furnish care, and the IDT's responsibility to coordinate care. As we discussed in the January 2021 final rule, PACE organizations are responsible for furnishing comprehensive services to PACE participants across all care settings, 24 hours a day, every day of the year (86 FR 6034, 86 FR 6036). The IDT, which consists of a subset of PACE organization's employees or contractors, is responsible for certain activities, such as coordinating care, which includes services that are furnished by the IDT as well as services furnished by other employees and contractors of the PACE organization. The proposed requirement at § 460.102(d)(1)(ii) for the IDT to coordinate and implement 24-hour care delivery that meets participant needs across all care settings aligns with this interpretation, as the IDT is not always responsible for directly furnishing or providing the care to participants, but it always maintains responsibility for coordinating care for participants.
As previously noted, we proposed adding 5 subparagraphs at
We proposed at § 460.102(d)(1)(ii)(B) to establish that the IDT is responsible for communicating all necessary care and relevant instructions for care. As discussed in connection with proposed § 460.102(d)(1)(ii)(A), the IDT is already responsible for authorizing all care the participant receives; however, in order for the participant to actually receive the care, the IDT must communicate the orders and relevant instructions to the appropriate individuals. For example, while a PCP may order a specialist consult, it is often scheduling or administrative staff that are responsible for arranging the appointment. As a part of coordinating care, the IDT must ensure that it communicates the necessary care and instructions to those individuals that need to know, for example, the individuals who will schedule, arrange, or provide the care and services. In the December 2022 proposed rule (87 FR 79652), we contemplated adding further specificity in regulation about who those individuals may be, but we believe that it would encompass too many individuals for us to identify. For example, for a participant residing in a nursing facility, the IDT would need to ensure it communicated orders and instructions for care to the facility staff. For scheduling appointments, the IDT may need to communicate orders to administrative staff. We believe the IDT would be in the best position to identify the staff that need to know the information, and therefore we are leaving this regulatory provision broad.
We proposed to specify at § 460.102(d)(1)(ii)(C) that the IDT is responsible for ensuring care is implemented as it was ordered, approved, or authorized by the IDT. We have seen through oversight and monitoring efforts that while the IDT will order or authorize care, the team does not always follow through on ensuring that the care is provided in accordance with those orders. For example, a PCP may order wound care 3 times a week, but then the IDT will not follow through on ensuring that the wound care is done in accordance with those orders. As previously discussed, the 1999 PACE interim final rule (64 FR 66279) established the IDT as instrumental in controlling the delivery, quality, and continuity of care. Part of controlling the delivery and quality of care is ensuring that the care that is ordered, approved or authorized is actually provided.
We proposed at § 460.102(d)(1)(ii)(D) to establish that the IDT is responsible for monitoring and evaluating the participant's condition to ensure that the care provided is effective and meets the participant's needs. The IDT cannot appropriately coordinate 24-hour care delivery without also ensuring that it remains alert to the participant's condition by monitoring and evaluating the participant's condition. While the IDT is responsible for making sure that care is implemented in accordance with the approved or authorized orders, the IDT also remains responsible for ensuring the participant's needs are met through that care. For example, if the PCP orders wound care 2 times a week but the wound continues to worsen, the PCP should consider whether a new order is necessary in order to meet the participant's needs.
We proposed to specify at § 460.102(d)(1)(ii)(E) that the IDT is responsible for promptly modifying care when the IDT determines the participant's needs are not met in order to provide safe, appropriate, and effective care to the participant. The IDT's responsibilities for a participant do not end when care is authorized or ordered. As we stated in the 2006 PACE final rule (71 FR 71289), it is important for the IDT to monitor and respond to any changes in a participant's condition. Also, it is essential that the IDT respond promptly and modify care when it is determined that the participant's needs are not currently being met. For example, if the PCP writes an order for blood pressure medication but then notes during a later assessment that the medication is not working, we would expect the PCP and the IDT to consider alternative medications or treatments that might better meet the participant's needs.
We proposed to redesignate current § 460.102(d)(1)(ii) as § 460.102(d)(1)(iii) and add the title “Documenting recommended services” for improved readability. No further modifications were proposed for this provision. Then, we proposed to add § 460.102(d)(1)(iv) to require the IDT to review, assess, and act on recommendations from emergency or urgent care providers following participant discharge, and employees and contractors, including medical specialists, within maximum timeframes, as proposed in at § 460.102(d)(1)(iv)(A) through (C). As discussed earlier, the IDT is responsible for authorizing, approving and ordering all care, including care recommended from contracted providers. Through monitoring and oversight activities, we had identified instances where the IDT is not promptly reviewing recommendations from urgent and emergency care providers, as well as employees and contractors. Based on data collected during the 2021 audits, approximately 75 percent of audited PACE organizations were cited based on a failure to review and act on recommendations from specialists in a manner necessary to meet the needs of the participant. Delayed review of recommendations and action on recommendations can delay the provision of necessary care and services and can jeopardize participant health and safety. To address these concerns, we proposed timeframes for the IDT to review and act on recommendations from urgent and emergency care providers, as well as employees and contractors.
As we stated in the January 2021 final rule (86 FR 6132), we do not believe we could implement a specific timeframe for the provision of services, given the vast array of services that PACE organizations provide and variation in individual participant needs. However, we believe requiring the IDT to promptly act on recommendations from urgent and emergency care providers, as well as employees and contractors, creates accountability for expeditious service delivery while offering flexibility for wide ranges of services and variation in urgency. The timeframes we proposed at § 460.102(d)(1)(iv)(A) through (C) would be maximum timeframes within which the IDT must review, assess and determine whether service recommendations from urgent and emergency care providers, as well as employees and contractors, are necessary to meet the participant's medical, physical, social, or emotional needs, and if so, promptly arrange and furnish the service in accordance with the timeframes at § 460.98(c).
Per § 460.98(b)(4) (which we proposed to redesignate as § 460.98(c)(4)), PACE organizations must continue to provide services as expeditiously as the
We proposed at § 460.102(d)(1)(iv)(A) to establish that the appropriate member(s) of the IDT must review all recommendations from hospitals, emergency departments, and urgent care providers and determine if the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs within 24 hours from the time of the participant's discharge. We considered multiple factors when proposing a 24-hour timeframe and expressed that we believed the 24-hour timeframe was necessary and reasonable due to the following considerations. First, the 24-hour timeframe would be limited to only those recommendations made by hospitals, emergency departments and urgent care providers, and it would not apply to recommendations made by other providers or more routine appointments. Second, we considered that PACE is responsible for the needs of the participant 24 hours a day, every day of the year. When a participant is discharged from one of these settings there may be recommendations made or care needed that cannot wait until the next business day. For example, a participant who is discharged from the hospital on a Saturday with a recommendation for antibiotics should not have to wait until Monday to have their prescription ordered or approved by the IDT. Third, we proposed to not require that the full IDT be involved in assessing and acting on these recommendations, but rather the appropriate member(s) of the team as determined by the IDT. We invited comment on alternative maximum timeframes for IDT review of all recommendations from hospitals, emergency departments, and urgent care providers and to make a determination on the recommendation's necessity. We requested commenters' perspectives on timeframes of 12 hours, 24 hours, 48 hours, and 72 hours from the time of the participant's discharge. We requested that such comments address how the commenter's preferred/recommended timeframe would ensure participant health and safety.
We proposed to require at § 460.102(d)(1)(iv)(B) that the appropriate member(s) of the IDT must review all recommendations from other employees and contractors and make a determination with respect to whether the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs as expeditiously as the participant's health condition requires, but no later than 5 calendar days from the date the recommendation was made. As discussed in the December 2022 proposed rule (87 FR 79653), we have seen through monitoring and audits where recommendations have not been considered or acted upon for significant periods of time, which has contributed to delays in the provision of necessary care. While we do not believe that all recommendations made by all types of employees and contractors need to be responded to as quickly as recommendations from hospitals, urgent care providers, or emergency departments, we do believe the IDT must act promptly to consider the recommendations made, and, when the IDT deems the recommended care necessary, it must authorize the recommended care. We explained that the proposed 5-day timeframe would represent the maximum amount of time a PACE organization would have to determine whether a recommended service is necessary, and that we would expect the IDT to consider the participant's condition in determining whether it is necessary to make a determination sooner than 5 calendar days after the recommendation is made.
Additionally, we proposed that the timeframe would begin when the recommendation is made, not when the recommendation is received by the IDT. We have seen through monitoring instances of PACE organizations not making initial requests for consult notes from a participant's appointment with a specialist until months after the appointment has taken place, and only learning at that time that a recommendation was made during the appointment. It is important that the PACE organization promptly act on recommendations, and it is our expectation that they develop processes with their employees and contractors to ensure the IDT is receiving recommendations in a manner that allows the IDT to determine the necessity of the recommended services within the proposed timeframe. We invited comment on alternative maximum timeframes for IDT review of all recommendations from other employees and contractors and to make a determination on the recommendation's necessity. We asked about commenters' perspectives on whether we should adopt a 3-calendar day timeframe, a 5-calendar day timeframe, a 7-calendar day timeframe, or a 10-calendar day timeframe. We requested that commenters address how the alternative timeframes would ensure participant health and safety.
In the December 2022 proposed rule (87 FR 79654), we emphasized that these recommendation review and necessity determination timeframes are maximum timeframes that the IDT and PACE organization should consider when reviewing recommendations. For some recommendations, such as an MRI to be done in 3 months, these timeframes would be sufficient to ensure that the service is approved and arranged before the service is needed. However, there are other recommendations made where it would not be appropriate for the IDT to take a full the full maximum timeframe to assess and act on a recommendation, and then arrange and schedule it. For example, if a cardiologist indicated that the participant needed an urgent coronary artery bypass graft, we would expect that the IDT and PACE organization act upon that information in a more expeditious manner.
Finally, we proposed to establish at § 460.102(d)(1)(iv)(C) that, if recommendations are authorized or approved by the IDT or a member of the IDT, the services must be promptly arranged and furnished in accordance with the timeframes at § 460.98(c).
As discussed in the December 2022 proposed rule, we are not scoring this provision in the Regulatory Impact Analysis section because the IDT is already required to comprehensively assess and meet the individual needs of each participant, including ensuring the participant's access to all necessary covered items and services 24 hours per day, every day of the year. We reiterate our belief that, by modifying this
We summarize the comments received on the proposal at § 460.102 and provide our responses to those comments in this section of this rule.
Another commenter noted different challenges with IDT involvement in daily care coordination at care facilities. These commenters remarked on the difficulty of ensuring daily communication between the IDT and the care facilities when care facilities experience operational issues, like staffing shortages, that may diminish their ability to promptly communicate with the IDT. The commenter asked CMS to provide guidance on how PACE organizations could strengthen care coordination with external healthcare facilities and suggested care coordination with the IDT be added into the contractual agreement between the PACE organization and care facility. This commenter also requested that CMS provide guidance on the types of documentation that would be needed to demonstrate that the IDT is meeting the care coordination requirements proposed at § 460.102(d)(1)(ii).
As for documentation that demonstrates IDT compliance with the care coordination requirements proposed at § 460.102(d)(1)(ii) when a participant resides in a care facility, CMS expects to see documentation of communications with the facility that demonstrate the IDT's active monitoring and management of the participant's condition. This may include documentation from the admission of the participant, which includes all approved or ordered services (including medication) and ongoing documentation addressing any changes to the participant's care.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.102(d)(1)(ii) to require coordination and implementation of 24-hour care delivery that meets participant needs across all care settings without modification.
After consideration of the comments and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.102(d)(1)(iv) to require the interdisciplinary team to review, assess, and act on recommendations from emergency or urgent care providers, employees, and contractors, including medical specialists without modification.
Additionally, as discussed in the December 2022 proposed rule (87 FR 79653), we reiterate that the IDT can determine the appropriate IDT disciplines for reviewing recommendations. We do not anticipate that the full IDT would need to be involved in all decisions relating to recommendations made by hospitals, emergency departments, or urgent care centers. More likely, 1 or 2 IDT members would be responsible for these recommendations, and we believe typically this would be the PCP. The PCP in PACE is typically the only individual that can order care given a state's scope of practice laws, and the PCP has the additional responsibility of ensuring they manage the participant's condition, including the use of specialists and inpatient care, as required per § 460.102(c)(2). The example we provided in the December 2022 proposed rule involved a post discharge recommendation for antibiotics. In this instance, the PCP may be the only IDT discipline needed in order to appropriately review, assess, and act on the medication request, since the PCP is responsible for ordering care and medications. We clarify that the IDT has flexibility to determine which IDT disciplines should review, assess, and act on employee and contractor recommendations as well, which may not involve the full IDT. However, we emphasize that PACE organizations are responsible for providing comprehensive, multidisciplinary care that meets the needs of each participant, and that the IDT should review recommendations with a multidisciplinary approach, as appropriate.
After consideration of the comments and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.102(d)(1)(iv) to require the interdisciplinary team to review, assess, and act on recommendations from emergency or urgent care providers, employees, and contractors, including medical specialists without modification.
Several commenters interpreted the proposed maximum timeframe at § 460.102(d)(1)(iv)(A) to require the full IDT to be on-call to review all recommendations from hospitals, emergency departments, and urgent care providers on weekends. They expressed that having the full IDT present to review recommendations on weekends would impose unreasonable cost increases on the PACE organization, reduce IDT availability for participant care, and impact staff retention. Another commenter expressed general concern for requiring the IDT to review these recommendations within the proposed timeframe when the participant's discharge occurs on weekends.
After consideration of the comments received, and for the reasons outlined in our response to comments, we are modifying and finalizing our proposal at 460.102(d)(1)(iv)(A) to require that the appropriate member(s) of the interdisciplinary team review all recommendations from hospitals, emergency departments, and urgent care providers and determine if the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs as expeditiously as the participant's health condition requires, but no later than 48 hours from the time of the participant's discharge.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.102(d)(1)(iv) to require the interdisciplinary team to review, assess, and act on recommendations from emergency or urgent care providers, employees, and contractors, including medical specialists without modification.
We continue to emphasize that the 7-calendar day timeframe is a maximum timeframe, and that the IDT must review all recommendations from other employees and contractors and determine if the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs as expeditiously as the participant's health condition requires, which may require action sooner than 7 calendar days. Although we recognize there may be logistical challenges involved with external provider communications, PACE organizations are responsible for providing care that meets the needs of each participant across all care settings, 24 hours a day, every day of the year, and we decline to implement a timeframe that may result in a lower standard of care on the basis of communication delays by the contracted providers, as we expect PACE organizations to initiate communication and follow-up with external providers to ensure participants receive any necessary follow-on care and services. We also understand that some specialists may not provide written consult notes immediately following an appointment, but nothing would prevent the IDT from calling the specialist and documenting recommendations prior to receiving the complete consultation documentation. Additionally, as discussed in the December 2022 proposed rule, we reiterate that the § 460.102(d)(1)(iv)(B) timeframe begins the date the recommendation was made (87 FR 79654), not the date that the PACE organization or IDT receives the recommendation. In order to ensure participants receive the care they need, in the timeframe they need it, it is important that the timeframe begins when the recommendation is made, and that the PACE organization puts processes into place to get information relating to the recommendations quickly from providers.
After consideration of the comments received, and for the reasons outlined in our response to comments, we are modifying and finalizing our proposal at § 460.102(d)(1)(iv)(B) to require the appropriate member(s) of the interdisciplinary team to review all recommendations from other employees and contractors and determine if the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs as expeditiously as the participant's health condition requires, but no later than 7 calendar days from the date the recommendation was made.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.102(d)(1)(iv)(C) to require that, if recommendations are authorized or approved by the interdisciplinary team or a member of the interdisciplinary team, the services must be promptly arranged and furnished under § 460.98(c) without modification.
Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act require that the PACE program provides comprehensive health care services to PACE participants in accordance with the PACE program agreement and regulations under those sections. Sections 1894(b) and 1934(b) of the Act set forth the scope of benefits and beneficiary safeguards under PACE. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in part that PACE organizations must provide participants, at a minimum, all items and services covered under titles XVIII and XIX of the Act without any limitation or condition as to amount, duration, or scope, and all additional items and services specified in regulations based upon those required under the PACE protocol. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act also specify that, under a PACE program agreement, a PACE organization must furnish items and services to PACE participants directly or under contract with other entities.
In the 1999 PACE interim final rule (64 FR 66251), CMS developed requirements for participant plans of care based on the requirements in Part IV, section B of the original PACE Protocol. Those requirements were finalized in the 2006 PACE final rule (71 FR 71292).
In 2010, in response to questions from PACE organizations, CMS issued a subregulatory document titled, “Care Planning Guidance for PACE Organizations.” This care planning document provided detailed guidance for developing, implementing, monitoring, reevaluating, and revising plans of care. While this document stressed that care plans should be comprehensive and include the participants medical, physical, social, and emotional needs, it also noted that not all care received by the participant would need to be included in the care plan, and instead, could be tracked and documented through discipline specific progress notes.
Since that time, CMS has seen through oversight and monitoring efforts that participant care plans are often sparse and may not fully detail the care received by a participant. We have noted that organizations are relying heavily on providing and documenting care through discipline-specific progress notes, rather than through incorporation into a more comprehensive and formal plan of care.
In the June 2019 final rule (84 FR 25675), CMS added additional requirements around the development
In addition to the modifications at § 460.104(b), in the June 2019 final rule, CMS also amended § 460.106 in order to provide additional clarity with respect to the development and content of the plan of care process (84 FR 25646). Among other changes, CMS added requirements for PACE organizations to utilize the most appropriate interventions for each care need that advance the participant toward a measurable goal and outcome (§ 460.106(b)(3)); identify each intervention and how it will be implemented (§ 460.106(b)(4)); and identify how each intervention will be evaluated to determine progress in reaching specified goals and desired outcomes (§ 460.106(b)(5)).
Despite the addition of these requirements in the June 2019 final rule, we continue to find that PACE organizations are struggling with developing, implementing, monitoring, reevaluating, and revising plans of care. As we discussed in the proposed rule, we have seen through our oversight and monitoring process that robust initial care plans become more sparse over time due to the omission of care originally included in the plan of care which is instead handled through discipline-specific progress notes as the participant's enrollment continues (87 FR 79655). In the proposed rule, we acknowledged that documenting detailed information about participant care and services in discipline-specific progress notes is necessary and an accepted standard practice, but argued that practice should not be done in lieu of a comprehensive plan of care that addresses the participant's needs because it results in individual IDT members providing care in an isolated and individualized approach (
Since the June 2019 final rule became effective, CMS has completed 40 PACE audits and we have identified a failure to provide services or delays in providing services in 37 of the 40 audits conducted. Although this noncompliance cannot be directly attributed to a failure to consolidate information into a comprehensive plan of care, our audit findings suggests that the coordination and delivery of necessary services is a challenge for PACE organizations.
Finally, we discussed in the proposed rule how we have also seen on audit that participant and caregiver involvement in the care planning process tends to be minimal and primarily occurs after the development and/or revisions to the plan of care have been finalized and implemented by the IDT (
As we discussed in the proposed rule, we believe it is prudent to implement additional requirements related to the minimum requirements for a participant's plan of care (
First, we proposed to modify the requirement in § 460.106(a) to require that the members of the IDT specified in § 460.102(b) must develop, evaluate, and if necessary, revise a person-centered plan of care for each participant. As we discussed in the proposed rule, this is consistent with the requirement at § 460.104(b) that states that within 30 days of the date of enrollment, the IDT must consolidate discipline-specific assessments into a single plan of care for each participant through team discussions and consensus of the entire IDT (87 FR 79656). Additionally, the IDT is required to reevaluate the plan of care on a semiannual basis at the current § 460.106(d); however, we proposed to remove that requirement as our proposal at § 460.106(a) would cover the role of the IDT in both the initial care plan development and also the subsequent reviews and reevaluations of the care plan. We also proposed to add language into § 460.106(a) that would require each plan of care to take into consideration the most current assessment findings and identify the services to be furnished to attain or maintain the participant's highest practicable level of well-being. The nursing home regulations require that care plans must describe “the services that are to be furnished to attain or maintain the resident's highest practicable physical, mental, and psych-social well-being” (§ 483.21(b)(1)(i)). This language should also apply to PACE care plans, since they serve the same nursing home eligible population.
Next, we proposed to add a new section, § 460.106(b), which would define the specific timeframes for developing, evaluating, and revising care plans. For initial care plans, we intend to maintain the requirement for the IDT to finalize the development of the initial plan of care within 30 calendar days of the participant's enrollment that is located at current § 460.106(a), but we propose to move this requirement to new section § 460.106(b)(1).
The regulation at § 460.106(d) currently requires the IDT to reevaluate the plan of care, including defined outcomes, and make changes as necessary on at least a semi-annual basis. The interpretation of the semiannual timeframe has posed issues for PACE organizations. We therefore proposed at § 460.106(b)(2) to require that the IDT must complete a reevaluation of, and if necessary, revisions to each participant's plan of care at least once every 180 calendar days. We believe that creating a strict timeframe of 180 days would be less ambiguous and easier for organizations to track.
We proposed at § 460.106(b)(3)(i) that the IDT must complete a reevaluation, and if necessary, revisions of the plan of care within 14 calendar days after the PACE organization determines, or should have determined, that there has been a change in the participant's health or psychosocial status or more expeditiously if the participant's condition requires. As we discussed in the proposed rule, the current requirement is that the IDT must conduct reassessments when a participant experiences a change in participant status and the IDT must also reevaluate the participant's plan of care (87 FR 79656). However, there is no timeframe for how quickly the IDT
We proposed to specify at § 460.106(b)(3)(i) that the 14-calendar day timeframe starts when the PACE organization determines, or should have determined, that a change in the participant's condition occurs. As we discussed in the proposed rule, if a participant experiences a change in status that triggers this reassessment and reevaluation of the care plan, the PACE organization should not be able to delay the timeframe by not recognizing the change in status for a period of time (87 FR 79657). We also proposed to define at § 460.106(b)(3)(i) what constitutes a change in status. As we discussed in the proposed rule, what constitutes a change in status has not been previously defined and we proposed to adopt in PACE the requirement applicable to nursing homes at § 483.20(b)(2)(ii), but with language tailored to be specific to PACE (
In conjunction with the proposed requirement that a PACE organization must reevaluate and, if necessary, revise the plan of care within 14 calendar days after a change in the participant's condition occurs, we proposed at § 460.106(b)(3)(ii) that if a participant is hospitalized within 14 calendar days of the change in participant status, the IDT must complete a reevaluation of, and if necessary, revisions to the plan of care as expeditiously as the participant's condition requires but no later than 14 calendar days after the date of discharge from the hospital. In the proposed rule, we recognized that when a participant is hospitalized, it is difficult for the IDT to assess the participant, and revise a plan of care, during the course of that hospitalization (87 FR 79657). We proposed that the timeframe for reevaluating the plan of care starts when the participant is discharged from the hospital. Despite this proposed exception, we reminded PACE organizations in the proposed rule that their responsibilities toward the participant do not end or stop when a participant is hospitalized, and the IDT should remain alert to pertinent information in all care settings under § 460.102(d)(2)(ii) (
We solicited comment on whether 14 calendar days is an appropriate timeframe to use or if 21 or 30 days would be more appropriate.
We proposed at § 460.106(c) to make certain modifications related to the content of a plan of care. As we discussed in the proposed rule, the current content of a plan of care is specified at § 460.106(b), which requires the care plan to include the care needed to meet the participant's medical, physical, emotional and social needs; identify measurable outcomes to be achieved; utilize the most appropriate interventions for each care need that advances the participant toward a measurable goal; identify each intervention and how it will be implemented; and identify how each intervention will be evaluated to determine progress (87 FR 79657). We discussed in the proposed rule that we have seen as part of our audit and oversight activities where treatments for participants' medical conditions are included in discipline-specific notes, but not in the comprehensive care plan which has caused members of the IDT to be unaware of the treatments and recommendations the participant has received from other members of the IDT or outside contracted specialists (
We proposed to limit what diseases must be included in the plan of care to
We proposed to specify at § 460.106(c)(1)(i) that the PACE participant's plan of care must address the participant's vision needs. This is consistent with the long-term care provisions at §§ 483.20(b)(1)(v) and 483.25(a). As we discussed in the proposed rule, the age of the PACE population and the co-morbidities that may impact the population makes addressing a participant's vision an important part of the care plan (87 FR 79658). We similarly proposed at § 460.106(c)(1)(ii) that a PACE participant's plan of care must address the participant's hearing needs. This is consistent with the long-term care regulations at § 483.25(a). We proposed at § 460.106(c)(1)(iii) that a participant's plan of care must address the participant's dentition. This is consistent with the requirement at § 483.20(b)(1)(xi). We proposed at § 460.106(c)(1)(iv) that a plan of care must address the participant's skin integrity. This is consistent with the requirements at §§ 483.20(b)(1)(xii) and 483.25(b). We proposed at § 460.106(c)(1)(v) that the participant's plan of care must address the participant's mobility. This is consistent with the requirement at § 483.25(c). We proposed at § 460.106(c)(1)(vi) that the participant's plan of care must address the participant's physical functioning (including activities of daily living). This is consistent with the requirements at §§ 483.20(b)(1)(viii) and 483.24(b). We proposed at § 460.106(c)(1)(vii) that the plan of care must address the participant's pain management needs. This is consistent with the requirement at § 483.25(k).
As we discussed in the proposed rule, the next few proposed requirements deviate from the nursing home requirements and are tailored specifically to the PACE program (87 FR 79658). We proposed to require at § 460.106(c)(1)(viii) that the plan of care address the participant's nutrition, including access to meals that meet the participant's daily nutritional and special dietary needs. The proposed language is based on the long-term care regulations at §§ 483.20(b)(1)(xi), 483.24(b)(4), and 483.25(g), but it is tailored to be more specific to PACE. As we discussed in the proposed rule, PACE participants live in a variety of settings and the exact manner in which the organization meets the requirement may be different for each participant (
We proposed at § 460.106(c)(1)(ix) to establish the requirement that the plan of care address the participant's ability to live safely in the community, including the safety of their home environment. As we discussed in the proposed rule, the proposal also deviates from the nursing home requirements, as the goal of PACE is to keep nursing home eligible individuals out of a facility and living in the community, and the IDT must assess the participant's environment and living situation for potential factors that may make it unsafe for the participant (87 FR 79658). As we noted in the 2006 PACE final rule (71 FR 71275), PACE organizations are at risk for all health care services the participant receives and, therefore, we expect PACE organizations will be involved in assuring the health and safety of participants at all times, including when they are at home. We proposed at § 460.106(c)(1)(x) that the plan of care must address the participant's home care needs. As we discussed in the proposed rule, this proposal would also deviate from nursing home guidance because, while nursing homes provide 24-hour care to residents living at the facility, PACE provides similar care through home care services (87 FR 79653). Therefore, we believe a participant's home care needs must be addressed through the plan of care. We proposed to establish at § 460.106(c)(1)(xi) that the participant's center attendance must be included in the plan of care. As we discussed in the proposed rule, center attendance is an integral part of the PACE program, and we believe it is appropriate to include it in a participant's plan of care (
We solicited comment on all items identified in proposed § 460.106(c)(1) and whether they should be required content in a plan of care for PACE participants. We specifically requested comment on whether to include acute diseases and/or acute behavioral and psychiatric disorders in the plan of care as part of the minimum criteria. We also solicited comment on whether there is other content that is required to be in a nursing home care plan that should also be included in a PACE plan of care.
We proposed at § 460.106(c)(2) to require that the plan of care must identify each intervention (the care or service) needed to meet the participant's medical, physical, emotional, and social needs. As we discussed in the proposed rule, the PACE organization must also identify any service that will be provided to meet the participant's medical, physical, social, or emotional needs (87 FR 79659). We proposed to include at § 460.106(c)(2) an exception to the interventions that need to be included in the plan of care; specifically, proposed § 460.106(c)(2) would provide that the plan of care does not need to identify the medications needed to meet a participant's needs if a comprehensive list of medications is already documented elsewhere in the medical record. As we discussed in the proposed rule, we define services at § 460.6 to include medications because we strongly believe that medications are an important part of the PACE benefit and may be the most applicable service for a particular diagnosis or condition (
We proposed to redesignate current § 460.106(b)(3), which requires the care
We proposed at § 460.106(c)(4) to specify that the plan of care must identify how each service will be implemented, including a timeframe for implementation. The proposed rule noted that the IDT is already required to identify how each intervention will be implemented in § 460.106(b)(4); we proposed to modify the language to specify that as part of identifying how the intervention will be implemented, the PACE organization should specify a timeframe for that implementation (
We proposed at § 460.106(c)(5) to require that the plan of care must identify a measurable goal for each intervention. As we discussed in the proposed rule, the current care plan regulations require that the plan identify measurable outcomes (§ 460.106(b)(2)) and utilize appropriate interventions that advance the participant toward a measurable goal (§ 460.106(b)(3)) (87 FR 79659). We explained in the proposed rule that our proposal at § 460.106(c)(5) is consistent with the intention of the current requirement; however, we believe that it is important when identifying a service to also identify the measurable goal for that service (
We proposed at § 460.106(c)(6) to require that the care plan identify how the goal for each intervention will be evaluated to determine whether the intervention should be continued, discontinued, or modified. As we discussed in the proposed rule, the IDT is currently required at § 460.106(b)(5) to identify how each intervention will be evaluated to determine progress in reaching specified goals and desired outcomes (87 FR 79659). We explained in the proposed rule that our proposal is similar in intent, but would reduce ambiguity by specifying that the evaluation by the IDT should focus on determining whether the goal was met before deciding if the intervention needs to be continued, discontinued or modified (
Finally, we proposed at § 460.106(c)(7) to require that the plan of care must identify the participant's preferences and goals of care. As we discussed in the proposed rule, it is important for the PACE organization to document the participant's goals and wishes for treatment and to consider them not only when developing and reevaluating the plan of care, but during implementation of the services that were added to the plan of care (87 FR 79659).
We proposed to move the requirements in § 460.106(c) to § 460.106(d) and make modifications to the existing requirements. We proposed to move the language in § 460.106(c)(1) to § 460.106(d)(1) and modify it to read that the IDT must continuously implement, coordinate, and monitor the plan of care, regardless of whether the services are furnished by PACE employees or contractors, across all care settings. As we discussed in the proposed rule, we have seen where PACE organizations met the minimum requirement of reassessing participants semiannually and updating the plan of care accordingly, but then took no further action with respect to the plan of care until the next semiannual assessment period (87 FR 79660). In the proposed rule, we reemphasized that the intent of the plan of care is to create a comprehensive, living document that is updated per the participant's current status at any given point (
We proposed to move the current requirements at § 460.106(c)(2) to § 460.106(d)(2) and to modify § 460.106(d)(2) to specify that the IDT must continuously evaluate and monitor the participant's medical, physical, emotional, and social needs, as well as the effectiveness of the plan of care, through the provision of services, informal observation, input from participants or caregivers, and communications among members of the IDT and other employees or contractors. As we discussed in the proposed rule, the modification to change the language from “participant's health and psychosocial status” to “participant's medical, physical, emotional, and social needs” is intended to align more closely with the regulation on required services at § 460.92(b) (87 FR 79660).
We proposed to add § 460.106(d)(3) to state that all services must be arranged and provided in accordance with § 460.98(c). As we discussed in section VI.G. of the proposed rule, we have proposed additional criteria concerning the arranging and provision of services that are determined necessary by the IDT (87 FR 79648). We explained in the proposed rule that when a service is care planned, the IDT has determined that the service is necessary for the participant, and we would expect it to be arranged and provided in accordance with the rules governing other approved or necessary services (87 FR 79660).
As we discussed in the December 2022 proposed rule, although § 460.106(e) currently requires that the team must develop, review, and reevaluate the plan of care in collaboration with the participant or caregiver, or both, we have seen as part of our audit and oversight activities where participants and/or caregivers are unaware of the contents of their plan of care or what services they should be receiving (87 FR 79660). We further discussed how we often see that the plan of care is finalized by the team and then provided or reviewed with the participant after the fact as a means of “collaboration.” (
As we discussed in the December 2022 proposed rule, we have seen organizations have insufficient documentation related to participant plans of care despite the current requirement that the team document the plan of care, and any changes made to it, in the participant's medical record (87 FR 79660). We further explained how we often see minimum documentation related to whether a participant has met the goals set at the last assessment and any changes in the participant's status, but no documentation of the conversations with the participant in the plan of care, including whether the participant disagreed with any part of the plan of care and whether those concerns were
We also proposed certain modifications to § 460.104 to align with our proposed amendments to § 460.106. We proposed to remove most of the language currently in § 460.104(e) and add the requirement that when the IDT conducts semiannual or unscheduled reassessments, the IDT must reevaluate and, if necessary, revise the plan of care in accordance with § 460.106(c) following the completion of all required assessments. As we discussed in the proposed rule, we believe this will eliminate any unnecessary duplication and ensure there is no confusion as it relates to care plans (87 FR 79661).
As both the development of and updates to the care plan are a typical responsibility for the IDT, any burden associated with this would be incurred by persons in their normal course of business. Therefore, the burden associated with the development of and updates to the care plan are exempt from the PRA in accordance with 5 CFR 1320.3(b)(2) because the time, effort, and financial resources necessary to comply with these requirements would be incurred by persons in the normal course of their activities and is a usual and customary business practice.
We solicited comment on these proposals. A summary of the comments received and our responses follow.
As for the language that the timeframe begins within 14 calendar days after the PACE organization determines, or should have determined, that there has been a change in the participant's health or psychosocial status; this language is meant to convey that the trigger for the timeframe is when the change in status event occurs, even if that event happens prior to the PACE organization becoming aware of it. For example, if the participant has a stroke with hemiplegia on a Monday, and the PACE organization becomes aware of the stroke 2 days later, the 14-calendar day timeframe begins the date of the stroke, not the date the PACE organization becomes aware of the stroke. However, if the participant is hospitalized because of the stroke, the 14-calendar day timeframe would begin upon discharge from the hospital. We are finalizing the 14-calendar day timeframe as proposed.
We understand that long-term care facilities and PACE organizations are not the same, but they share some important similarities. They are both direct care providers serving nursing home eligible participants. Therefore, we do not believe it is inappropriate to adopt long-term care standards in order to ensure equitable access to care among the vulnerable populations served.
We are not persuaded that requiring the IDT to record its diagnoses into the care plan as well as the medical record is duplicative. PACE was created to care for the individual as a whole, with the IDT and care planning being important components of the program's success. If the care plan does not include all current diagnoses from the different IDT disciplines, then the participant may not receive all the care for which they have been approved. As we stated in the proposed rule, we have seen as part of our oversight and monitoring activities that PACE organizations rely heavily on
We are also not persuaded by the argument to extend the timeframe beyond 180 days to allow a grace period for finalizing the care plan to accommodate participants' and/or their caregivers' availability and willingness to review the care plan. However, nothing prevents a PACE organization from factoring in their own grace period when calculating the 180-day timeframe to ensure the PACE organization has enough time to meet with the participant before the deadline. For example, if the participant is historically difficult to reach, the IDT may decide to start the care planning discussions a few weeks prior to the
Our intent in proposing the participant and/or caregiver participation requirement was to reduce the instances of participants and/or caregivers being presented with a finalized care plan after the IDT has completed its assessments and recommendations. As we stated in the proposed rule, we “want to ensure the participant and/or caregiver has an opportunity to voice concerns and ensure that any concerns are addressed in the proposed plan of care” (87 FR 79660). While we understand that participants and/or caregivers may not wish to participate in the care planning process, they should at least be given the opportunity prior to the care plan being finalized. We would expect a PACE organization to document attempts to engage the participant and/or caregiver in the care planning process and would consider those attempts in our review of a PACE organization's compliance with this requirement.
After considering the comments, we are finalizing the proposed changes to § 460.106 in part, with a modification to the language at § 460.106(b)(2) to clarify that the required timeline for the care plan reevaluation is 180 days from the date when the previous care plan was finalized.
Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify in part that PACE organizations must have in effect written safeguards of the rights of enrolled participants, including a patient bill of rights. Previously, we established in § 460.112 certain rights to which a participant is entitled. This includes the participant's right to considerate, respectful care and the right not to be discriminated against (§ 460.112(a)); the right to receive accurate, easily understood information and to receive assistance in making informed health care decisions (§ 460.112(b)); the right to access emergency services without prior authorization (§ 460.112(d)); and the right to participate fully in decisions related to his or her treatment (§ 460.112(e)).
In the proposed rule, CMS proposed to amend § 460.112 to incorporate the following participant rights: the right to appropriate and timely treatment for health conditions including the right to receive all care and services needed to improve or maintain the participant's health condition and to attain the highest practicable physical, emotional and social well-being; the right to have the PACE organization explain all treatment options; the right to be fully informed, in writing, before the PACE organization implements palliative care, comfort care, or end-of-life care services; the right to fully understand the PACE organization's palliative care, comfort care, and end-of-life care services; and the right to request services from the PACE organization, its employees, or contractors through the process described in § 460.121.
Sections 1894(b)(1)(B) and 1934(b)(1)(B) of the Act establish that PACE organizations shall provide participants access to necessary covered items and services 24 hours per day, every day of the year. We codified these required services at § 460.92, which provides that the PACE benefit package for all participants, regardless of the source of payment, must include all Medicare covered services, all Medicaid covered services as specified in the State's approved Medicaid plan, and other services determined necessary by the IDT to improve and maintain the participant's overall health status. At § 460.98(a), we established the requirement for PACE organizations to provide care that meets the needs of each participant across all care settings, 24 hours a day, every day of the year. However, as we discussed in the proposed rule, we have identified some PACE organizations that do not provide care meant to improve or maintain the participant's condition, and instead provide a palliative-like benefit, where the services provided to participants are geared more toward ensuring the participant's comfort even when that is not in line with the participant's wishes or needs (87 FR 79661). We also stated in the proposed rule that we have seen organizations use terms such as palliative care and comfort care without clearly defining those terms for the participants and/or their designated representatives, leaving participants and families confused as to what level of care they are receiving (
For the foregoing reasons, we proposed certain modifications to § 460.112. First, we proposed to redesignate current paragraphs (a) through (c) as paragraphs (b) through (d) to allow for the addition of proposed new paragraph (a). Proposed new paragraph (a)(1) would state that participants have a right to appropriate and timely treatment for their health conditions, which includes the right to receive all care and services needed to improve or maintain the participant's health condition and attain the highest practicable physical, emotional, and social well-being. As we discussed in the proposed rule, we considered the language in § 460.92 related to services meant to improve or maintain the participant's health condition as well as nursing home regulations at § 483.21(b)(1)(i), which require care plans to describe “the services that are to be furnished to attain or maintain the resident's highest practicable physical, mental, and psychosocial well-being” (87 FR79661).
In addition, we proposed to add to § 460.112 a new paragraph (a)(2), which would state that participants have the right to appropriate and timely treatment for their health conditions, including the right to access emergency health care services when and where the need arises without prior authorization by the PACE interdisciplinary team. As we discussed in the proposed rule, although the right to access emergency care services currently appears at § 460.112(d), we believe that it relates to the right to treatment, and therefore, we proposed to move the text of current § 460.112(d) to new § 460.112(a)(2) (87 FR 79662).
In the 1999 PACE interim final rule, we codified at § 460.112(a) (which we proposed to redesignate as § 460.112(b)) that all participants have the right to considerate respectful care, and each participant has the right not to be discriminated against in the delivery of required PACE services based on race, ethnicity, national origin, religion, sex, age, mental or physical disability, or source of payment (64 FR 66253). We also codified at § 460.112(e) the right of participants to participate fully in all treatment decisions. As we discussed in the proposed rule, § 460.112(e)(1) has two specific parts; the right to have all treatment options explained in a culturally competent manner, and the right to make health care decisions (87 FR 79662). We stated in the proposed
In the 1999 PACE interim final rule (64 FR 66254), we codified the participant's rights to receive accurate and easily understood information at current § 460.112(b) (which we proposed to redesignate as § 460.112(c)). In the 2006 PACE final rule, we further stated that this information was necessary for participants to “comprehensively assess differences in their health care options” (71 FR 71295). We also codified at § 460.112(e) that “a participant who is unable to participate fully in treatment decisions has the right to designate a representative” (64 FR 66290). We argued in the proposed rule that a participant's designated representative should receive the same accurate, easily understood information the participant receives in order to make informed decisions on behalf of the participant (87 FR 79662). We proposed to add language to the newly designated § 460.112(c) that would provide that a participant has the right to have all information in this section shared with their designated representative.
The proposed rule at 87 FR 79662 discussed how we have seen as part of our audit and oversight activities that PACE organizations used the terms palliative care, comfort care, and end-of-life care, without providing participants with clear information on how the PACE organization is defining those terms or offering clear explanations of whether participants who opt to receive those forms of treatment will also continue to receive curative treatments. Although we did not propose to define these terms, we believe it is important for PACE organizations to define the terms within their respective programs, and provide clear information to participants and their designated representatives on what the terms mean. Therefore, we proposed to add language to newly designated § 460.112(c)(5) that would provide that participants have the right to be fully informed, in writing, of several factors before the PACE organization implements palliative care, comfort care, or end-of-life care. We proposed that the written notification to participants must explain four different aspects of the treatment options, which we outlined in proposed § 460.112(c)(5)(i) through (iv).
First, we proposed at § 460.112(c)(5)(i) that the written notification must include a description of the palliative care, comfort care, and end-of-life care services (as applicable) and how they differ from the care the participant is currently receiving to meet their individual needs. As we discussed in the proposed rule, a participant should have the right to fully understand the care they are agreeing to receive prior to that care being initiated (87 FR 79662).
As proposed, § 460.112(c)(5)(ii) would require PACE organizations to explain, in writing, to participants or their designated representative whether palliative care, comfort care, or end-of-life care services (as applicable) will be provided in addition to or in lieu of the care the participant is currently receiving. As we discussed in the proposed rule, we have seen through audit that some PACE participants receive palliative care and/or comfort care in addition to curative treatment; however, we have also seen participants receive palliative care and/or comfort care instead of treatment meant to improve or maintain the participant's health condition when the participant was unaware that in choosing palliative care, they were also choosing to forego curative treatments (
As proposed, § 460.112(c)(5)(iii) would require PACE organizations to identify all services that would be impacted if the participant and/or their designated representative elects to initiate palliative care, comfort care, or end-of-life care. As discussed in the proposed rule, PACE organizations would be required to provide a detailed explanation of how specific services would be impacted by the addition of or transition to palliative care, comfort care, or end-of-life care (87 FR 79663). We further explained that PACE organizations that provide palliative care services in conjunction with curative treatment may not have to provide a detailed analysis and could instead include language in their explanation that palliative or comfort care will not impact existing services (
As proposed, § 460.112(c)(5)(iv) would state that the participant has the right to revoke or withdraw their consent to receive palliative, comfort, or end-of-life care at any time and for any reason either verbally or in writing. We also proposed to require PACE organizations to explain this right to participants both orally and in writing. A participant has the right to fully participate in treatment decisions, as established at current § 460.112(e). That includes the right to participate in the decision-making process of what care to receive, and a participant must not only understand what the proposed care or treatment decisions mean, but also that they can change their mind with regards to treatment decisions previously made. As we discussed in the proposed rule, we have seen situations where participants or their designated representatives want to stop palliative care or comfort care when they realize this means they will no longer receive other services, and they do not know they have the right to revisit prior treatment decisions (87 FR 79663). As we discussed in the proposed rule, participants should be clearly informed, in writing, that they have the ability to change their mind on these important treatment decisions (
In the 1999 PACE interim final rule (64 FR 66255), we established at § 460.112(e) the right for each participant to fully participate in all decisions related to his or her care. Paragraph (e)(1) specifies that this includes the right “[t]o have all treatment options explained in a culturally competent manner and to make health care decisions, including the right to refuse treatment, and be informed of the consequences of the decisions.” In the proposed rule, we proposed to amend § 460.112(e)(1) by removing the language regarding the participant's right to have all treatment options explained in a culturally competent manner. As we explained in the discussion around our proposed amendments to § 460.112(b), the right to have treatment options explained in a culturally competent manner is better suited for inclusion in that paragraph, which, as amended, sets forth participant rights related to respect and non-discrimination. We also proposed to restructure and modify § 460.112(e)(1) by separating the requirements into three subparts at § 460.112(e)(1)(i), (ii) and (iii). We proposed at § 460.112(e)(1)(i) to establish that a participant's right to make health care decisions includes the right to have all treatment options fully explained to them. As we discussed in
As proposed, § 460.112(e)(1)(ii) would provide that participants have the right to refuse any and all care and services. As we explained in the 2006 PACE final rule (71 FR 71298), the right to refuse treatment is a type of health care decision, and participants have the right to make those decisions. We proposed at § 460.112(e)(1)(iii) to specify that participants have the right to be informed of the consequences their decisions may have on their health and/or psychosocial status. The language at current § 460.112(e)(1) refers to the participant's right to “be informed of the consequences of the decisions,” but we proposed to add additional specificity around that right and the obligation it creates for PACE organizations by modifying the regulatory language to refer to the participant's right to “be informed of the consequences their decisions may have on their health and/or psychosocial status.” As we discussed in the proposed rule, we believe this proposed revision would emphasize that the participant should be made aware of how their decision to refuse care may impact their health and/or psychosocial status (87 FR 79663).
We proposed to further amend § 460.112(e) by redesignating current paragraphs (e)(2) through (e)(6) as (e)(3) through (e)(7), and by adding a new paragraph (e)(2), which would state that participants have a right to fully understand the PACE organization's palliative care, comfort care, and end-of-life care services. Proposed paragraph (e)(2) would further require that PACE organizations take several steps, outlined at proposed § 460.112(e)(2)(i) through (iii), in order to ensure that participants understand this right.
At § 460.112(e)(2)(i), we proposed to establish that the PACE organization must fully explain the applicable treatment options to the participant prior to initiating palliative care, comfort care, or end-of-life care services. We proposed at § 460.112(e)(2)(ii) to require that the PACE organization provide the participant with written information about their treatment options in accordance with § 460.112(c)(5). As we discussed in the proposed rule for § 460.112(c)(5), we believe providing written information on these terms is important for the participant, and that the information must include details regarding the treatment and how the participant's current services may be impacted (87 FR 79662). We proposed to add paragraphs (e)(2)(i) and (e)(2)(ii) as separate provisions because the organization should be responsible both for providing the written notification outlined in § 460.112(c)(5), and explaining the treatment options in a way that is understandable to the participant so that the participant has a full understanding of their options. Finally, we proposed at § 460.112(e)(2)(iii) that the PACE organization obtain written consent from the participant or their designated representative to change a treatment plan to include palliative care, comfort care, or end-of-life care. As we discussed in the proposed rule, we have seen that some organizations stop treatments to improve or maintain a participant's condition when a participant enters palliative care or comfort care, and therefore, we believe it is especially important that participants or their designated representatives are in agreement with these treatment options, and consent to receiving this care (87 FR 79664). We proposed to redesignate current paragraphs (e)(2) through (e)(6) of § 460.112 as (e)(3) through (e)(7) to allow for the addition of a new paragraph (e)(2) as discussed in this section. As we emphasized in the proposed rule, this proposed requirement would not take the place of any advanced directives a participant may have and would not eliminate the requirement in current § 460.112(e)(2) (which would be redesignated as (e)(3) under our proposal) that requires a PACE organization to explain advance directives and to establish them, if the participant so desires (
In the 1999 PACE interim final rule (64 FR 66256, 66290), we codified at § 460.112(g) the participant's right to “a fair and efficient process for resolving differences with the PACE organization, including a rigorous system for internal review by the organization and an independent system of external review.” In the January 2021 final rule (86 FR 5864), we added § 460.121 to clearly define service determination requests and specify the requirements for how those requests would be processed. As we explained in that rule, the service determination request process serves as an important participant protection, as it allows a participant to advocate for services (86 FR 6008). We also explained that the service determination request process is the first step of the appeals process (
We solicited comments on these proposals and a summary of the comments received and our responses follow.
As for ensuring that the IDT includes the expertise to provide meaningful end-of-life care to participants, in the April 12, 2023 final rule, we modified the proposed regulation for contracted services to include palliative medicine. Effective January 1, 2024, PACE organizations are required to staff and/or contract with palliative medicine specialists. At this time, we do not believe it is necessary to include a palliative care specialist on the IDT as a routine role. The disciplines that participate in the IDT are the minimum required, but the IDT may always include additional personnel or specialists as it sees fit. To the extent an IDT wants to bring in a palliative care specialist to assist with developing an end-of-life plan of care, it is allowed and encouraged to do so.
After considering the comments, and for the reasons set forth in the proposed rule and in the previous responses, we are finalizing the changes to § 460.112 as proposed.
Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify that PACE organizations must have in effect written safeguards of the rights of enrolled participants, including procedures for grievances and appeals. We have codified requirements around the processing of grievances at § 460.120. The grievance process serves as an important participant protection as it allows for participants and their family members to express complaints related to the quality of care a participant receives, or the delivery of services. We have discovered through audits that the current grievance process, which allows PACE organizations latitude to define their own grievance resolution timeframes and develop their own procedures for processing grievances, has created confusion and inconsistency in how grievances are handled from organization to organization. In the December 2022 proposed rule (87 FR 79452), we proposed certain modifications to the grievance requirements at § 460.120 to strengthen participant protections and provide more detailed processing requirements for grievances from PACE participants and their family members. We also proposed certain adjustments that would align the requirements with the service determination process in § 460.121 for consistency.
First, we proposed to amend § 460.120(a) by removing the current paragraph header, which reads “Process to resolve grievances.” and added in its place a new paragraph header “Written procedures.” Specifically, we proposed to modify the requirement to state that each PACE organization must have formal written procedures to promptly identify, document, investigate, and resolve all medical and nonmedical grievances in accordance with the requirements in this part. In addition, we proposed to further amend § 460.120(a) by removing the list of individuals who can file a grievance, as we proposed to create a new paragraph that outlines who may submit a grievance at § 460.120(d). We proposed to add to § 460.120 a new paragraph (b), which would define a grievance in PACE as a complaint, either oral or written, expressing dissatisfaction with service delivery or the quality of care furnished, regardless of whether remedial action is requested; and further that a grievance may be between a participant and the PACE organization or any other entity or individual through which the PACE organization provides services to the participant. We have heard from PACE organizations over the years that they would prefer that the term grievance be better defined in the regulations, and we have received requests from PACE organizations for the grievance definition to be narrowed to exclude complaints that may not rise to the level of a grievance. Based on this feedback, we considered how we might refine the definition of grievance for the purposes of PACE. Specifically, in the December 2022 proposed rule, we discussed how the grievance definitions in other managed care programs and care settings, specifically in MA and in nursing homes, could inform and enhance the grievance definition for PACE.
When considering these other approaches to defining what constitutes a grievance, we concluded that the definition used in PACE is already tailored more narrowly than the MA or nursing home requirements. That being the case, we do not believe it would be appropriate to narrow the definition even more, and potentially limit a PACE participant's ability to complain about their care and have their complaints resolved through a formal process. We noted that the MA regulations specify that a grievance is any complaint that meets the definition at § 422.561 regardless of whether remedial action is requested. We have seen on audit where PACE organizations will not recognize or process complaints that fit within the definition of a grievance, because remedial action was not requested. However, we want to stress that a grievance must be identified and processed if it satisfies the definition, regardless of whether remedial action is requested. This is an important participant safeguard because grievances are required under the current § 460.120(f) to be maintained, aggregated, and analyzed as part of the PACE organization's quality
We also proposed that the definition of a grievance would provide that a grievance may be between a participant and the PACE organization, but it may also be between any other entity or individual through which the PACE organization provides services to the participant. This proposed change to the PACE grievance definition is based on the MA grievance definition, which provides at the current § 422.564(a) that each MA organization must provide meaningful procedures for timely hearing and resolving grievances between enrollees and the organization or any other entity or individual through which the organization provides health care services under any MA plan it offers. PACE provides a wide array of services through different home care agencies, medical specialists, and facilities such as nursing homes. It is important that a participant or their family have the ability to voice complaints related to any care they receive, even if that care is provided through a contracted entity or individual.
We solicited comment on whether we should modify the PACE grievance definition to more closely resemble the definition of grievances in MA at § 422.561. Specifically, we solicited comment on whether we should consider adopting the following definition of grievance for purposes of the PACE regulations: A grievance means any complaint or dispute expressing dissatisfaction with any aspect of the PACE organization's or its contractors' operations, activities, or behavior, regardless of whether remedial action is requested.
We proposed to redesignate current § 460.120(b) as § 460.120(c), change the title, and amend the regulation text. Specifically, we proposed to change the title from “Notification to participants.” to “Grievance process notification to participants.”, to differentiate from notifications related to grievance resolutions, and to add the requirement that the grievance process notification be written in understandable language. We proposed to add new paragraphs (c)(1), (c)(2), and (c)(3) to § 460.120, which would set forth requirements for the grievance process notification. We solicited comment on whether the other individuals should receive the grievance process notification, in addition to the participant, upon the participant's enrollment and annually thereafter. Specifically, we solicited comment on whether the other individuals specified in § 460.120(d) should receive the grievance process notification, or at a minimum, whether the participant's designated representative should receive the notification in addition to the participant.
First, we proposed at § 460.120(c)(1) that the grievance process notification must include information on the right of the participant or other individual specified in § 460.120(d) to voice grievances without discrimination or reprisal, and without fear of discrimination or reprisal. When we have conducted interviews of PACE participants and their family members as part of our audit process, we have heard that some participants are afraid to voice grievances for fear that the PACE organization will take some punitive action against them. For example, some participants have expressed fears that the PACE organization will eliminate their center attendance, or discontinue other necessary services, if the participant complains about the care they receive. We believe it is important for the grievance process notification to participants to emphasize that a participant or other individual specified in § 460.120(d) has the right to voice grievances without the fear of reprisal or discrimination.
We proposed at § 460.120(c)(2) that the grievance process notification must inform participants that a Medicare participant as defined in § 460.6 or other individual specified in § 460.120(d) acting on behalf of a Medicare participant has the right to file a written complaint with the quality improvement organization (QIO) with regard to Medicare covered services, consistent with section 1154(a)(14) of the Act. Since most PACE participants are Medicare beneficiaries, they are also eligible to submit quality of care grievances to a QIO. This right has not been formally provided to PACE participants before, and we are proposing to require it now in order to ensure that Medicare beneficiaries enrolled in PACE understand this additional right. We proposed at § 460.120(c)(3) to require that the grievance process notification include the grievance definition at § 460.120(b) and provide information on all grievance processing requirements in paragraphs (d) through (k) of § 460.120. In order for the grievance process to serve as a fair and efficient avenue for participants to express their dissatisfaction with service delivery or the quality of care furnished, and to resolve their differences with the PACE organization or any other entity or individual through which the PACE organization provides services to the participant, participants must understand how to submit a grievance to the organization, and how that grievance will be processed once submitted.
We proposed to move the language regarding who can submit a grievance from current § 460.120(a) to a new paragraph at § 460.120(d), as we believe the details regarding who is eligible to submit a grievance will be more easily understood if they are placed in a new paragraph and separated from the remainder of § 460.120(a), which, under the amendments we proposed, would require PACE organizations to have a formal written process to promptly identify, document, investigate, and resolve all medical and nonmedical grievances. We proposed to amend the list of individuals who can submit a grievance to include the participant's caregiver. We believe the addition of the participant's caregiver would be in alignment with the service determination process requirements in § 460.121, which allow a participant's caregiver to request services (§ 460.121(c)(3)), and with the plan of care requirements at § 460.106, which allow the caregiver to be involved in the development and reevaluation of the care plan (§ 460.106(e)).
As we stated in the January 2021 final rule (86 FR 6018), given the fact that caregivers may provide some care to the participants, it is important that caregivers are able to advocate for services on the participant's behalf. Similarly, if caregivers are providing some care to the participant, they should be able to make complaints related to any aspect of the care that the participant receives from the PACE organization.
As we explained in the January 2021 final (86 FR 6018), we have not historically considered “caregivers” to include employees or contractors of the PACE organization. We know some organizations may use the term “caregiver” to describe an aide at a nursing home, but CMS would not generally consider these individuals to fall within this category. We also explained in that rule (86 FR 6018) that employees and contractors of the PACE organizations enter into a contractual relationship with the PACE organization and generally have a predominately financial incentive to provide care; and we have not considered these
We proposed to add these rules around the submission of grievances in new paragraph § 460.120(e). We proposed § 460.120(e)(1) would provide that any individual permitted to file a grievance with a PACE organization under § 460.120(d) may do so either orally or in writing. We proposed § 460.120(e)(2) would establish that the PACE organization may not require a written grievance to be submitted on a specific form. While we understand that some organizations may use forms to help them process and investigate the grievance, we do not believe that a PACE participant should be restricted in how they can submit the complaint. We have seen participants detail their complaints to PACE organizations in letters and email correspondence. Receipt of these written complaints should be considered grievances and accepted in their original form. If a PACE organization decides to create a grievance form on its own and summarize the original grievance, that would continue to be permitted under our proposal, as long as the PACE organization maintains the written communication in its original form as required by § 460.200(d)(2). Proposed § 460.120(e)(3) would provide that a grievance may be made to any employee or contractor of the PACE organization that provides care to a participant in the participant's residence, the PACE center, or while transporting participants. This language is similar to the method for filing a service determination request at § 460.121(d)(2). As we indicated in the January 2021 final rule (86 FR 6019), these are the settings where participants have the most frequent contact with employees or contractors of the PACE organization, and therefore are logical settings for service determination requests to occur. We believe the same logic can be applied to grievances, and as a result, we limited our proposal to employees and contractors working in these settings.
We proposed at new § 460.120(f) to establish the requirement that the PACE organization must conduct a thorough investigation of all distinct issues within the grievance when the cause of the issue is not already known. Investigating why the situation occurred is an important part of ensuring that appropriate action will be taken in response to a grievance. However, we also recognize there may be some situations where the cause for the complaint or a specific issue is already known and therefore an investigation is not needed. For example, if the PACE bus has a flat tire, and as a result is late to pick up a participant for their center attendance, the participant may complain to the PACE organization about the late pick-up. While this would constitute a grievance and would need to be identified and processed, an investigation would not be necessary because the PACE organization was already aware of the cause of the complaint (that is, the flat tire). If there are multiple issues within a grievance that require investigation, proposed § 460.120(f) would require the PACE organization to conduct a thorough investigation into each distinct issue when the cause of an issue is not known. We have seen on audit that some complaints may contain different issues within the one grievance. For example, a participant may call to complain that their home care aide is routinely late and does not clean the kitchen as is care planned for that participant. These are two different issues, and both may need to be investigated in order to appropriately resolve the grievance. The PACE organization may determine through its investigation that while the aide was late due to poor time management skills, the kitchen was not being cleaned because the home care company did not have the most recent care plan for the participant. The results of the investigation would directly impact how the PACE organization would resolve these concerns.
We proposed at § 460.120(g)(1) that the PACE organization must take action to resolve the grievance based on the results of its investigation as expeditiously as the case requires, but no later than 30 calendar days after the date the PACE organization receives the oral or written grievance. In our proposal for the PACE grievance regulation, we proposed to adopt a modified version of the requirement in the MA regulations, which would specify that the 30-day timeframe is the maximum amount of time the PACE organization has to resolve the grievance, as opposed to the maximum amount of time to notify the participant. Proposed § 460.120(g) would maintain the language regarding ensuring that this timeframe is a maximum length of time, and that organizations may need to resolve grievances more quickly if the participant's case requires. We proposed at § 460.120(g)(2) that the PACE organization must notify the individual who submitted the grievance of the grievance resolution as expeditiously as the case requires, but no later than 3 calendar days after the date the PACE organization resolves the grievance in accordance with § 460.120(g)(1).
We proposed § 460.120(h) would establish requirements for the processing of expedited grievances. Specifically, we proposed to require that the PACE organization must resolve and notify the individual who submitted the grievance of the grievance resolution as expeditiously as the case requires, but no later than 24 hours after the time the PACE organization receives the oral or written grievance if the nature of the grievance could have an imminent and significant impact on the health or safety of the participant. We proposed at new § 460.120(i) to create grievance resolution notification requirements for how the PACE organization must inform the individual who submitted the grievance of the resolution of that grievance. We proposed at § 460.120(i)(1) that the PACE organization may inform the individual either orally or in writing, based on the individual's preference for notification, except for grievances identified in § 460.120(i)(3). We contemplated following the MA rule around notification in § 422.564(e)(3), which allows for oral grievances to be responded to orally or in writing but requires written grievances to be responded to in writing. However, we understand that because PACE organizations are not only an insurer, but also a provider, they often have calls or other remote communications with participants, and likely talk with them more often than an MA organization would talk with one of their enrollees. We also understand that some PACE participants would prefer oral notification, even if their grievance was submitted in writing. Likewise, some PACE participants may call with a grievance, but may want a formal written notice explaining the resolution. Therefore, we believe that PACE organizations should tailor the notification of the grievance resolution to what a PACE participant prefers.
We proposed to establish at § 460.120(i)(2) that oral or written notification of grievance resolutions
We proposed to establish at § 460.120(i)(3) that, when a grievance relates to a Medicare quality of care issue, the PACE organization must provide a written grievance resolution notification that describes the right of a Medicare participant or other individual specified in § 460.120(d) acting on behalf of a Medicare participant to file a written complaint with the QIO with regard to Medicare covered services. The only exception to this requirement to provide a written resolution notice would be when the submitter specifically requests not to receive notification as specified in proposed § 460.120(i)(4), which is discussed in more detail in this section of this final rule. We also proposed to specify that for any complaint submitted to a QIO, the PACE organization must cooperate with the QIO in resolving the complaint. This language is consistent with the language used in the MA program, and therefore we are proposing it be added to the PACE regulation as well. Because the QIO's statutory function related to review of quality of care concerns and responses to beneficiary complaints is only applicable to Medicare services and only available to Medicare beneficiaries, and because PACE organizations may have some participants who are not Medicare beneficiaries and may cover non-Medicare services, we expect PACE organizations to work with participants to help them understand whether their grievance relates to a Medicare quality of care issue.
We proposed to establish at new § 460.120(i)(4) that the PACE organization may withhold notification of the grievance resolution if the individual who submitted the grievance specifically requests not to receive notification of the grievance resolution, and the PACE organization has documented this request in writing. In order to balance the need for an organization to track and process grievances, with respect for the preferences of participants who wish to not receive communications related to the resolution of a grievance after submitting the initial complaint, we proposed to specify in new § 460.120(i)(4) that PACE participants must have an option to request not to receive any further communication or notification of the grievance resolution following their initial complaint submission. In order for a PACE organization to withhold notification of the grievance resolution for participants who request to exercise this option, the PACE organization would be required to document the participant's request in writing.
We proposed to include in a new § 460.120(i)(4) language that provides the PACE organization would still be responsible for all other parts of this section. Section § 460.120(d) specifies the PACE organization must continue to furnish all required services to the participant during the grievance process. We proposed to redesignate current § 460.120(d) as 460.120(j) to account for our other proposals.
We proposed to add a new paragraph § 460.120(k) that would redesignate and modify the requirement that is currently included at § 460.120(c)(4). Specifically, we proposed that the PACE organization must develop and implement procedures to ensure that they maintain the confidentiality of a grievance, including protecting the identity of any individuals involved in the grievance from other employees and contractors when appropriate. As we stated when discussing the proposed notification requirements at § 460.120(i)(4), we understand that some grievances may be sensitive, and some participants or other submitters may wish for their complaint to be kept confidential. For example, if a participant has a complaint related to their physical therapist, that participant may not want the physical therapist to be aware of the complaint. We expect that PACE organizations consider these situations and have a method for participants that may want certain information to be kept confidential. There may be instances where a person submitting the complaint may want their identity to be protected, or where the complaint involves a sensitive matter where the identity of all individuals may need to be protected, and we would expect the PACE organization to have a process for ensuring that there is a way to maintain the confidentiality of the identity of any individual involved in the grievance from other employees or contractors when it is appropriate. However, we reiterate that accepting and processing a confidential grievance would not negate the PACE organization's responsibilities to investigate and resolve the grievance. It also would not negate the responsibilities to document, aggregate and analyze the grievance, as required under current § 460.120(f). Additionally, as we discussed earlier, we have heard from multiple PACE participants that sometimes participants or their family members are afraid to complain to the PACE organization for fear of reprisal. While we require a PACE organization to ensure that confidentiality of a grievance is maintained, we also want to remind PACE organizations that participants have the right to submit grievances without fear of reprisal. We have heard through oversight and monitoring activities that participants are afraid that they will lose necessary services, or not be approved for services, if they complain regarding the care received by an organization. PACE organizations should ensure that all participants understand that they are free to complain without any fear of reprisal, regardless of what their grievance is about.
We proposed to add a new paragraph at § 460.120(l) that aligns with the record keeping requirements for service
Finally, current § 460.120(f) requires PACE organizations to maintain, aggregate, and analyze information on grievance proceedings. We proposed to redesignate this as paragraph (m) to account for our other proposals. We also proposed to remove the word “maintain” that appears in the current regulation text, since the requirement to maintain records has been added to the proposed paragraph (l). Redesignated § 460.120(m), as revised under our proposal, would state that the PACE organization must aggregate and analyze the information collected under the proposed paragraph (l) of this section for purposes of its internal quality improvement program. We noted that this requirement applies to all grievances; oral or written, including anonymous grievances.
We estimated a one-time burden for PACE organizations to update their grievance materials to meet these proposed requirements. We do not believe there will be a change in annual burden as a PACE organization is already required to provide notification to participants regarding their grievance resolution and may opt to do so orally or in writing. Therefore, we believe that the ongoing burden will not change with this proposal. We discuss and account for the one-time burden for PACE organizations to update their grievance materials to meet the proposed new requirements in the Collection of Information Requirements section. We solicited comment on this proposal regarding burden.
We summarize the comments received on the proposal at § 460.120 and provide our responses to those comments in this section of this rule.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing the proposed amendments to § 460.120 without modification.
A few commenters disagreed with including complaints for which no remedial action is requested as part of the proposed grievance definition at § 460.120(b). These commenters generally considered the proposed grievance definition at § 460.120(b) to be broader and more administratively burdensome than the current grievance definition at § 460.120, and either did not want to process these complaints as grievances or recommended a separate administrative process for such complaints. A commenter suggested that including complaints for which no remedial action is requested in the grievance definition would increase the number of complaints that would be considered grievances, which the commenter believed would increase the administrative burden of processing grievances without improving participant care and outcomes. The commenter recommended that CMS amend the proposed grievance definition to give PACE organizations the flexibility to not have to document complaints as grievances when the participant declines remediation. The commenter emphasized the uniqueness of the PACE care model and how it requires frequent communication and interaction between staff and participants, which they believed made documenting all complaints as grievances unreasonable and unnecessary. Another commenter indicated CMS's proposed grievance definition emphasized process compliance over staff judgment to the detriment of quality care, participant outcomes, and organizational culture.
We disagree with the commenters that described the proposed definition of grievance at § 460.120(b) as overly broad, unnecessary, and burdensome with potentially negative consequences for participant care and PACE organizations' workplace culture. As explained in the December 2022 proposed rule, we believe the proposed grievance definition at § 460.120(b) clarifies how we expect PACE organizations to identify grievances. The proposed grievance definition was the result of requests from PACE organizations over the years for CMS to better define grievances in the PACE regulation. We believe the proposed grievance definition clarifies our expectations for grievances and would not necessitate major changes to PACE organizations' existing grievance processes if they are already compliant with the current requirements at § 460.120.
Additionally, we have determined that categorically excluding complaints that do not require remedial action would be counter to compliance with other requirements within the PACE statute and regulation. As established at § 460.112(g), each participant has the right to a fair and efficient process for resolving differences with the PACE organization, including a rigorous system for internal review by the organization and an independent system of external review. Specifically, it is a participant right to be encouraged and assisted to voice complaints to PACE staff and outside representatives of their choice, free of any restraint, interference, coercion, discrimination, or reprisal by PACE staff. Therefore, amending the regulation to clarify that the definition of grievance includes complaints regardless of whether remedial action was requested provides important guidance to PACE organizations on how to achieve program compliance with current program requirements. Also, PACE organizations are required to aggregate and analyze grievances as part of their quality improvement organization (see §§ 460.120(l) and 460.134(a)(5)). A participant may feel that remedial action is not necessary in a particular situation, but that does not mean the PACE organization should not consider, analyze, and aggregate that information as part of its quality improvement efforts as a whole. If multiple participants have the same complaint, and none of them request remedial action, it may still be indicative of a larger, systemic breakdown that needs to be considered by the PACE organization.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing the grievance definition at § 460.120(b) as proposed, which includes complaints regardless of whether remedial action was requested.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.120(d) to require that PACE organizations accept grievances from participants' caregivers without modification.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal at § 460.120(g)(2) to require that PACE organizations notify the individual who submitted the grievance of the grievance resolution as expeditiously as the case requires, but no later than 3 calendar days after the date the PACE organization resolves the grievance in accordance with § 460.120(g)(1) without modification.
After consideration of the comments received and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal to require that PACE organizations must provide notification of the grievance resolution either orally or in writing, based on the individual's preference for notification, without modification, except we are redesignating proposed § 460.120(i)(1) as § 460.120(h)(1).
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing this provision by redesignating
Additionally, we do not specify the level of detail a PACE organization should provide in the grievance resolution notification to describe the corrective actions taken, or when the participant may expect the corrective action(s) to occur. As explained in the December 2022 proposed rule (87 FR 79668), the purpose of including information on corrective actions that have or will be taken by the PACE organization in response to a grievance is for the participant to understand how their grievance has been resolved or how it will be resolved. PACE organizations may protect provider privacy and business confidentiality in how they disclose the details of their investigation and any corrective action when providing grievance resolution notification. An appropriate level of detail for the corrective action demonstrates that the PACE organization has addressed each specific grievance issue, has taken or will take action to resolve the issue(s), and that the individual submitting the grievance can understand what actions were taken or will be taken to resolve the grievance. For example, if the complaint relates to a participant always being picked up by the PACE driver late, the correction may be that a new driver will be assigned to pick up that participant and the new driver will start in a week.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal to require the grievance notification to include, for grievances that require corrective action, the corrective action(s) taken or to be taken by the PACE organization as a result of the grievance, and when the participant may expect corrective action(s) to occur without modification, except we are redesignating proposed § 460.120(i)(2)(iii) as § 460.120(h)(2)(iii).
After consideration of the comments received and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal to include QIO rights in grievance resolution letters to Medicare participants with quality of care grievances about Medicare covered services without modification, except that we are redesignating § 460.120(i)(3) as § 460.120(h)(3) and paragraphs § 460.120(h)(3)(i) and § 460.120(h)(3)(ii).
In the December 2022 proposed rule (87 FR 79668), we explained that Medicare beneficiaries, and by extension, Medicare participants enrolled in PACE, have the right to submit quality of care grievances and complaints to a QIO under section 1154(a)(14) of the Act. We proposed at § 460.120(i)(3) that, when a grievance relates to a Medicare quality of care issue, the PACE organization must provide a written grievance resolution notification that describes the right of a Medicare participant or other individual specified in § 460.120(d) acting on behalf of a Medicare participant to file a written complaint with the QIO with regard to Medicare covered services. We reiterate that the QIO quality of care grievance process applies to Medicare participants' quality of care grievances regarding Medicare covered services. Therefore, participants who are not enrolled in Medicare, including Medicaid-only participants, would not be eligible for the QIO quality of care grievance process.
After consideration of the comments received, and for the reasons outlined in the proposed rule and our response to comments, we are finalizing our proposal to include QIO rights in grievance resolution letters to Medicare participants with quality of care grievances about Medicare covered
Sections 1894(f)(3) and 1934(f)(3) of the Act provide CMS the discretion to apply such requirements of Part C of title XVIII and sections 1903(m) and 1932 of the Act relating to protection of beneficiaries and program integrity as would apply to Medicare Advantage (MA) organizations under Part C and to Medicaid managed care organizations under prepaid capitation agreements under section 1903(m) of the Act. Some examples of where CMS has previously exercised this discretion include the development and implementation of requirements related to PACE compliance and oversight, PACE enforcement actions (CMPs, sanctions, and termination), and PACE participant rights and protections.
Under §§ 422.111(g) and 423.128(f), CMS may require an MA organization or Part D plan sponsor to disclose to its enrollees or potential enrollees, the MA organization or Part D sponsor's performance and contract compliance deficiencies in a manner specified by CMS. The purpose of these beneficiary protections is to provide beneficiaries with the information they need to assess the quality of care they are receiving and to make sponsoring organizations accountable for their performance deficiencies, which should improve compliance with the rules and requirements of the Medicare program. Further, in the final rule titled “Medicare Program; Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs” (75 FR 19677, hereinafter referred to as the April 2010 final rule), which appeared in the April 15, 2010 issue of the
In contrast to the Part C and D regulations at 42 CFR parts 422 and 423, respectively, the PACE regulations at Part 460 do not include a requirement for PACE organizations to notify current and potential PACE participants of the organization's performance and contract compliance deficiencies. In addition, we note that although regulations at Part 423 generally apply to PACE organizations, § 423.128 was waived for PACE organizations in 2005 (
Therefore, we proposed to amend the regulations at 42 CFR part 460 by adding § 460.198, which would require PACE organizations to disclose to current PACE participants and potential PACE participants information specific to PACE organization performance and contract compliance deficiencies, in a manner specified by CMS. As in the MA and Part D programs, we anticipate that we would invoke the disclosure requirement when we become aware that a PACE organization has serious compliance or performance deficiencies such as those that may lead to intermediate sanctions or requires immediate correction, and where we believe PACE participants and potential PACE participants should be specifically notified.
Consistent with § 423.128(d), CMS waives any provision of the Part D regulations to the extent that CMS determines that the provision is duplicative of, or conflicts with, a provision otherwise applicable to PACE organizations under sections 1894 or 1934 of the Act, or as necessary to promote coordination between Part D and PACE. Because sections 1894 and 1934 of the Act do not include a requirement for PACE organizations to notify current and potential PACE participants of the organization's performance and contract compliance deficiencies, the regulation at § 423.128(f) does not duplicate, conflict with, or impede coordination between Part D and PACE. In addition, we note that at the time CMS announced the waiver of § 423.128 in the January Part D 2005 final rule (
We received the following comments on this proposal, which are summarized later in this section:
We received a comment on the following topic which is outside the scope of our proposal and to which we are therefore not responding: A request for CMS to create public reporting of performance for PACE organizations similar to Nursing Home Compare and an updated PACE manual with interpretive guidance prior to instituting a disclosure requirement.
After consideration of the comments received, and for the reasons set forth in the proposed rule and our responses to comments, we are finalizing our proposal to add § 460.198 to require PACE organizations to disclose to current PACE participants and potential PACE participants information specific to PACE organization performance and contract compliance deficiencies, in a manner specified by CMS, without modification.
Sections 1894(e)(3)(A) and 1934(e)(3)(A) of the Act require PACE organizations to collect, maintain, and report data necessary to monitor the operation, cost, and effectiveness of the PACE program to CMS and the State administering agency (SAA).
Following publication of the 1999 PACE interim final rule, CMS established a set of participant health outcomes data that PACE organizations were required to report to CMS. In subsequent years, we have modified the participant health outcomes data on a routine basis to ensure that we are collecting data that is relevant and useful to our efforts to monitor and oversee the PACE program. According to 5 CFR 1320.15, at least once every 3 years, to comply with the Paperwork Reduction Act of 1995 (Pub L. 104-13) (PRA), CMS is required to publish the proposed data collection and solicit public comment. The data collection requirements related to participant health outcomes data can be found in the information collection request currently approved under OMB control number 0938-1264 (CMS-10525). Section 460.202 currently requires participant health outcomes data reported to CMS and the SAA to be specified in the PACE program agreement; however, CMS does not routinely update program agreements based on changes to the required participant health outcomes data. As a result, the quality data collection specified in the program agreement is often out of date and no longer applicable within a few years.
Since the participant health outcomes data that PACE organizations must report to CMS and the SAA are specified and routinely updated through the PRA process, we proposed to amend paragraph (b) of § 460.202 by striking the final sentence, which states, “The items collected are specified in the PACE program agreement.” As explained in the proposed rule, we believe this change would eliminate any confusion regarding where the data collection requirements may be found (87 FR 79673).
The PACE program agreement would still include a statement of the data collected, as required by § 460.32(a)(11), but it would not include the level of specificity regarding the data collection that is included in the CMS PRA information collection request approved under OMB control number 0938-1264. We believe modifying § 460.202 as proposed would not increase the burden on PACE organizations as they are currently required to furnish information to CMS and the SAA through the aforementioned information collection request.
We solicited comment on this proposal and a summary of the comments received and our response follows.
Sections 1894(e)(4) and 1934(e)(4) of the Act require CMS, in cooperation with the State administering agency (SAA), to conduct comprehensive reviews of PACE organizations' compliance with all significant program requirements. Additionally, sections 18941(e)(6)(A)(i) and 1934(e)(6)(A)(i) of the Act condition the continuation of the PACE program agreement upon timely execution of a corrective action plan if the PACE provider fails to substantially comply with the program requirements as set forth in the Act and regulation. In the 1999 PACE interim final rule, we specified at § 460.194(a) and (c) that PACE organizations must take action to correct deficiencies identified by CMS or the SAA, or PACE organizations may be subject to sanction or termination (84 FR 66296). The 2019 PACE final rule amended § 460.194(a) to expand the ways CMS or the SAA may identify deficiencies that the PACE organization must correct (84 FR 25677). These include ongoing monitoring, reviews, audits, or participant or caregiver complaints, and for any other instance in which CMS or SAA identifies programmatic deficiencies requiring correction (84 FR 25677).
The 1999 PACE interim final rule also specified at § 460.194(b) that CMS or the SAA monitors the effectiveness of PACE organizations' corrective actions. The burden on CMS and SAAs to always monitor the effectiveness of every corrective action taken by the organization after an audit is high, and the number of audits, and thus the number of instances in which monitoring is required, increases each year because the PACE program continues to rapidly grow, and CMS is required to conduct audits in each year of the three-year trial period for new PACE contracts. However, as discussed in the November 2023 proposed rule, our experience overseeing this program has shown that it is not always necessary or worthwhile for CMS to monitor the effectiveness of every corrective action taken by an audited organization. We provided the example that a PACE organization may implement a corrective action that impacts its unscheduled reassessments due to a change in participant status, but historically, these types of assessments are not conducted frequently; thus, it may not be worthwhile for CMS or the states to spend resources monitoring the effectiveness of that correction due to limited data available for CMS or the SAA to monitor. Additionally, as PACE continues to grow, it will be increasingly important that CMS and the SAA have the flexibility to determine how to use their oversight resources most effectively. Therefore, in the November 2023 proposed rule, we proposed an amendment to § 460.194(b) that specified, at their discretion, CMS or the SAA may monitor the effectiveness of corrective actions (88 FR 78587).
As discussed in the November 2023 proposed rule, the flexibility afforded under this proposed amendment to § 460.194(b) would not change our expectation that PACE organizations expeditiously and fully correct any identified deficiencies, and CMS and the SAAs would continue to engage in monitoring efforts that prioritize participant health and safety and program integrity. In addition, as a part
Since the effect of the proposed change would be to provide CMS and the SAA more flexibility when monitoring the effectiveness of corrective actions without placing new requirements on CMS, the SAAs, or PACE organizations, we believe this change would create no additional burden for PACE organizations. Additionally, we do not expect this change to have economic impact on the Medicare Trust Fund.
We solicited comment on this proposal. A summary of the comments received, and our response follows.
In response to commenters that support the change to § 460.194(b), we offer the following clarifications. First, we clarify that we do not expect the implementation of the change at § 460.194(b) to alter the PACE audit corrective action monitoring process in a way that increases PACE organizations' burden. Second, we clarify that, given the complexity and scope of potential corrective actions, we decline to establish specific criteria or thresholds as determinants of whether CMS or the SAA will monitor the effectiveness of a particular corrective action for the purposes of this final rule. Moreover, it is important for any corrective action monitoring threshold we create as a result of the discretion afforded under § 460.194(b) to be internal to CMS and the SAA in order to ensure we have the flexibility to reassess any thresholds, as needed, based on new information and changing data. However, such discretion, when applied, will safeguard PACE participant wellbeing and safety and program integrity while considering the monitoring resources available to CMS and the SAA, and will be consistently applied across organizations. Whether monitoring a specific corrective action is necessary or worthwhile will depend on CMS and SAA consideration of these objectives.
In response to the commenter that supported the change at § 460.194(b) and recommended that CMS and the SAA use their corrective action monitoring discretion “liberally” to reduce burden for PACE organizations, we emphasize that, although the change to § 460.194(b) might reduce burden for audited PACE organizations, we do not anticipate a significant burden reduction for PACE organizations as a result of this provision. Regardless of formal monitoring of corrective actions by CMS or the SAA, as previously mentioned, PACE organizations must correct any issues of noncompliance identified by CMS and the SAA and adopt their own oversight compliance program in accordance with § 460.63 compliance oversight requirements. Additionally, we expect PACE organizations to demonstrate that they have appropriately corrected all noncompliance identified during their previous audit during subsequent audits by CMS and the SAA.
After consideration of the comments we received, we are finalizing the proposed amendments to § 460.194(b) without modification.
Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify that PACE organizations must have in effect written safeguards of the rights of enrolled participants, including procedures for grievances and appeals. Along with the regulations at § 460.120 related to grievances, and § 460.122 related to appeals, CMS created a process for service determination requests, the first stage of an appeal, at § 460.121.
The PACE regulations define a service determination request as a request to
Our intention for this provision was that the IDT would discuss specific requests made by a participant and/or caregiver as part of the care planning process and determine whether these requests needed to be addressed in the plan of care. We stated in the February 2020 proposed rule that if a participant asked for a specific number of home care hours, that the request would not need to be processed as a service determination request because the IDT was actively considering how many home care hours the participant should receive as part of the development of the initial plan of care (85 FR 9125). This rationale is also consistent with our statement in the proposed rule titled “Medicare and Medicaid Programs; Programs of All-Inclusive Care for the Elderly (PACE),” which appeared in the August 16, 2016
However, as part of our oversight and monitoring of PACE organizations, we have found that often requests made by participants and/or caregivers prior to the finalizing of the care plan are not discussed during the care planning process and are therefore not considered by the IDT. These requests are some of the first communications from participants related to the care they will be receiving from the PACE organization and would otherwise be considered service determination requests at any other stage of their enrollment. While we continue to believe that it is not prudent for the PACE organization to process these requests as service determination requests, it is important that the IDT consider these requests and determine whether they are necessary for the participant.
Therefore, we proposed to modify the regulation text at § 460.121(b)(2) to specify that service requests made prior to developing the participant's initial plan of care must either be approved and incorporated into the participant's initial plan of care, or the rationale for why it was not approved and incorporated must be documented. Specifically, we proposed to add the following sentence at the end of current § 460.121(b)(2): “For all requests identified in this section, the interdisciplinary team must (i) document the request, and (ii) discuss the request during the care plan meeting, and either: A) approve the requested service and incorporate it into the participant's initial plan of care, or B) document their rationale for not approving the service in the initial plan of care.” As we stated in the November 2023 proposed rule at 88 FR 78588, we believe this change is consistent with existing plan of care requirements at § 460.104(b) and aligns with our plan of care proposals in the December 2022 proposed rule (87 FR 79452), which we discuss in section IX.F of this final rule.
As the development of the plan of care is a typical responsibility for the IDT, any burden associated with this would be incurred by persons in their normal course of business. Therefore, the burden associated with documenting the determination of any assessment of a participant and/or caregiver service request during the initial care planning process is exempt from the PRA in accordance with 5 CFR 1320.3(b)(2).
We solicited comment on this proposal. A summary of the comments received and our responses follow.
While we understand that certain service areas may require PACE organizations to finalize the initial plan of care prior to enrollment, we would expect that any request for service received during the initial care planning process would be documented and that the IDT would discuss the request as part of the normal course of creating the initial plan of care regardless of whether the care planning process occurs prior to or after enrollment. We have seen through our oversight and monitoring activities that these requests for services
We are also not persuaded by the argument that it is more appropriate to wait until the participant has an initial plan of care to document their requests for services to allow the participant to become more familiar with the services provided by the PACE organization. Per § 460.98(a), PACE organizations are required to provide care that meets participant needs across all care settings, 24 hours a day, every day of the year regardless of whether the participant is familiar with what services are available to them. Additionally, in the early part of a participant's enrollment into PACE, prior to an initial plan of care being finalized, participants are actively engaged in communicating the services they hope to receive from the PACE organization. Those requests that indicate the participant's wishes for treatment should be considered and addressed as part of the development of the initial plan of care. It is the IDT's responsibility to document, assess, and determine whether a requested service is necessary to meet the needs of the participant based on the requirements in § 460.92(b). Due to the PACE benefit including any service that is determined necessary by the IDT, the participant's understanding of the benefit should not hinder their ability to advocate for services they believe are necessary for their medical, physical, social, or emotional needs.
After reviewing and considering the public comments received, we are finalizing the regulation as proposed.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501
• The need for the information collection and its usefulness in carrying out the proper functions of our agency.
• The accuracy of our estimate of the information collection burden.
• The quality, utility, and clarity of the information to be collected.
• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.
In our December 27, 2022 (CMS-4201-P; RIN 0938-AU96; 87 FR 79452) and November 15, 2023 (CMS-4205-P; RIN 0938-AV24; 88 FR 78476) proposed rules we solicited public comment on each of the aforementioned issues for the following information collection requirements. The following ICRs received PRA-related comment: #2 (Standards for Electronic Prescribing), #7 (Mid-Year Notice of Unused Supplemental Benefits), #9 (Agent Broker Compensation), and #14 (Part D Medication Therapy Management Program Eligibility Criteria). A summary of the comments and our response can be found below under the applicable ICR section.
To derive mean costs, we are using data from the most current U.S. Bureau of Labor Statistics' (BLS's) National Occupational Employment and Wage Estimates for all salary estimates (
As indicated, we are adjusting our employee hourly wage estimates by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and other indirect costs vary significantly from employer to employer and because methods of estimating these costs vary widely from study to study. In this regard, we believe that doubling the hourly wage to estimate costs is a reasonably accurate estimation method.
The December 2022 NPRM's (CMS-4201-P) wages were based on BLS' 2021 wage data. This final rule updates those wages to reflect BLS' 2022 wage data. Table J2 compares BLS' May 2021 and May 2022 mean hourly wages for the applicable occupation codes.
The November 2023 NPRM (CMS-4205-P) set out BLS' May 2022 wages. In that regard they are unchanged in this final rule.
We believe that the cost for beneficiaries undertaking administrative and other tasks on their own time is a post-tax wage of $20.71/hr. The Valuing Time in U.S. Department of Health and Human Services Regulatory Impact Analyses: Conceptual Framework and Best Practices identifies the approach for valuing time when individuals undertake activities on their own time. To derive the costs for beneficiaries, a measurement of the usual weekly earnings of wage and salary workers of $998, divided by 40 hours to calculate
The following ICRs are listed in the order of appearance within the preamble of this final rule.
The following changes will be submitted to OMB for approval under control number 0938-1346 (CMS-10636).
To ensure that MA enrollees have access to provider networks sufficient to provide covered services, including behavioral health service providers, we are proposing to add one new facility-specialty type that will be subject to network adequacy evaluation under § 422.116. As discussed in the “Expanding Network Adequacy Requirements for Behavioral Health” section of the preamble, we are finalizing our proposal to amend the network adequacy requirements and add one combined facility-specialty category called “Outpatient Behavioral Health” under § 422.116(b)(2) and to add “Outpatient Behavioral Health” to the time and distance requirements at § 422.116(d)(2). For network adequacy evaluation purposes, provider types under this category can include, Marriage and Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid Treatment Program (OTP) providers Community Mental Health Centers or other behavioral health and addiction medicine specialists and facilities. Based on the current regulation at § 422.116(e)(2) for all facility-specialty types other than acute inpatient hospitals, the minimum provider number requirement for this proposed new provider type is one. Finally, we also proposed to add the new “Outpatient Behavioral Health” facility-specialty type to the list at § 422.116(d)(5) of the specialty types that will receive a 10-percentage point credit towards the percentage of beneficiaries that reside within published time and distance standards for certain providers when the plan includes one or more telehealth providers of that specialty type that provide additional telehealth benefits, as defined in § 422.135, in its contracted network. To determine the potential burden regarding this proposal, we considered cost estimates for MA organizations to update policies and procedures. However, the burden for updating the HPMS system is a burden to CMS and its contractors and hence is not subject to the requirements of the PRA.
Although there is no cost for MA organizations to report new specialty types to CMS for their network adequacy reviews as this proposal requires, we have determined that there is a minimal one-time cost for MA organizations to update their policies and procedures associated with this proposal.
First, regarding reporting the new specialty types to CMS, MA organizations are already conducting ongoing work related to network adequacy reviews that happen during the initial or service area application, or every 3 years for the triennial review. This provision requires that the specialty type be added to the Health Services Delivery (HSD) tables during any network adequacy evaluation requested by CMS. The time to conduct tasks related to adding additional specialty types on the HSD tables is negligible.
We understand that MA organizations will need to update their policies and procedures related to submission of HSD tables to ensure that the new required behavioral health specialty type is included. We estimate that it would take 5 minutes (0.0833 hr) at $79.50/hr for a business operations specialist to update policies and procedures related to this task. In aggregate we estimate a one-time burden of 62 hours (742 MA contracts * 0.0833 hr) at a cost of $4,929 (62 hr * $79.50/hr).
We received no comments specific to our analysis of paperwork burden and are therefore finalizing our estimates as is.
The following changes will be posted for public review under control number 0938-0964 (CMS-10141) using the standard non-rule PRA process which includes the publication of 60- and 30-day
In the provision, “Changes to an Approved Formulary” (see section III.Q. of the December 2022 proposed rule [87 FR 79452]) we proposed to codify guidance in place since early in the Part D program and in section VII.B.10. of the December 2022 proposed rule (87 FR 79680), we outlined ICRs regarding the proposed provision. In the provision “Additional Changes to an Approved Formulary—Biosimilar Biological Product Maintenance Changes and Timing of Substitutions” (see section III.F. of the November 2023 proposed rule [88 FR 78476]), we proposed to update the regulatory text proposed in the December 2022 proposed rule to permit Part D sponsors to treat substitutions of biosimilar biological products other than interchangeable biological products as “maintenance changes” under § 423.100 as proposed in the December 2022 rule. We also proposed to revise paragraphs (1) and (2) of the § 423.100 definition of “maintenance changes” to clarify that certain substitutions need not take place “at the same time” but that Part D sponsors can remove or make negative changes to a brand name drug or reference product within a certain time period after adding a corresponding drug or a biosimilar biological product other than an interchangeable biological product to the formulary. Lastly, we proposed a few technical changes, including in support of the above specified proposals. In this final rule, we are finalizing the proposed changes with some technical clarifications that do not impact our estimates.
The burden estimates in the December 2022 proposed rule were based on actual formulary changes submitted to CMS for contract year (CY) 2021 since the “Changes to an Approved Formulary” proposals primarily set out to codify existing guidance that Part D sponsors had already been following. We did not make adjustments to the methodology for this collection request
The burden associated with the negative change request process and notice of negative formulary changes to CMS, affected enrollees, current and prospective enrollees, and other specified entities (as listed in
Immediate formulary changes require advance general notice that such changes may occur at any time. Advance general notice to CMS of immediate substitutions is currently incorporated into annual bid submission workflow as a simple checkbox, which we do not believe has added substantial burden to the overall bid submission process. Language constituting advance general notice of immediate formulary changes (that is, immediate substitutions, positive formulary changes, and market withdrawals) for other specified entities and current and prospective enrollees, is already incorporated into model formulary and evidence of coverage documents and we do not believe our changes would add a substantial burden to preparing the documents outside of the routine annual updates. The burden attributed to the dissemination of Part D plan information is approved under the aforementioned control number at 80 hours annually for each Part D contract's business operations specialist to prepare required plan materials consistent with
Part D sponsors notify CMS of their intent to make a negative formulary change by submitting a negative change request (NCR) via the Health Plan Management System (HPMS) NCR module. Part D sponsors provide CMS notice of changes which do not require NCRs by submitting updated formulary files during monthly windows, which is a standard formulary management operation. Part D sponsors submit formularies which can be used across multiple contracts and plans. In 2023, CMS approved 542 formularies which were used across 1,556 contracts and 7,048 plans offered by 197 parent organizations. Since there are some efficiencies with respect to formulary management and NCR submissions (for example, NCRs submitted for one formulary can be applied to others in a streamlined manner), we estimate burden at the parent organization level. However, not all Part D sponsors submit NCRs. In 2023, 89 parent organizations submitted 2,642 NCRs for 219 formularies. We believe that generally a pharmacist is responsible for managing NCR submissions and that each NCR takes approximately 5 minutes (0.0833 hr) to submit through the HPMS module, based on CMS internal user testing. In total, for 89 parent organizations, the burden to submit NCRs is estimated to be 220 hours (2,642 NCRs × 0.0833 hr per NCR) at a cost of $ 27,377 ($124.44/hr × 220 hr).
Part D sponsors include immediate formulary changes, approved negative changes, and any enhancements (for example, addition of newly approved drugs, moving a drug to a lower cost-sharing tier, removing or making less restrictive utilization management requirements) to their formularies consistent with formulary requirements. Generally, every formulary is updated during these monthly formulary update windows and CMS reviews all changes to ensure they are consistent with regulatory requirements. Since every parent organization generally updates their formulary regardless of whether any negative changes are made, we estimate burden for all 197 parent organizations representing 542 formularies in 2023. There are 11 formulary update windows per year (monthly from January to November). We believe a pharmacist is generally responsible for managing formulary submissions. In this case, 5,962 formulary submissions (542 formularies × 11 submission windows). We estimate that each formulary file update requires 2 hours to prepare, for a total of 11,924 hours (5,962 submissions × 2 hr per submission) at a cost of $1,483,823 (11,924 hr × $124.44/hr).
In addition to notifying CMS in the manner described, Part D sponsors are required to notify other specified entities of formulary changes. As
Enrollees affected by negative formulary changes are currently required to receive direct written notice as described at
The following example illustrates this process. As of December 2023, there were 52,376,078 Part D enrollees. As stated previously, multiple contracts and plans may share the same formulary. A negative formulary change submitted for Drug A on a particular formulary impacted a total of 108 individual plans utilizing this formulary. The total number of Part D enrollees taking Drug A in 2022 was 364,930. The total number of enrollees in the 108 plans implementing the negative formulary change was 1,776,856, representing 3.392 percent of the total Part D enrollment (1,776,856/52,376,078). We then assume that of the 364,930 Part D enrollees taking Drug A during 2022, that 3.392 percent or 12,380 enrollees (364,930 × 0.03392) were affected by the negative formulary change assuming they were still taking the drug in 2023. This logic was applied across all immediate substitutions and maintenance formulary changes submitted for contract year 2023. We do not estimate enrollees affected by market withdrawals since these occur infrequently and unpredictably (historically occurring every few years) and the number of enrollees affected could vary substantially depending on the drug implicated.
In total, there were 143 parent organizations that implemented immediate substitutions or maintenance formulary changes for 348 formularies used for 528 contracts and 2,298 plans affecting a total of 54,114 enrollees. We do not attribute substantial burden associated with incorporating the model notice into Part D sponsors' internal systems for mailing, since this would have been a one-time initial upload with minor updates annually. We therefore calculate non-labor costs associated with sending notice of formulary change to affected enrollees. Enrollees may opt in to receiving communication materials electronically rather than via hard-copy mailings; however, consistent with informal communication from stakeholders for other required documents, we assume all affected enrollees prefer hard-copy mailings. Costs for hard-copy mailings include paper, toner, envelopes, and postage.
•
•
•
•
++ A sheet of paper weights 0.16 ounces (5 pounds/500 sheets × 16 ounces/pound). We estimate each mailing to consist of 2 pages or 0.32 ounces, so no additional postage for mailings in excess of 1 ounce is anticipated.
Thus, the cost per mailing is $0.712 ([$0.007 for paper × 2 pages] + [$0.007 for toner × 2 pages] + $0.64 for postage + $0.044 per envelope). We estimate the total annual mailing cost at $38,529 ($0.7120 per notice × 54,114 affected enrollees).
The summary of burden, labor and non-labor costs, associated with this provision follows in Table J3.
We received no comments specific to our analysis of paperwork burden based on our proposed changes to an approved formulary in the December 2022
The following changes will be submitted to OMB for approval under control number 0938-TBD (CMS-10874). At this time, the OMB control number has not been determined, but it will be assigned by OMB upon its clearance of our collection of information request. We intend to identify the new control number in the subsequent final rule. The control number's expiration date will be issued by OMB upon its approval of our final rule's collection of information request. When ready, the expiration date can be found on
Ordinarily, the changes would be submitted to OMB for approval under control number 0938-0964 (CMS-10141), where the current OMB-approved Part D drug management program (DMP) information collection and burden is located. However, based on internal review, we are removing the DMP information collection and related burden from CMS-10141 and submitting it under a new collection of information request (OMB 0938-TBD, CMS-10874). This change will streamline clearance processes and minimize duplicative administrative burden for CMS and other stakeholders. Although we are removing DMP burden from CMS-10141, that collection will continue to include burden associated with many other aspects of the Part D program.
As described in section III.L. Improvements to Drug Management Programs, Definition of Exempted Beneficiary of this final rule, we are amending regulations regarding Part D DMPs for beneficiaries at risk of abuse or misuse of frequently abused drugs (FADs). Specifically, we are amending the definition of “exempted beneficiary” at § 423.100 by replacing the reference to “active cancer-related pain” with “cancer-related pain.” This change will reduce the overall burden associated with sponsors providing DMP case management and notices to potentially at-risk beneficiaries (PARBs) and at-risk beneficiaries (ARBs) because some beneficiaries identified as PARBs under the current definition would be excluded under the amended definition.
Under § 423.153(a), all Part D plan sponsors must have a DMP to address overutilization of FADs for enrollees in their prescription drug benefit plans. Based on 2023 data, there are 319 Part D parent organizations. The provisions codified at § 423.153(f)(2) require that Part D sponsors conduct case management of beneficiaries identified by the minimum overutilization monitoring system (OMS) criteria through contact with their prescribers to determine if a beneficiary is at-risk for abuse or misuse of opioids and/or benzodiazepines. Case management must include informing the beneficiary's prescriber(s) of the beneficiary's potential risk for misuse or abuse of FADs and requesting information from the prescribers relevant to evaluating the beneficiary's risk, including whether they meet the regulatory definition of exempted beneficiary. Under current CMS regulations at § 423.100, if a beneficiary meets the definition of an exempted beneficiary, the beneficiary does not meet the definition of a PARB. For this reason, exempted beneficiaries cannot be placed in a Part D sponsor's DMP.
In 2022, the OMS identified 43,915 PARBs meeting the minimum criteria prior to applying exclusions and 30,411 after excluding exempted beneficiaries. Thus, 13,504 beneficiaries (43,915−30,411) met the definition of exempted beneficiary. Amending the definition of “exempted beneficiary” at § 423.100 by replacing the reference to “active cancer-related pain” with “cancer-related pain” results in 46 additional enrollees meeting the definition of exempted beneficiary, or 13,550 exempted beneficiaries total (13,504 + 46). This yields 30,365 (43,915−13,550) instead of 30,411 beneficiaries requiring case management under the amended definition.
We estimate it takes an average of 5 hours for a sponsor to conduct case management for a PARB. We assume certain components of case management can be completed by staff of differing specialization and credentialing. Of the 5 hours, we assume that 2 hours at $124.44/hr would be conducted by a pharmacist (such as initial review of medication profiles, utilization, etc.), 2 hours at $38.70/hr would be conducted by a pharmacy technician, and 1 hour at $229.52/hr would be conducted by a physician to work directly with prescribers on discussing available options and determining the best course of action. The case management team would require 5 hours at a cost of $555.80 per PARB case managed ([2 hr × $124.44/hr] + [2 hr * $38.70/hr] + [1 hr * $229.52/hr]). Therefore, the case management team's average hourly wage is $111.16/hr ($555.80/5 hr). In aggregate, we estimate annual burden with the changes for case management is 151,825 hours (30,365 enrollees subject to case management * 5 hr/response) at a cost of $16,876,867 (151,825 hr * $111.16/hr); see case management row in Table J5. CMS 10141 included an estimate for the current case management burden of 178,855 hours and, with the hourly wage updated, a cost of $19,881,522; see case management row in Table J4. Thus, we calculate a savings of 27,030 hours (178,855 hr−151,825 hr) and $3,004,655 ($19,955,671−$16,876,867) with this updated burden; see case management row in Table J6 and note that in Table J6 we list savings as a negative number.
As a result of case management, a portion of PARBs may receive notice from a plan sponsor informing the beneficiary of the sponsor's intention to limit their access to coverage of opioids and/or benzodiazepines. Approximately 5 percent of PARBs identified by OMS criteria receive an initial and either a second notice or an alternate second notice. Amending the definition of “exempted beneficiary” would reduce the number of notices sent. Therefore, it follows that 2 fewer PARBs would receive notices (46 additional individuals * 0.05) and there would be 4 fewer notices total (2 enrollees * 2 notices/enrollee). Approximately 1,518 (30,365 * 0.05) PARBs overall would receive an initial and second notice (or alternate second notice) annually. We estimate it takes a pharmacy technician at $38.70/hr approximately 5 minutes (0.0833 hr) to send each notice and a total of 10 minutes (0.1667 hr) per enrollee to send both notices. In aggregate, we estimate an annual burden with the changes for sending notices of 253 hours (1,518 enrollees * 0.1667 hr) at a cost of $9,791 (253 hr * $38.70/hr) to send both notices; see the row for notification for enrollees in Table J5. CMS 10141, presenting the current burden, includes an estimated notice burden of 1,319 hours and, with the hourly wage updated, a cost of $51,045; see the row for notification for enrollees in Table J4 Thus, we calculate a savings of 1,066 hours (1,319 hr−253 hr) and $41,254 ($51,045−$9,791) with this updated burden; see the row for notification for enrollees in Table J6 and note that in Table J6 we list savings as a negative number.
Amending the definition of “exempted beneficiary” also reduces the burden of disclosure of DMP data to CMS based on the outcome of case management of PARBs. Using 30,365
Table J5 presents the estimated burden in this final rule which will be submitted with the new package, CMS-10874, which uses the currently approved burden from CMS-10141 as a baseline.
In aggregate, these changes will result in an annual reduction of cost of $3,049,392 and reduction of 28,186 hours. The aggregate burden change (reduction) is presented in Table J6, and will be submitted with the new package, CMS-10874.
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
In section III.Q. of this final rule, we discuss two provisions to improve access to MA encounter data for certain purposes. We noted that our current regulatory language limits CMS's ability to use and disclose MA encounter data to States for activities in support of administration or evaluation of the Medicaid program, including care coordination. Further, the regulation delays when CMS may share MA encounter data to State Medicaid agencies for care coordination and quality review and improvement activities for the Medicaid program, particularly with regard to dually eligible individuals. This final rule improves access to MA encounter data by:
• Adding “and Medicaid programs” to the current MA risk adjustment data use purposes codified at § 422.310(f)(1)(vi) and (vii); and
• Adding § 422.310(f)(3)(v) to allow for risk adjustment data to be released prior to reconciliation if the data will be released to States for the purpose of coordinating care for dually eligible individuals.
Together, these provisions clarify and broaden the allowable data uses for CMS and external entities (for data disclosed in accordance with § 422.310(f)(2) and (3)). We discuss the regulatory impact on CMS review and fulfillment of new MA encounter data requests in section XI. of this rule, explaining that we did not anticipate any significant impact to CMS.
As discussed in sections III.Q. and XI. of this rule, these provisions will allow States to voluntarily request MA encounter data from CMS for certain allowable purposes to support the Medicaid program. Currently, States can request MA encounter data to support the administration of the Medicare program or Medicare-Medicaid demonstrations, and to conduct evaluations and other analyses to support the Medicare program (including demonstrations). In addition, we interpret the regulation as permitting use and disclosure of MA encounter data for quality review and improvement activities for Medicaid as well as Medicare.
When determining the potential burden on States, we considered our existing data sharing program for States to request Medicare data for initiatives related to their dually eligible population. We expected the process to request MA encounter data would be similar to the process that States currently undertake to request new Medicare FFS claims and events data files or to update allowable data uses. All States, including the District of Columbia, maintain agreements with CMS that cover operational data exchanges related to the Medicare and Medicaid program administration as well as optional data requests for Medicare claims and events data. Therefore, States interested in requesting MA encounter data will not need to complete and submit a new data agreement for MA encounter data; instead, they will submit a use justification for the new data request and update their existing data agreement form. We note that requesting Medicare data is voluntary and that not all States currently request Medicare FFS claims or prescription drug events data for coordinating care of dually eligible beneficiaries, and of those States that request Medicare data, not all States request the same Medicare data files. As with Medicare FFS claims and events data, States will maintain the ability to choose if and when they want to request MA encounter data for existing or newly expanded uses. We further note that the process for States to submit a request for data and for CMS to review these requests are part of standard operations for CMS and many States. Additionally, we have technical assistance support to help States navigate the data request process and maintain their data agreements.
In the August 2014 final rule, when we established several of the current provisions around CMS disclosure of MA encounter data, we explained that we had determined that “the proposed regulatory amendments would not impose a burden on the entity requesting data files.” (79 FR 50445). Similarly, for the proposed refinements to the approved data uses and the data disclosure in the November 2023 proposed rule, we did not anticipate a significant change in burden for States.
In the November 2023 proposed rule, we solicited comments specific to our analysis of no impact on paperwork burden. We received no comments on this analysis. We are finalizing the ICR narrative as is.
The following changes will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267).
As explained in section IV.B. of this rule, due to increased offering of SSCBI, we are finalizing our proposal with modification to: (1) require the MA organization to establish, by the date on which it submits its bid, a bibliography of “relevant acceptable evidence” related to the item or service the MA
Item (4) is a burden specific to CMS and is therefore not subject to collection of information requirements. We choose to combine the burdens of: (1) and (2) as the evidence gathered under (1) will likely directly inform the criteria established under (2).
In estimating the impact, we note the following: (i) Not all contracts offer SSBCI (only about 40 percent); (ii) not all plan benefit packages (PBP) offer them (only about 20 percent); (iii) the distribution of the number of SSBCI per PBP is highly skewed (for example, for 2023 the average is about 8 while the median is 2); and (iv) both the median and 3rd quartile of the number of SSBCI per PBP reflect only a handful of SSBCI offered.
Based on internal CMS data we are using 10,000 SSBCI per year for the three-year estimates required by the Collection of Information requirements. To comply with the requirements of the provision that would require bibliography, a staff member knowledgeable in health should be deployed. We are using a registered nurse. Establishing a bibliography requires research, including reading papers and assessing their quality. Because the bibliography would contain only citations and copies of the necessary information, and not any narrative, we assume these activities would take a day of work (8 hours), which can refer to the aggregate activity of 1 nurse working 8 hours or 2 nurses working 4 hours each. A plan would need to review and update its bibliography annually. We assume that updating an existing bibliography would take less time than establishing an initial bibliography. We estimate that it would take 8 hours each year to update existing bibliographies.
To create a single line-item, we estimate that it would take 8 hours at $85.60/hr for a registered nurse to create the bibliography for one plan. Thus, the median burden per plan is 16 hours (8/hr per SSBCI * a median of 2 SSBCI) at a cost of $1,397 ($85.60/hr *16 hr). The aggregate cost across all plans would be 80,000 hours (8 hours per SSBCI * 10,000 aggregate SSBCI) at a cost of $6,848,000 (80,000 * $85.60/hr).
Regarding the requirement for plans to document approvals and denials of SSCBI eligibility, it is reasonable that plans already have this information stored in their systems. Thus, we assume that plans will need to compile data already collected into a report or other transmittable format. We estimate that it would take 2 hours at $98.84/hr for a programmer to complete the initial software update. In aggregate, we estimate a one-time burden of 1,548 hours (774 plans × 2 hr) at a cost of $153,004 (1,548 hr × $98.84/hr).
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
When ready, the following changes will be posted for public review under control number 0938-TBD (CMS-10893) using the standard non-rule PRA process which includes the publication of 60- and 30-day
We note that in the proposed rule, we stated that the changes would be submitted to OMB for approval under control number 0938-0753 (CMS-R-267). However, because (as discussed in the preamble) we intend to create a model notice which will require additional burden analysis and scoring, CMS believes providing the additional 60-day and 30-day public notices through a standalone PRA package will allow both the agency and stakeholders to give the model notice more comprehensive and thoughtful consideration.
Per CMS regulations at § 422.101, MA organizations are permitted to offer mandatory supplemental benefits, optional supplemental benefits, and special supplemental benefits for the chronically ill (SSBCI). The number of supplemental benefit offerings has risen significantly in recent years, as observed through trends identified in CMS's annual PBP reviews. At the same time, CMS has received reports that MA organizations have observed low utilization for many of these benefits by their enrollees and it is unclear whether plans are actively encouraging utilization of these benefits by their enrollees. The finalization of this new requirement will establish a minimum requirement for MA organizations to conduct outreach to enrollees to encourage utilization of supplemental benefits.
We have several concerns about this low utilization of some supplemental benefits. First, we are concerned that beneficiaries may be making enrollment decisions based on the allure of supplemental benefits that are extensively marketed by a given MA plan during the annual election period (AEP), but once enrolled in the plan the beneficiaries do not fully utilize, or utilize at all, those supplemental benefits during the plan year. Such under-utilization of supplemental benefits may hinder or nullify any potential health benefit value offered by these extra benefits. Additionally, section 1854(b)(1)(C) of the Act requires MA plans to provide the value of the MA rebates to enrollees; per CMS regulations at § 422.266, MA rebates must be provided to enrollees in the form of payment for supplemental benefits (including reductions in cost sharing for Part A and B benefits compared to Original Medicare), or payment of Part B or D premiums. Therefore, CMS has an interest in ensuring that the MA rebate is provided to enrollees in a way that they can benefit from the value of these rebate dollars.
Hence, we are finalizing the proposal to require plans engage in targeted outreach to inform enrollees of their unused supplemental benefits they have not yet accessed. This targeted outreach aims to increase utilization of these benefits, as it would increase enrollees' awareness of the supplemental benefits available to them.
This new requirement will ensure that a minimum outreach effort is conducted by MA organizations to inform enrollees of supplemental benefits available under their plans they have not yet accessed. Beginning January 1, 2026, MA organizations must mail a mid-year notice annually, but not sooner than June 30 and not later than July 31 of the
When estimating the burden of this provision, we first noted that plans already keep track of utilization patterns of benefits by enrollees. The primary burden is therefore dissemination of notices. In this regard, there are three burdens: (1) a one-time update to software systems to produce reports; (2) a one-time update of policies and procedures; and (3) the printing and sending of notices to beneficiaries.
• We estimate that a software developer working at $127.82/hr would take about 4 hours to update systems. In aggregate we estimate a one-time burden of 3,096 hours (774 prepaid contracts * 4 hr/contract) at a cost of $395,731 (3,096 hr * $127.82/hr).
• We estimate that a business operations specialist working at $79.50/hr would take 1 hour to update of policies and procedures. In aggregate we estimate a one-time burden of 774 hours (774 prepaid contracts * 1 hour/contract) at a cost of $61,533 (774 hr * $79.50/hr).
• The major cost would be printing and dissemination. There have been several recent CMS rules in which such printing and dissemination has been estimated.
A recent estimate was presented in proposed rule, “Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, Medicare Parts A, B, C, and D Overpayment Provisions of the Affordable Care Act and Programs of All-Inclusive Care for the Elderly; Health Information Technology Standards and Implementation Specifications,” CMS-4201-P, (87 FR 79452) published on December 27, 2022. We have checked the prices listed there for paper and toner and found them consistent with current pricing.
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To make a final calculation we need to estimate the number of enrollees affected and the average number of pages involved.
We believe it reasonable that every MA enrollee has at least one supplemental benefit that they have not used. Since PDPs do not provide supplemental benefits, we would require 32 million mailings for the 32 million enrollees in prepaid contracts. We do not have a definite basis for estimating the average number of pages needed per enrollee. Some enrollees may only require 1 page listing 1 to 3 benefits with all information required by CMS. Some enrollees may require more. We are estimating 3 pages on average per enrollee. Consistent with a 3-page average we are not estimating extra postage (extra postage would first be required for mailings of seven or more pages and we have no way of estimating how many plans if any would require an excess of 6 pages).
Therefore, costs per mailing are $0.726 per mailing ([3 * $0.007 for paper] + [3 * $0.007 for toner] + $0.64 for postage + $0.044 for an envelope). The aggregate non-labor cost for 32 million mailings of one page would be $23,232,000 (32,000,000 * $0.726).
We received the following comment:
With regard to length, the Mid-Year Notice of Unused Supplemental Benefits is intended to be a concise and user-friendly document, and CMS is committed to the formulation of a model design that is both informative and succinct. The length of the document will ultimately vary from enrollee to enrollee, depending on individual utilization and the number of supplemental benefits offered under the plan.
The following changes will be submitted to OMB for approval under control number 0938-0964 (CMS-10141).
As discussed in section IV.F. of this rule, we are adding new requirements related to the Utilization Management (UM) Committee established at § 422.137.
We are finalizing at § 422.137(c)(5) to require a member of the UM committee have expertise in health equity. Reviewing UM policies and procedures is an important beneficiary protection, and adding a committee member with expertise in health equity will ensure that policies and procedures are reviewed from a health equity perspective. We estimate that a compliance officer working at $74.02/hr would take 30 minutes for a one-time update of the policies and procedures. In aggregate, we estimate a one-time burden of 483 hours (966 plans * 0.5 hr) at a cost of $35,752 (483 hr * $74.02/hr).
We are finalizing at § 422.137(d)(6) to require the UM committee to conduct an annual health equity analysis of the use of prior authorization and publicly post the results of the analysis to the plan's website. The analysis will examine the impact of prior authorization, at the plan level, on enrollees with one or more of the following social risk factors: (i) receipt of the low-income subsidy for Medicare Part D, or being dually eligible for Medicare and Medicaid, or (ii) having a disability, as reflected in CMS's records regarding the basis for Medicare Part A entitlement. To gain a deeper understanding of the impact of prior authorization practices on
• The percentage of standard prior authorization requests that were approved.
• The percentage of standard prior authorization requests that were denied.
• The percentage of standard prior authorization requests that were approved after appeal.
• The percentage of prior authorization requests for which the timeframe for review was extended, and the request was approved.
• The percentage of expedited prior authorization requests that were approved.
• The percentage of expedited prior authorization requests that were denied.
• The average and median time that elapsed between the submission of a request and a determination by the MA plan, for standard prior authorizations.
• The average and median time that elapsed between the submission of a request and a decision by the MA plan for expedited prior authorizations.
We estimate that a software and web developer working at an hourly wage of $120.14/hr would take 8 hours at a cost of $961 (8 hr * $120.14/hr) for developing the software necessary to collect and aggregate the health equity analysis data required to produce the report. In aggregate, we estimate a one-time burden of 7,728 hr (966 plans * 8 hr/plan) at a cost of $928,442 (7,728 hr * $120.14/hr).
Annually, the report must be produced and posted to the plan's website. The health equity analysis and public reporting must be easily accessible, without barriers, including but not limited to ensuring the information is available: free of charge; without having to establish a user account or password; without having to submit personal identifying information (PII); to automated searches and direct file downloads through a link posted in the footer on the plan's publicly available website, and includes a txt file in the root directory that includes a direct link to the machine-readable file of public reporting and health equity analysis to establish and maintain automated access. We believe that making this information more easily accessible to automated searches and data pulls and capturing this information in a meaningful way across MA organizations will help third parties develop tools and researchers conduct studies that further aid the public in understanding the information. We assume the plans' programmers will make this an automated process accessing data already in the plans' systems; hence, we estimate minimal time to produce and inspect the report prior to posting. We estimate a Business Operations Specialist working at $79.50/hr would take 0.1667 hr (10 minutes) to produce, inspect, and post the report at a cost of $13 ($79.50/hr * 0.1667 hr). In the aggregate, we estimate an annual burden of 161 hours (966 plans * 0.1667 hr/plan) at a cost of $12,800 (161 hr * $79.50/hr).
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
Since we are scoring this provision as having no burden, we are not submitting any changes to OMB. The active requirements and burden estimates are approved by OMB under control number 0938-0753 (CMS-R-267).
Currently, agents and brokers are compensated by MA plans at national fair market value (FMV) base rate a base rate with a maximum of $611 per enrollee, plus administrative payments. As explained in section X.X of this finalized rule, separate administrative payments are being eliminated but the base rate per enrollee is increasing by $100 per enrollee for new enrollments in MA plans, beginning with contract year 2025. We are also eliminating administrative payments for PDPs and increasing their base rate by $100. For each renewal, agents and brokers receive compensation equal up to 50 percent of the compensation rate so that for MA and PDP enrollees' agents and brokers would receive up to $50 more per enrollee renewal, as permitted under § 422.2274(d)(3).
These increases of $100 per enrollee for MA plan enrollment, and up to $50 for renewals of MA and PDP plans are not costs but rather transfers. The money that formerly was being paid for administrative is sufficient to cover these increases. While we do not have detailed quantitative information on payments, many commenters, from both those who pay as well as those who receive, submitted overall quantitative payment recommendations for administrative payments. The numbers range from $50 to about $500. In other words, currently, several hundred dollars is already being paid per enrollee for administrative payments; this finalized regulation, requiring a payment of $100 per new enrollment would not, according to most commentators, increase net payments but transfer a portion of them to increased compensation.
The differences between this finalized version and the proposed version are explained below in our response to comments.
The comments also included a variety of line items besides the training and transcription items discussed in the NPRM, which commenters believed should be included in estimating the minimum necessary cost of administrative activities.
As a result of comments, we are finalizing our impact analysis as a transfer with no additional cost.
The following changes will be submitted to OMB for approval under
Historically, the industry has stated that CMS's current network adequacy criteria under § 422.116 create challenges for facility-based Institutional Special Needs Plans (I-SNP) because facility-based I-SNP enrollees access services and seek care in a different way than enrollees of other plan types. Thus, we are finalizing provisions to broaden our acceptable rationales for facility-based I-SNPs when submitting a network exception under § 422.116(f). The first new basis for an exception request is that a facility-based I-SNP is unable to contract with certain specialty types required under § 422.116(b) because of the way enrollees in facility-based I-SNPs receive care. Facility-based I-SNPs may also request an exception from the network adequacy requirements in § 422.116(b) through (e) if: The I-SNP covers Additional Telehealth Benefits (ATBs) consistent with § 422.135 and uses ATB telehealth providers of the specialties listed in paragraph (d)(5) to furnish services to enrollees; when substituting ATB telehealth providers of the specialties listed in paragraph (d)(5) for in-person providers, the facility-based I-SNP would fulfill the network adequacy requirements in § 422.116(b) through (e); the I-SNP complies with § 422.135(c)(1) and (2) by covering in-person services from an out-of-network provider at in-network cost sharing for the enrollee who requests in-person services instead of ATBs; and the I-SNP provides substantial and credible evidence that the enrollees of the facility-based I-SNP receive sufficient and adequate access to all covered benefits.
To determine the potential burden, we considered the one-time burden for MA organizations to update policies. The other burden associated with this provision involve updates to the HPMS system, which is done by CMS and its contractors and hence is not subject to the requirements of the PRA.
MA organizations that offer facility-based I-SNPs are already required to conduct work related to network adequacy reviews that happen during the initial or service area expansion application process, or every 3 years for the triennial review. Further, MA organizations that offer facility-based I-SNPs should already have measures in place to submit data to meet CMS network adequacy review requirements to CMS, so there is no additional burden.
We understand that MA organizations will need to update their policies and procedures related to broadening our acceptable rationales for facility-based I-SNPs when submitting a network exception. We estimate that a business operations specialist working at $79.50/hr would take 5 minutes (0.0833 hr) to update policies and procedures related to this task. In aggregate, we estimate a one-time burden of 0.8 hour (10 facility-based I-SNP contracts * 0.0833 hr) at a cost of $64 (0.8 hr * $79.50/hr).
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
In section VIII.F. of this final rule, we are amending §§ 422.514(h), 422.503(b), 422.504(a), and 422.530(c). Section 422.514(h) will require an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, where that MA organization offers a D-SNP (and that parent organization also contracts with the State as a Medicaid managed care organization (MCO) in the same service area), to only offer one D-SNP for full-benefit dually eligible individuals. We are finalizing the regulation at § 422.514(h) with a minor technical modification at § 422.514(h)(1) to correct the terminology to use the term “full-benefit dual eligible individual(s)” where necessary. We are finalizing § 422.514(h)(2) with a modification to clarify that any D-SNP(s) subject to enrollment limitations in § 422.514(h)(1) may only enroll (or continue coverage of people already enrolled) individuals also enrolled in (or in the process of enrolling in) the Medicaid MCO beginning in 2030. We are finalizing with modifications our proposal at § 422.514(h)(3)(i) to permit an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, to offer more than one D-SNP for full-benefit dually eligible individuals in the same service area as that MA organization's affiliated Medicaid MCO only when a SMAC requires it in order to differentiate enrollment into D-SNPs by age group or to align enrollment in each D-SNP with the eligibility criteria or benefit design used in the State's Medicaid managed care program(s). We are also finalizing with technical modifications our proposed amendment at § 422.514(h)(3)(ii) to permit an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization that offers both HMO D-SNP(s) and PPO D-SNP(s) to continue to offer both the HMO and PPO D-SNPs only if the D-SNP(s) not subject to the enrollment limitations at § 422.514(h)(1) no longer accepts new full-benefit dual eligible enrollment in the same service area as the D-SNP affected by the new regulations at §§ 422.504(a)(20) and 422.514(h). This finalized provision will also require the affected D-SNP to limit new enrollment to individuals enrolling in, or in the process of enrolling in, the affiliated Medicaid MCO effective 2027, and further require the D-SNP to limit all enrollment to individuals enrolled in, or in the process of enrolling in the affiliated MCO effective 2030. A new contract provision that we are finalizing at § 422.503(b)(8) will prohibit parent organizations from offering a new D-SNP when that D-SNP would result in noncompliance with the regulation finalized at § 422.514(h). Additionally, the finalized regulation at § 422.504(a)(20) will require compliance with § 422.514(h). To support parent organizations seeking to consolidate D-SNPs, we are also finalizing § 422.530(c)(4)(iii) that will provide a new crosswalk exception to allow D-SNP parent organizations to crosswalk enrollees (within the same parent organization and among consistent plan types) where they are impacted by the requirements at § 422.514(h).
The provisions we are finalizing at §§ 422.514(h) and 422.530(c)(4)(iii) will create burden for MA organizations where they offer multiple D-SNPs in a service area with a Medicaid MCO. Impacted MA organizations will need to non-renew or (more likely) combine plans and update systems as well as notify enrollees of plan changes. We expect that MA organizations will need two software engineers with each working 4 hours at $127.82/hr to update software in the first year with no additional burden in future years and one business operations specialist working 4 hours at $79.50/hr to update plan policies and procedures in the first year with no additional burden in future years. In aggregate, we estimate a one-time burden (for plan year 2027) of 600 hours (50 plans * 12 hr/plan) at a cost of $67,028 (50 plans × [(8 hr * $127.82/hr) + (4 hr * $79.50/hr)]). The aforementioned changes will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267).
We are finalizing a proposal to redesignate § 423.38(c)(35) as § 423.38(c)(36) and finalizing with modification a new integrated care special enrollment period (SEP) at § 423.38(c)(35). This final policy narrows the scope from the proposed policy that would have allowed enrollment in any month into FIDE SNPs, HIDE SNPs, and AIPs for those dually eligible individuals who meet the qualifications for such plans. Instead, the integrated care SEP that we are finalizing at § 423.38(c)(35) will only be available to facilitate aligned enrollment as defined at § 422.2 and are clarifying in § 423.38(c)(35)(i) that the SEP is available only for full-benefit dual eligible individuals as defined in § 423.772. The integrated care SEP at § 423.38(c)(35) will require plans to update guidance and train staff. That new burden would be limited to FIDE SNPs, HIDE SNPs, and AIPs. We expect that plans will need one software engineer working 4 hours at $127.82/hr to update software and one business operations specialist working 4 hours at $79.50/hr to update plan policies and procedures and train staff in the first year with no additional burden in future years. In aggregate, we estimate a one-time burden (for plan year 2025) of 904 hours (113 plans * 8 hr/plan) at a cost of $93,709 (113 plans × [(4 hr * $127.82/hr) + (4 hr * $79.50/hr)]). We do not anticipate any new burden to plans after the initial year. The aforementioned changes will be submitted to OMB for approval under control number 0938-0964 (CMS-10141).
At § 423.38(c)(4) we are replacing the current quarterly special enrollment period (SEP) with a one-time-per month SEP for dually eligible individuals and others enrolled in the Part D low-income subsidy program to elect a standalone PDP. At § 423.38(c)(35), we proposed a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis and are finalizing this proposal with a modification that will narrow the scope of the SEP.
The amendments we are finalizing at § 423.38(c)(4) and (35) will affect the circumstances in which individuals can change plans. Individuals can complete an enrollment form to effectuate such changes, and we have previously estimated that the forms take 0.3333 hours (20 min) to complete as cited under OMB control number 0938-1378 (CMS-10718). However, Medicare beneficiaries make enrollment choices currently, and we do not expect the overall volume of enrollment selections to materially change with our finalized provisions. Therefore, we do not believe the provisions at § 423.38(c)(4) and (35) will impact the burden estimates that are currently approved under 0938-1378 (CMS-10718). Similarly, we are not finalizing any changes to that collection's currently approved forms.
In section XI. of this rule, we describe the impacts related to the expected enrollment shift from non-integrated MA-PDs into FIDE SNPs, HIDE SNPs, and AIPs over time as more D-SNPs align with Medicaid MCOs.
The following changes will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267) consistent with burden on MA plans identified as D-SNP look-alikes under § 422.514(d) through (e). While mentioned below, we are not making any changes under control number 0938-0935 (CMS-10237) and control number 0938-1051 (CMS-10260).
As described in section VIII.J. of this final rule, we are reducing the D-SNP look-alike threshold from 80 percent to 60 percent over a two-year period. We are finalizing a limitation on non-SNP MA plans with 70 or greater percent dually eligible individuals for CY 2025. For CY 2026, we are reducing the threshold from 70 percent to 60 percent or greater dually eligible enrollment as a share of total enrollment. This incremental approach will minimize disruptions to dually eligible individuals and allow plans and CMS to operationalize these transitions over a two-year period.
We will maintain processes to minimize disruption for the enrollees in plans affected by this change. We are applying the existing transition processes and procedures at § 422.514(e) to non-SNP MA plans that meet the D-SNP look-alike contracting limitation of 70 percent or greater dually eligible individuals effective plan year 2025 and 60 percent or greater dually eligible individuals effective plan year 2026. Consistent with the initial years of implementation of the D-SNP look-alike contract limitations with the 80-percent threshold, maintaining these transition processes and procedures will help to minimize disruption for current enrollees as a result of the prohibition on contract renewal for existing D-SNP look-alikes. For plan year 2027 and subsequent years, we are limiting the § 422.514(e) transition processes and procedures to D-SNP look-alikes transitioning dually eligible enrollees into D-SNPs. Based on our experience with D-SNP look-alike transitions through plan year 2024, the vast majority of enrollees transitioned to other MA-PDs under the same parent organization as the D-SNP look-alike.
MA organizations can utilize other CMS processes to transition D-SNP look-alike enrollees to other MA plans. For example, an MA organization can utilize the CMS crosswalk process if it is transitioning the full D-SNP look-alike enrollment to one non-SNP plan benefit package (PBP) of the same type offered by the same MA organization under the same contract and the requirements at § 422.530 for a crosswalk are met. An MA organization moving the entire enrollment of the D-SNP look-alike PBP to another PBP of the same type under the same contract may structure this action as a consolidation of PBPs and use the crosswalk for consolidated renewal process, under § 422.530(b)(1)(ii). An MA organization may utilize the crosswalk exception process, subject to CMS approval, at § 422.530(c)(2) to transition the entire enrollment of the MA contract (including the D-SNP look-alike) to another MA contract (of the same type) offered by another MA organization with the same parent organization as part of a contract consolidation of separate MA contracts. While multiple options exist for MA organizations to transition D-SNP look-alike enrollees to other non-SNP MA plans, these pathways are not available for moving enrollees to D-SNPs.
Using data from the 2023 contract year, we estimate that there are 30 non-SNP MA plans that have enrollment of dually eligible individuals of 70 percent through 79.9 percent of total enrollment and 40 non-SNP MA plans that have enrollment of dually eligible individuals of 60 percent through 69.9 percent of total enrollment. As of January 2023, the 30 non-SNP MA plans had total enrollment of 53,334 enrollees and the 40 non-SNP MA plans had 92,100 enrollees collectively. Of the 30 non-SNP MA plans with 70-79.9 percent dually eligible enrollment, 28 are in States where for contract year 2023 there are D-SNPs or comparable managed care plans and would be subject to § 422.514(d). Of the 40 non-SNP MA plans with 60-69.9 percent dually eligible enrollment, all are in States where for contract year 2023 there are D-SNPs or comparable managed care plans and would be subject to § 422.514(d). As of January 2023, these 68 plans had total enrollment of 145,434 for contract year 2023. If these plans all have the same
As indicated, the following changes will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267).
At § 422.514(e), we established a process for an MA organization with a D-SNP look-alike to transition individuals who are enrolled in its D-SNP look-alike to another MA-PD plan offered by the MA organization, or by the same parent organization as the MA organization, to minimize disruption as a result of the prohibition on contract renewal for existing D-SNP look-alikes. This process allows, but does not require, the MA organization to transition dually eligible enrollees from D-SNP look-alikes into D-SNPs and other qualifying MA-PD plans for which the enrollees are eligible without the transitioned enrollees having to complete an election form. This transition process is conceptually similar to the “crosswalk exception” procedures at § 422.530(a) and (b); however, § 422.514(e) allows the transition process to apply across contracts or legal entities and from non-SNP to SNPs provided that the receiving plan is otherwise of the same plan type (for example, HMO or PPO) as the D-SNP look-alike.
Based on the experience of D-SNP look-alike transitions through plan year 2024, we believe 94 percent of D-SNP look-alikes for plan years 2025 and 2026 will be able to move enrollees into another MA-PD plan using the transition process established at § 422.514(e) or existing crosswalk functionality at § 422.530 and will choose to transition enrollment for plan years 2025 and 2026. All are in States where for contract year 2023 there are D-SNPs or comparable managed care plans that would be subject to § 422.514(d). Therefore, we are assuming the burden of 26 of the 28 non-SNP MA plans with 70-79.9 percent dually eligible enrollment and offered in a State with a D-SNP would transition enrollees for plan year 2025 (for a January 2025 effective date) and 38 of the 40 non-SNP MA plans with 60-69.9 percent dually eligible enrollment would transition enrollees for plan year 2026 (for a January 2026 effective date). In 2027 and subsequent years, we estimate that 12 plans per year would be identified as D-SNP look-alikes under § 422.514(d). Consistent with our assumptions for plan years 2025 and 2026, we assume 94 percent of D-SNP look-alikes for plan year 2027, which is 11 D-SNP look-alikes, will be able to move enrollees into another MA-PD plan. Consistent with our estimates from the June 2020 final rule, we estimate each plan will take a one-time amount of 2 hours at $79.50/hr for a business operations specialist to submit all enrollment changes to CMS necessary to complete the transition process. D-SNP look-alikes that transition enrollees into another non-SNP plan will take less time than D-SNP look-alikes that transition eligible beneficiaries into a D-SNP because they would not need to verify enrollees' Medicaid eligibility. The 2-hour time estimate accounts for any additional work to confirm enrollees' Medicaid eligibility for D-SNP lookalikes transitioning eligible enrollees to a D-SNP. Based on the previous discussion, the estimates for the burden for MA organizations to transition enrollees to other MA-PD plans during the 2025-2027 plan years is summarized in Table J7.
Based on our experience through plan year 2024, we expect the vast majority of MA organizations with non-SNP MA plans with dually eligible enrollment between 60 and 80 percent of total enrollment also have an MA-PD plan with a premium of $0 or a D-SNP in the same service area as the D-SNP look-alike. Based on 2023 plan year data, of the 30 non-SNP MA plans with 70 to 79.9 percent dually eligible enrollment, 19 of these plans (63 percent) have a D-SNP within the same service area or nearly the same service area. Also based on 2023 plan year data, of the 40 non-SNP MA plans with 60 to 69.9 percent dually eligible enrollment, 24 of these plans (60 percent) have a D-SNP within the same service area or nearly the same service area. An MA organization with one of these non-SNP MA plans could expand its service area for an existing MA-PD plan or D-SNP. The MA organizations with the non-SNP MA plans between 60 and 79.9 percent dually eligible enrollment already have the opportunity to establish a D-SNP and expand their service areas. Any burden associated with these MA organizations establishing new D-SNPs and/or expanding their service areas is already captured under currently approved burden under control number 0938-0935 (CMS-10237) for creating a new MA-PD plan to receive non-SNP MA plan enrollees. In this regard, we are not making any changes under that control number.
Per § 422.514(e)(2)(ii), in the Annual Notice of Change (ANOC) that the MA organization must send consistent with § 422.111(a), (d), and (e), the MA organization will be required to describe changes to the MA-PD plan benefits and provide information about the MA-PD plan into which the individual is enrolled.
Consistent with § 422.111(d)(2), enrollees will receive this ANOC describing the change in plan enrollment and any differences in plan enrollment at least 15 days prior to the first date of the annual election period (AEP). As each MA plan must send out the ANOC to all enrollees annually, we do not estimate that MA organizations will incur additional burden for transitioned enrollees. The current burden for the ANOC is approved by OMB under control number 0938-1051 (CMS-10260). In this regard, we are not making any changes under that control number.
We expect one plan for plan year 2025 and two plans for plan year 2026 will be required to send affected enrollees a written notice consistent with the non-renewal notice requirements at § 422.506(a)(2) and described at § 422.514(e)(4), as we anticipate—based on our experience with transitions through plan year 2024—not all D-SNP look-alikes will be able to transition their enrollees into another MA-PD plan (or plans).
In 2027 and subsequent years, we estimate that 12 plans per year would be identified as D-SNP look-alikes under § 422.514(d). We base our estimate on the fact that there are 12 D-SNP look-alikes for plan year 2024, which is the first year following the phase in of the 80-percent threshold. We expect the policy we are finalizing in this rule to lower the threshold for identifying D-SNP look-alikes from 80 percent to 60 percent will increase the number of plans identified as D-SNP look-alikes. However, we expect this increase to be offset by a reduction in D-SNP look-alikes due to our changes to the § 422.514(e) transition process, which will limit use of the § 422.514(e) transition process to D-SNP look-alikes transitioning dually eligible enrollees into D-SNPs. Under our provision, D-SNP look-alikes transitioning effective for plan year 2025 and plan year 2026—including the newly identified D-SNP look-alikes based on the threshold lowered to 70 percent and then 60 percent—can continue to use the existing transition process under § 422.514(e). Once the newly identified D-SNP look-alikes at the lower thresholds complete their transitions for plan year 2025 and plan year 2026, the § 422.514(e) transition process can only be used for D-SNP look-alike transitioning enrollees into D-SNPs. We believe this limit will give MA organizations a stronger incentive to avoid creating D-SNP look-alikes, due to the more limited opportunity for these plans to transition enrollees to non-D-SNPs. The limit on the § 422.514(e) transitions will be effective for plan year 2027 and subsequent years. We believe that these 12 D-SNP look-alikes will non-renew and transition their enrollment into a D-SNP or other MA-PD plan. The annual burden is summarized in Table J7.
As indicated, the following changes will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267).
An individual transitioned from a D-SNP look-alike to another MA-PD plan may stay in the MA-PD plan receiving the enrollment or, using the AEP or another enrollment period (such as the MA OEP), make a different election. The enrollees may choose new forms of coverage for the following plan year, including a new MA-PD plan or receiving services through Traditional Medicare and enrollment in a stand-alone PDP. Because the enrollment transition process is effective on January 1 and notices would be provided during the AEP, affected individuals have opportunities to make different plan selections through the AEP (prior to January 1) or the MA open enrollment period (OEP) (after January 1). Affected individuals may also qualify for a special enrollment period (SEP), such as the SEP for plan non-renewals at § 422.62(b)(1) or the SEP for dually eligible/LIS beneficiaries at § 423.38(c)(4), which we are revising as discussed in section VIII.F. of this final rule. Based on our experience with D-SNP look-alike transitions through plan year 2024, we estimate that 98 percent of the 53,334 D-SNP look-alike enrollees (52,267 enrollees = 53,334 enrollees × 0.98) in the 30 non-SNP MA plans with dually eligible enrollment of 70 to 79.9 percent and 98 percent of the 92,100 D-SNP look-alike enrollees (90,258 enrollees = 92,100 enrollees × 0.98) in the 40 non-SNP MA plans with dually eligible enrollment of 60 to 69.9 percent would transition into another plan under the same parent organization as the D-SNP look-alike. Of these 142,525 transitioning enrollees (52,267 enrollees + 90,258 enrollees), our experience with D-SNP look-alike transitions through plan year 2023 suggests that 14 percent will select a new plan or the Traditional Medicare and PDP option rather than accepting the transition into a different MA-PD plan or D-SNP under the same MA organization as the D-SNP in which they are currently enrolled. For plan year 2025, we estimate that 7,317 enrollees (52,2677 transitioning D-SNP look-alike enrollees * 0.14), will opt out of the new plan into which the D-SNP look-alike transitioned them. For plan year 2026, we estimate that 12,636 enrollees (90,258 transitioning D-SNP look-alike enrollees * 0.14), will opt out of the new plan into which the D-SNP look-alike transitioned them. Consistent with the per response time estimate that is currently approved by OMB under control number 0938-0753 (CMS-R-267), we continue to estimate that the enrollment process requires 20 minutes (0.3333 hr).
Based on the aforementioned discussion, Table J8, summarizes the hour and dollar burden for added enrollments for years 2025 to 2027.
As stated previously, we believe that in 2027 and subsequent years, 12 plans will be identified as D-SNP look-alikes and therefore this rule would have a much smaller impact on MA enrollees after the initial period of implementation. Since the current 70 non-SNP MA plans with dually eligible enrollment of 60.0 to 79.9 percent have 145,434 enrollees in 70 plans, we estimate 24,932 enrollees (145,434 enrollees * 12/70 plans) in 12 plans. For plan year 2027, we estimate that 98 percent of the 24,433 D-SNP look-alike enrollees (24,433 enrollees = 24,932 enrollees × 0.98) in the 12 non-SNP MA plans would transition into another plan under the same parent organization as the D-SNP look-alike. We further estimate that we estimate that 3,421 enrollees (24,433 transitioning D-SNP look-alike enrollees * 0.14) will opt out of the new plan into which the D-SNP look-alike transitioned them. The burden on D-SNP look-alike enrollees is summarized in Table J7. The average annual enrollee burden over 3 years is presented in Table J8.
We received no comments specific to our analysis of paperwork burden and, except for modifications made to reflect 2024 plan year experience with D-SNP look-alike transitions, we are therefore finalizing our estimates as is.
The following changes will be submitted to OMB for approval under control number 0938-1421 (CMS-10802).
The multi-language insert (MLI) required at §§ 422.2267(e)(31) and 423.2267(e)(33) is a standardized communications material that informs enrollees and prospective enrollees that interpreter services are available in Spanish, Chinese, Tagalog, French, Vietnamese, German, Korean, Russian, Arabic, Italian, Portuguese, French Creole, Polish, Hindi, and Japanese. These were the 15 most common non-English languages in the United States when we reinstituted the MLI in the May 2022 final rule. Additionally, §§ 422.2267(e)(31)(i) and 423.2267(e)(33)(i) require plans to provide the MLI in any non-English language that is the primary language of at least 5 percent of the individuals in a PBP service area but is not already included on the MLI. These regulations also provide that a plan may opt to include the MLI in any additional languages that do not meet the 5 percent threshold, where it determines that including the language would be appropriate.
As discussed in section III.P. of this final rule, we are finalizing an update to §§ 422.2267(e)(31) and 423.2267(e)(33) to require that notice of availability of language assistance services and auxiliary aids and services be provided in English and at least the 15 languages most commonly spoken by individuals with limited English proficiency in a State and must be provided in alternate formats for individuals with disabilities who require auxiliary aids and services to ensure effective communication. We are finalizing this provision with one amendment: We are adding “or States associated with the plan's service area” between the language “relevant State” and “and must be provided . . .” to reduce the burden on organizations with plan benefit packages that operate in more than one State and conform with the OCR proposed rule, and to clarify that the requirement is based on the plan benefit package service area. Thus, under the final provision, MA organizations and Part D sponsors would send the Notice of Availability in English and at least the 15 most common non-English languages in a State or States associated with the plan's service area instead of the current MLI in the 15 most common non-English languages nationally. This policy is consistent with a proposed rule that OCR published in August 2022 (87 FR 47824). We also expect that this policy will better align with the Medicaid translation requirements at § 438.10(d)(2).
We did not expect this policy to create any new collection of information burden for MA organizations or Part D sponsors since the August 2022 proposed rule indicates that OCR would provide translations of the Notice of Availability. Also, the MA organizations and Part D sponsors are already distributing the MLI and, under this final provision, would instead distribute the Notice of Availability, so we do not anticipate any new burden associated with printing or mailing. In addition, the Notice of Availability will be a one-page document that would never be sent
We expected some new burden for MA organizations and Part D sponsors operating plans across multiple States. Rather than sending the same MLI with the same 15 non-English language translations to plans in any State, under the final rule the plans under these MA organizations or Part D sponsors would need to send the Notice of Availability with translations in at least the 15 most common non-English languages in each State or States in which the plan operates. Based on plan year 2023 data, we estimated there are approximately 20 MA parent organizations offering MA plans in multiple States with approximately 3,900 PBPs and approximately 20 Part D sponsors offering Part D plans in multiple States with approximately 1,400 Part D plans. Since many of these parent organizations have MA organizations at the State level, we estimated that these 20 parent organizations have approximately 220 MA organizations covering PBPs by State. Similarly, we estimated that the 20 Part D sponsors had approximately 50 parent organizations covering PBPs by State. We believe the parent organizations will update systems software and plan policies and procedures as well as train staff at the MA organization and Part D sponsor level to cover all PBPs and Part D plans, respectively, offered in a State. We expected that MA organizations and Part D sponsors would need one software engineer working one hour to update systems software in the first year with no additional burden in future years and 1 hour at $127.82/hr to update systems software in the first year with no additional burden in future years and one business operations specialist working 1 hour at $79.50/hr to update plan policies and procedures and train staff in the first year with no additional burden in future years.
For MA organizations, we estimated the burden for plan year 2025 at 440 hours (220 MA organizations * 2 hr/plan) at a cost of $56,241 (440 hr * $127.82/hr) for a software engineer to update systems to ensure the Notice of Availability with the correct State or States-specific languages is distributed with other communications and marketing materials. We estimated the burden for MA organizations for plan year 2025 to be 440 hours (220 MA organizations * 2 hr/plan) at a cost of $34,980 (440 hr * $79.50/hr) for a business operations specialist to update plan policies and procedures and train staff.
For Part D sponsors, we estimate the burden for plan year 2025 at 100 hours (50 Part D sponsors * 2 hr/plan) at a cost of $12,782 (100 hr * $127.82/hr) for a software engineer to update systems to ensure the Notice of Availability with the correct State or States-specific languages is distributed with other communications and marketing materials. We estimated the burden for Part D sponsors for plan year 2025 to be 100 hours (50 Part D sponsors * 2 hr/plan) at a cost of $7,950 (100 hr * $79.50/hr) for a business operations specialist to update plan policies and procedures and train staff. We do not anticipate any new burden to plans after the initial year.
We also note that, as part of the current MLI required at §§ 422.2267(e)(31) and 423.2267(e)(33), MA organizations and Part D sponsors must already include additional languages that meet the 5 percent service area threshold as required under §§ 422.2267(a)(2) and 423.2267(a)(3). Thus, MA organizations and Part D sponsors must currently review the most frequently used languages in a service area beyond the top 15 national languages. As a result, we did not believe the burden will be greater than our estimate noted previously.
We do not believe that the modified policy poses any additional impact on burden. We received no comments specific to our analysis of paperwork burden and are therefore finalizing our estimates as is.
The following changes will be submitted to OMB for approval under control number 0938-1154 (CMS-10396). Based on comments summarized in section III.E., we are finalizing our proposed changes to the MTM eligibility criteria with modification, as follows:
• Requiring plan sponsors to target all core chronic diseases and continuing to allow them to Add other chronic diseases.
• Codifying the current nine core chronic diseases in regulation and adding HIV/AIDS, for a total of 10 core chronic diseases.
• Maintaining the maximum number of covered Part D drugs a sponsor may require at eight drugs, requiring sponsors to include all Part D maintenance drugs in their targeting criteria, and continuing to allow them to include all covered Part D drugs in their targeting criteria.
• Revising the annual cost threshold ($5,330 in 2024) methodology to be based on the average annual cost of eight generic drugs ($1,623 for 2025 based on 2023 data).
We are also revising our estimates to reflect our final policies and updated data, including more accurate postage rates. Taken together, we estimate that the changes to the MTM eligibility criteria will increase the number (and percentage) of Part D enrollees eligible for MTM services by 3,466,029 beneficiaries, from 3,599,356 (7 percent of all Part D enrollees) to 7,065,385 (13 percent of all Part D enrollees). While we considered multiple alternative proposals, we ultimately finalized this combination of changes as a way to close significant gaps in MTM eligibility while being responsive to concerns about program size and burden on Part D sponsors.
Under § 423.153(d)(1)(vii), all MTM enrollees must be offered a CMR at least annually and TMRs no less than quarterly. A CMR is an interactive consultation, performed by a pharmacist or other qualified provider, that is either in person or performed via synchronous telehealth, that includes a review of the individual's medications and may result in the creation of a recommended medication action plan as required in § 423.153(d)(1)(vii)(B)(
To obtain aggregate burden we separately estimate: (1) the burden for pharmacists to complete the CMR; (2) the mailing costs of the CMRs; and (3) the cost of mailing of safe disposal instructions to those targeted beneficiaries who do not Accept the offer of a CMR.
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Therefore, the total burden associated with the finalized revisions to the MTM targeting criteria is 1,529,750 hours and $192,724,594 ($190,362,090 for a pharmacist to perform the CMRs for beneficiaries newly targeted for MTM under the revised criteria + $2,344,990 to mail the CMR written summary in the CMS Standardized Format with safe disposal information + $17,514 for mailing information regarding safe disposal to beneficiaries newly targeted for MTM who do not receive a CMR).
We received the following comments on the estimates included in this section of the proposed rule, and our responses follow:
The following changes will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267).
MA organizations that offer special needs plans are currently effectuating involuntary disenrollments for loss of special needs status as part of existing disenrollment processes, including the member notifications; therefore, no additional burden is anticipated from this change. However, because a burden estimate for these member notifications has not previously been submitted to OMB, due to inadvertent oversight, we are seeking OMB approval under the aforementioned OMB control number.
We are codifying current policy on MA plan notices prior to a member disenrollment for loss of special needs status. MA organizations will be required to provide the member a minimum of 30 days advance notice of disenrollment regardless of the date of the loss of special needs status. Additionally, the organization will be required to provide the member a final notice of involuntary disenrollment, sent within 3 business days following
Where an individual is involuntarily disenrolled from an MA plan for any reason other than death, loss of entitlement to Part A or Part B, the MA organization must give the individual a written notice of the disenrollment with an explanation of why the MA organization is planning to disenroll the individual, pursuant to § 422.74(c). The notice requirement in § 422.74(c) is currently approved by OMB under the aforementioned control number.
To estimate the number of notices required due to involuntary disenrollments for loss of special needs status, we determined the average number of annual disenrollments due to loss of special needs status. Between 2017 and 2021, there were an average of 55,127 involuntary disenrollments per year due to loss of special needs status.
We estimate that it would take each MA organization 1 minute (0.017 hr) to assemble and disseminate the advance notice, 5 minutes (0.083 hr) to submit the required transaction to CMS for each disenrollment, and 0.017 hr to assemble and disseminate the final notice for each disenrollment. Therefore, the total annual time for each MA organization is 0.117 hours (0.017 hr + 0.083 hr + 0.017 hr).
We estimate the aggregate annual burden for all MA organizations to process these disenrollments to be 6,450 hours (55,127 disenrollments * 0.117 hr) at a cost of $512,775 (6,450 hr * $79.50/hr)
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
The requirement at § 422.74(b)(2)(vii) to establish a process for involuntary disenrollment for an individual who loses eligibility mid-year to be enrolled in an MA MSA plan, and more specifically, the requirement for the MA organization to give the individual a written notice of the disenrollment at § 422.74(c) with an explanation of why the MA organization is planning to disenroll the individual, will be submitted to OMB for approval under control number 0938-0753 (CMS-R-267).
The annual burden associated with this requirement consists of the time and cost to notify the individual and CMS. Based on the active burden in CMS-R-267, we estimate that each disenrollment will require 1 minute (0.017 hr) for the MA MSA plan to notify CMS and 5 minutes (0.083 hr) for the MA MSA plan to notify the individual. Thus, the total burden per disenrollment is estimated at 6 minutes (0.1 hr) (1 minute to assemble and disseminate the notice to CMS and 5 minutes to assemble and disseminate the notice to the individual) at a cost of $7.95 (0.1 hr × $79.50/hr for a business operations specialist to perform the work).
To obtain aggregate burden we used data from 2019 and 2021 in which there were an average of 4 MSA contracts. We used an average since the data had no visible trend but hovered around a central value. There was an average of 8,624 enrollees during 2019-2021 and the average disenrollment was 124. Thus, we estimate an aggregate burden of 12 hours (124 disenrollments * 0.1 hr per disenrollment) at a cost of $954 (12 hr * $79.50/hr).
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
The following changes will be submitted to OMB for approval under control number 0938-1378 (CMS-10718).
CMS's subregulatory guidance currently provides that MA and PDP plans send notification of enrollment reinstatement based on the cancellation of enrollment in a new plan. Our change will not add to existing reinstatement processes; therefore, no additional burden is anticipated. However, because a burden estimate for these enrollment reinstatement notifications has not previously been submitted to OMB, we are correcting that oversight by requesting OMB's review and approval under the aforementioned control number.
We are codifying CMS's current policy that plans notify an individual when the individual's enrollment is reinstated due to the individual's cancellation of enrollment in a different plan. The MA or PDP plan from which the individual was disenrolled will be required to send the notification of the enrollment reinstatement within 10 days of receipt of Daily Transaction Reply Report (DTRR) confirmation of the individual's reinstatement. The reinstatement notice will include confirmation of the individual's enrollment in the previous plan with no break in coverage, plan-specific information as needed, and plan contact information.
To estimate the number of reinstatement notices required due to an individual's cancellation of enrollment in a new plan, we determined the number of annual reinstatements based on the cancellations of enrollment in a new plan. In 2021, there were 5,686,989 disenrollments from MA and MA-PD plans due to enrollments in another plan and 4,292,426 disenrollments from PDP plans due to enrollments in another plan. Further, between 2017 and 2021, there was an average of 193,183 cancelled enrollments per year in a new MA plan (including MA-PD plans). Between 2017 and 2021, there was an average of 32,723 cancelled enrollments per year in a new PDP plan. Each cancelled enrollment in a new plan results in a reinstatement notice sent to the beneficiary. Thus, we estimate 225,906 (193,183 + 32,723) reinstatements annually.
We estimate that it will take 1 minute (0.017 hr) at $79.50/hr for a MA or PDP plan's business operations specialist to assemble and disseminate the notice for each reinstatement. In aggregate, we estimate an annual burden of 3,840 hours (225,906 reinstatements * 0.017 hr) at a cost of $305,280 (3,840 hr * $79.50/hr).
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
In this rule, §§ 422.528, 422.529, 423.521, and 423.522 will permit that MA organizations and Part D sponsors who disagree with the CMS calculated final settlement amount appeal the final settlement amount, if any, for each contract that consolidates, non-renews, or terminates. In the December 2022 proposed rule, we had erroneously estimated the burden of the proposed provision. We are correcting that oversight in this final rule by removing such burden since the preparation and submission of appeals are in response to an administrative action, investigation or audit pertaining to specific individuals or entities (5 CFR 1320.4(a)(2) and (c)). In this regard, the preparation and submission of appeals
The following changes will be submitted to OMB for approval under control number 0938-0790 (CMS-R-244).
Section 460.64 currently includes the requirements relating to the qualifications of PACE personnel who have direct contact with PACE participants. This includes the requirement that PACE organizations medically clear personnel of communicable diseases. As discussed in section IX.C. of this final rule, we are finalizing our proposal to allow PACE organizations the option to create and implement a risk assessment tool to assist with this medical clearance process. Therefore, we estimate there will be a one-time burden for PACE organizations associated with these new requirements to update policies and procedures related to medical clearance, and when applicable, to develop a risk assessment tool. We believe the compliance officer and primary care physician (PCP) would be responsible for ensuring the necessary materials are updated, for determining medical clearance, and developing the risk assessment tool. For revising policies and procedures related to medical clearance, we estimate it would take 1 hour at $74.02/hr for a compliance officer at each PACE organization to update these materials. In aggregate, we estimate a one-time burden of 156 hours (156 PACE organizations * 1 hr) at a cost of $11,547 (156 hr * $74.02/hr) for the update of policies and procedures.
For the development of the risk assessment tool, we estimate it would take each PACE organization 5 hours consisting of: 4 hours of work by the compliance officer at $74.02/hr and 1 hour of work by the PCP at $229.52/hr. The weighted hourly wage for the compliance officer and PCP to create a risk assessment tool is $105.12/hr ([(4 hr * $74.02/hr) + (1 hr * $229.52/hr)]/5 hr of aggregate burden). In aggregate, we estimate a one-time burden of 780 hours (156 PACE organizations * 5 hr) at a cost of $81,994 (780 hr * $105.12/hr) for both the compliance officer and PCP roles in developing the risk assessment tool.
Based on internal CMS data, there were 156 active PACE organizations as of February 2024. This number of active PACE organization represents an increase of 7 PACE organizations from the 149 active PACE organizations counted in the December 2022 proposed rule and based on September 2022 data.
We received no comments specific to our analysis of paperwork burden and are therefore finalizing our estimates as is, except that we have made updates related to the increased number of PACE organizations and changes to mean hourly wages.
The following changes will be submitted to OMB for approval under control number 0938-0790 (CMS-R-244).
Section 460.98 currently includes requirements related to delivery of services to PACE participants. This includes the minimum requirements for the provision of services PACE organizations must provide and how the services must be furnished. The current requirement that PACE organizations must provide all necessary services to meet the needs of participants as expeditiously as the participant's health conditions require would not change with this final rule, but as discussed in section IX.D. of this final rule, we are finalizing our proposal to add required maximum timeframes for arranging and scheduling services for PACE participants. We believe there will be a one-time burden for PACE organizations to update their policies and procedures to reflect the finalized timeframes. We believe the compliance officer will be responsible for updating the policies and procedures. We estimate that it would take the compliance officer 1 hour at $74.02/hr to update the necessary materials. Therefore, we estimate a one-time burden of 156 hours (156 PACE organizations * 1 hr) at a cost of $11,547 (156 hr * $74.02/hr).
We received no comments specific to our analysis of paperwork burden and are therefore finalizing our estimates as is, except that we have made updates related to the increased number of PACE organizations and changes to mean hourly wages.
The following changes will be submitted to OMB for approval under control number 0938-0790 (CMS-R-244).
Section 460.112 currently includes the specific rights to which PACE participants are entitled. As discussed in section IX.G. of this final rule, we are finalizing our proposal to add new participant rights and modify existing participant rights to enhance participant protections. Specifically, we are finalizing our proposal to add and/or modify the rights to appropriate and timely treatment; to be fully informed, in writing, of different treatment options including palliative, comfort, and end-of-life care; to fully understand the PACE organization's palliative, comfort, and end-of-life care services; and to request services from the PACE organization through the process described in § 460.121. PACE organizations are currently required to provide a copy of the participant rights listed in § 460.112 to participants at the time of enrollment, and to post a copy of the rights in the PACE center. Under our finalized changes to § 460.112, PACE organizations must revise the materials they provide to participants at the time of enrollment and the posting in the PACE center to account for the new and modified requirements. Therefore, we estimate a one-time burden for PACE organizations to update the participant rights included in the enrollment information and post the new participant rights in PACE centers. We believe it would take a compliance officer 2 hours at $74.02/hr to update these materials.
Additionally, PACE organizations must develop written templates explaining palliative care, comfort care, and end-of-life care services. We believe the development of these materials is a one-time burden and would take a compliance officer 2 hours to complete at $74.02/hr.
In aggregate, we estimate a one-time burden of 624 hours (156 PACE organizations * (2 hr + 2 hr)) at a cost of $46,188 (624 hr * $74.02/hr).
We also estimate this provision would result in increased ongoing costs to PACE organizations. As discussed in section IX.G. of this final rule, we are finalizing the requirement that PACE organizations provide participants with written documentation explaining the different treatment options including palliative, comfort, and end-of-life care services. Specifically, we are finalizing the requirement that PACE organizations must describe their palliative care, comfort care, and end-of-life care services and how they differ from the care the participant is currently receiving; whether these treatment options will be provided in addition to or in lieu of the care the participant is currently receiving; a detailed description of all services that will be impacted and how they will be impacted if the participant and/or designated representative elects to initiate a different treatment option; and that the participant has the right to revoke or withdraw their consent to receive these treatment options at any time and for any reason.
We estimate that a registered nurse (RN) will need to tailor written
For tailoring information within the written templates and providing written materials to participants as specified at finalized § 460.112(c)(5), we estimate ongoing burden using the weighted hourly wage for the RN and MSW. The weighted average can be obtained as follows. The total cost per participant is $95.66/hr [(1 hr * $85.60/hr (RN)) + (0.1667 hr * $60.34/hr (MSW))]. The total time is 1.1667 hours (1 hr for the RN plus 0.1667 hr the MSW). Thus, the average hourly wage is $81.99/hr (total cost of $95.66/1.1667 hr).
Using these assumptions, we estimate the ongoing burden for the finalized requirements at § 460.112(c)(5) would affect 12,169 participants (60,847 enrollees times 20 percent of participants who are expected to need end-of-life explanations). Therefore, to tailor and mail materials there is an annual burden of 14,198 hours (12,169 affected participants * 1.1667 hr) at a cost of $1,164,094 (14,198 hr * $81.99/hr).
We are also finalizing our proposal requiring that PACE organizations explain the treatment options to participants and/or their designated representatives before palliative care, comfort care, or end-of-life care services can be initiated. This includes fully explaining the treatment options, providing the participant and/or designated representative with the written materials discussed previously, and obtaining written consent from the participant and/or designated representative. We estimate it would take the MSW 1 hour at $60.34/hr to explain the services and answer any questions the participant and/or designated representative might have.
To estimate the increased burden, we use the following assumptions about the number of participants who may pursue palliative care, comfort care, and/or end-of-life care services, based on our experience monitoring and auditing PACE organizations. We estimate that 2 out of every 10 participants in a given year (20 percent) will require written materials for palliative care, comfort care, or end-of-life care services. Based on CMS internal data, the total national enrollment in PACE as of February 2024 was 60,847. This enrollment data represents an 11 percent increase from the national PACE enrollment data utilized in the December 2022 proposed rule, 54,637 enrollees, which was based on September 2022 enrollment data.
We estimate an ongoing burden for PACE organizations' MSW to explain treatment options to participants as specified at § 460.112(e)(2) to be 12,169 hours (60,847 participants * 0.20 * 1 hr) at a cost of $734,277 (12,169 hr to discuss treatment options * $60.34/hr).
We estimate a total one-time burden of 624 hours at a cost of $46,188 and a total annual ongoing burden of 26,367 hours (14,198 hr + 12,169 hr) at a cost of $1,898,371 ($1,164,094 + $734,277).
We received no comments specific to our analysis of paperwork burden and are therefore finalizing our estimates as is, except that we have made updates related to the increased number of PACE organizations, national PACE enrollment data, and changes to mean hourly wages.
The following changes will be submitted to OMB for approval under control number 0938-0790 (CMS-R-244).
Section 460.120 currently includes the grievance process PACE organizations are required to follow. As discussed in section IX.H. of this final rule, PACE organizations are already required to develop procedures on processing grievances and to provide notification of the grievance process to participants upon enrollment and at least annually. We are finalizing our proposed changes to further require that PACE organizations update those procedures. Specifically, we are finalizing our proposal that written or oral notification of the grievance resolution must include a summary of the grievance issues, a summary of the findings for each distinct issue that requires an investigation, the corrective action(s) taken or to be taken by the PACE organization as a result of the grievance, and when the participant may expect corrective action(s) to occur (if applicable). Our finalized changes, which add requirements on what must be included in grievance resolution notifications, require PACE organizations to revise and update their notification templates. Therefore, we estimate a one-time burden for PACE organizations to update their materials to meet these new requirements. We do not believe the finalized changes to § 460.120 will impact the annual hours of burden for PACE organizations, because they are already required to provide notification of grievance resolutions to participants and may opt to do so orally or in writing. Therefore, we believe that the ongoing burden will not change with this requirement.
For the one-time burden for updating policies and procedures, we estimate that it would take the compliance officer 2 hours to update these materials at $74.02/hr. For the revised notification of the grievance process, that is provided both upon enrollment and at least annually, we estimate it would take the compliance officer 1 hour to revise these notifications at $74.02/hr. For the written grievance resolution notification, we estimate it will take the compliance officer 1 hour to revise the written resolution notification at $74.02/hr.
In aggregate, we estimate it would take PACE organizations 624 hours [156 PACE organizations * (2 hr + 1 hr + 1 hr)] at a cost of $46,188 (624 hr * $74.02/hr).
We received no comments specific to our analysis of paperwork burden and are therefore finalizing our estimates as is, except that we have made updates related to the increased number of PACE organizations and changes to mean hourly wages.
The following changes will be submitted to OMB for approval under control number 0938-0790 (CMS-R-244).
To enable CMS to better protect PACE participants by ensuring that PACE participants and their caregivers have adequate information to make informed decisions regarding the PACE organization, this rule adds a new provision, § 460.198, which gives CMS the authority to, at its discretion, require a PACE organization to disclose to its PACE participants or potential PACE participants, the PACE organization's performance and contract compliance deficiencies in a manner specified by CMS.
The overall PACE organization burden of this requirement is expected to be minimal. In the past, CMS has only required organizations to send these notices to enrollees when CMS sanctioned the organization, which is an extremely rare occurrence. Regarding PACE organizations, between CY 2019 and 2021, CMS sanctioned a total of 3
For the annual burden for completing the template and sending it to participants and potential participants, we estimate that it would take the compliance officer at the PACE organization 1 hour at $74.02/hr to complete and send out the template (which would be automated). In aggregate, we estimate it would take 2 hours (2 PACE organizations * 1 hr) at a cost of $148 (2 hr * $74.02/hr).
We did not receive any comments related to the aforementioned collection of information requirements and burden estimates and are finalizing them in this rule as proposed.
The following changes will be submitted to OMB for approval under control number (0938-0753) (CMS-R-267).
As explained in section VI.A. of this rule, personal beneficiary data collected by a TPMO for marketing or enrolling them into an MA plan may only be shared with another when prior express written consent is given by the beneficiary. Additionally, we codified that prior express written consent from the beneficiary to share the data and be contacted for marketing or enrollment purposes must be obtained through a clear and conspicuous disclosure that lists each TPMO receiving the data and allows the beneficiary to consent or reject to the sharing of their information with each entity. We expect that each TPMO that collects personal beneficiary data and intends to share it with TPMOs must update their disclosure process to obtain individual consent for each TPMO with whom it will share the information. We expect that this collection of a consent to have information shared with other TPMOs will impact both TPMOs and Medicare beneficiaries.
To estimate the information collection burden for beneficiaries, we have estimated the number of beneficiaries enrolling through agents and brokers that received their contact information from a TPMO and the time it takes for the beneficiary to complete the consent to sharing their information with specific entities. First, we estimate that it will take a beneficiary approximately five minutes to read the disclosure and provide consent to have their information shared with the entities of their choosing. We estimate that there are approximately 2 million new MA enrollees every year
To estimate the information collection burden on TPMOs, we have estimated the number of TPMOs that collect personal beneficiary data for purposes of marketing or enrolling them into an MA or Part D plan. The most current industry profile for Market Research and Analysis and Marketing Specialists provided by the U.S. Bureau of Labor Statistics
As described in section VII. of this final rule, we are finalizing adding, removing, and updating certain measures. Most of the new measures will be calculated from administrative data and, as such, there will be no increase in plan burden. The other measure-level changes entail moving existing measures from the display page to Star Ratings, which also will have no impact on plan burden. We are also finalizing a series of technical clarifications related to QBP appeals processes, consolidations, and weighting of measures with a substantive specification change. The finalized provisions will not change any respondent requirements or burden pertaining to any of CMS's Star Ratings related PRA packages, including: OMB control number 0938-0732 for CAHPS (CMS-R-246), OMB control number 0938-0701 for HOS (CMS-10203), OMB control number 0938-1028 for HEDIS (CMS-10219), OMB control number 0938-1054 for Part C Reporting Requirements (CMS-10261), OMB control number 0938-0992 for Part D Reporting Requirements (CMS-10185),
The primary purpose of this final rule is to amend the regulations for the Medicare Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D) program, Medicare cost plan program, and Program of All-Inclusive Care for the Elderly (PACE). This final rule includes several new policies that would improve these programs beginning with contract year 2025 as well as codify existing Part C and Part D sub-regulatory guidance. This final rule also includes revisions to existing regulations in the Risk Adjustment Data Validation (RADV) audit appeals process and the appeal process for quality bonus payment determination that would take effect 60 days after publication. Revisions to existing regulations for the use and release of risk adjustment data would also take effect 60 days after publication of a final rule. Additionally, this final rule would implement certain sections of the following Federal laws related to the Parts C and D programs:
We have examined the impacts of this final rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), Executive Order 14094 entitled “Modernizing Regulatory Review” (April 6, 2023), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct 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). The Executive Order 14094, entitled “Modernizing Regulatory Review” (hereinafter, the Modernizing E.O.), amends section 3(f)(1) of Executive Order 12866 (Regulatory Planning and Review). The amended section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) having an annual effect on the economy of $200 million or more in any 1 year, or adversely affecting in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or Tribal governments or communities; (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising legal or policy issues for which centralized review would meaningfully further the President's priorities or the principles set forth in this Executive order.
A regulatory impact analysis (RIA) must be prepared for regulatory actions that are significant under 3(f)(1). The total economic impact for this final rule exceeds $200 million in several years. Therefore, based on our estimates, OMB's Office of Information and Regulatory Affairs (OIRA) has determined this rulemaking is significant per section 3(f)(1). Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act), OIRA has also determined that this rule meets the criteria set forth in 5 U.S.C. 804(2). Accordingly, we have prepared a Regulatory Impact Analysis that to the best of our ability presents the costs and benefits of the rulemaking.
Section 202 of UMRA 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. In 2023, the most recent year for which we have complete data, that threshold is approximately $183 million. This final rule is not anticipated to have an unfunded effect on State, local, or Tribal governments, in the aggregate, or on the private sector of $183 million or more.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. Since this final rule does not impose any substantial costs on State or local governments, preempt State law or have federalism implications, the requirements of Executive Order 13132 are not applicable.
We did not prepare an analysis for section 1102(b) of the Act because we determined, and the Secretary certified, that this final rule would not have a significant impact on the operations of a substantial number of small rural hospitals.
Using the wage information from the BLS for medical and health service managers (Code 11-9111), we estimate that—
• The hourly cost per reviewer for reviewing this final rule is $123.06 per hour, including overhead and fringe benefits
• We estimate that there will be less than 2,000 reviewers of this final rule: There are currently less than 1,000 contracts (which includes MA, MA-PD, and PDP contracts), 55 State Medicaid agencies, and 300 Medicaid MCOs. We also expect a variety of other organizations to review (for example, consumer advocacy groups, PBMs). We expect that each organization will designate one person to review the rule. Therefore, a reasonable maximal number is 2,000 total reviewers. We note that other assumptions are possible.
• The rule is about 150,000 words. Average reading speeds vary from 180 to 240 words per minute. Since the rule is technical and presumably notes are being taken, we use the lower estimate. Furthermore, since in addition to notetaking, summaries would be submitted to leadership we are lowering the 180 words/minutes to 150. Accordingly, we assume it would take staff 17 hours to review this final rule (150,000 words/150 words per minute/60 minutes hour). This may be an overestimate since each entity will likely only read the provisions affecting them and not the entire rule.
• Therefore, the estimated cost per reviewing entity for reading this entire rule is $2,100 (17 hr × $123.06/hr), and the total cost over all entities for reviewing this entire final rule is $ 4.2 million ($2,100 × 2,000 reviewers). However, we expect that many reviewers, for example pharmaceutical companies and PBMs, will not review the entire rule but just the sections that are relevant to them. Thus, it is very likely that on average only half or a
Please note that this analysis assumes one reader per contract. Some alternatives include assuming one reader per parent organization. Using parent organizations instead of contracts will reduce the number of reviewers. However, we believe it is likely that review will be performed by contract. The argument for this is that a parent organization might have local reviewers assessing potential local, or region-specific effects from this final rule.
In accordance with the provisions of Executive Order 12866, this final rule was reviewed by OMB.
The RFA, as amended, requires agencies to analyze options for regulatory relief of small businesses if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions.
A wide range of policies are being finalized in this rule. These policies codify, modify, and update current guidance governing MA organization and Part D Plan Sponsor bid requirements.
This rule has several affected stakeholders. They include: (1) MA organizations such as HMOs, local and regional PPOs, MSAs, PFFS and Part D sponsors; (2) providers, including institutional providers, outpatient providers, clinical laboratories, and pharmacies; (3) agents and brokers, and (4) enrollees. Some descriptive data on these stakeholders are provided in Table K-1.
We are certifying that this final rule does not have a significant economic impact on a substantial number of small entities. To explain our position, we explain certain operational aspects of the Medicare program.
Each year, MA plans submit a bid for furnishing Part A and B benefits and the entire bid amount is paid by the government to the plan if the plan's bid is below an administratively set benchmark. If the plan's bid exceeds that benchmark, the beneficiary pays the difference in the form of a basic premium (note that a small percentage of plans bid above the benchmark, whereby enrollees pay basic premium, thus this percentage of plans is not “significant” as defined by the RFA and as justified in this section of this final rule).
MA plans can also offer extra benefits, that is, benefits not covered under Traditional Medicare Parts A and B, called supplemental benefits. These benefits are paid for through enrollee premiums, rebate dollars or a combination. Under the statutory payment formula, if the bid submitted by a Medicare Advantage plan for furnishing Parts A and B benefits is lower than the administratively set benchmark, the government pays a portion of the difference to the plan in the form of a rebate. The rebate must be used to provide supplemental benefits (that is benefits not covered under Traditional Medicare, including lower cost sharing) and or/lower beneficiary Part B or Part D premiums. Some examples of these supplemental benefits include vision, dental, and hearing, fitness and worldwide coverage of emergency and urgently needed services.
Part D plans, including MA-PD plans, submit bids and those amounts are paid to plans through a combination Medicare funds and beneficiary premiums. In addition, for enrolled low-income beneficiaries, Part D plans receive special government payments to cover most of the premium and cost sharing amounts those beneficiaries would otherwise pay.
Thus, the cost of providing services by MA and Part D plans is funded by a variety of government fundingsources and in some cases by enrollee premiums. As a result, MA and Part D plans are not expected to incur burden or losses since the private companies' costs are being supported by the government and enrolled beneficiaries. This lack of expected burden applies to both large and small health plans.
Small entities that must comply with MA and Part D regulations, such as those in this final rule, are expected to include the costs of compliance in their bids, thus avoiding additional burden, since the cost of complying with any final rule is funded by payments from the government and, if applicable, enrollee premiums.
For Direct Health and Medical Insurance Carriers, NAICS 524114, plans estimate their costs for the upcoming year and submit bids and proposed plan benefit packages. Upon approval, the plan commits to providing the proposed benefits, and CMS commits to paying the plan either (1) the full amount of the bid, if the bid is below the benchmark, which is a ceiling on bid payments annually calculated from Traditional Medicare data; or (2)
Theoretically, there is additional burden if plans bid above the benchmark. However, consistent with the RFA, the number of these plans is not substantial. Historically, only two percent of plans bid above the benchmark, and they contain roughly one percent of all plan enrollees. Since the CMS criteria for a substantial number of small entities is 3 to 5 percent, the number of plans bidding above the benchmark is not substantial.
The preceding analysis shows that meeting the direct cost of this final rule does not have a significant economic impact on a substantial number of small entities, as required by the RFA.
Therefore, we next examine in detail each of the other stakeholders and explain how they can bear cost. Each of the following are providers (inpatient, outpatient, or pharmacy) that furnish plan-covered services to plan enrollees for:
• Pharmacies and Drug Stores, NAICS 446110;
• Ambulatory Health Care Services, NAICS 621, including about two dozen sub-specialties, including Physician Offices, Dentists, Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic Imaging Centers, and Dialysis Centers, NAICD 621492;
• Insurance Brokerages & Agencies, NAICS 524210;
• Hospitals, NAICS 622, including General Medical and Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals; and
• SNFs, NAICS 623110.
Except for insurance brokers and agencies, each of these are providers that furnish plan-covered services to plan enrollees. Whether these providers are contracted or, in the case of PPOs and PFFS MA plans, not contracted with the MA plan, their aggregate payment for services is the sum of the enrollee cost Sharing and plan payments.
• For non-contracted providers, § 422.214 and sections 1852(k)(1) and 1866(a)(1)(O) of the Act require that a non-contracted provider that furnishes covered services to an MA enrollee accept payment that is at least what the provider would have been paid had the services been furnished to A Medicare FFS beneficiary.
• For contracted providers, § 422.520 requires that the payment is governed by a mutually agreed upon contract between the provider and the plan. CMS is prohibited from requiring MA plans to contract with a particular health care provider or to use a particular price structure for payment by section 1854(a)(6)(B)(iii) of the Act.
Consequently, for providers, there is no additional cost burden above the already existing burden in Traditional Medicare.
Our finalized provision requires TPMOs that collect personal beneficiary data for purposes of marketing or enrolling them into an MA or Part D plan to obtain prior express written consent through a disclosure to share that data with another TPMO. In response to our proposal to ban the distribution of beneficiary data, one commenter said that CMS failed to provide a cost-benefit analysis showing the impact of a data distribution ban on TPMOs and independent agents. However, since we are not completely prohibiting the sharing of beneficiary data in this final rule, we expect that TPMOs can make adjustments to their disclosures to conform to these new requirements without a major disruption to their business model or having a negative impact on independent agents and brokers. Further, we believe beneficiaries that are interested in obtaining more information about their plan options will complete the required consent processes. We expect some minor reduction in collection of data and a corresponding reduction in the sharing of that data, to which beneficiaries did not previously consent, as this data sharing may not have been wanted by beneficiaries who unknowingly consented to the sharing, and which resulted in complaints received by CMS. This consent requirement and a reduction in unwanted contacts is, in fact, the goal of the provision. We, however, have no way of estimating how much data-sharing occurred nor do we know the extent to which requiring beneficiaries to consent to their data being shared will reduce the amount of data shared in the future.
Based on the previous discussion, the Secretary certifies that this final rule will not have a significant impact on a substantial number of small entities.
There are certain indirect consequences of these provisions which also create impact. We have already explained that at least 98 percent of the plans bid below the benchmark. Thus, their estimated costs for the coming year are fully paid by the Federal Government, given that as previously noted, under the statutory payment formula, if a bid submitted by a Medicare Advantage plan for furnishing Part A and B benefits is lower than the administratively set benchmark, the government pays a portion of the difference to the plan in the form of a beneficiary rebate, which must be used to provide supplemental and/or lower beneficiary Part B or Part D premiums. If the plan's bid exceeds the administratively set benchmark, the beneficiary pays the difference in the form of a basic premium. However, as also noted previously, the number of MA plans bidding above the benchmark to whom this burden applies does not meet the RFA criteria of a significant number of plans.
If the provisions of this final rule were to cause bids to increase and if the benchmark remains unchanged or increases by less than the bid does, the result could be a reduced rebate. Plans have different ways to address this in the short-term, such as reducing administrative costs, modifying benefit structures, and/or adjusting profit margins. These decisions may be driven by market forces. Part of the challenge in pinpointing the indirect effects is that there are many other factors combining with the effects of proposed and final rules, making it effectively impossible to determine whether a particular policy had a long-term effect on bids, administrative costs, margins, or supplemental benefits.
Many provisions of this final rule have negligible impact either because they are technical provisions, clarifications, or are provisions that codify existing guidance. Other provisions have an impact that cannot be quantified. Throughout the preamble, we have noted when we estimated that provisions have no impact either because they are codifying already existing practices, or, for example, because contractors for CMS have asserted that changes work within their current contract without the need for additional compensation. Additionally, this Regulatory Impact Statement discusses several provisions with either zero impact or impact that cannot be quantified. The remaining provisions' effects are estimated in section XXX of this final rule and in this RIA. Where appropriate, when a group of provisions have both paperwork and non-paperwork impact, this Regulatory Impact Statement cross-references impacts from section XXX of this final rule in order to arrive at total impact.
We discussed in section III.Q. of this final rule two provisions to improve access to MA encounter data for certain purposes. We noted that our current regulatory language limits CMS's ability to use and disclose MA encounter data for activities in support of administration or evaluation of the Medicaid program, including care coordination. Further, the regulation delays when CMS may share MA encounter data to State Medicaid agencies for care coordination and quality review and improvement activities for the Medicaid program, particularly with regard to dually eligible individuals. This final rule improves access to MA data by—
• Adding “and Medicaid programs” to the current MA risk adjustment data use purposes codified at § 422.310(f)(1)(vi) and (vii); and
• Adding a new § 422.310(f)(3)(v) to allow for risk adjustment data to be released prior to reconciliation if the data will be released to State Medicaid agencies for the purpose of coordinating care for dually eligible individuals.
Together, these provisions clarify and broaden the allowable data uses for CMS and external entities (for data disclosed in accordance with § 422.310(f)(2) and (3)). These proposals do not change the external entities allowed to request MA encounter data from CMS.
As discussed in sections X and III.Q. of this final rule, these provisions will allow external entities to voluntarily request MA encounter data for allowable data uses to support the Medicare program, Medicaid program, and Medicare and Medicaid combined purposes. In the November 2023 proposed rule, we noted that there was one area where this provision could have impacted the burden to CMS: CMS reviewing and fulfilling new MA encounter data requests. However, in the Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Fiscal Year 2015 Rates; Quality Reporting Requirements for Specific Providers; Reasonable Compensation Equivalents for Physician Services in Excluded Hospitals and Certain Teaching Hospitals; Provider Administrative Appeals and Judicial Review; Enforcement Provisions for Organ Transplant Centers; and Electronic Health Record (EHR) Incentive Program final rule, when we initially established CMS disclosure of MA encounter data, we explained that we had determined that “there are not any economically significant effects of the proposed provisions” (79 FR 50445). The same applies for the proposed refinements to the approved data uses and the data disclosure in this rule. We received no comments specific to our analysis of burden. We are finalizing our estimate as-is.
We discussed collection of information burden associated with this provision in section X of this final rule. In this section, we describe the impacts of our changes to the dual/LIS SEP, new integrated care SEP, and contract limitations for non-integrated MA-PD plans.
These final provisions will impact dually eligible and other LIS eligible individuals that currently use the quarterly dual/LIS SEP to change their enrollment in MA-PD plans. We are finalizing a change the quarterly dual/LIS SEP to a one-time-per month SEP for dually eligible individuals and other LIS eligible individuals to elect a standalone PDP. The finalized provision will allow individuals to switch PDPs or leave their MA-PD plans for Traditional Medicare (with a standalone PDP) in any month. The finalized dual/LIS SEP will no longer permit enrollment into MA-PD plans or changes between MA-PD plans (although such options would remain available through other enrollment periods and SEPs). In
We are finalizing §§ 422.504(a)(20) and 422.514(h) largely as proposed with modifications to § 422.514(h). These provisions will establish a new requirement for an MA organization, that, beginning in plan year 2027, when an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, also contracts with a State as a Medicaid MCO that enrolls full-benefit dual eligible individuals in the same service area, that the MA organization's D-SNP(s) must limit new enrollment to individuals enrolled in (or in the process of enrolling in) the D-SNP's aligned Medicaid MCO. We are finalizing the proposed regulation at § 422.514(h) with a minor technical modification at § 422.514(h)(1) to correct the terminology to use the term “full-benefit dual eligible individual(s)” where necessary. We are finalizing § 422.514(h)(2) with a modification to clarify that any D-SNP(s) subject to enrollment limitations in § 422.514(h)(1) may only enroll (or continue coverage of people already enrolled) individuals also enrolled in (or in the process of enrolling in) the Medicaid MCO beginning in 2030. We are finalizing with modifications our proposal at § 422.514(h)(3)(i) to permit an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization, to offer more than one D-SNP for full-benefit dual eligible individuals in the same service area as that MA organization's affiliated Medicaid MCO only when a SMAC requires it in order to differentiate enrollment into D-SNPs by age group or to align enrollment in each D-SNP with the eligibility criteria or benefit design used in the State's Medicaid managed care program(s). We are also finalizing with minor technical modifications at § 422.514(h)(3)(ii) to permit an MA organization, its parent organization, or an entity that shares a parent organization with the MA organization that offers both HMO D-SNP(s) and PPO D-SNP(s) to continue to offer both the HMO and PPO D-SNPs only if the D-SNP(s) not subject to the enrollment limitations at § 422.514(h)(1) no longer accept new full-benefit dual eligible enrollment in the same service area as the D-SNP affected by the new regulations at §§ 422.504(a)(20) and 422.514(h). Additionally, an MA organization (or its parent organization or another MA organization with the same parent organization) in this situation would only be able to offer one D-SNP for full-benefit dual eligible individuals in the same service area as that MA organization's affiliated Medicaid MCO (with limited exceptions as described in section VIII.F. of this final rule). Further, beginning in plan year 2030, such D-SNPs must only enroll (or continue to cover) individuals enrolled in (or in the process of enrolling in) the affiliated Medicaid MCO.
Full-benefit dual eligible individuals enrolled in a D-SNP that consolidates due to our proposals at §§ 422.504(a)(20) and 422.514(h) will be moved into a new plan. The impacted enrollees will receive materials about the plan consolidation and materials associated with the new plan. We believe the plan benefit packages of the plans required to consolidate to be similar if not the same and do not expect impact to enrollees.
We expect there to be an enrollment shift from MA-PDs into FIDE SNPs, HIDE SNPs, or AIPs over time as more D-SNPs align with Medicaid MCOs. Starting in plan year 2027, we expect new D-SNP enrollment to be limited and then we expect integrated D-SNP enrollment to accelerate in 2030 when D-SNPs under a parent organization with an affiliated Medicaid MCO would need to disenroll individuals who are not enrolled in both the D-SNP and affiliated MCO.
We examined contract year 2023 bid data for D-SNPs that enroll beneficiaries in States that also use Medicaid managed care to cover some or all benefits for dually eligible individuals. In general, the data shows that the more integrated D-SNPs have higher per capita MA rebates than those in less integrated plans. MA rebates are used to reduce beneficiary cost sharing, lower beneficiary premiums, and provide additional supplemental benefits. MA rebates are calculated by multiplying the difference in the risk-adjusted benchmarks and the risk-adjusted bids by a percentage called the rebate percentage. The Federal Government retains the complement of the rebate percentage (or 1−rebate percentage) multiplied by the difference in the risk-adjusted benchmarks and bids. The (risk-adjusted) bid-to-benchmark ratios, in general, are smaller for the more integrated plans versus the less integrated plans. This suggests that the more integrated D-SNPs can provide Traditional Medicare benefits (represented by the risk adjusted bid) at a lower or more efficient level than the less integrated D-SNPs. We have assumed that this provision's requirement for greater alignment between the D-SNP and the affiliated Medicaid MCO will lead to greater health benefit efficiencies and incur Federal Government savings since the Federal Government retains the complement of the difference between the submitted risk adjusted bids and benchmarks.
In calculating our estimates, we assumed savings would begin in 2027 when new D-SNPs enrollment would be limited. We expect integrated D-SNP enrollment and related savings to accelerate in 2030 when D-SNPs under a parent organization participating in Medicaid managed care would need to disenroll individuals who are not enrolled in both the D-SNP and affiliated Medicaid MCO under the same parent organization. We estimated that the other elements of this proposal (including the proposed changes to the SEP) would have a negligible impact.
To develop the savings projections, we calculated the bid-to-benchmark ratios for the integrated D-SNPs based on the calendar year 2023 plan data and applied them to the coordination-only D-SNPs that we assume would convert to aligned D-SNPs by 2030. We assumed that a large percentage of the coordination-only D-SNP enrollment would convert to integrated D-SNPs by 2030. For trending purposes, we used 2023 bid data and 2023 enrollment data as the starting point and trended those data points by values found in the 2023 Medicare Trustees Report. We calculated gross costs (savings are represented by negative dollar amounts) by multiplying the per member per month expenditure differences by the enrollment that is projected to switch to aligned plans. Then, we calculated the net cost by multiplying the gross costs by the net of Part B premium amount which averages between 85.1 percent and 84.6 percent from 2025-2034. This yields an overall annual estimate of net Part C costs ranging from −$6 million in contract year 2027 to −$207 million in contract year 2034.
We performed a similar comparison of contract year 2023 bids for Part D on the same MA plans and their associated population. The data also suggests that the more integrated D-SNPs had lower combined bid and reinsurance amounts for contract year 2023. As a result, we also projected that there would be efficiencies when D-SNPs aligned more with the Medicaid MCOs. The observed 2023 difference (efficiency) in the combined bid and reinsurance amounts is projected with the corresponding D-SNP trend assumed in the 2023 Medicare Trustees' Report (not shown in that report). The Part D gross savings are the product of the efficiency and the associated switchers from Table K-3. Since the premiums for the Medicaid beneficiaries are subsidized, there would be no premium offset. As a result, the net savings would be the same as the gross savings. We estimated the net costs would range from −$7 million in contract year 2027 to −$286 million in contract year 2034.
We also have reviewed the impact to the Medicaid program and have concluded that the Medicaid impacts would be negligible. The majority of States have a “lesser-of” policy, under which the State caps its payment of Medicare cost sharing so that the sum of Medicare payment and cost-sharing does not exceed the Medicaid rate for a particular service. Under this policy, the Medicare payment and the cost sharing are not expected to increase resulting in non-significant impacts to Medicaid payments. For Part D, given that the Medicaid liability is limited to the beneficiary cost sharing and that the vast majority of dually eligible individuals qualify for low-income cost sharing, we anticipate no significant impacts to Medicaid costs.
In addition to the estimated savings from limiting enrollment into certain D-SNPs starting in plan year 2027, these provisions require updates to a variety of CMS manual systems.
The finalized change to § 423.38(c)(4) and the finalized provision at § 423.38(c)(35) will create burden for CMS to update MA-PD plan manual chapters, the plan communication user guide (PCUG), and model enrollment notices. Additionally, the MARx system will require coding changes for the finalized amended dual/LIS SEP at § 423.38(c)(4) and finalized integrated care SEP at § 423.38(c)(35). The CMS call center 1-800-MEDICARE will need training on the finalized SEPs to be able to identify beneficiaries eligible for the SEPs. The updates and changes will require two GS-13 staff 20 hours to complete the necessary updates. We estimate the burden for plan year 2025, would be at 40 hours (2 GS-13 * 20 hrs) at a cost of $2,433 (40 hrs * $60.83) for two GS-13 staff to update manual chapters, the PCUG, enrollment notices, and complete coding for MARx. This is a one-time cost that will not create new burden in subsequent years.
The finalized provision at § 422.514(h)(3)(ii) with modification will allow plans to continue operating a PPO and HMO in the same service area but not allow new enrollments of full-benefit dually eligible individuals into the plan (or plans) that are not aligned with the affiliated MCO as described § 422.514(h)(1). This provision will not create new administrative cost for CMS since CMS would use its existing process to suppress these plans from Medicare Plan Finder.
The finalized provision at § 422.530(c)(4)(iii) allowing a crosswalk exception for plans consolidating their D-SNPs will create burden for CMS. The coding to create the crosswalk exception would require one GS-13 10 hours to complete the necessary updates. The burden for plan year 2025, is estimated at 10 hours (1 GS-13 * 10 hrs) at a cost of $608.30 (10 hrs * $60.83) for a GS-13 to complete coding for crosswalk exceptions. This is a one-time cost that will not create new burden in subsequent years. The burden associated with crosswalks and plan consolidation could create additional burden such as breaking plans into
We do not estimate any impact on the Medicare Trust Fund as a result of the provisions to permit immediate substitutions of new interchangeable biological products for their reference products or to treat substitutions of biosimilar biological products other than interchangeable biological products for their reference products as maintenance changes. New biosimilar biological products are approved or licensed by the FDA and become available on the market at irregular intervals. Therefore, with respect to this provision, we cannot predict when new biosimilar biological products will enter the market or to what extent Part D sponsors will make formulary substitutions as a result. The introduction of biosimilar biological products to the market is relatively recent compared to generic small molecule drugs. We believe there is a potential for savings to the Medicare Trust Fund in the long term as acceptance of biosimilar biological products grows and increased competition drives down costs; however, a number cannot be estimated right now. We received no comments on our estimate and are therefore finalizing without change.
This proposal would require plans to notify enrollees about any supplemental benefit they have not used during the first half-year of the contract year. We lack data to quantify the effects of this provision. Therefore, we present a qualitative analysis below. The provision has 3 impacts on plans and the MA program.
One impact is the burden to plans to notify enrollees. This burden has been quantified in the Collection of Information in section X. of this finalized rule. The burden consists of: (1) a system update to identify supplemental benefits not utilized by enrollees; and (2) the burden to notify enrollees.
The second impact relates to the intent of the provision, which is to increase utilization of benefits when appropriate. In some cases, this could initially involve a cost to both enrollees for their share of cost sharing, and to the plans for providing the benefit. In assessing the impact, there are several dimensions of impact for which we lack complete data: (1) which supplemental benefits are not being utilized at all by some enrollees; (2) for each plan offering supplemental benefits, how many enrollees do and do not utilize these benefits; (3) how many more enrollees would utilize these benefits as a result of the notification; and (4) what is the range and distribution of the cost to provide these supplemental benefits.
The third impact relates to savings expected from increased utilization. Normally, such savings are considered consequences of a provision and not typically analyzed in an RIA. We use dental and gym benefits to show several complications and possibilities in this analysis.
Enrollees who use their preventive supplemental dental benefits may uncover problems early, thus preventing unnecessary complications. For example, the filling of cavities may prevent a costlier root canal later. Also note that the filling may happen in one plan while the costlier root canal that was prevented refers to a possible event several years later possibly in another plan (or out of pocket for the enrollee).
An interesting subtlety of this example is that enrollees who have preventive dental checkups may do so annually or semi-annually. The effect of the notification might be to increase annual checkups to semi-annual checkups. It is harder to quantify the savings from such a change in frequency.
From discussions with plans, we know that enrollees may incur the cost of a gym membership benefit without utilizing it. The intent of the provision would be to increase gym utilization. In the case of gym benefits the savings from increased prevention is challenging to analyze since different frequencies of gym attendance have different effects on health. An enrollee, for example, who decides to visit the gym only once because of the notification might not have any significant health benefits generating savings; even enrollees who switch to monthly visits may not experience savings. The savings on enrollees who decide to continue gym visits on a regular basis might arise from varied consequences since increased exercise has the potential to “reduce risk of chronic conditions like obesity, type 2 diabetes, heart disease, many types of cancer, depression and anxiety, and dementia.”
In summary, this is the type of provision that has a savings impact that can be analyzed only after several years of experience with the provision.
In the NPRM we proposed to: (1) generally prohibit contract terms between MA organizations and agents, brokers, or other TMPOs that may interfere with the agent's or broker's ability to objectively assess and recommend the plan which best fits a beneficiary's health care needs; (2) set a single agent and broker compensation rate for all plans, while revising the scope of what is considered “compensation;” and (3) eliminate the regulatory framework which currently allows for separate payment to agents and brokers for administrative services. We also proposed to make conforming edits to the agent broker compensation rules at § 423.2274.
We are finalizing the above provisions as proposed, but with the following modifications.
We are finalizing our proposal to generally prohibit contract terms between MA organizations and agents, brokers, or other TMPOs that may interfere with the agent's or broker's ability to objectively assess and recommend the plan which best fits a beneficiary's health care needs. We are finalizing the policies to set a single agent and broker compensation rate for all plans, while revising the scope of what is considered “compensation,” and clarify the applicability date of October 1, 2024. And we are finalizing our policy to eliminate the use of administrative payments, with an applicability date of October 1, 2024. In addition, we are finalizing a one-time $100 increase to the FMV compensation rate for agents and brokers to reimburse them for necessary administrative activities.
As explained in the Section X.C.9 of this final rule, as a result of comments we replaced the line-item approach to estimating costs with a holistic cost estimate. This holistic cost estimate was based on the wide range of estimates of current administrative costs provided by stakeholders in response to our solicitation of comments. Additionally, since the finalized $100 flat rate to be paid by plans directly to agent brokers is less than the current administrative payments by plans—which are being eliminated, we regard the costs
The true cost of most administrative expenses can vary greatly from one agent or broker to another and is based in data and contracts that CMS does not have access to, so it would be extremely difficult for us to accurately capture, making a line-item calculation not practicable. This was further reflected in the wide variation among alternate rates posed by commenters, with a few commenters suggesting an alternate rate increase of $50, another $75, while the majority recommended higher rates beginning at $100 and some going as high as $500. Some commenters suggested that we should calculate the compensation increase as a percentage of the base rate, such as 30% or 33% of the current $611 compensation figure.
Considering the complexities involved in balancing the incentives not only between MA organizations and agents, brokers, and other TPMOs, but also balancing incentives between MA and other parts of Medicare, such as Traditional Medicare with PDP or supplemental Medigap plans, we believe that choosing a flat rate for calculating the increase is an appropriate path forward. By taking a flat-rate approach, we are able to create parity among agents, regardless of which plan, plan type, or type of Medicare enrollment they effectuate on behalf of the beneficiary. Given the fact that the administrative payments are intended to cover administrative costs that do not substantially differ based on which plan a beneficiary ultimately enrolls in, the flat rate approach is the best way to achieve our goals.
Several commenters suggested that an increase of $100 would be an appropriate starting point, and reflects the minimum monthly costs of necessary licensing and technology costs. We understand that other commenters recommended an increase of more than $100, including some suggesting an increase of $200 or more. However, we believe, based on the totality of comments, that recommendations for an increase above $100 may have been inflated to include the full price of all technology and systems that are also utilized to effectuate sales in other markets. In addition, it appears that such recommendations may reflect the lost “bonuses” and other “administrative payments” agents and brokers may previously have received, some of which were beyond the scope and FMV of the services involved in enrolling beneficiaries into MA plans and, therefore, should not have been included under compensation or administrative payments.
In § 422.626, we proposed to (1) require the QIO instead of the MA plan, to review untimely fast-track appeals of an MA plan's decision to terminate services in an HHA, CORF, or SNF; and (2) fully eliminate the provision requiring the forfeiture of an enrollee's right to appeal a termination of services decision when they leave the facility or end home health, CORF, or home-based hospice services before the proposed terminate date.
Currently, there is no data collected on the volume of fast-track appeals conducted by MA plans for untimely requests. The QIO conducts appeals for FFS fast-track appeals for untimely requests but does not formally collect data on appeals based on untimely requests from MA enrollees. Thus, the following estimates were speculative given the lack of precise data on the number of the fast-track appeals for untimely FFS requests.
Anecdotal data from the QIOs conducting these fast-track appeals indicates that approximately 2.5 percent of all fee-for-service (FFS) fast-track appeal requests are untimely. In CY 2021 (most recent year available), there were 190,031 MA fast-track appeals to the QIO. Thus, we estimate that approximately 4,751 fast track appeals will be shifted from MA plans to the QIO (0.025 × 190,031).
The shift of these untimely appeals from the MA plans to the QIOs will result in an increased burden to QIOs and a reduced burden to MA plans. There is an estimated per case cost for QIOs to conduct these appeals (per the Financial Information and Vouchering System (FIVS) from 5/1/2019-7/31/2023), while MA plans are not specifically reimbursed for this activity. The average QIO appeal of this type takes 1.69 hours at $85.18/hr.
In aggregate we estimate an annual burden of 8,029 hours (4,751 responses * 1.69 hr/response) at a cost of $683,910 (8,029 hr × $85.18/hr). This is being classified as a transfer from MA plans to QIOs.
We were unable to estimate how many new QIO reviews will be conducted under the proposed provision at § 422.626(a)(3) to eliminate the provision requiring the forfeiture of an enrollee's right to appeal a termination of services decision when they leave the skilled nursing facility or end home health, CORF, or home-based hospice services before the proposed termination date. No entity tracks how many appeals are not conducted because the enrollee stopped the services at issue before the last day of coverage. Further, because this provision has never existed for FFS, we have no basis from which to derive an estimate.
We received no comments on our estimate and are therefore finalizing without change.
We proposed to revise § 423.153(d)(2) to: (1) codify the current nine core chronic diseases in regulation, and add HIV/AIDS to the list of core chronic diseases for a total of 10 core chronic diseases and require Part D sponsors to include all core chronic diseases in their MTM targeting criteria; (2) lower the maximum number of Part D drugs a Part D sponsor may require from eight to five drugs and require sponsors to include all Part D maintenance drugs in their targeting criteria; and (3) change the annual cost threshold methodology to be commensurate with the average annual cost of five generic drugs ($1,004 in 2020). We estimated that these proposals would increase the number of Part D beneficiaries eligible for MTM services.
These proposed changes would allow us to address specific problems identified in the Part D MTM program by improving access to MTM services for enrollees with multiple chronic conditions who are taking multiple Part D drugs, reducing marked variability in MTM eligibility across plans, better aligning with Congressional intent to improve medication use and reduce the risk of adverse events by focusing more on case complexity and drug regimen, and establishing a more reasonable cost threshold that would keep the MTM program size manageable. Almost all of the chronic diseases that CMS proposed to codify as core chronic diseases are more prevalent among underserved populations, including minority and lower income populations. As a result, we anticipated that our proposed changes would increase eligibility rates among those populations.
We did not receive any comments on this section of the proposed rule. After consideration of the comments we did receive, we are finalizing our proposal with modifications. We are finalizing the requirement that sponsors include all core chronic conditions in their targeting criteria (the current nine core
We cannot definitively score this proposal because there may be other administrative costs attributable to MTM, and MTM program costs are not a specific line item that can be easily extracted from the bid. Additionally, published studies have found that MTM services may generate overall medical savings, for example, through reduced adverse outcomes including reduced hospitalizations and readmissions, outpatient encounters, or nursing home admissions. CMS is unable to generate reliable savings estimates from the published studies due to limitations in potential study design, including the lack of a control group and numerous intervening variables. The burden associated with these changes is addressed in the Collection of Information section (section X.) of this final rule in the ICR section for MTM targeting criteria.
In this section, CMS includes discussions of alternatives considered. Several provisions of this final rule reflect a codification of existing policy where we have evidence, as discussed in the appropriate preamble sections, that the codification of this existing policy would not affect compliance. In such cases, the preamble typically discusses the effectiveness metrics of these provisions for public health. Also, in these cases, traditional categories of alternative analysis such as different compliance dates, different enforcement methods, different levels of stringency, as outlined in section C of OMB's Circular A-4, are not fully relevant since the provision is already being complied with adequately. Consequently, alternative analysis is not provided for these provisions.
We are finalizing a reduction to the threshold for D-SNP look-alikes from 80 percent to 60 percent over a 2-year period. We considered an alternative proposal to lower the D-SNP look-alike threshold to 60 percent in 1 year, allowing an earlier phase-out of these non-SNP MA plans. But we are finalizing the more incremental approach to minimize disruptions to dually eligible individuals and allow plans and CMS more time to operationalize these transitions.
We considered and solicited comment on an alternative to our proposal that would eliminate the proposed 70 percent threshold for plan year 2025 but would involve additional conditions and changes related to the transition authority. Specifically, this alternative would:
• Apply the 60 percent threshold beginning in plan year 2026;
• Permit use of the transition authority into non-SNP MA plans (as currently permitted under § 422.514(e) for plan year 2025; and
• Limit use of transition authority under § 422.514(e) to transition D-SNP look-alike enrollees into D-SNPs for plan year 2026 and subsequent plan years.
Relative to our final provision, this alternative would have given plans with dually eligible individual enrollment between 70 and 80 percent of total enrollment based on January 2024 enrollment data one additional year to apply for a new D-SNP or service area expansion to an existing D-SNP, such that these plans could transition enrollees into a D-SNP for plan year 2026. The alternative would have balanced the additional year using the existing 80 percent enrollment threshold to identify prohibited D-SNP look-alikes with an earlier limitation on the § 422.514(e) transition authority to enrollees transitioning into non-SNPs. We solicited comment on whether this alternative is a better balance of the goals of our policy to prohibit circumvention of the requirements for D-SNPs and to encourage and incentivize enrollment in integrated care plans.
Among the factors we considered related to the alternative is the extent to which plans with 70 percent or more dually eligible enrollment in plan year 2024 expect to be able to establish a D-SNP in the same service area as the D-SNP look-alike if given an additional year (that is, 2026) to transition enrollees. Based on 2023 plan year data, approximately two-thirds of the MA organizations with non-SNP MA plans with between 70 and 80 percent dually eligible individuals already have a D-SNP under the same MA organization with the vast majority of those D-SNPs having a service area that covers the service area as the non-SNP MA plan. The other approximately one-third of the MA organizations with non-SNP MA plans with between 70 and 80 percent dually eligible individuals do not have a D-SNP in the same service area in plan year 2023. If given an additional year, these MA organizations would have had more time in which to establish D-SNPs in the same service areas as non-SNP MA plans and transition the enrollees into a D-SNP.
We are not finalizing any of these alternative policies, and instead are finalizing this provision as proposed, as discussed in section VIII.J. of this final rule.
We considered two alternatives to our original proposal. The first alternative we considered would maintain our proposed changes related to chronic diseases and Part D drug utilization, but would establish a cost threshold commensurate with the average annual cost of 2 Part D maintenance drugs. Under this alternative, CMS would calculate the dollar amount based on the average daily cost of both brand and generic drugs identified as maintenance drugs in Medi-Span. Based on 2020 PDE data, the cost threshold under this alternative would be $1,657, with an estimated program size of about 9,363,087 beneficiaries (19.53 percent of the total Part D population) and an estimated increased burden of $251,600,394.
The second alternative we considered would include our proposed changes related to chronic diseases, retain the current maximum number of Part D drugs a sponsor may require for MTM program enrollment at 8 drugs, require sponsors to include all Part D
We did not receive any comments in response to the specific alternatives considered in the proposed rule; therefore, we did not pursue finalizing either of these alternatives. We are instead finalizing the proposed changes with modifications to the Part D MTM program eligibility requirements as discussed in section III.E. of this final rule which includes our proposed changes related to chronic diseases, retains the current maximum number of Part D drugs a sponsor may require for MTM program enrollment at 8 drugs, requires sponsors to include all Part D maintenance drugs in their targeting criteria, and establishes a cost threshold commensurate with the average annual cost of 8 generic maintenance drugs. The changes we are finalizing allows us to be responsive to commenters' concerns regarding the potential impact of reducing the maximum number of Part D drugs from eight to five to maintain, about program size, and the ability to administer effective MTM services, while still addressing the barriers to eligibility posed by the increasingly restrictive plan criteria (for example, by targeting select core chronic diseases or drugs) and the high cost threshold, which were identified in our analysis as the main drivers of reduced eligibility rates for MTM.
As required by OMB Circular A-4 (available at
The following Tables K5a and K5b summarize costs, and savings by provision and year, and form a basis for the accounting Table K4. In Tables K5a and K5b, annual costs and savings are expressed as positive numbers and, except for the last two rows, are true costs and savings reflecting increases or decreases in consumption of services and goods. However, the provisions presenting impacts of increasing enrollment for D-SNPs on Part C and Part D which affect the Medicare Trust Fund are transfers reflecting buying the same goods and services with greater efficiency. These transfers are expressed as positive numbers and reflect reduced dollar spending to the Trust Fund, that is savings. The provision enhancing enrollee appeal rights is a transfer from MA administrative costs to QIO costs. The 10-year aggregate impacts in the right-most column use positive numbers to reflect costs and negative numbers to reflect savings, Tables K5a and K5b combine related provisions. For example, all provisions in the COI summary table related to PACE are combined into one line item in the RIA.
In aggregate this final rule combines both savings and costs. Three provisions reduce spending by the Medicare Trust Fund: (1) the effect on Part C plans from the provisions designed to increase the
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & Medicaid Services, approved this document on March 29, 2024.
Administrative practice and procedure, Grant programs—health, Health care, Health Insurance, Health maintenance organizations (HMO), Loan programs—health Medicare, and Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health maintenance organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.
Administrative practice and procedure, Health facilities, Health maintenance organizations (HMO), Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.
Aged, Citizenship and naturalization, Civil rights, Health, Health care, Health records, Individuals with disabilities, Medicaid, Medicare, Religious discrimination, Reporting and recordkeeping requirements, Sex discrimination.
For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR Chapter IV as set forth below:
42 U.S.C. 1302 and 1395hh, and 300e, 300e-5, and 300e-9, and 31 U.S.C. 9701.
(c) * * *
(3)
(i) Submits a request for reinstatement for good cause within 60 calendar days of the disenrollment effective date.
(ii) Has not previously requested reinstatement for good cause during the same 60-day period following the involuntary disenrollment.
(iii) Shows good cause for failure to pay.
(iv) Pays all overdue premiums or other charges within 3 calendar months after the disenrollment date.
(v) Establishes by a credible statement that failure to pay premiums or other charges was due to circumstances for which the individual had no control, or which the individual could not reasonably have been expected to foresee.
(e) * * *
(2)
(ii) The HMO or CMP must inform the individual of the right to use the organization's grievance procedures, through the notices described in paragraph (e)(7) of this section.
(4)
(7)
(i) The first notice, the advance notice, informs the member that continued disruptive behavior could lead to involuntary disenrollment and provides the individual an opportunity to cease the behavior in order to avoid the disenrollment action.
(A) If the disruptive behavior ceases after the enrollee receives the advance notice and then later resumes, the HMO or CMP must begin the process again.
(B) The HMO or CMP must wait at least 30 days after sending the advance notice before sending the second notice, during which 30-days period the individual has to provide an opportunity for the individual to cease their behavior.
(ii) The second notice, the notice of intent to request CMS permission to disenroll the member, notifies the enrollee that the HMO or CMP requests CMS permission to involuntarily disenroll the enrollee. This notice must be provided before submission of the request to CMS.
(l)
42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and 1395hh.
The revisions and additions read as follows:
(1) Hospice services; and
(2) Beginning in 2021, organ acquisitions for kidney transplants, including costs covered under section 1881(d) of the Act.
(1) Restricts enrollment to MA eligible individuals who meet the definition of institutionalized;
(2) Must own or contract with at least one institution, specified in the definition of institutionalized in this section, for each county in the plan's service area; and
(3) Must own or have a contractual arrangement with each institutionalized facility serving enrollees in the plan.
(1) Restricts enrollment to both MA eligible individuals who meet the definition of institutionalized and MA eligible individuals who meet the definition of institutionalized-equivalent in this section; and
(2) Meet the standards specified in the definitions of FI-SNP and IE-SNP.
(1) IE-SNP.
(2) HI-SNP.
(3) FI-SNP.
(1) Means—
(i) A coordinated care plan as specified in § 422.4(a)(1)(iii);
(ii) A network-based MSA plan; or
(iii) A section 1876 reasonable cost plan; and
(2) Excludes an MA regional plan that meets access requirements substantially through the authority of § 422.112(a)(1)(ii) instead of written contracts.
(1) Chronic alcohol use disorder and other substance use disorders (SUDs).
(2) Autoimmune disorders:
(i) Polyarteritis nodosa.
(ii) Polymyalgia rheumatica.
(iii) Polymyositis.
(iv) Dermatomyositis.
(v) Rheumatoid arthritis.
(vi) Systemic lupus erythematosus.
(vii) Psoriatic arthritis.
(viii) Scleroderma.
(3) Cancer.
(4) Cardiovascular disorders:
(i) Cardiac arrhythmias.
(ii) Coronary artery disease.
(iii) Peripheral vascular disease.
(iv) Valvular heart disease.
(5) Chronic heart failure.
(6) Dementia.
(7) Diabetes mellitus.
(8) Overweight, obesity, and metabolic syndrome.
(9) Chronic gastrointestinal disease:
(i) Chronic liver disease.
(ii) Non-alcoholic fatty liver disease (NAFLD).
(iii) Hepatitis B.
(iv) Hepatitis C.
(v) Pancreatitis.
(vi) Irritable bowel syndrome.
(vii) Inflammatory bowel disease.
(10) Chronic kidney disease (CKD):
(i) CKD requiring dialysis/End-stage renal disease (ESRD).
(ii) CKD not requiring dialysis.
(11) Severe hematologic disorders:
(i) Aplastic anemia.
(ii) Hemophilia.
(iii) Immune thrombocytopenic purpura.
(iv) Myelodysplastic syndrome.
(v) Sickle-cell disease (excluding sickle-cell trait).
(vi) Chronic venous thromboembolic disorder.
(12) HIV/AIDS.
(13) Chronic lung disorders:
(i) Asthma, Chronic bronchitis.
(ii) Cystic Fibrosis.
(iii) Emphysema.
(iv) Pulmonary fibrosis.
(v) Pulmonary hypertension.
(vi) Chronic Obstructive Pulmonary Disease (COPD).
(14) Chronic and disabling mental health conditions:
(i) Bipolar disorders.
(ii) Major depressive disorders.
(iii) Paranoid disorder.
(iv) Schizophrenia.
(v) Schizoaffective disorder.
(vi) Post-traumatic stress disorder (PTSD).
(vii) Eating Disorders.
(viii) Anxiety disorders.
(15) Neurologic disorders:
(i) Amyotrophic lateral sclerosis (ALS).
(ii) Epilepsy.
(iii) Extensive paralysis (that is, hemiplegia, quadriplegia, paraplegia, monoplegia).
(iv) Huntington's disease.
(v) Multiple sclerosis.
(vi) Parkinson's disease.
(vii) Polyneuropathy.
(viii) Fibromyalgia.
(ix) Chronic fatigue syndrome.
(x) Spinal cord injuries.
(xi) Spinal stenosis.
(xii) Stroke-related neurologic deficit.
(16) Stroke.
(17) Post-organ transplantation care.
(18) Immunodeficiency and Immunosuppressive disorders.
(19) Conditions associated with cognitive impairment:
(i) Alzheimer's disease.
(ii) Intellectual disabilities and developmental disabilities.
(iii) Traumatic brain injuries.
(iv) Disabling mental illness associated with cognitive impairment.
(v) Mild cognitive impairment.
(20) Conditions with functional challenges and require similar services including the following:
(i) Spinal cord injuries.
(ii) Paralysis.
(iii) Limb loss.
(iv) Stroke.
(v) Arthritis.
(21) Chronic conditions that impair vision, hearing (deafness), taste, touch, and smell.
(22) Conditions that require continued therapy services in order for individuals to maintain or retain functioning.
(a) * * *
(1) * * *
(iv) * * *
(A) A C-SNP may focus on one severe or disabling chronic condition, as defined in § 422.2, or on a grouping of severe or disabling chronic conditions.
(B) Upon CMS approval, an MA organization may offer a C-SNP that focuses on multiple commonly co-morbid and clinically linked conditions from the following list of groupings:
(
(
(
(
(
(
(
(
The revision and additions read as follows:
(b) * * *
(2) Meet the eligibility requirements for that specific SNP, including any additional eligibility requirements established in the State Medicaid agency contract (as described at § 422.107(a)) for dual eligible special needs plans; and
(f) Establishing eligibility for enrollment. (1) For enrollments into an SNP that exclusively enrolls individuals that have severe or disabling chronic conditions (C-SNP), the organization must contact the applicant's current health care provider, who is a physician as defined in section 1861(r)(1) of the Act, physician assistant as defined in section 1861(aa)(5)(A) of the Act and who meets the qualifications specified in § 410.74(c) of this chapter, or a nurse practitioner as defined in section 1861(aa)(5)(A) of the Act and who meets the qualifications specified in § 410.75(b)(1)(i) and (ii) of this chapter to confirm that the applicant has the qualifying condition(s). The organization must obtain this information in one of the following two ways described in paragraph (f)(1)(i) or (ii) of this section:
(i) Contact the current health care provider or current health care provider's office and obtain verification of the applicant's condition(s) prior to enrollment in a form and manner authorized by CMS.
(ii) Through an assessment with the enrollee using a pre-enrollment qualification assessment tool (PQAT) where the assessment and the information gathered are verified (as described in paragraph (f)(1)(iii) of this section) before the end of the first month of enrollment in the C-SNP. Use of a PQAT requires the following:
(A) The PQAT must do all of the following:
(
(
(
(
(B) The C-SNP conducts a post-enrollment confirmation of each enrollee's information and eligibility by having the completed PQAT reviewed and signed by the enrollee's current health care provider as specified in paragraph (f)(1) of this section.
(C) The C-SNP must include the information gathered in the PQAT and used in this verification process in its records related to or about the enrollee that are subject to the confidentiality requirements in § 422.118.
(D)(
(
(E) If the organization does not obtain verification of the enrollees' required chronic condition(s) by the end of the first month of enrollment in the C-SNP, the organization must—
(
(
(F) The organization must maintain the enrollment of the individual if verification of the required condition(s) is obtained at any point before the end of the second month of enrollment.
(iii) Prior to enrollment, the PQAT must be completed by the enrollee, completed by the enrollee's current health care provider, or administered with the enrollee by a provider employed or contracted by the plan. The PQAT must be signed by the enrollee's current health care provider as verification and confirmation that the enrollee has the severe or disabling chronic condition required to be eligible for the C-SNP, which may be done post-enrollment.
(2) [Reserved]
(g)
The revision and additions read as follows:
(a) * * *
(1) Except for the limitations on enrollment in an MA MSA plan provided by § 422.62(d)(1) and except as specified in paragraphs (a)(2) and (3) of this section, each MA organization must accept without restriction (except for an MA RFB plan as provided by § 422.57) individuals who are eligible to elect an MA plan that the MA organization offers and who elect an MA plan during initial coverage election periods under § 422.62(a)(1), annual election periods under § 422.62(a)(2), and under the
(3) Dual eligible special needs plans must limit enrollments to those individuals who meet the eligibility requirements established in the state Medicaid agency contract, as specified at § 422.52(b)(2).
(h)
(i)
(1) The authorized representative would constitute the “beneficiary” or the “enrollee” for the purpose of making an election.
(2) Authorized representatives may include court-appointed legal guardians, persons having durable power of attorney for health care decisions, or individuals authorized to make health care decisions under state surrogate consent laws, provided they have the authority to act for the beneficiary in this capacity.
The revisions and addition read as follows:
(a) * * *
(1) * * *
(i) The last day of the second month after the month in which they are first entitled to Part A and enrolled in Part B; or
(4)
(i) Subject to the MA plan being open to enrollees as provided under § 422.60(a)(2), an MA eligible institutionalized individual may at any time elect an MA plan or change his or her election from an MA plan to Original Medicare, to a different MA plan, or from Original Medicare to an MA plan.
(ii) The open enrollment period for institutionalized individuals ends on the last day of the second month after the month the individual ceases to reside in one of the long-term care facility settings described in the definition of “institutionalized” in § 422.2.
(b) * * *
(2) The individual is not eligible to remain enrolled in the plan because of a change in his or her place of residence to a location out of the service area or continuation area or other change in circumstances as determined by CMS but not including terminations resulting from a failure to make timely payment of an MA monthly or supplemental beneficiary premium, or from disruptive behavior. Also eligible for this SEP are individuals who, as a result of a change in permanent residence, have new MA plan options available to them.
(18) Individuals affected by an emergency or major disaster declared by a Federal, State or local government entity are eligible for an SEP to make an MA enrollment or disenrollment election. The SEP starts as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier. The SEP ends 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, the date the incident automatically ends under applicable state or local law, or, if the incident end date is not otherwise identified, the incident end date specified in paragraph (b)(18)(i) of this section.
(i) If the incident end date of an emergency or major disaster is not otherwise identified, the incident end date is 1 year after the SEP start date; or, if applicable, the date of a renewal or extension of the emergency or disaster declaration, whichever is later. The maximum length of this SEP, if the incident end date is not otherwise identified, is 14 full calendar months after the SEP start date or, if applicable, the date of a renewal or extension of the emergency or disaster declaration.
(b) * * *
(3) * * *
(v) In the case of an incomplete disenrollment request—
(A) Document its efforts to obtain information to complete the disenrollment request;
(B) Notify the individual (in writing or verbally) within 10 calendar days of receipt of the disenrollment request.
(C) The organization must deny the request if any additional information needed to make the disenrollment request “complete” is not received within the following timeframes:
(
(
(6)
(g)
(1) To determine the beneficiary's choice of election period and effective
(2) If the MA organization is unable to obtain the beneficiary's desired enrollment effective date, the MA organization must assign an election period using the following ranking of election periods:
(i) ICEP/Part D IEP.
(ii) MA-OEP.
(iii) SEP.
(iv) AEP.
(v) OEPI.
(3) If the MA organization is unable to obtain the beneficiary's desired disenrollment effective date, the MA organization must assign an election period that results in the earliest disenrollment.
The addition and revisions read as follows:
(b) * * *
(2) * * *
(vi) The individual no longer meets the MA MSA's eligibility criteria specified under § 422.56 due to a mid-year change in eligibility.
(c)
(1) Be provided to the individual before submission of the disenrollment to CMS; and
(2) Include an explanation of the individual's right to submit a grievance under the MA organization's grievance procedures.
(d) * * *
(1) * * *
(i) * * *
(B) * * *
(
(v)
(A) Submits a request for reinstatement for good cause within 60 calendar days of the disenrollment effective date;
(B) Has not previously requested reinstatement for good cause during the same 60-day period following the involuntary disenrollment;
(C) Shows good cause for failure to pay within the initial grace period;
(D) Pays all overdue premiums within 3 calendar months after the disenrollment date; and
(E) Establishes by a credible statement that failure to pay premiums within the initial grace period was due to circumstances for which the individual had no control, or which the individual could not reasonably have been expected to foresee.
(2) * * *
(iii)
(
(
(B) The beneficiary has a right to submit any information or explanation that he or she may wish to the MA organization.
(iv)
(A) Must document the enrollee's behavior, its own efforts to resolve any problems, as described in paragraph (d)(2)(iii) of this section, and any extenuating circumstances.
(B) May request from CMS the ability to decline future enrollment by the individual.
(C) Must submit to CMS—
(
(
(
(vii)
(A) The first notice, the advance notice, informs the member that continued disruptive behavior could lead to involuntary disenrollment and provides the individual an opportunity to cease the behavior in order to avoid the disenrollment action.
(
(
(B) The second notice, the notice of intent to request CMS permission to disenroll the member, notifies the member that the MA organization requests CMS permission to involuntarily disenroll the member.
(
(
(4) * * *
(i)
(ii) * * *
(A) The individual is considered to be temporarily absent from the plan service area when one or more of the required materials and content referenced in § 422.2267(e), if provided by mail, is returned to the MA organization by the U.S. Postal Service as undeliverable and a forwarding address is not provided.
(B) [Reserved]
(iii) * * *
(F) The individual is considered to be temporarily absent from the plan service
(iv)
(8)
(i) The advance notice must be provided to the enrollee within 10 calendar days of the plan learning of the loss of special needs status and must afford the enrollee an opportunity to prove that they are still eligible to remain in the plan.
(ii) The advance notice must include all of the following:
(A) The disenrollment effective date.
(B) A description of eligibility for the SEP described in § 422.62(b)(11).
(C) If applicable all of the following:
(
(
(
(iii) A final notice of involuntary disenrollment must be sent as follows:
(A) Within 3 business days following the disenrollment effective date, which is either—
(
(
(B) Before submission of the disenrollment to CMS.
(iv) The final notice of involuntary disenrollment must include an explanation of the enrollee's right to file a grievance under the MA organization's grievance procedures that are required by § 422.564.
(10)
(e) * * *
(1)
(o)
(1) Complies with the limits described in paragraph (f)(6) of this section with the exception that references to the MOOP amounts refer to the total catastrophic limits under § 422.101(d)(3) for local PPOs and MA regional plans; and
(2) Complies with the limits described in paragraph (j)(1) of this section with the exception that references to the MOOP amounts refer to the total catastrophic limits under § 422.101(d)(3) for local PPOs and MA regional plans and, for regional PPO dual eligible special needs plans, excluding paragraph (j)(1)(i)(C)(
The additions and revisions read as follows:
(f) * * *
(2) * * *
(vi) For I-SNPs, ensure that contracts with long-term care institutions (listed in the definition of the term institutionalized in § 422.2) contain requirements allowing I-SNP clinical and care coordination staff access to enrollees of the I-SNP who are institutionalized.
(3) * * *
(iii) Each element of the model of care of a plan must meet a minimum benchmark score of 50 percent and each MOC must meet an aggregate minimum benchmark of 70 percent, and a plan's model of care is only approved if each element of the model of care meets the minimum benchmark and the model of care meets the aggregate minimum benchmark.
(A) An MOC for a C-SNP that receives a passing score is approved for 1 year.
(B)(
(
(
(C) For an MOC that fails to meet a minimum element benchmark score of 50 percent or an MOC that fails to meet the aggregate minimum benchmark of 70 percent, the MA organization is permitted a one-time opportunity to resubmit the corrected MOC for reevaluation; and an MOC that is corrected and resubmitted using this cure period is approved for only 1 year.
(iv) An MA organization sponsoring a SNP that seeks to revise the MOC before the end of the MOC approval period may submit changes to the MOC as off-cycle MOC submissions for review by NCQA as follows:
(A) C-SNPs, D-SNPs and I-SNPs must submit updates and corrections to their NCQA-approved MOC when CMS requires an off-cycle submission to ensure compliance with applicable law.
(B) D-SNPs and I-SNPs must submit updates and corrections to their NCQA approved MOC between June 1st and November 30th of each calendar year if the I-SNP or D-SNP wishes to make any of the following revisions:
(
(
(
(
(
(
(
(
(
(
(C) NCQA only reviews off-cycle submissions after the start of the effective date of the current MOC unless CMS deems it necessary to ensure compliance with the applicable regulations.
(D) SNPs may not implement any changes to a MOC until NCQA has reviewed and approved the off-cycle MOC changes. NCQA does not rescore the MOC during the off-cycle review of changes to the MOC, but changes are reviewed and determined by NCQA to be either “Acceptable” or “Non-acceptable.” “Acceptable” means that the changes have been approved by NCQA and the MOC has been updated; “Non-acceptable” means the changes have been rejected by NCQA and the MOC has not been changed. If NCQA determines that off-cycle changes are unacceptable, the SNP must continue to implement the MOC as originally approved.
(E) Successful revision of the MOC under paragraph (f)(3)(iv)(B) of this section does not change the MOC's original period of approval.
(F) C-SNPs are only permitted to submit an off-cycle MOC submission when CMS requires an off-cycle submission to ensure compliance with applicable law.
(G) When a deficiency is identified in the off-cycle MOC revision(s) submitted by a SNP, the SNP has one opportunity to submit a corrected off-cycle revision between June 1st and November 30th of each calendar year.
(f) * * *
(1) * * *
(i) * * *
(A) * * *
(
(3)
(i) Relevant acceptable evidence includes large, randomized controlled trials or prospective cohort studies with clear results, published in a peer-reviewed journal, and specifically designed to investigate whether the item or service impacts the health or overall function of a population, or large systematic reviews or meta-analyses summarizing the literature of the same.
(ii) An MA organization must include in its bibliography a comprehensive list of relevant acceptable evidence published within the 10 years prior to the June immediately preceding the coverage year during which the SSBCI will be offered, including any available negative evidence and literature.
(iii) If no evidence of the type described in paragraphs (f)(3)(i) and (ii) of this section exists for a given item or service, then MA organization may cite case studies, federal policies or reports, internal analyses, or any other investigation of the impact that the item or service has on the health or overall function of its recipient as relevant acceptable evidence in the MA organization's bibliography.
(iv) The MA organization must make its bibliography of relevant acceptable evidence available to CMS upon request.
(4)
(i) Have written policies for determining enrollee eligibility and must document its determination that an enrollee is a chronically ill enrollee based on the definition in
(ii) Make information and documentation related to determining enrollee eligibility available to CMS upon request.
(iii)(A) Have and apply written policies based on objective criteria for determining a chronically ill enrollee's eligibility to receive a particular SSBCI; and
(B) Document the written policies specified in paragraph (f)(4)(iii)(A) of this paragraph and the objective criteria on which the written policies are based.
(iv) Document each eligibility determination for an enrollee, whether eligible or ineligible, to receive a specific SSBCI and make this information available to CMS upon request.
(v) Maintain without modification, as it relates to an SSBCI, evidentiary standards for a specific enrollee to be determined eligible for a particular SSBCI, or the specific objective criteria used by a plan as part of SSBCI eligibility determinations for the full coverage year.
(5)
(ii) CMS may annually review the items or services that an MA organization includes as SSBCI in its bid for compliance with all applicable requirements, taking into account updates to the relevant acceptable evidence applicable to each item or service.
(iii) This provision does not limit CMS's authority to review and negotiate bids or to reject bids under section 1854(a) of the Act and 42 CFR part 422 subpart F nor does it limit CMS's authority to review plan benefits and bids for compliance with all applicable requirements.
The revision and addition read as follows:
(h) * * *
(1) * * *
(iv) * * *
(B) Establishes contact with a customer service representative within 7 minutes on no fewer than 80 percent of incoming calls requiring TTY services.
(l)
(a) * * *
(3) * * *
(ii) Network-based plan as defined in § 422.2.
The additions and revisions read as follows:
(b) * * *
(2) * * *
(xiv) Outpatient behavioral health, which can include marriage and family therapists (as defined in section 1861(lll) of the Act), mental health counselors (as defined in section 1861(lll) of the act), opioid treatment programs (as defined in section 1861(jjj) of the act), community mental health centers (as defined in section 1861(ff)(3)(b) of the act), or those of the following who regularly furnish or will regularly furnish behavioral health counseling or therapy services including psychotherapy or prescription of medication for substance use disorders; physician assistants, nurse practitioners and clinical nurse specialists (as defined in section 1861(aa)(5) of the Act); addiction medicine physicians; or outpatient mental health and substance use treatment facilities.
(A) To be considered as regularly furnishing behavioral health services for the purposes of this regulation, a physician assistant (PA), nurse practitioner (NP), and clinical nurse specialist (CNS) must have furnished specific psychotherapy or medication prescription services (including, buprenorphine and methadone, for substance use disorders) to at least 20 patients within a 12-month period. CMS will identify, by detailed descriptions or Healthcare Common Procedure Coding System (HCPCS) code(s), the specific services in the HSD Reference File described in paragraph (a)(4)(i) of this section.
(B) To determine that a PA, NP, or CNS meets the standard in paragraph (b)(2)(xiv)(A) of this section, an MA organization must do all of the following:
(
(
(
(d) * * *
(2) * * *
(5) * * *
(xv) Outpatient Behavioral Health, described in paragraph (b)(2)(xiv) of this section.
(f)
(i)(A) Certain providers or facilities are not available for the MA plan to meet the network adequacy criteria as shown in the Provider Supply file for the year for a given county and specialty type; and
(B) The MA plan has contracted with other providers and facilities that may be located beyond the limits in the time and distance criteria, but are currently available and accessible to most enrollees, consistent with the local pattern of care.
(ii)(A) A facility-based Institutional-Special Needs Plan (I-SNP) is unable to contract with certain specialty types required under § 422.116(b) because of the way enrollees in facility-based I-SNPs receive care; or
(B) A facility-based I-SNP provides sufficient and adequate access to basic benefits through additional telehealth benefits (in compliance with § 422.135) when using telehealth providers of the specialties listed in paragraph (d)(5) of this section in place of in-person providers to fulfill network adequacy standards in paragraphs (b) through (e) of this section.
(2) * * *
(iv) As applicable, the facility-based I-SNP submits:
(A) Evidence of the inability to contract with certain specialty types required under this section due to the way enrollees in facility-based I-SNPs receive care; or
(B) Substantial and credible evidence that sufficient and adequate access to basic benefits is provided to enrollees using additional telehealth benefits (in compliance with § 422.135) furnished by providers of the specialties listed in paragraph (d)(5) of this section and the
(3) Any MA organization that receives the exception provided for facility-based I-SNPs must agree to offer only facility-based I-SNPs under the MA contract that receives the exception.
(a)
(b)
(2)
(3)
(4)
(5)
(c)
(c) * * *
(5) Beginning January 1, 2025, include at least one member with expertise in health equity. Expertise in health equity includes educational degrees or credentials with an emphasis on health equity; experience conducting studies identifying disparities amongst different population groups; experience leading organization-wide policies, programs, or services to achieve health equity; or experience leading advocacy efforts to achieve health equity.
(d) * * *
(6) Beginning in 2025, annually conduct a health equity analysis of the use of prior authorization.
(i) The final report of the analysis must be approved by the member of the committee with expertise in health equity before it is publicly posted.
(ii) The analysis must examine the impact of prior authorization on enrollees with one or more of the following social risk factors:
(A) Receipt of the low-income subsidy or being dually eligible for Medicare and Medicaid.
(B) Disability status is determined using the variable original reason for entitlement code (OREC) for Medicare using the information from the Social Security Administration and Railroad Retirement Board record systems.
(iii) The analysis must use the following metrics, calculated for enrollees with the specified social risk factors and enrollees without the specified social risk factors, to conduct the analysis at the plan level using data from the prior contract year regarding coverage of items and services excluding data on drugs as defined in § 422.119(b)(1)(v):
(A) The percentage of standard prior authorization requests that were approved, aggregated for all items and services.
(B) The percentage of standard prior authorization requests that were denied, aggregated for all items and services.
(C) The percentage of standard prior authorization requests that were approved after appeal, aggregated for all items and services.
(D) The percentage of prior authorization requests for which the timeframe for review was extended, and the request was approved, aggregated for all items and services.
(E) The percentage of expedited prior authorization requests that were approved, aggregated for all items and services.
(F) The percentage of expedited prior authorization requests that were denied, aggregated for all items and services.
(G) The average and median time that elapsed between the submission of a request and a determination by the MA plan, for standard prior authorizations, aggregated for all items and services.
(H) The average and median time that elapsed between the submission of a request and a decision by the MA plan for expedited prior authorizations, aggregated for all items and services.
(7) By July 1, 2025, and annually thereafter, publicly post the results of the health equity analysis of the utilization management policies and procedures on the plan's website meeting the following requirements:
(i) In a prominent manner and clearly identified in the footer of the website.
(ii) Easily accessible to the general public, without barriers, including but not limited to ensuring the information is accessible:
(A) Free of charge.
(B) Without having to establish a user account or password.
(C) Without having to submit personal identifying information.
(iii) In a machine-readable format with the data contained within that file being digitally searchable and downloadable.
(iv) Include a txt file in the root directory of the website domain that includes a direct link to the machine-readable file to establish and maintain automated access.
The revisions and addition read as follows:
(d) * * *
(1) * * *
(v) Add alternative data sources or expand modes of data collection.
(g) * * *
(1) * * *
(iii) For the appeals measures, CMS uses statistical criteria to estimate the percentage of missing data for each contract using data from MA organizations, the independent review entity (IRE), or CMS administrative sources to determine whether the data at the IRE are complete. CMS uses scaled reductions for the Star Ratings for the applicable appeals measures to account for the degree to which the IRE data are missing.
(A)(
(
(B) [Reserved]
(C) The reductions range from a one-star reduction to a four-star reduction; the most severe reduction for the degree of missing IRE data is a four-star reduction.
(D) The thresholds used for determining the reduction and the associated appeals measure reduction are as follows:
(
(
(
(
(E) If a contract receives a reduction due to missing Part C IRE data, the reduction is applied to both of the contract's Part C appeals measures.
(F) [Reserved]
(G) The scaled reduction is applied after the calculation for the appeals measure-level Star Ratings. If the application of the scaled reduction results in a measure-level star rating less than 1 star, the contract will be assigned 1 star for the appeals measure.
(H) The Part C calculated error is determined using 1 minus the quotient of the total number of cases received by the IRE that were supposed to be sent and the total number of cases that should have been forwarded to the IRE. The total number of cases that should have been forwarded to the IRE is determined by the sum of the partially favorable (adverse) reconsiderations and unfavorable (adverse) reconsiderations for the applicable measurement year.
(I) [Reserved]
(J) [Reserved]
(K) Contracts are subject to a possible reduction due to lack of IRE data completeness if both of the following conditions are met:
(
(
(L) A confidence interval estimate for the true error rate for the contract is calculated using a Score Interval (Wilson Score Interval) at a confidence level of 95 percent and an associated z of 1.959964 for a contract that is subject to a possible reduction.
(M) A contract's lower bound is compared to the thresholds of the scaled reductions to determine the IRE data completeness reduction.
(N) The reduction is identified by the highest threshold that a contract's lower bound exceeds.
(O) CMS reduces the measure rating to 1 star for the applicable appeals measure(s) if CMS does not have accurate, complete, and unbiased data to validate the completeness of the Part C appeals measures.
(2) * * *
(h) * * *
(3) Beginning with the 2025 measurement year (2027 Star Ratings), an MA organization may request that CMS review its contract's administrative data for Patient Safety measures provided that the request is received by the annual deadline set by CMS for the applicable Star Ratings year.
The revisions and addition read as follows:
(e) * * *
(2)
(f) * * *
(2) * * *
(i) * * *
(B) To determine a contract's final adjustment category, contract enrollment is determined using enrollment data for the month of December for the measurement period of the Star Ratings year.
(
(
(
(
(3) * * *
(viii) * * *
(A) In the case of contract consolidations involving two or more contracts for health or drug services of the same plan type under the same parent organization, CMS calculates the HEI reward for the surviving contract accounting for both the surviving and consumed contract(s). For the first year following a consolidation, the HEI reward for the surviving contract is calculated as the enrollment-weighted mean of the HEI reward of the consumed and surviving contracts using total contract enrollment from July of the most recent measurement year used in calculating the HEI reward. A reward value of zero is used in calculating the enrollment-weighted mean for contracts that do not meet the minimum percentage of enrollees with the SRF thresholds or the minimum performance threshold specified at paragraph (f)(3)(vii) of this section.
(B) For the second year following a consolidation when calculating the HEI score for the surviving contract, the patient-level data used in calculating the HEI score will be combined from the consumed and surviving contracts and used in calculating the HEI score.
(a) * * *
(5) After an MA organization is permitted to begin marketing prospective plan year offerings for the following contract year (consistent with § 422.2263(a)), the MA organization must not change and must provide the benefits described in its CMS-approved plan benefit package (PBP) (as defined in § 422.162) for the following contract year without modification, except where a modification in benefits is required by law. This prohibition on changes applies to cost sharing and premiums as well as benefits.
The revisions and addition read as follows:
(c) * * *
(1) * * *
(i) The MA organization requesting reconsideration of its QBP status must do so by providing written notice to CMS within 10 business days of the release of its QBP status. The request must specify the given measure(s) in question and the basis for reconsideration such as a calculation error or incorrect data was used to determine the QBP status. Requests are limited to those circumstances where the error could impact an individual measure's value or the overall Star Rating. Based on any corrections, any applicable measure-level Star Ratings could go up, stay the same, or go down. The overall Star Rating also may go up, stay the same, or go down based on any corrections.
(2) * * *
(v) The MA organization must prove by a preponderance of evidence that CMS' calculations of the measure(s) and value(s) in question were incorrect. The burden of proof is on the MA organization to prove an error was made in the calculation of the QBP status.
(vii) After the hearing officer's decision is issued to the MA organization and the CMS Administrator, the hearing officer's decision is subject to review and modification by the CMS Administrator within 10 business days of issuance. If the Administrator does not review and issue a decision within 10 business days, the hearing officer's decision is final and binding.
(3) * * *
(iii) The MA organization may not request a review based on data inaccuracy for the following data sources:
(A) HEDIS.
(B) CAHPS.
(C) HOS.
(D) Part C and D Reporting Requirements.
(E) PDE.
(F) Medicare Plan Finder pricing files.
(G) Data from the Medicare Beneficiary Database Suite of Systems.
(H) Medicare Advantage Prescription Drug (MARx) system.
(I) Other Federal data sources.
(d)
The revisions and addition read as follows:
(f) * * *
(1) * * *
(vi) To conduct evaluations and other analysis to support the Medicare and Medicaid programs (including demonstrations) and to support public health initiatives and other health care-related research;
(vii) For activities to support the administration of the Medicare and Medicaid programs;
(3) * * *
(v) CMS determines that releasing data to State Medicaid agencies before reconciliation for the purpose of coordinating care for dually eligible individuals is necessary and appropriate to support activities or authorized uses under paragraph (f)(1)(vii) of this section.
The revisions and additions read as follows:
(a)
(1) Recovery of improper payments from MA organizations is conducted in accordance with the Secretary's payment error extrapolation and recovery methodologies.
(2) CMS may apply extrapolation to audits for payment year 2018 and subsequent payment years.
(c) * * *
(5) * * *
(ii) * * *
(B) Whether the MA organization requests a payment error calculation appeal, the issues with which the MA organization disagrees, and the reasons for the disagreements. MA organizations will forgo their medical record review determination appeal if they choose to file only a payment error calculation appeal because medical record review determinations need to be final prior to adjudicating a payment error calculation appeal.
(iii) For MA organizations that intend to appeal both the medical record
(A) The administrative appeal process for the RADV medical record review determinations filed by the MA organization has been exhausted; or
(B) The MA organization does not timely request a RADV medical record review determination appeal at the hearing stage and/or the CMS Administrator review stage, as applicable.
(iv) An MA organization whose medical record review determination appeal has been completed as described in paragraph (c)(5)(iii) of this section has 60 days from the date of issuance of a revised RADV audit report, based on the final medical record review determination, to file a written request with CMS for a RADV payment error calculation appeal. This request for RADV payment error calculation appeal must clearly specify where the Secretary's RADV payment error calculation was erroneous, what the MA organization disagrees with, and the reasons for the disagreements.
(6) * * *
(i) * * *
(A) Any and all HCC(s) that the Secretary identified as being in error that the MA organization wishes to appeal.
(iv) * * *
(B) The reconsideration official's decision is final unless it is reversed or modified by a final decision of the hearing officer as defined at § 422.311(c)(7)(x).
(v)
(B) For MA organizations appealing the RADV payment error calculation only, once the reconsideration official's payment error calculation decision is considered final in accordance with paragraph (c)(6)(iv)(B) of this section, the Secretary recalculates the MA organization's RADV payment error and issues a revised RADV audit report superseding all prior RADV audit reports to the appellant MA organization.
(7) * * *
(ix)
(B) For MA organizations appealing the RADV payment error calculation only, once the hearing officer's payment error calculation decision is considered final in accordance with paragraph (c)(7)(x) of this section, the Secretary recalculates the MA organization's RADV payment error and issues a revised RADV audit report superseding all prior RADV audit reports to the appellant MA organization.
(8) * * *
(iii) After reviewing a request for review, the CMS Administrator has the discretion to elect to review the hearing officer's decision or to decline to review the hearing officer's decision. If the CMS Administrator does not decline to review or does not elect to review within 90 days of receipt of either the MA organization or CMS's timely request for review (whichever is later), the hearing officer's decision becomes final.
(iv) If the CMS Administrator elects to review the hearing decision—
(A) The CMS Administrator acknowledges the decision to review the hearing decision in writing and notifies CMS and the MA organization of their right to submit comments within 15 days of the date of the issuance of the notification that the Administrator has elected to review the hearing decision; and
(v) The CMS Administrator renders his or her final decision in writing within 60 days of the date of the issuance of the notice acknowledging his or her decision to elect to review the hearing officer's decision.
(vi) The decision of the hearing officer is final if the CMS Administrator—
(A) Declines to review the hearing officer's decision; or
(B) Does not decline to review or elect to review within 90 days of the date of the receipt of either the MA organization or CMS's request for review (whichever is later); or
(C) Does not make a decision within 60 days of the date of the issuance of the notice acknowledging his or her decision to elect to review the hearing officer's decision.
(vii)
(B) For MA organizations appealing the RADV payment error calculation only, once the CMS Administrator's payment error calculation decision is considered final in accordance with paragraph (c)(8)(vi) of this section, the Secretary recalculates the MA organization's RADV payment error and issues a revised and final RADV audit report superseding all prior RADV audit reports to the appellant MA organization.
(9)
(b) * * *
(1) Risk adjustment reconciliation (described in § 422.310);
(2) Part D annual reconciliation (described in § 423.343);
(3) Coverage Gap Discount Program annual reconciliation (described in § 423.2320) and;
(4) MLR remittances (described in §§ 422.2470 and 423.2470).
The additions and revisions read as follows.
(a) * * *
(1)
(2)
(3)
(ii) An application is substantially incomplete when the submission as of the deadline for applications established by CMS is missing content or responsive materials for one or more sections of the application form required by CMS.
(iii) A determination that an application is substantially incomplete is not a contract determination as defined in § 422.641 and a determination that an organization submitted a substantially incomplete application is not subject to the appeals provisions of subpart N of this part.
(b) * * *
(1) * * *
(i) * * *
(A) Was under intermediate sanction under subpart O of this part or a determination by CMS to prohibit the enrollment of new enrollees in accordance with § 422.2410(c), with the exception of a sanction imposed under § 422.752(d).
(B) Failed to maintain a fiscally sound operation consistent with the requirements of § 422.504(a)(14).
(C) Filed for or is currently in federal or state bankruptcy proceedings.
(b) * * *
(8) Not newly offer a dual eligible special needs plan that would result in noncompliance with § 422.514(h).
(a) * * *
(15) As described in § 422.125 of this part, address and resolve complaints received by CMS against the MA organization in the Complaints Tracking Module.
(20) To comply with the requirements established in § 422.514(h).
(21) Not to establish additional MA plans that are not facility based I-SNPs to contracts described in § 422.116(f)(3).
(e) If CMS makes a determination to terminate a MA organization's contract under § 422.510(a), CMS also imposes the intermediate sanctions at § 422.750(a)(1) and (3) in accordance with the following procedures:
(1) The sanction goes into effect 15 days after the termination notice is sent.
(2) The MA organization has a right to appeal the intermediate sanction in the same proceeding as the termination appeal specified in paragraph (d) of this section.
(3) A request for a hearing does not delay the date specified by CMS when the sanction becomes effective.
(4) The sanction remains in effect—
(i) Until the effective date of the termination; or
(ii) If the termination decision is overturned on appeal, when a final decision is made by the hearing officer or Administrator.
The revisions and additions read as follows:
(d) * * *
(1) Enter into or renew a contract under this subpart for a MA plan that—
(ii) Projects enrollment in its bid submitted under § 422.254 in which enrollees entitled to medical assistance under a State plan under title XIX constitute a percentage of the plan's total enrollment that meets or exceeds one of the following:—
(A) For plan year 2024, 80 percent.
(B) For plan year 2025, 70 percent.
(C) For plan year 2026 and subsequent years, 60 percent.
(2) Renew a contract under this subpart for an MA plan that—
(ii) Unless the MA plan has been active for less than 1 year and has enrollment of 200 or fewer individuals at the time of such determination, has
(A) For renewals for plan year 2024, 80 percent.
(B) For renewals for plan year 2025, 70 percent.
(C) For renewals for plan year 2026 and subsequent years, 60 percent.
(e) * * *
(1) * * *
(v) For transitions for plan year 2027 and subsequent years, is a dual eligible special needs plan as defined in § 422.2.
(h)
(1) Beginning in 2027, where an MA organization offers a dual eligible special needs plan and the MA organization, its parent organization, or any entity that shares a parent organization with the MA organization also contracts with a State as a Medicaid managed care organization (MCO) (as defined in § 438.2) that enrolls full-benefit dual eligible individuals as defined in § 423.772, during the effective dates and in the same service area (even if there is only partial overlap of the service areas) of that Medicaid MCO contract, the MA organization—
(i) May only offer, or have a parent organization or share a parent organization with another MA organization that offers, one D-SNP for full-benefit dual eligible individuals, except as permitted in paragraph (h)(3) of this section; and
(ii) Must limit new enrollment in the D-SNP to individuals enrolled in, or in the process of enrolling in, the Medicaid MCO.
(2) Beginning in 2030, such D-SNPs may only enroll (or continue to cover individuals enrolled in (or in the process of enrolling in) the Medicaid MCO, except that such D-SNPs may continue to implement deemed continued eligibility requirements as described in § 422.52(d).
(3)(i) If a State Medicaid agency's contract(s) with the MA organization differentiates enrollment into D-SNPs by age group or to align enrollment in each D-SNP with the eligibility or benefit design used in the State's Medicaid managed care program(s) (as defined in § 438.2), the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization may offer one or more additional D-SNPs for full-benefit dual eligible individuals in the same service area in accordance with the group (or groups) eligible for D-SNPs based on provisions of the contract with the State Medicaid agency under § 422.107.
(ii) If the MA organization, its parent organization, or an entity that shares a parent organization with the MA organization offers both HMO D-SNP(s) and PPO D-SNP(s), and one or more of the—
(A) HMO D-SNPs is subject to paragraph (h)(1) of this section, the PPO D-SNP(s) not subject to paragraph (h)(1) of this section may continue if they no longer accept new enrollment of full-benefit dual eligible individuals in the same service area as the plan (or plans) subject to paragraph (h)(1) of this section.
(B) PPO D-SNPs is subject to paragraph (h)(1) of this section, the HMO D-SNP(s) not subject to paragraph (h)(1) of this section may continue if they no longer accept new enrollment of full-benefit dual eligible individuals in the same service area as the plan (or plans) subject to paragraph (h)(1) of this section.
(a)
(2) The procedures related to and utilization of its services and items.
(a)
(1) A final settlement amount, which may be either an amount due to the MA organization, or an amount due from the MA organization, or $0 if nothing is due to or from the MA organization, for the contract that has been consolidated, nonrenewed, or terminated.
(2) Relevant banking and financial mailing instructions for MA organizations that owe CMS a final settlement amount.
(3) Relevant CMS contact information.
(4) A description of the steps for requesting an appeal of the final settlement amount calculation, in accordance with the requirements specified in § 422.529.
(b)
(1) If an MA organization agrees with the final settlement amount, no response is required.
(2) If an MA organization disagrees with the final settlement amount but does not request an appeal within 15 calendar days from the date of the issuance of the notice of final settlement, CMS does not consider subsequent requests for appeal.
(c)
(2) For MA organizations that owe CMS money, the MA organization is required to remit payment to CMS within 120 calendar days from issuance of the notice of final settlement. If the MA organization fails to remit payment within that 120-calendar-day period, CMS refers the debt owed to CMS to the Department of the Treasury for collection.
(d)
(e)
(a)
(1)
(i)
(ii)
(A) Specify the calculation with which the MA organization disagrees and the reasons for its disagreement.
(B) Include evidence supporting the assertion that CMS' calculation of the final settlement amount is incorrect.
(C) Not include new reconciliation data or data that was submitted to CMS after the final settlement notice was issued. CMS does not consider information submitted for the purposes of retroactively adjusting a prior reconciliation.
(iii)
(iv)
(v)
(2)
(i)
(ii)
(iii)
(A) The CMS Hearing Officer provides written notice of the time and place of the informal hearing at least 30 days before the scheduled date.
(B) The CMS reconsideration official provides a copy of the record that was before CMS when CMS made its decision to the hearing officer.
(C) The hearing officer review is conducted by a CMS hearing officer who neither receives testimony nor accepts any new evidence. The CMS hearing officer is limited to the review of the record that was before CMS when CMS made its decision.
(iv)
(v)
(3)
(i)
(ii)
(iii)
(iv)
(b)
(2) The MA organization bears the burden of proof by providing evidence demonstrating that CMS' calculation of the final settlement amount is incorrect.
(c)
(d)
(c) * * *
(4) * * *
(iii) For contract year 2027 and subsequent years, where one or more MA organizations that share a parent organization seek to consolidate D-SNPs in the same service area down to a single D-SNP under one MA-PD contract to comply with requirements at §§ 422.514(h) and 422.504(a)(20), CMS permits enrollees to be moved between different contracts.
(d)
(1) The current MA organization, with respect to the affected contract, has substantially failed to comply with the regulatory requirements as described in § 422.510(a)(4)(ix) and the contract may
(i)(A) If the new owner does not participate in the Medicare program in the same service area as the affected contract, it must apply for, and enter into, a contract in accordance with subpart K of this part and part 423 if applicable; and
(B) If the application is conditionally approved, must submit, within 30 days of the conditional approval, the documentation required under § 422.550(c) for review and approval by CMS; or
(ii) If the new owner currently participates in the Medicare program and operates in the same service area as the affected contract, it must, within 30 days of imposition of intermediate sanctions as outlined in paragraph (d)(1) of this section, submit the documentation required under § 422.550(c) for review and approval by CMS.
(2) If the new owner fails to begin the processes required under paragraph (d)(1)(i) or (d)(1)(ii) of this section within 30 days of imposition of intermediate sanctions as outlined in paragraph (d)(1) of this section, the existing contract is subject to termination in accordance with § 422.510(a)(4)(ix).
(b)
(1) The date of receipt of the organization determination is presumed to be 5 calendar days after the date of the written organization determination, unless there is evidence to the contrary.
(2) For purposes of meeting the 60-calendar day filing deadline, the request is considered as filed on the date it is received by the plan or delegated entity specified in the MA organization's written organization determination.
(b)
(3) The date of receipt of the organization determination is presumed to be 5 calendar days after the date of the written organization determination, unless there is evidence to the contrary.
(4) For purposes of meeting the 60-calendar day filing deadline, the request is considered as filed on the date it is received by the plan or delegated entity specified in the MA organization's written organization determination.
(a) * * *
(2) If an enrollee makes an untimely request to an IRE, the IRE accepts the request and makes a determination as soon as possible, but the timeframe under paragraph (d)(5) of this section and the financial liability protection under paragraph (b) of this section do not apply.
(d) * * *
(1)
(i) The date of receipt of the adverse organization determination is presumed to be 5 calendar days after the date of the integrated organization determination notice, unless there is evidence to the contrary.
(ii) For purposes of meeting the 60-calendar day filing deadline, the request is considered as filed on the date it is received by the applicable integrated plan.
(b) * * *
(3)(i)
(B)
(C)
(D)
(ii) CMS sets minimum penalty amounts in accordance with paragraphs (b)(1) and (2) of this section.
(iii) CMS announces the standard minimum penalty amounts and aggravating factor amounts for per determination and per enrollee penalties on an annual basis.
(iv) CMS has the discretion to issue penalties up to the maximum amount under paragraphs (b)(1) and (2) of this section when CMS determines that an organization's non-compliance warrants a penalty that is higher than would be applied under the minimum penalty amounts set by CMS.
The revisions and additions read as follows:
(e) * * *
(31)
(i) Prior to contract year 2026 marketing on September 30, 2025, the notice is referred to as the
(A) Additional languages that meet the 5 percent service area threshold, as required under paragraph (a)(2) of this section, must be added to the MLI used in that service area. A plan may also opt to include in the MLI any additional language that do not meet the 5 percent service area threshold, where it determines that this inclusion would be appropriate.
(B) Except where otherwise provided in paragraph (e)(31)(i)(G) of this section, the MLI must be provided with all required materials under paragraph (e) of this section.
(C) The MLI may be included as a part of the required material or as a standalone material in conjunction with the required material.
(D) When used as a standalone material, the MLI may include organization name and logo.
(E) When mailing multiple required materials together, only one MLI is required.
(F) The MLI may be provided electronically when a required material is provided electronically as permitted under paragraph (d)(2) of this section.
(G) At plan option for CY 2025 marketing and communications beginning September 30, 2024, the plan may use the model notice described in § 422.2267(e)(31)(ii) to satisfy the MLI requirements set forth in paragraph (e)(31)(i) of this section.
(ii) For CY 2026 marketing and communications beginning September 30, 2025, the required notice is referred to as the Notice of availability of language assistance services and auxiliary aids and services (Notice of Availability). This is a model communications material through which MA organizations must provide a notice of availability of language assistance services and auxiliary aids and services that, at a minimum, states that the MA organization provides language assistance services and appropriate auxiliary aids and services free of charge.
(A) This notice of availability of language assistance services and auxiliary aids and services must be provided in English and at least the 15 languages most commonly spoken by individuals with limited English proficiency of the relevant State or States associated with the plan's service area and must be provided in alternate formats for individuals with disabilities who require auxiliary aids and services to ensure effective communication.
(B) If there are additional languages in a particular service area that meet the 5 percent service area threshold, described in paragraph (a)(2) of this section, beyond the languages described in paragraph (e)(31)(i) of this section, the notice of availability of language assistance services and auxiliary aids and services must also be translated into those languages. MA organizations may also opt to translate the notice in any additional languages that do not meet the 5 percent service area threshold, where the MA organization determines that this inclusion would be appropriate.
(C) The notice must be provided with all required materials under paragraph (e) of this section.
(D) The notice may be included as a part of the required material or as a standalone material in conjunction with the required material.
(E) When used as a standalone material, the notice may include organization name and logo.
(F) When mailing multiple required materials together, only one notice is required.
(G) The notice may be provided electronically when a required material is provided electronically as permitted under paragraph (d)(2) of this section.
(34)
(i) * * *
(ii) List the chronic condition(s) the enrollee must have to be eligible for the SSBCI offered by the applicable MA plan(s), in accordance with the following requirements.
(A) The following applies when only one type of SSBCI is mentioned:
(
(
(B) The following applies when multiple types of SSBCI are mentioned:
(
(
(iii) Convey that even if the enrollee has a listed chronic condition, the enrollee will not necessarily receive the benefit because coverage of the item or service depends on the enrollee being a “chronically ill enrollee” as defined in § 422.102(f)(1)(i)(A) and on the applicable MA plan's coverage criteria for a specific SSBCI required by § 422.102(f)(4).
(iv) Meet the following requirements for the SSBCI disclaimer in ads:
(A) For television, online, social media, radio, or other voice-based ads, either read the disclaimer at the same pace as, or display the disclaimer in the same font size as, the advertised phone number or other contact information.
(B) For outdoor advertising (as defined in § 422.2260), display the disclaimer in the same font size as the advertised phone number or other contact information.
(v) Include the SSBCI disclaimer in all marketing and communications materials that mention SSBCI.
(42)
(i) The notice must be sent on an annual basis, no earlier than June 30 of the plan year, and no later than July 31 of the plan year.
(ii) The notice must include the following content:
(A)
(B)
(C)
(
(
(
(D) The information about all supplemental benefits listed in the notice must include all of the following:
(
(
(
(
(E) Supplemental benefits listed consistent with the format of the EOC.
(F) A customer service number, and required TTY number, to call for additional help.
The revisions and addition read as follows:
(a) * * *
(A) Commissions.
(B) Bonuses.
(C) Gifts.
(D) Prizes or awards.
(E) Beginning with contract year 2025, payment of fees to comply with state appointment laws, training, certification, and testing costs.
(F) Beginning with contract year 2025, reimbursement for mileage to, and from, appointments with beneficiaries.
(G) Beginning with contract year 2025, reimbursement for actual costs associated with beneficiary sales appointments such as venue rent, snacks, and materials.
(H) Beginning with contract year 2025, any other payments made to an agent or broker that are tied to enrollment, related to an enrollment in an MA plan or product, or for services conducted as a part of the relationship associated with the enrollment into an MA plan or product.
(c) * * *
(5) On an annual basis for plan years through 2024, by the last Friday in July, report to CMS whether the MA organization intends to use employed, captive, or independent agents or brokers in the upcoming plan year and the specific rates or range of rates the plan will pay independent agents and brokers. Following the reporting deadline, MA organizations may not change their decisions related to agent or broker type, or their compensation rates and ranges, until the next plan year.
(13) Beginning with contract year 2025, ensure that no provision of a contract with an agent, broker, or other TPMO has a direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent or broker's ability to objectively assess and recommend which plan best fits the health care needs of a beneficiary.
(d) * * *
(1) * * *
(ii) For contract years through contract year 2024, MA organizations may determine, through their contracts, the amount of compensation to be paid, provided it does not exceed limitations outlined in this section. Beginning with contract year 2025, MA organizations are limited to the compensation amounts outlined in this section.
(2) Initial enrollment year compensation. For each enrollment in an initial enrollment year for contract years through contract year 2024, MA organizations may pay compensation at or below FMV.
(3)
(e) * * *
(1) For contract years through contract year 2024, payments made for services other than enrollment of beneficiaries (for example, training, customer service, agent recruitment, operational overhead, or assistance with completion of health risk assessments) must not exceed the value of those services in the marketplace.
(2) Beginning with contract year 2025, administrative payments are included in the calculation of enrollment-based compensation.
(g) * * *
(4) Beginning October 1, 2024, personal beneficiary data collected by a TPMO for marketing or enrolling them into an MA plan may only be shared with another TPMO when prior express written consent is given by the beneficiary. Prior express written consent from the beneficiary to share the data and be contacted for marketing or enrollment purposes must be obtained through a clear and conspicuous disclosure that lists each entity receiving the data and allows the beneficiary to consent or reject to the sharing of their data with each individual TPMO.
42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, and 1395hh.
(h)
(i)
(2) In order to obtain the effective date described in paragraph (i)(1) of this section, the beneficiary must certify that, at the time of enrollment in the PDP, he or she received the disclosure statement specified in § 423.128.
(3) Upon receipt of the election from the employer, the PDP sponsor must submit the enrollment to CMS within timeframes specified by CMS.
(j)
(1) The authorized representative would constitute the “beneficiary” or the “enrollee” for the purpose of making an election.
(2) Authorized representatives may include court-appointed legal guardians, persons having durable power of attorney for health care decisions, or individuals authorized to make health care decisions under state surrogate consent laws, provided they have the authority to act for the beneficiary in this capacity.
(b) * * *
(4) In the case of an incomplete disenrollment request—
(i) Document its efforts to obtain information to complete the disenrollment request;
(ii) Notify the individual (in writing or verbally) within 10 calendar days of receipt of the disenrollment request; and
(iii) The organization must deny the request if any additional information needed to make the disenrollment request “complete” is not received within the following timeframes:
(A) For disenrollment requests received during the AEP by December 7, or within 21 calendar days of the request for additional information, whichever is later; and
(B) For disenrollment requests received during all other election periods, by the end of the month in which the disenrollment request was initially received, or within 21 calendar days of the request for additional information, whichever is later.
(d)
(e)
(2) Upon receipt of the election from the employer, the PDP sponsor must submit the disenrollment to CMS within timeframes specified by CMS.
(f)
The revision and addition read as follows:
(c) * * *
(4) * * *
(i) Except as provided in paragraph (ii) of this section, the individual is a full-subsidy eligible individual or other subsidy-eligible individual as defined in § 423.772, who is making a one-time-per month election into a PDP.
(7)(i) The individual is no longer eligible for the PDP because of a change in his or her place of residence to a location outside of the PDP region(s) in which the PDP is offered; or
(ii) The individual who, as a result of a change in permanent residence, has new Part D plan options available to them.
(23) Individuals affected by an emergency or major disaster declared by a Federal, State or local government entity are eligible for an SEP to make a Part D enrollment or disenrollment election. The SEP starts as of the date the declaration is made, the incident start date or, if different, the start date identified in the declaration, whichever is earlier. The SEP ends 2 full calendar months following the end date identified in the declaration or, if different, the date the end of the incident is announced, the date the incident automatically ends under applicable state or local law, or, if the incident end date is not otherwise identified, the incident end date specified in paragraph (c)(23)(i) of this section.
(i) If the incident end date of an emergency or major disaster is not otherwise identified, the incident end date is 1 year after the SEP start date or, if applicable, the date of a renewal or extension of the emergency or disaster declaration, whichever is later. Therefore, the maximum length of this SEP, if the incident end date is not otherwise identified, is 14 full calendar months after the SEP start date or, if applicable, the date of a renewal or extension of the emergency or disaster declaration.
(35)(i) The individual is a full-benefit dual eligible individual (as defined in § 423.772) making a one-time-per month election into a fully integrated dual eligible special needs plan as defined in § 422.2 of this chapter, a highly integrated dual eligible special needs plan as defined in § 422.2 of this chapter, or an applicable integrated plan as defined in § 422.561 of this chapter.
(ii) The SEP is available only to facilitate aligned enrollment as defined in § 422.2 of this chapter.
(f)
(1) To determine the beneficiary's choice of election period and effective date, the Part D plan sponsor must attempt to contact the beneficiary and must document its attempts.
(2) If the Part D plan sponsor is unable to obtain the beneficiary's desired enrollment effective date, the Part D plan sponsor must assign an election period using the following ranking of election periods:
(i) ICEP/Part D IEP.
(ii) MA-OEP.
(iii) SEP.
(iv) AEP.
(v) OEPI.
(3) If the Part D plan sponsor is unable to obtain the beneficiary's desired disenrollment effective date, the Part D plan sponsor must assign an election period that results in the earliest disenrollment.
The revisions read as follows:
(b) * * *
(1) * * *
(iii) The individual provides fraudulent information on his or her election form or permits abuse of his or her enrollment card as specified in paragraph (d)(9) of this section.
(d) * * *
(1) Except as specified in paragraph (d)(1)(v) of this section, a PDP sponsor may disenroll an individual from the PDP for failure to pay any monthly premium under the following circumstances:
(iii) * * *
(A) Be at least 2 whole calendar months; and
(v) A PDP sponsor may not disenroll either of the following:
(A) An individual who had monthly premiums withheld per § 423.293(a) and (e) of this part or who is in premium withhold status, as defined by CMS.
(B) A member or initiate the disenrollment process if the sponsor has been notified that an SPAP, or other payer, is paying the Part D portion of the premium, and the sponsor has not yet coordinated receipt of the premium payments with the SPAP or other payer.
(vi)
(A) Submits a request for reinstatement for good cause within 60 calendar days of the disenrollment effective date.
(B) Has not previously requested reinstatement for good cause during the same 60-day period following the involuntary disenrollment.
(C) Shows good cause for failure to pay within the initial grace period.
(D) Pays all overdue premiums within 3 calendar months after the disenrollment date.
(E) Establishes by a credible statement that failure to pay premiums within the initial grace period was due to circumstances for which the individual had no control, or which the individual could not reasonably have been expected to foresee.
(2) * * *
(iii)
(iv)
(A) Must document the enrollee's behavior, its own efforts to resolve any problems, as described in paragraph (d)(2)(iii) of this section, and any extenuating circumstances;
(B) May request from CMS the ability to decline future enrollment by the individual; and
(C) Must submit the following:
(
(
(
(viii)
(A) The first notice, the advance notice, informs the member that continued disruptive behavior could lead to involuntary disenrollment and provides the individual an opportunity to cease the behavior in order to avoid the disenrollment action.
(
(
(B) The second notice, the notice of intent to request CMS permission to disenroll the member, notifies the member that the PDP sponsor requests CMS permission to involuntarily disenroll the member.
(
(
(5) * * *
(i)
(ii)
(9)
(A) Knowingly provides, on the election form, fraudulent information that materially affects the individual's eligibility to enroll in the PDP; or
(B) Intentionally permits others to use his or her enrollment card to obtain drugs under the PDP.
(ii)
(iii)
(3) Is being treated for cancer-related pain or
(1) Making any negative formulary changes to a drug within 90 days of adding a corresponding drug to the same or a lower cost-sharing tier and with the same or less restrictive prior authorization (PA), step therapy (ST), or quantity limit (QL) requirements (other than immediate substitutions that meet the requirements of § 423.120(e)(2)(i)).
(2) Making any negative formulary changes to a reference product within 90 days of adding a biosimilar biological product other than an interchangeable biological product of that reference product to the same or a lower cost-sharing tier and with the same or less restrictive PA, ST, or QL requirements.
(3) Removing a non-Part D drug.
(4) Adding or making more restrictive PA, ST, or QL requirements based upon a new FDA-mandated boxed warning.
(5) Removing a drug withdrawn from sale by the manufacturer or that FDA determines to be withdrawn for safety or effectiveness reasons if the Part D
(6) Removing a drug based on long term shortage and market availability.
(7) Making negative formulary changes based upon new clinical guidelines or information or to promote safe utilization.
(8) Adding PA to help determine Part B versus Part D coverage.
(1) Removing a drug from a formulary.
(2) Moving a drug to a higher cost-sharing tier.
(3) Adding or making more restrictive prior authorization (PA), step therapy (ST), or quantity limit (QL) requirements. Negative formulary changes do not include safety-based claim edits which are not submitted to CMS as part of the formulary.
The revisions and additions read as follows:
(b) * * *
(3) * * *
(i) * * *
(B) Not apply in cases of immediate changes as permitted under paragraph (e)(2) of this section.
(5) Notice of formulary changes. Part D sponsors must provide notice of changes to CMS-approved formularies as specified in § 423.120(f).
(6) Changes to CMS-approved formularies. Changes to CMS-approved formularies may be made only in accordance with paragraph (e) of this section.
(e)
(1)
(2)
(i)
(ii)
(3)
(ii)
(4)
(f)
(1)
(2)
(3)
(4)
(i) The name of the affected covered Part D drug.
(ii) Whether the plan is removing the covered Part D drug from the formulary, moving it to a higher cost-sharing tier, or adding or making more restrictive PA, ST, or QL requirements.
(iii) The reason for the negative formulary change.
(iv) Appropriate alternative drugs on the formulary in the same or a lower cost-sharing tier and the expected cost sharing for those drugs.
(v) For formulary changes other than those described in paragraph (e)(2)(ii) of this section, the means by which enrollees may obtain a coverage determination under § 423.566, including an exception to a coverage rule under § 423.578.
(5)
(i) Advance general notice to all current and prospective enrollees, CMS, and other specified entities in formulary and other applicable beneficiary communication materials advising them that the Part D sponsor may make formulary changes other than negative formulary changes at any time and providing information about how to access the plan's online formulary and how to contact the plan; and
(ii) Notice of specific formulary changes to other specified entities by complying with § 423.128(d)(2) and to CMS by submitting such changes to CMS in their next required or scheduled formulary update.
(d) * * *
(1) * * *
(v) * * *
(B) Establishes contact with a customer service representative within 7 minutes on no fewer than 80 percent of incoming calls requiring TTY services.
(2) * * *
(iii) Provides current and prospective Part D enrollees with notice that is timely under § 423.120(f) regarding any negative formulary changes on its Part D plan's formulary.
(e) * * *
(6) Include any negative formulary changes applicable to an enrollee for which Part D plans are required to provide notice as described in § 423.120(f).
(a)
(b)
(2)
(3)
(4)
(5)
(c)
The revisions and additions read as follows:
(d) ***
(1) * * *
(vii) * * *
(B) * * *
(
(
(
(2) * * *
(i) * * *
(C) Are likely to incur annual covered Part D drug costs greater than or equal to the MTM cost threshold determined by CMS, as specified in this paragraph (d)(2)(i)(C) of this section.
(
(
(
(iii) Beginning January 1, 2025, in identifying beneficiaries who have multiple chronic diseases under paragraph (d)(2)(i)(A) of this section, Part D plan sponsors must include all of the following diseases, and may include additional chronic diseases:
(A) Alzheimer's disease.
(B) Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis).
(C) Chronic congestive heart failure (CHF).
(D) Diabetes.
(E) Dyslipidemia.
(F) End-stage renal disease (ESRD).
(G) Human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS).
(H) Hypertension.
(I) Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions).
(J) Respiratory disease (including asthma, chronic obstructive pulmonary disease (COPD), and other chronic lung disorders).
(iv) Beginning January 1, 2025, in identifying the number of Part D drugs under paragraph (d)(2)(i)(B) of this section, Part D plan sponsors must include all Part D maintenance drugs, relying on information in a widely accepted, commercially or publicly available drug database to make such determinations, and may include all Part D drugs.
(5) * * *
(i) Describe in its application how it takes into account the resources used and time required to implement the MTM program it chooses to adopt in establishing fees for pharmacists or others providing MTM services for covered Part D drugs under a Part D plan.
(ii) Disclose to CMS upon request the amount of the management and dispensing fees and the portion paid for MTM services to pharmacists and others upon request. Reports of these amounts are protected under the provisions of section 1927(b)(3)(D) of the Act.
(f) * * *
(8) * * *
(i) * * *
(A) Within 3 days of the date the sponsor makes the relevant determination.
(ii) In the case of a beneficiary who is determined by a Part D sponsor to be exempt, the sponsor must provide the alternate second notice within 3 days of the date the sponsor makes the relevant determination, even if such determination is made less than 30 days from the date of the initial notice described in paragraph (f)(5) of this section.
The revision and addition read as follows:
(d) * * *
(1) * * *
(v) Add alternative data sources or expand modes of data collection.
(g) * * *
(1) * * *
(ii) [Reserved]
(h) * * *
(3) Beginning with the 2025 measurement year (2027 Star Ratings), Part D sponsor may request that CMS review its contract's administrative data for Patient Safety measures provided that the request is received by the annual deadline set by CMS for the applicable Star Ratings year.
The revisions and addition read as follows:
(e) * * *
(2)
(f) * * *
(2) * * *
(i) * * *
(B) To determine a contract's final adjustment category, contract enrollment is determined using enrollment data for the month of December for the measurement period of the Star Ratings year.
(
(
(
(
(3) * * *
(viii) * * *
(A) In the case of contract consolidations involving two or more contracts for health or drug services of the same plan type under the same parent organization, CMS calculates the HEI reward for the surviving contract accounting for both the surviving and consumed contract(s). For the first year following a consolidation, the HEI reward for the surviving contract is calculated as the enrollment-weighted mean of the HEI reward of the consumed and surviving contracts using total contract enrollment from July of the most recent measurement year used in calculating the HEI reward. A reward value of zero is used in calculating the enrollment-weighted mean for contracts that do not meet the minimum percentage of enrollees with the SRF thresholds or the minimum performance threshold specified at paragraph (f)(3)(vii) of this section.
(B) For the second year following a consolidation when calculating the HEI score for the surviving contract, the patient-level data used in calculating the HEI score will be combined from the consumed and surviving contracts and used in calculating the HEI score.
(b) * * *
(5)
(a)
(1) In accordance with the timing of premium payments;
(2) At the time a drug is dispensed; or
(3) By billing the enrollee or another appropriate party after the fact.
(b) Refunds of incorrect collections—(1)
(B) Includes amounts collected with respect to an enrollee who was believed to be entitled to Medicare benefits but was later found not to be entitled; and
(C) Excludes de minimis amounts, as calculated per PDE transaction or per monthly premium billing.
(A) Accessed at an out-of-network pharmacy in accordance with the requirements at § 423.124; or
(B) Initially denied but, upon appeal, found to be covered Part D drugs the enrollee was entitled to have provided by the Part D plan.
(2)
(3)
(A) Amounts incorrectly collected as cost-sharing.
(B) Other amounts due.
(C) All amounts due if the Part D plan is going out of business or terminating its Part D contract for a prescription drug plan(s).
(ii)
(iii)
(4)
(ii) The Part D plan may receive compliance notices from CMS or, depending on the extent of the non-compliance, be the subject of an intermediate sanction (for example, suspension of marketing and enrollment activities) in accordance with subpart O of this part.
(c)
(2)
(3)
(2)
The revision and additions read as follows:
(a) CMS may conduct a global or targeted reopening to reopen and revise an initial or reconsidered final payment determination (including a determination on the final amount of direct subsidy described in § 423.329(a)(1), final reinsurance payments described in § 423.329(c), the final amount of the low income subsidy described in § 423.329(d), or final risk corridor payments as described in § 423.336) or the Coverage Gap Discount Reconciliation (as described at § 423.2320(b))—
(e) CMS notifies the sponsor(s) that will be included in the reopening of its intention to conduct a global or targeted reopening when it is necessary for the sponsor(s) to submit prescription drug event (PDE) data or direct and indirect remuneration (DIR) for the reopening. The notification to sponsor(s) must include the following:
(1) The date by which PDE or DIR data must be accepted by CMS to be included in the reopening, which is at least 90 calendar days after the date of the notification.
(2) A statement indicating the Part D contracts or types of contracts that is included in the reopening.
(f) CMS announces when it has completed a reopening and provide the sponsor(s) with all of the following information:
(1) A description of the data used in the reopening.
(2) A statement indicating the Part D contracts or types of contracts that were included in the reopening.
(3) The date by which reports describing the reopening results is available to the sponsor.
(4) The date by which a sponsor must submit an appeal, in accordance with § 423.350, if the sponsor disagrees with the reopening results.
(g) Inclusion criteria—
(1) For a global reopening, CMS includes only those Part D sponsor contracts that were in effect for the contract year being reopened and for whom CMS has not sent the “Notice of final settlement,” as described at § 423.521(a), as of the date CMS announces the completion of the reopening in accordance with paragraph (f) of this section.
(2) For a target reopening, CMS includes only Part D sponsor contracts that meet the criteria for inclusion in a global reopening as specified in paragraph (1) of this section and that CMS specifies for inclusion in the reopening as provided in paragraph (e)(2) or (f)(2) of this section.
(1) Risk adjustment reconciliation, as applicable (described in § 422.310 of this chapter).
(2) Part D annual reconciliation (described in § 423.343).
(3) Coverage Gap Discount Program annual reconciliation (described in § 423.2320).
(4) MLR remittances (described in §§ 422.2470 of this chapter and 423.2470).
(1) Calculates the final settlement amount.
(2) Issues the final settlement amount along with supporting documentation in the notice of final settlement to the Part D sponsor.
(3) Receives responses from the Part D sponsor requesting an appeal of the final settlement amount.
(5) Takes final actions to adjudicate an appeal (if requested) and make payments to or receive payments from the Part D sponsor. The final settlement amount is calculated after all applicable reconciliations have occurred after a contract has been consolidated, nonrenewed, or terminated.
The addition and revisions read as follows:
(a) * * *
(1)
(2)
(3)
(4)
(ii) An application is substantially incomplete when the submission as of the deadline for applications established by CMS is missing content or responsive materials for one or more sections of the application form required by CMS.
(iii) A determination that an application is substantially incomplete is not a contract determination as defined in § 423.641 and a determination that an organization submitted a substantially incomplete application is not subject to the appeals provisions of subpart N of this part.
(b) * * *
(1) * * *
(i) * * *
(A) Was under an intermediate sanction under subpart O of this part, or a determination by CMS to prohibit the enrollment of new enrollees under § 423.2410(c).
(C) Filed for or is currently in federal or state bankruptcy proceedings.
(b) * * *
(22) As described in § 423.129, address and resolve complaints received by CMS against the Part D sponsor in the Complaints Tracking Module.
(i) * * *
(6) If the Part D plan sponsor delegates any of the following functions to a first tier, downstream, or related entity, the Part D sponsor's written arrangements must state that a termination initiated by such entity must provide, at minimum, 60-days' prior notice and have an effective termination date that coincides with the end of a calendar month:
(i) Authorization, adjudication, and processing of prescription drug claims at the point of sale.
(ii) Administration and tracking of enrollees' drug benefits in real time, including automated coordination of benefits with other payers.
(iii) Operation of an enrollee appeals and grievance process.
(iv) Contracting with or selection of prescription drug providers for inclusion in the Part D sponsor's network.
(a) * * *
(3)(i) If a Part D plan sponsor does not renew a contract under this paragraph (a), CMS cannot enter into a contract with the organization for 2 years in the PDP region or regions served by the contract unless there are circumstances that warrant special consideration, as determined by CMS.
(ii) If a PDP sponsor does not renew any of its PBPs in a PDP region, CMS does not approve plan bids submitted by the organization in that PDP region for 2 years unless there are circumstances that warrant special consideration, as determined by CMS.
(iii) The provisions of this paragraph do not apply to employer group waiver plans offered by a Part D plan sponsor.
(e)
(2) A PDP sponsor that agrees to terminate its offering of PBPs in a PDP region also agrees that it is not eligible to apply to resume offering plans in that region for 2 years.
(3) The provisions of this paragraph do not apply to employer group waiver plans offered by a Part D plan sponsor.
(f) If CMS makes a determination to terminate a Part D sponsor's contract under § 423.509(a), CMS also imposes the intermediate sanctions at § 423.750(a)(1) and (3) in accordance with the following procedures:
(1) The sanction will go into effect 15 days after the termination notice is sent.
(2) The Part D sponsor will have a right to appeal the intermediate sanction in the same proceeding as the termination appeal specified in paragraph (d) of this section.
(3) A request for a hearing does not delay the date specified by CMS when the sanction becomes effective.
(4) The sanction will remain in effect—
(i) Until the effective date of the termination; or
(ii) If the termination decision is overturned on appeal, when a final decision is made by the hearing officer or Administrator.
(a)
(2) The procedures related to and utilization of its services and items.
(a)
(1) A final settlement amount for the contract that has been consolidated, nonrenewed, or terminated, which may be one of the following:
(i) An amount due to the Part D sponsor.
(ii) An amount due from the Part D sponsor.
(iii) $0 if nothing is due to or from the Part D sponsor.
(2) Relevant banking and financial mailing instructions for Part D sponsors that owe CMS a final settlement amount.
(3) Relevant CMS contact information.
(4) A description of the steps for requesting an appeal of the final settlement amount calculation, in accordance with the requirements specified in § 423.522.
(b)
(1) If a Part D sponsor agrees with the final settlement amount, no response is required.
(2) If a Part D sponsor disagrees with the final settlement amount but does not request an appeal within 15 calendar days from the date of the issuance of the notice of final settlement, CMS does not consider subsequent requests for appeal.
(c)
(2) For Part D sponsors that owe CMS money, the Part D sponsor is required to remit payment to CMS within 120 calendar days from issuance of the notice of final settlement. If the Part D sponsor fails to remit payment within that 120-calendar-day period, CMS refers the debt owed to CMS to the Department of the Treasury for collection.
(d)
(e)
(1) No longer applies retroactive payment adjustments to the terminated, consolidated or nonrenewed contract; and
(2) There are no adjustments applied to amounts used in the calculation of the final settlement amount.
(a)
(1)
(i)
(ii)
(A) Specify the calculation with which the Part D sponsor disagrees and the reasons for its disagreement.
(B) Include evidence supporting the assertion that CMS's calculation of the final settlement amount is incorrect.
(C) Not include new reconciliation data or data that was submitted to CMS after the final settlement notice was issued. CMS does not consider information submitted for the purposes of retroactively adjusting a prior reconciliation.
(iii)
(iv)
(v)
(2)
(i)
(ii)
(iii)
(A) The CMS Hearing Officer provides written notice of the time and place of the informal hearing at least 30 calendar days before the scheduled date.
(B) The CMS reconsideration official provides a copy of the record that was before CMS when CMS made its decision to the hearing officer.
(C) The hearing officer review is conducted by a CMS hearing officer who neither receives testimony nor accepts any new evidence. The CMS hearing officer is limited to the review of the record that was before CMS when CMS made its decision.
(iv)
(v)
(3)
(i)
(ii)
(B) If the Administrator declines to review the hearing officer's decision, the hearing officer's decision is final and binding.
(iii)
(iv)
(b)
(2) The Part D sponsor bears the burden of proof by providing evidence demonstrating that CMS' calculation of the final settlement amount is incorrect.
(e)
(f)
(a)
(2)
(ii) Plan crosswalks are prohibited that split the enrollment of one PBP into multiple PBPs.
(iii) Plan crosswalks are prohibited from a PBP offering basic prescription drug coverage to a PBP offering enhanced alternative coverage.
(3)
(4)
(5)
(b)
(1)
(2)
(c)
(1)
(i) The plan ID for the upcoming contract year PBP must be the same plan ID as one of PBPs for the current contract year.
(ii) The PBPs being consolidated must be under the same PDP contract.
(iii) A PBP offering basic prescription drug coverage may not be discontinued if the PDP contract continues to offer coverage (other than employer group waiver plans) in the service area of the PBP.
(iv) Enrollment from a PBP offering enhanced alternative coverage may be crosswalked into a PBP offering either enhanced alternative or basic prescription drug coverage.
(v) If the PDP contract includes more than one renewing PBP into which enrollment of the non-renewing PBP can be crosswalked, the enrollment of the non-renewing PBP must be crosswalked into the renewing PBP that will result in lowest increase in monthly premiums for the enrollees.
(vi) A plan crosswalk is not approved under this paragraph if it will result in a premium increase for the following benefit year (as reflected in the bid for the receiving PBP submitted on the first Monday in June) that is higher than the greater of the following:
(A) The current year's premium for the non-renewing PBP.
(B) The current year's average base beneficiary premium, as described in § 423.286(c) of this part, for the PDP region in which the PBP operates.
(vii) If an organization that non-renews an enhanced alternative PBP does not request and receive a plan crosswalk exception as provided in paragraph (d) of this section, CMS does not approve a new enhanced alternative PBP in the same service area as the non-renewing PBP in the following contract year.
(2)
(i) The non-renewing PDP contract and the surviving contract must be held by the same legal entity or by legal entities with the same parent organization.
(ii) The approved service area of the surviving contract must include the service area of the non-renewing PBPs whose enrollment will be crosswalked into the surviving contract.
(iii) Enrollment may be crosswalked between PBPs offering the same type of prescription drug coverage (basic or enhanced alternative).
(iv) Enrollment from a PBP offering enhanced alternative coverage may be crosswalked into a PBP offering basic prescription drug coverage.
(v) Enrollment from a PBP offering enhanced alternative coverage must be crosswalked into the PBP in the surviving contract that will result in the lowest premium increase.
(vi) A plan crosswalk is not approved under this paragraph if it will result in a premium increase for the following benefit year (as reflected in the bid for the receiving PBP submitted on the first Monday in June) that is higher than the greater of:
(A) The current year's premium for the non-renewing PBP, or
(B) The current year's average base beneficiary premium, as described in § 423.286(c), for the region in which the PBP operates.
(d)
(i) All plan crosswalks described in paragraph (b) of this section in writing through the bid submission process in HPMS by the bid submission deadline.
(ii) All plan crosswalk exception requests described in paragraph (c) of this section in writing through the plan crosswalk exceptions process in HPMS by the plan crosswalk exception request deadline announced annually by CMS.
(2) CMS verifies the requests and notifies a requesting PDP sponsor of the approval or denial after the crosswalk exception request deadline.
(1) The current PDP sponsor, with respect to the affected contract, has substantially failed to comply with the regulatory requirements as described in § 423.509(a)(4)(ix) and the contract may be subject to intermediate enrollment and marketing sanctions as outlined in § 423.750(a)(1) and (a)(3). Intermediate sanctions imposed as part of this section remain in place until CMS approves the change of ownership (including execution of an approved novation agreement), or the contract is terminated.
(i)(A) If the new owner does not participate in the Medicare program in the same service area as the affected contract, it must apply for, and enter into, a contract in accordance with subpart K of this part and part 422 if applicable; and
(B) If the application is conditionally approved, must submit, within 30 days of the conditional approval, the documentation required under § 423.551(d) for review and approval by CMS; or
(ii) If the new owner currently participates in the Medicare program and operates in the same service area as the affected contract, it must, within 30 days of imposition of intermediate sanctions as outlined in paragraph (e)(1) of this section, submit the documentation required under § 423.551(d) for review and approval by CMS.
(2) If the new owner fails to begin the processes required under paragraph (e)(1)(i) or (e)(1)(ii) of this section, within 30 days of imposition of intermediate sanctions as outlined in paragraph (e)(1) of this section, the existing contract is subject to termination in accordance with § 423.509(a)(4)(ix).
(a) * * *
(1) * * *
(v) Appeal procedures that meet the requirements of this subpart for issues that involve at-risk determinations. Determinations made in accordance with the processes at § 423.153(f) are collectively referred to as an at-risk determination, defined at § 423.560, made under a drug management program.
(d) Notice regarding formulary changes. Whenever a Part D plan sponsor makes any negative formulary change, as defined in § 423.100, to its CMS-approved formulary, the Part D plan sponsor must provide notice in accordance with the requirements at § 423.120(b)(5) and (f).
(b)
(1) The date of receipt of the coverage determination or at-risk determination is presumed to be 5 calendar days after the date of the written coverage determination or at-risk determination, unless there is evidence to the contrary.
(2) For purposes of meeting the 60-calendar day filing deadline, the request is considered as filed on the date it is received by the Part D plan sponsor or delegated entity specified in the Part D plan sponsor's written coverage determination or at-risk determination.
(b)
(3) The date of receipt of the coverage determination or at-risk determination is presumed to be 5 calendar days after the date of the written coverage determination or at-risk determination, unless there is evidence to the contrary.
(4) For purposes of meeting the 60-calendar day filing deadline, the request is considered as filed on the date it is received by the Part D plan sponsor or delegated entity specified the Part D plan sponsor's written coverage determination or at-risk determination.
(a) An enrollee who is dissatisfied with the redetermination of a Part D plan sponsor has a right to a reconsideration by an independent review entity that contracts with CMS. The prescribing physician or other prescriber (acting on behalf of an enrollee), upon providing notice to the enrollee, may request an IRE reconsideration. The enrollee, or the enrollee's prescribing physician or other prescriber (acting on behalf of the enrollee) must file a written request for reconsideration with the IRE within 60 calendar days after receipt of the written redetermination by the Part D plan sponsor.
(1) The date of receipt of the redetermination is presumed to be 5 calendar days after the date of the Part D plan sponsor's written redetermination, unless there is evidence to the contrary.
(2) For purposes of meeting the 60-calendar day filing deadline, the request is considered as filed on the date it is received by the IRE specified in the Part D plan sponsor's written redetermination.
(b) * * *
(3)(i) Definitions for calculating penalty amounts—
(A)
(B)
(C)
(D)
(ii) CMS sets minimum penalty amounts in accordance with paragraphs (b)(1) and (2) of this section.
(iii) CMS announces the standard minimum penalty amounts and
(iv) CMS has the discretion to issue penalties up to the maximum amount under paragraphs (b)(1) and (2) of this section when CMS determines that an organization's non-compliance warrants a penalty that is higher than would be applied under the minimum penalty amounts set by CMS.
(e) * * *
(33)
(i) Prior to contract year 2026 marketing on September 30, 2025, the notice is referred to as the
(A) Additional languages that meet the 5-percent service area threshold, as required under paragraph (a)(2) of this section, must be added to the MLI used in that service area. A plan may also opt to include in the MLI any additional language that do not meet the 5 percent service area threshold, where it determines that this inclusion would be appropriate.
(B) Except where otherwise provided in paragraph (e)(33)(i)(G) of this section, the MLI must be provided with all required materials under paragraph (e) of this section.
(C) The MLI may be included as a part of the required material or as a standalone material in conjunction with the required material.
(D) When used as a standalone material, the MLI may include organization name and logo.
(E) When mailing multiple required materials together, only one MLI is required.
(F) The MLI may be provided electronically when a required material is provided electronically as permitted under paragraph (d)(2) of this section.
(G) At plan option for CY 2025 marketing and communications beginning September 30, 2024, the plan may use the model notice described in § 423.2267(e)(33)(ii) to satisfy the MLI requirements set forth in paragraph (e)(33)(i) of this section.
(ii) For CY 2026 marketing and communications beginning September 30, 2025, the required notice is referred to as the
(A) This notice of availability of language assistance services and auxiliary aids and services must be provided in English and at least the 15 languages most commonly spoken by individuals with limited English proficiency of the relevant State or States associated with the plan's service area and must be provided in alternate formats for individuals with disabilities who require auxiliary aids and services to ensure effective communication.
(B) If there are additional languages in a particular service area that meet the 5 percent service area threshold, described in paragraph (a)(2) of this section, beyond the languages described in paragraph (e)(33)(i) of this section, the notice of availability of language assistance services and auxiliary aids and services must also be translated into those languages. MA organizations may also opt to translate the notice in any additional languages that do not meet the 5-percent service area threshold, where the MA organization determines that this inclusion would be appropriate.
(C) The notice must be provided with all required materials under paragraph (e) of this section.
(D) The notice may be included as a part of the required material or as a standalone material in conjunction with the required material.
(E) When used as a standalone material, the notice may include organization name and logo.
(F) When mailing multiple required materials together, only one notice is required.
(G) The notice may be provided electronically when a required material is provided electronically as permitted under paragraph (d)(2) of this section.
The revisions and addition read as follows:
(a) * * *
(A) Commissions.
(B) Bonuses.
(C) Gifts.
(D) Prizes or Awards.
(E) Beginning with contract year 2025, payment of fees to comply with state appointment laws, training, certification, and testing costs.
(F) Beginning with contract year 2025, reimbursement for mileage to, and from, appointments with beneficiaries.
(G) Beginning with contract year 2025, reimbursement for actual costs associated with beneficiary sales appointments such as venue rent, snacks, and materials.
(H) Beginning with contract year 2025, any other payments made to an agent or broker that are tied to enrollment, related to an enrollment in a Part D plan or product, or for services conducted as a part of the relationship associated with the enrollment into a Part D plan or product.
(c) * * *
(5) On an annual basis for plan years through 2024, by the last Friday in July, report to CMS whether the MA organization intends to use employed, captive, or independent agents or brokers in the upcoming plan year and the specific rates or range of rates the plan will pay independent agents and brokers. Following the reporting deadline, MA organizations may not change their decisions related to agent or broker type, or their compensation rates and ranges, until the next plan year.
(13) Beginning with contract year 2025, ensure that no provision of a contract with an agent, broker, or other TPMO has a direct or indirect effect of creating an incentive that would reasonably be expected to inhibit an agent or broker's ability to objectively assess and recommend which plan best fits the health care needs of a beneficiary.
(d) * * *
(1) * * *
(ii) For contract years through contract year 2024, Part D sponsors may determine, through their contracts, the amount of compensation to be paid, provided it does not exceed limitations outlined in this section. Beginning with contract year 2025, Part D sponsors are limited to the compensation amounts outlined in this section.
(2) Initial enrollment year compensation. For each enrollment in an initial enrollment year for contract years through contract year 2024, Part D sponsors may pay compensation at or below FMV.
(3)
(e) * * *
(1) For contract years through contract year 2024, payments for services other than enrollment of beneficiaries (for example, training, customer service, agent recruitment, operational overhead, or assistance with completion of health risk assessments) must not exceed the value of those services in the marketplace.
(2) Beginning with contract year 2025, administrative payments are included in the calculation of enrollment-based compensation.
(g) * * *
(4) Beginning October 1, 2024, personal beneficiary data collected by a TPMO for marketing or enrolling them into a Part D plan may only be shared with another TPMO when prior express written consent is given by the beneficiary. Prior express written consent from the beneficiary to share the information and be contacted for marketing or enrollment purposes must be obtained through a clear and conspicuous disclosure that lists each entity receiving the data and allows the beneficiary to consent or reject to the sharing of their data with each individual TPMO.
42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f).
(a)
(2) An individual authorized to act for an entity that seeks to become a PACE organization must submit an application to qualify as a Part D sponsor in the form and manner required by CMS in accordance with 42 CFR part 423, subpart K.
(c)
(i) An applicant may be considered to have failed to comply with the requirements of the PACE program under a PACE program agreement for purposes of an application denial under paragraph (c)(1) of this section if any of the following conditions apply with respect to the applicant during the applicable 12-month review period:
(A) Was subject to the imposition of an enrollment or payment sanction under § 460.42(a) or (b) for one or more of the violations specified in § 460.40.
(B) Failed to maintain a fiscally sound operation consistent with the requirements of § 460.80(a) after the end of the trial period.
(C) Filed for or is currently in State bankruptcy proceedings.
(D) Met or exceeded 13 points for compliance actions for any one PACE program agreement.
(
(
(
(
(
(ii) CMS may deny an application submitted by an organization that does not hold a PACE program agreement at the time of the submission if the applicant's parent organization or another subsidiary of the parent organization meets the criteria for denial stated in paragraph (c)(1)(i) of this section. This paragraph does not apply to a parent organization that completed the acquisition of a subsidiary that meets the criteria for denial within the 24 months preceding the application submission deadline.
(d) If CMS has terminated a PACE program agreement under § 460.50, or
(a) CMS may take compliance actions as described in paragraph (c)(1) of this section if CMS determines that the PACE organization has not complied with the terms of a current or prior PACE program agreement with CMS and a State administering agency.
(1) CMS may determine that a PACE organization is out of compliance with requirements when the organization fails to meet performance standards articulated in sections 1894 and 1934 of the Act and regulations in this chapter.
(2) If CMS has not already articulated a measure for determining non-compliance, CMS may determine that a PACE organization is out of compliance when its performance in fulfilling requirements represents an outlier relative to the performance of other PACE organizations.
(b) CMS bases its decision on whether to issue a compliance action and what level of compliance action to take on an assessment of the circumstances surrounding the non-compliance, including all of the following:
(1) The nature of the conduct.
(2) The degree of culpability of the PACE organization.
(3) The actual or potential adverse effect on beneficiaries which resulted or could have resulted from the conduct of the PACE organization.
(4) The history of prior offenses by the PACE organization or its related entities.
(5) Whether the non-compliance was self-reported.
(6) Other factors which relate to the impact of the underlying non-compliance or to the PACE organization's inadequate oversight of the operations that contributed to the non-compliance.
(c) CMS may take one of three types of compliance actions based on the nature of the non-compliance.
(1)
(2)
(3)
(ii) CMS issues a corrective action plan if CMS determines that the PACE organization has repeated or not corrected non-compliance identified in prior compliance actions, has substantially impacted beneficiaries or the program with its non-compliance, or must implement a detailed plan to correct the underlying causes of the non-compliance.
(c)
(a) * * *
(5) Be medically cleared for communicable diseases before engaging in direct participant contact.
(i) Staff must be cleared for communicable diseases based on a physical examination performed by a licensed physician, nurse practitioner, or physician assistant acting within the scope of their authority to practice, unless—
(A) The PACE organization conducts an individual risk assessment that meets the conditions specified in paragraph (a)(5)(iii) of this section; and
(B) The results of the risk assessment indicate the individual does not require a physical examination for medical clearance.
(ii) As part of the initial physical examination, staff must be determined to be free of active Tuberculosis disease.
(iii) If the PACE organization conducts a risk assessment on an individual under paragraphs (a)(5)(i)(A) and (B) of this section—
(A) Policies and procedures for conducting a risk assessment on each individual with direct participant contact must be based on accepted professional standards of care;
(B) The PACE organization's risk assessment must identify when a physical examination is required based on the results of the assessment; and
(C) The results of the risk assessment must be reviewed by a registered nurse, physician, nurse practitioner, or physician assistant.
(D) At a minimum, the risk assessment must do both of the following:
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(6) Have all immunizations up to date before engaging in direct participant contact.
The revision and addition read as follows:
(b) * * *
(4) Be medically cleared for communicable diseases before engaging
(5) Have all immunizations up to date before engaging in direct participant contact.
The addition reads as follows:
(c)
(2)
(i) Interdisciplinary team approved services include:
(A) Services approved by the full interdisciplinary team.
(B) Services approved by a member of the interdisciplinary team.
(C) Services ordered by a member of the interdisciplinary team.
(D) Care planned services.
(ii) [Reserved]
(3)
(i) The PACE organization documents that they were unable to schedule the appointment due to circumstances beyond the control of the PACE organization.
(ii) The participant does not have a change in status that requires the service to be provided more quickly.
(iii) The PACE organization provides the service as expeditiously as the participant's condition requires.
(4)
(d) * * *
(1) The interdisciplinary team is responsible for the following for each participant:
(i)
(ii)
(A) Ordering, approving, or authorizing all necessary care.
(B) Communicating all necessary care and relevant instructions for care.
(C) Ensuring care is implemented as it was ordered, approved, or authorized by the IDT.
(D) Monitoring and evaluating the participant's condition to ensure that the care provided is effective and meets the participant's needs.
(E) Promptly modifying care when the IDT determines the participant's needs are not met in order to provide safe, appropriate, and effective care to the participant.
(iii)
(iv)
(A) The appropriate member(s) of the interdisciplinary team must review all recommendations from hospitals, emergency departments, and urgent care providers and determine if the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs as expeditiously as the participant's health condition requires, but no later than 48 hours from the time of the participant's discharge.
(B) The appropriate member(s) of the interdisciplinary team must review all recommendations from other employees and contractors and determine if the recommended services are necessary to meet the participant's medical, physical, social, or emotional needs as expeditiously as the participant's health condition requires, but no later than 7 calendar days from the date the recommendation was made.
(C) If recommendations are authorized or approved by the interdisciplinary team or a member of the interdisciplinary team, the services must be promptly arranged and furnished under § 460.98(c).
(e)
(a)
(2)
(ii) Each plan of care must do all of the following:
(A) Take into consideration the most current assessment findings.
(B) Identify the services to be furnished to attain or maintain the participant's highest practicable level of well-being.
(b)
(2)
(3)
(ii) If a participant is hospitalized within 14 calendar days of the change in participant status, the interdisciplinary team must complete a reevaluation of, and if necessary, revisions to the plan of care as expeditiously as the participant's condition requires but no later than 14 calendar days after the date of discharge from the hospital.
(c)
(1) Identify all of the participant's current medical, physical, emotional, and social needs, including all needs associated with chronic diseases, behavioral disorders, and psychiatric disorders that require treatment or routine monitoring. At a minimum, the care plan must address the following factors:
(i) Vision.
(ii) Hearing.
(iii) Dentition.
(iv) Skin integrity.
(v) Mobility.
(vi) Physical functioning, including activities of daily living.
(vii) Pain management.
(viii) Nutrition, including access to meals that meet the participant's daily nutritional and special dietary needs.
(ix) The participant's ability to live safely in the community, including the safety of their home environment.
(x) Home care.
(xi) Center attendance.
(xii) Transportation.
(xiii) Communication, including any identified language barriers.
(2)(i) Identify each intervention (the care and services) needed to meet each medical, physical, emotional, and social needs.
(ii) It does not have to identify the medications needed to meet the participant's needs if a comprehensive list of medications is already documented elsewhere in the medical record.
(3) Utilize the most appropriate interventions for each care need that advances the participant toward a measurable goal and outcome.
(4) Identify how each intervention will be implemented, including a timeframe for implementation.
(5) Identify a measurable goal for each intervention.
(6) Identify how the goal for each intervention will be evaluated to determine whether the intervention should be continued, discontinued, or modified.
(7) The participant's preferences and goals of care.
(d)
(1) Implement, coordinate, and monitor the plan of care regardless of whether the services are furnished by PACE employees or contractors, across all care settings.
(2) Evaluate and monitor the participant's medical, physical, emotional, and social needs as well as the effectiveness of the plan of care, through the provision of services, informal observation, input from participants or caregivers, and communications among members of the interdisciplinary team and other employees or contractors.
(e)
(2) The interdisciplinary team must review and discuss each plan of care with the participant or the participant's caregiver or both before the plan of care is completed to ensure that there is agreement with the plan of care and that the participant's concerns are addressed.
(f)
(1) Establish and implement a process to document and maintain records related to all requirements for plans of care, in the participant's medical record.
(2) Ensure that the most recent care plan is available to all employees and contractors within the organization as needed.
The additions and revisions read as follows:
(a)
(1) Receive all care and services needed to improve or maintain the participant's health condition and attain the highest practicable physical, emotional, and social well-being.
(2) Access emergency health care services when and where the need arises without prior authorization by the PACE interdisciplinary team.
(b) * * *
(8) To have all information regarding PACE services and treatment options explained in a culturally competent manner.
(c)
(5) To be fully informed of the following, in writing, before the PACE organization implements palliative care, comfort care, or end-of-life care services:
(i) A description of the PACE organization's palliative care, comfort care, and end-of-life care services (as applicable) and how they differ from the care the participant is currently receiving.
(ii) Whether palliative care, comfort care, or end-of-life care services (as applicable) is provided in addition to or in lieu of the care the participant is currently receiving.
(iii) Identify all services that are impacted and provide a detailed explanation of how the services will be impacted if the participant or designated representative elects to initiate palliative care, comfort care, or end-of-life care, including but not limited to the following types of services.
(A) Physician services, including specialist services.
(B) Hospital services.
(C) Long-term care services.
(D) Nursing services.
(E) Social services.
(F) Dietary services.
(G) Transportation.
(H) Home care.
(I) Therapy, including physical, occupation, and speech therapy.
(J) Behavioral health.
(K) Diagnostic testing, including imaging and laboratory services.
(L) Medications.
(M) Preventative healthcare services.
(N) PACE center attendance.
(ii) The right to revoke or withdraw their consent to receive palliative, comfort, or end-of-life care at any time and for any reason, either verbally or in writing.
(e) * * *
(1) To make health care decisions, including the right to all of the following:
(i) Have all treatment options fully explained.
(ii) Refuse any and all care and services.
(iii) Be informed of the consequences their decisions may have on their health and/or psychosocial status.
(2) To fully understand the PACE organization's palliative care, comfort care, and end-of-life care services. Specifically, the PACE organization must do all of the following before palliative care, comfort care, or end-of-life care services can be initiated:
(i) Fully explain the applicable treatment options.
(ii) Provide the participant with written information about their treatment options, in accordance with paragraph (c)(5) of this section.
(iii) Obtain written consent from the participant or designated representative prior to initiating palliative care, comfort care, or end-of-life care.
(g)
(2) To request services from the PACE organizations, its employees, or contractors through the process described in § 460.121.
(3) To appeal any treatment decision of the PACE organization, its employees, or contractors through the process described in § 460.122.
The PACE organization must comply with requirements of §§ 422.125 and 422.504(a)(15) of this chapter, through the CMS complaints tracking module as defined in § 422.125(a) of this chapter, address and resolve complaints received by CMS against the PACE organization within the required timeframes. References to the MA organization or MA plan in those regulations must be read as references to the PACE organization. Nothing in this section should be construed to affect the PACE organization's obligation to resolve grievances as described in § 460.120, service determinations as described in § 460.121, or appeals as described in § 460.122.
(a)
(b)
(c)
(1) A participant or other individual specified in paragraph (d) of this section has the right to voice grievances without discrimination or reprisal, and without fear of discrimination or reprisal.
(2) A Medicare participant or other individual specified in paragraph (d) of this section acting on behalf of a Medicare participant has the right to file a written complaint with the quality improvement organization (QIO) with regard to Medicare covered services.
(3) The requirements under paragraphs (b) and (d) through (j) of this section.
(d)
(1) The participant.
(2) The participant's family member.
(3) The participant's designated representative.
(4) The participant's caregiver.
(e)
(2) The PACE organization may not require a written grievance to be submitted on a specific form.
(3) A grievance may be made to any employee or contractor of the PACE organization that provides care to a participant in the participant's residence, the PACE center, or while transporting participants.
(f)
(g)
(1) Take action to resolve the grievance based on the results of its investigation as expeditiously as the case requires, but no later than 30 calendar days after the date the PACE organization receives the oral or written grievance.
(2) Notify the individual who submitted the grievance of the grievance resolution as expeditiously as the case requires, but no later than 3 calendar days after the date the PACE organization resolves the grievance in accordance with paragraph (g)(1) of this section.
(h)
(1) Either orally or in writing, based on the individual's preference for notification, except for grievances identified in paragraph (h)(3) of this section.
(2) At a minimum, oral or written notification of grievance resolutions must include the following, if applicable:
(i) A summary statement of the participant's grievance including all distinct issues.
(ii) A summary of the pertinent findings or conclusions regarding the concerns for each distinct issue that requires investigation.
(iii) For a grievance that requires corrective action, the corrective action(s) taken or to be taken by the PACE organization as a result of the grievance, and when the participant may expect corrective action(s) to occur.
(3) All grievances related to quality of care, regardless of how the grievance is filed, must be responded to in writing.
(i) The response must describe the right of a Medicare participant or other individual specified in paragraph (d) of this section acting on behalf of a Medicare participant to file a written complaint with the QIO with regard to Medicare covered services.
(ii) For any complaint submitted to a QIO, the PACE organization must cooperate with the QIO in resolving the complaint.
(4) The PACE organization may withhold notification of the grievance resolution if the individual who submitted the grievance specifically requests not to receive the notification, and the PACE organization has documented this request in writing. The PACE organization is still responsible for paragraphs (h)(1) through (3) of this section.
(i)
(j)
(k)
(l)
(b) * * *
(2)
(i) Document the request; and
(ii) Discuss the request during the care planning meeting, and either:
(A) Approve the requested service and incorporate it into the participant's initial plan of care, or
(B) Document their rationale for not approving the service in the initial plan of care.
(b) At their discretion, CMS or the State administering agency may monitor the effectiveness of corrective actions.
CMS may require a PACE organization to disclose to its PACE participants or potential PACE participants the PACE organization's performance and contract compliance deficiencies in a manner specified by CMS.
Office of the Secretary, U.S. Department of Housing and Urban Development (HUD).
Final rule.
This final rule revises HUD's regulations governing floodplain management and the protection of wetlands to implement the Federal Flood Risk Management Standard (FFRMS) in accordance with the Executive Order titled “Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input.” These revisions to HUD's regulations will improve the resilience of HUD-assisted or financed projects to the effects of climate change and natural disasters and provide for greater flexibility in the use of HUD assistance in floodways under certain circumstances. Among other revisions, this rule provides a process for determining the extent of the FFRMS floodplain, with a preference for a climate-informed science approach (CISA) to making this determination. The rule also revises HUD's floodplain and wetland regulations to streamline, improve overall clarity, and modernize standards. Also, this rule revises HUD's Minimum Property Standards for one-to-four-unit housing under HUD's mortgage insurance and low-rent public housing programs to require that the lowest floor in newly constructed structures located within the 1-percent-annual-chance (100-year) floodplain be built at least 2 feet above the base flood elevation (BFE) as determined by best available information. The rule also revises a categorical exclusion when HUD performs environmental reviews and updates various HUD environmental regulations to permit online posting of public notices.
Kristin L. Fontenot, Director, Office of Environment and Energy, Office of Community Planning and Development, Department of Housing and Urban Development, 451 7th Street SW, Room 7282, Washington, DC 20410-8000. For inquiry by phone or email, contact Lauren Hayes Knutson, Director, Environmental Planning Division, Office of Environment and Energy, Office of Community Planning and Development, at 202-402-4270 (this is not a toll-free number) or email to:
On March 24, 2023, HUD published the “Floodplain Management and Protection of Wetlands; Minimum Property Standards for Flood Hazard Exposure; Building to the Federal Flood Risk Management Standard” proposed rule (the “proposed rule”).
HUD has broad general rulemaking authority under 42 U.S.C. 3535 to “make such rules and regulations as may be necessary to carry out [the Secretary's] functions, powers and duties” in order to implement its statutory mission, which is to provide assistance for housing to promote “the general welfare and security of the Nation and the health and living standards of [its] people.”
• to use all practicable means;
• to improve and coordinate Federal plans, functions, programs, and resources to the end that the Nation may:
○ fulfill the responsibilities of each generation as trustee of the environment for succeeding generations;
○ assure for all Americans safe, healthful, productive, and esthetically and culturally pleasing surroundings;
○ attain the widest range of beneficial uses of the environment without degradation, risk to health or safety, or other undesirable and unintended consequences.
NEPA also requires all Federal agencies to “utilize a systematic, interdisciplinary approach which will ensure the integrated use of the natural and social sciences and the environmental design arts in planning and in decision making which may have an impact on man's environment.” 42 U.S.C. 4332(2)(A). Each year, HUD provides States, local governments, and housing providers with billions of dollars in Federal financial assistance, appropriated and authorized by Congress. By taking the actions it does in this final rule, HUD protects Federal investments, preserves the environment for future generations, and promotes the health, safety, and general welfare of individuals. As described in the
Significantly for the purposes of this rulemaking, E.O. 13690 revised section 6(c) of E.O. 11988 to provide new approaches to establish the floodplain. E.O. 13690 provided, however, that prior to any actions implementing E.O. 13690, additional input from stakeholders be solicited and considered. Consistent with this direction, the Federal Emergency Management Agency (FEMA), as Chair of the Mitigation Framework Leadership Group (MitFLG),
On October 8, 2015, the WRC issued the updated “Guidelines for Implementing Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input” (the “Guidelines”).
•
•
•
The FVA and 0.2-percent-annual-chance flood approach result in higher elevations than the base flood elevation with correspondingly larger horizontal floodplain areas. CISA will generally have a similar result, with the exception that agencies using CISA may find the resulting elevation to be equal to or lower than the current elevation in some areas due to the nature of the specific climate change processes and physical factors affecting flood risk at the project site. However, as a matter of policy established in the Guidelines, CISA should only be used if the resulting flood elevation is at least equal to or higher, depending on the criticality of the action, than current base flood elevation.
In response to comments received on the Guidelines, MitFLG included an appendix that explained CISA. Appendix H of the Guidelines
As described in the Guidelines, CISA relies on best available and actionable science. Best available means data and science that is transparent, technically credible, usable, legitimate, and flexible. Actionable science consists of theories, data, analyses, models, projects, scenarios, and tools that are relevant to the decision under consideration; reliable in terms of its scientific or engineering basis and appropriate level of peer review; understandable to those making the decision; supportive of decisions across wide spatial, temporal, and organization ranges; and co-produced by scientists, practitioners, and decision-makers. Appendix H indicates that different approaches are appropriate for coastal and riverine flooding because the directional change of local sea level plus storm surge is generally known for coastal flood risk but, for riverine, it is difficult to determine the direction of changes in precipitation and resulting flood elevations. As a result, the MitFLG recommended that coastal flood risks agencies take into account mean sea level rise scenarios that are adjusted to reflect local conditions to identify CISA. The MitFLG and Appendix H to the Guidelines do not provide a similar hydrologic standard for CISA for riverine flood risks because of the limitations on best-available and actionable science.
In 2023, Federal agencies participating in the White House Flood Resilience Interagency Working Group
E.O. 11988 directs Federal agencies to avoid, to the extent possible, the long- and short-term adverse impacts associated with the occupancy and modification of floodplains and to avoid direct and indirect support of floodplain development wherever there is a practicable alternative. Floodplains are found both in coastal flood areas, where rising tides and storm surge are often responsible for flooding, and in riverine flood areas where moving water bodies may overrun their banks due to heavy rains or snow melt. E.O. 11988 directs each agency to evaluate the potential effects of any actions it may take in a floodplain; to ensure that agency planning programs and budget requests reflect consideration of flood hazards and floodplain management; and to identify the floodplain area.
E.O. 11988, as amended, requires agencies to take a scientific approach to determine if a proposed action is in or affects a floodplain. The result of this analysis is often most easily conveyed via a map, making floodplain maps ubiquitous with the process of identifying the floodplain, though, in process, they are separate. The identification of the floodplain is the analysis the agencies have been tasked with carrying out under E.O. 11988 and maps are the visual representation of that analysis. Because flood risk can change over time, FEMA and the National Flood Insurance Program (NFIP) program continually revise Flood Insurance Rate Maps (FIRMs), advisory base flood elevations and preliminary floodplain maps and studies to incorporate new information and reflect the current understanding of flood risk. E.O. 13690 amended E.O. 11988 to direct agencies to update the floodplain using one (or a combination) of the three approaches listed above, which are incorporated in the FFRMS.
Communities across the Nation have proactively strengthened their local floodplain management codes and standards to ensure that buildings and infrastructure are resilient to flood risk. By implementing the FFRMS, HUD's standards will better align with these actions and better protect against future flood risk, considering climate informed science, where available. At the same time, HUD recognizes that the need to make structures resilient also requires a flexible approach to adapt to the needs of the Federal agency, local community, and the circumstances surrounding each project or action.
In its 2021 Climate Action Plan,
HUD notes that affordable housing is increasingly at risk from both extreme weather events and sea level rise, with coastal communities especially at risk. Recent peer-reviewed analysis and mapping by independent research organization Climate Central projects that the number of affordable housing units at risk from flooding in coastal areas will triple by 2050,
HUD's experience in the wake of flood disasters is that unless structures in flood-prone areas are properly designed, constructed, and elevated, they may not withstand future severe flooding events. This risk is exacerbated by climate change and projected increases in hurricane rainfall and intensity as well as other precipitation throughout most of the United States. This final rule provides for a more forward-looking approach to floodplain management, which bases decisions not just on past flooding but on how flood risk is anticipated to grow and change over the anticipated life of a project.
This final rule expands the floodplain of concern from the 1-percent-annual-chance floodplain to the FFRMS floodplain, designated based on projected future flood risk, to ensure that HUD projects are designed with a more complete picture of a proposed project site's flood risk over time. Flood risk projection based on current climate science can help HUD meet the objectives of E.O. 11988, including avoidance of floodplain impacts and minimization of such impacts where there is no practicable alternative to locating a HUD-assisted activity in proximity to flood sources. Adequate elevation of structures is a key minimization strategy, together with complementary natural ecosystem processes and nature-based approaches, to promote the preservation of beneficial floodplain functions.
As recognized by MitFLG and directed by the FFRMS and E.O. 13690, requiring structures located within the expanded FFRMS floodplain to be elevated or floodproofed to an additional elevation above the base flood elevation will increase resiliency and reduce loss of life, property damage, and other economic loss, and can also benefit property owners by reducing flood insurance rates. These higher standards provide an extra buffer above the base flood elevation based on the best available information to improve the long-term resilience of communities. Additionally, higher standards help account for increased flood risk associated with projected sea level rise, increased rainfall, and other climate risks, which are not considered in current FEMA maps and flood insurance costs. As stated in the report “Global and Regional Sea Level Rise Scenarios for the United States” (February 2022) by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA),
Choosing alternative sites outside the FFRMS floodplain and requiring additional elevation above the base flood elevation may also lead to a net reduction of expected housing costs over time. HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. Flood insurance is a key financial tool to manage potential rebuilding costs and can make homes in risky areas more expensive due to their greater flood risk. By elevating additional feet above the base flood elevation, homeowners may benefit from flood insurance premium reductions that will increase long-term affordability.
Through this final rule, HUD is prioritizing using CISA in defining the floodplain because it provides a forward-looking assessment of flood risk based on likely or potential climate change scenarios, regional climate factors, and an advanced scientific understanding of these effects. Therefore, in this final rule, HUD will require the use of CISA, where data is available and actionable, to establish the required level of flood resilience for floodplain management decision making, elevation of structures, and floodproofing. In areas where CISA data is not currently available and actionable to define the FFRMS floodplain, as described in this final rule, HUD will typically require that the FFRMS floodplain to be based on the FEMA-mapped 0.2-percent-annual-chance floodplain or a freeboard height above the FEMA-mapped 1-percent-annual-chance floodplain, as further described in the subsection that follows. As CISA data availability improves over time and over a greater area, HUD expects the use of CISA to increase.
Beyond implementing the FFRMS floodplain and elevation requirements, this final rule implements broader changes to modernize and improve 24 CFR part 55 in accordance with the Department's climate adaptation, environmental justice, and equity priorities. These revisions explicitly recognize HUD's responsibility to consider the environmental justice impact of the Department's actions within the floodplain management and decision making process. To meet HUD's affordable housing and community development mission more effectively and efficiently, this final rule also streamlines decision making for activities that mitigate flood risk, avoid wetland losses, or provide co-benefits that directly contribute to HUD's efforts to reduce climate impacts. This final rule also strengthens HUD's commitment to use nature-based floodplain management approaches, where practicable, by identifying specific strategies and practices that have proven effective in increasing flood resilience and environmental quality.
HUD notes that adherence to the requirements in this final rule does not modify any party's responsibilities or obligations under any other Federal laws, including statutes and regulations administered by other Federal agencies.
To implement the framework described in this rule, this final rule defines the FFRMS floodplain in a new 24 CFR 55.7. This new section establishes a three-tiered approach to define the FFRMS floodplain, depending on the data available in the project area.
1.
2.
3.
If CISA data is not available or actionable and FEMA FIRMs, FIS, preliminary maps, and advisory base flood elevations are unavailable or insufficiently detailed to determine base flood elevation, other Federal, State, local, or Tribal data may be used as “best available information” to define the 1-percent-annual-chance floodplain.
As described throughout this final rule, CISA is the preferred approach to define the FFRMS floodplain. In § 55.7, HUD requires that the FFRMS floodplain be defined using CISA where data is available and actionable.
As described in § 55.7, HUD considers CISA data to be available and actionable for a particular project where: (1) the data is included in a tool, resource, or other process developed or identified by a Federal agency or agencies to define the floodplain using CISA, and (2) HUD has adopted the particular tool, resource, or other process through a
Regardless of whether HUD has adopted a particular tool, resource, or other process to define the floodplain using CISA, this final rule at § 55.7(f) permits HUD or a responsible entity to voluntarily define the FFRMS floodplain utilizing CISA when a State, Tribal, or local government has formally adopted, through code or other formal adoption measures, a tool, resource, or other written standards that provides data or other methods to identify the FFRMS floodplain using CISA for a particular project. In addition, HUD may identify additional tools, resources, or other processes that a responsible entity may voluntarily use to define the FFRMS floodplain using CISA. HUD or a responsible entity has the option to utilize a tool, resource, written standard, or other process permitted in § 55.7(f) where it results in an elevation that is at least as high as the lowest of (1) the 0.2-percent-annual-chance floodplain elevation; (2) the elevation that results from adding an additional two feet to the base flood elevation; or (3) the elevation required by paragraphs (b) or (c) of § 55.7, if CISA data is available and actionable under paragraphs (b)(1) or (c)(1). Where HUD or a responsible entity voluntarily defines the FFRMS floodplain using the options in paragraphs (f)(1)(i) or (f)(1)(ii) of § 55.7, the criticality of the action must be considered when determining the appropriate elevation of the FFRMS floodplain.
This final rule revises various definitions in 24 CFR 55.2. The definitions are revised as follows:
Sources of best available information for identifying the FFRMS floodplain are described in 24 CFR 55.7 according to CISA, 0.2-Percent-Annual-Chance Flood Approach, and FVA methods. Best available information sources for floodways, coastal high hazard areas, and areas within the Limit of Moderate Wave Action (LiMWA) are identified in 24 CFR 55.8 and include effective and advisory or preliminary FEMA analysis reflected in FEMA's maps.
This final rule clarifies in 24 CFR 55.3 that HUD Assistant Secretaries, the HUD General Counsel, and the President of the Government National Mortgage Association shall take responsibility for all decisions made under their jurisdictions that are made pursuant to the decision making process in 24 CFR 55.20. The final rule also revises the duties of grantees and applicants for clarity and adds a new § 55.3(f) that codifies the role of third-party providers.
This final rule revises HUD's regulations requiring notification of floodplain hazard. The notification requirements in 24 CFR 55.21 and conveyance restrictions in 24 CFR 55.22 are moved to a new 24 CFR 55.4. This creation of the new § 55.4 emphasizes the importance of providing notice as early in the process as possible. Section 55.4 retains the requirement that HUD (or HUD's designee) or the responsible entity must ensure that any party participating in a financial transaction for a property located in a floodplain and any current or prospective tenant is notified of the hazards of the floodplain location. In addition, 24 CFR 55.4 defines the notification requirements for property owners, buyers, developers, and renters and identifies specific hazards and information that must be included in these notices based on the interests of these parties.
The required information for owners, buyers, and developers includes the requirement or option to obtain flood insurance, the approximate elevation of the FFRMS floodplain, proximity of the site to flood-related infrastructure including dams and levees,
The final rule also moves the conveyance restrictions for the disposition of multifamily real property from 24 CFR 55.22 to 24 CFR 55.4 with minimal changes to reflect updated floodplain terminology.
To address the issues of flood insurance requirements more comprehensively in the context of 24 CFR part 55 decision making, this final rule consolidates and moves all applicable flood insurance requirements to a new § 55.5. The flood insurance topic requirements covered in the new § 55.5 include Flood Disaster Protection Act (FDPA) limitations on HUD program participation for properties in communities not participating in FEMA's NFIP and on HUD disaster assistance for property damage in a special flood hazard area where previous flood disaster assistance required maintenance of flood insurance and the insurance was not maintained. In addition, § 55.5 includes the much more frequently applicable FDPA requirement for HUD-assisted projects regarding the mandatory purchase of flood insurance within the Special Flood Hazard Area (SFHA) as designated by FEMA on the effective FIRM or FIS, and the NFIP plays an important role in minimization measures to reduce flood losses.
The new § 55.5 also includes new language clarifying that HUD or the responsible entity may require flood insurance beyond the minimums established in the FDPA or by a State, locality, Tribe, or part 55 when necessary to minimize financial risk. Also, the new § 55.5 clarifies that mortgagees participating in a HUD assistance or mortgage insurance or guarantee program may impose additional flood insurance requirements.
While nothing in part 55 requires flood insurance outside of the SFHA, HUD strongly encourages that flood insurance be obtained and maintained for all structures within the FFRMS floodplain to mitigate financial losses. It may also be appropriate for high-value structures to maintain more flood insurance than is available under the NFIP. The maximum available building coverage through the NFIP is $250,000 for single family structures of one-to-four units and $500,000 for multifamily structures with five or more housing units and commercial structures.
This final rule creates a new § 55.6 regarding complying with the requirements for floodplain management and protection of wetlands by outlining the process HUD or the responsible entity must follow to determine whether compliance with part 55 is required. The new § 55.6 also describes how to determine whether the 8-step decision making process
This final rule also creates a new section regarding limitations on HUD assistance in floodplains at § 55.8 and revises § 55.10 to address the topic of limitations on HUD assistance in wetlands. Sections 55.8 and 55.10 largely maintain the restrictions that existed prior to this final rule but with some revisions and additions. For example, § 55.8(b) maintains the current requirement that all decisions be based on the best available flood data provided by FEMA unless the current effective data indicates a higher flood risk than interim or preliminary sources.
In order for HUD assistance to be used in a proposed activity, § 55.8(c) requires that HUD or the responsible entity take measures to address repeat flood losses associated with structures identified by FEMA as Severe Repetitive Loss (SRL) properties.
1. The building has incurred flood-related damage for which four or more separate claims payments have been made, with the amount of each claim (including building and contents payments) exceeding $5,000, and with the cumulative amount of such claims payments exceeding $20,000; or
2. At least two separate claims payments (building payments only) have been made under such coverage, with the cumulative amount of such claims exceeding the market value of the building.
In both instances, at least two of the claims must be within 10 years of each other, and claims made within 10 days of each other will be counted as one claim. In determining SRL status, FEMA considers the loss history since 1978, or from the building's construction if it was built after 1978, regardless of any changes in the ownership of the building. The term “SRL property” refers to either an SRL building or the contents within an SRL building, or both. The most recent designations can be found in Appendix I of the April 2020 NFIP Flood Insurance Manual, available at
For purposes of defining when projects with onsite floodways may proceed, this final rule removes floodways, as well as coastal high hazard areas and the LiMWA, from the incidental floodplain exception at § 55.12(c)(7) and replaces it with the new § 55.8(a)(1), which covers limitations on HUD assistance in floodways. The new § 55.8(a)(1) clarifies that HUD assistance may be used in floodways in two circumstances:
1. Where an exception in § 55.12 applies. This is not a change from HUD's existing regulations.
2. Where all structures and most improvements are removed from the floodway and a permanent covenant or comparable restriction would prevent future development or expansion of existing uses in the floodplain and/or wetland. Rehabilitation activities, including reconstruction in the case of Presidentially declared disasters, that do not expand existing uses in the FFRMS floodplain outside of the floodway are permitted under the new § 55.8. This exception combines aspects of the existing exceptions for floodplain restoration activities and incidental floodplains and allows for limited improvements in the floodway, including functionally dependent uses, utility lines, de minimis improvements, and removal of existing structures or improvements. This option allows for a broader range of activities in the floodway and in the adjacent FFRMS floodplain than is permitted under the current incidental floodplain exception. This option does require projects with onsite floodways to complete the 8-step decision making process in § 55.20 and determine that there are no practicable alternatives before approving any proposed activity on a site that includes a floodway.
This final rule maintains a narrower version of the existing incidental floodplain exception as applied to the FFRMS floodplain (not including floodways, coastal high hazard areas, or within the LiMWA) in the revised § 55.12(g). The revised § 55.12(g) allows projects to proceed without completing the 8-step decision making process where an incidental portion of the project site falls within the FFRMS floodplain.
This final rule adds a new § 55.9 and revises § 55.10 to address issues regarding wetlands identification and HUD's limitations on work impacting wetlands.
The new § 55.9, “Identifying Wetlands,” builds on the definition of “wetlands” in § 55.2(b)(13) by clarifying common areas of confusion and removes unnecessary procedural requirements. Section 55.9 revises HUD's current regulations to address limitations associated with the exclusive use of the National Wetlands Inventory (NWI) for wetlands screening.
The revised § 55.10, “Limitations of HUD Assistance in Wetlands,” explicitly defines the procedural requirements for projects with the potential to directly or indirectly impact on- or off-site wetlands. These revisions to § 55.10 codify and clarify existing policies on wetlands compliance without imposing new requirements.
This final rule breaks down the exceptions in the current § 55.12(a)-(c) into three separate sections, §§ 55.12, 55.13, and 55.14. This revision improves the overall clarity of the three distinct categories of excepted activities: (1) those that are excluded from all compliance with part 55 (§ 55.12); (2) those that must comply with the standards and limitations in part 55, such as prohibitions on activities in floodways but that are not required to complete the 8-step decision making process (§ 55.13); and (3) those that may complete the modified 5-Step decision making process in lieu of the full 8-step decision making process (§ 55.14). Beyond this revision, the final rule makes only limited changes to the exceptions themselves.
Based on HUD's experience and activities reflected in environmental review records for floodplain restoration projects, this final rule provides flexibility for floodplain-compatible parks and recreation uses routinely combined with floodplain and wetland restoration and preservation work. In the revised 24 CFR 55.12, “Inapplicability of 24 CFR part 55 to certain categories of proposed actions,” this final rule expands on the existing exception for floodplain and wetland restoration and preservation activities to allow certain structures and improvements designed to be compatible with the beneficial floodplain or wetland function of a property.
Two exceptions are removed through this final rule. The exception for sites where FEMA has issued a Letter of Map Amendment (LOMA) or Letter of Map Revision (LOMR) in the current § 55.12(c)(8) is removed. HUD is removing the exception described in the current § 55.12(c)(8)(i) because a FEMA determination, through the LOMA/LOMR process, that a location is outside of the 1-percent-annual-chance floodplain or above base flood elevation is not intended to state whether the location is or is not within the FFRMS floodplain. HUD is removing the exception described in the current § 55.12(c)(8)(ii) on conditional LOMAs and conditional LOMRs for the same reason, as well as because this exception can incentivize adding fill in a floodplain in a manner that reduces floodplain function in adjoining areas by excepting such actions from compliance with part 55. HUD is changing this policy to disincentivize the use of sitewide fill and require completion of the 8-step decision making process before adding fill to modify a floodplain.
HUD is also removing the exception described in the current § 55.12(c)(11) for projects related to ships and waterborne vessels because these are not activities that generally receive HUD funds and practitioners have expressed confusion over its presence in the rule.
The final rule makes minimal changes to the activities listed in the current § 55.12(a) and (b), which must comply with the requirements in part 55 but do not trigger the full 8-step decision making process. The final rule makes clarifying changes to the requirements currently listed in § 55.12(a)(3) and (4) that the footprint of the structure and paved areas are not significantly increased. Through this final rule, the new § 55.14(c) and (d) require that the footprint of the structure and paved areas are not increased by more than 20 percent. The final rule also includes a clarification for the requirement currently listed in § 55.12(b)(5)(iii) that the approval of financial assistance to lease an existing structure located in the floodplain requires that the structure be insured to the maximum in order to meet the exception. This existing provision was inadvertently omitted from the text of the proposed rule. The final rule provision also clarifies that this exception applies to financial assistance to lease both an existing structure and units within an existing structure.
Notably, the final rule adds two new exceptions:
1.
2.
For actions that trigger the 8-step decision making process in whole or in part, the final rule makes several revisions to § 55.20 to implement FFRMS, clarify proper completion of each of the 8 steps of the decision making process, and otherwise modernize requirements. These revisions include:
1. Codifying roles and responsibilities in the 8-step decision making process, which have been frequently misunderstood.
2. Editing for consistency with FFRMS and new paragraphs on identification and limitations associated with the FFRMS floodplain and wetlands.
3. Adding an option to publish public notices in Steps 2 and 7 on an appropriate government website as an alternative to a printed news medium.
4. Inserting further clarifications and examples of required and suggested analysis.
5. Adding a requirement to coordinate the 8-step decision making process with any public engagement process associated with environmental justice, where project planners are also engaging stakeholders. This is consistent with the policy goals of Executive Order 14096, “Revitalizing Our Nation's Commitment
In addition to the revisions to § 55.20 previously described, this final rule significantly expands Step 5 in § 55.20(e) to implement FFRMS. Section 55.20(e) of the final rule provides that, in addition to the current mitigation and risk reduction requirements, all new construction and substantial improvement actions in the FFRMS floodplain subject to the 8-step decision making process must be elevated or, in certain cases, floodproofed above the FFRMS floodplain. If higher elevations, setbacks, or other floodplain management measures are required by State, Tribal, or locally adopted code or standards, HUD will require that those higher standards apply. The revised § 55.20(e) also provides more specific instruction on minimization and floodplain restoration measures, which are a key component of increasing flood resilience and must be considered in the 8-step decision making process.
For non-critical actions that are non-residential structures or multifamily residential structures that have no residential dwelling units below the FFRMS floodplain, through § 55.20(e)(1)(ii) of this final rule, new construction and substantial improvement projects may, as an alternative to being elevated above the FFRMS floodplain, be designed and constructed such that, below the FFRMS floodplain, the structure is floodproofed. Except for changing “base flood level” to “FFRMS floodplain,” as defined in § 55.7, this final rule adopts FEMA's requirements for floodproofing as provided in FEMA's regulations at 44 CFR 60.3(c)(3)(ii) and 60.3(c)(4)(i). In summary, all substantially rehabilitated or newly constructed structures within the FFRMS floodplain which are not elevated must be floodproofed consistent with the latest FEMA standards at or above the level of the FFRMS floodplain. This provision permits owners of non-residential and certain residential buildings to construct structures in a way that is less expensive than elevating but allows the buildings to withstand flooding, thus appropriately balancing property protection with costs and reflecting the lower risk to human life and safety in non-residential structures or parts of structures.
In the case of residential buildings, § 55.20(e)(1) of this final rule provides that the term “lowest floor” must be applied consistent with FEMA regulations in 44 CFR 59.1, FEMA's Elevation Certificate guidance, or FEMA's current guidance that establishes lowest floor.
Through this final rule, § 55.20(e)(2) identifies specific strategies that can reduce flood risk and loss of beneficial values of floodplains and wetlands, including green infrastructure, reconfiguration of the project footprint, and incorporation of resilient buildings standards. These strategies are based on floodplain and stormwater management best practices and HUD experience. Based on requests for technical assistance in this area, HUD believes the inclusion of recommended minimization measures will assist persons engaged in an 8-step decision making process.
This final rule also adds a new § 55.20(e)(3) to describe more clearly what is meant by restoration and preservation of wetlands or beneficial functions of the floodplain. Floodplain preservation is a concept that has been used in 24 CFR part 55 implementation historically but has been defined primarily through guidance, and this clarification is based on past practice and the successful incorporation of these measures in HUD-assisted projects.
Finally, this final rule replaces the current § 55.20(e)(3), which defines mitigation measures specific to critical actions, with a new § 55.20(e)(4). Section 55.20(e)(4) establishes mandatory actions to plan ahead for residents' safety in multifamily residential properties, healthcare facilities, and critical actions.
This final rule creates a new § 55.21, “Alternate processing for existing nonconforming sites,” to address concerns about existing sites with onsite floodways. This section creates a special approval process for improvements to existing HUD-assisted or HUD-insured properties with onsite floodways under the following circumstances, summarized as:
1. HUD completes an 8-step decision making process and environmental review pursuant to part 50 and mandates measures to reduce flood risk and ensure that there are no other environmental risks or hazards at the site;
2. Specific measures will be taken to minimize flood risk and improve overall resilience at the site, including removing all residential units and critical action structures from the floodway; and
3. HUD determines that the HUD assistance cannot be practicably transferred to a safer site.
The purpose of this section is to establish a means of continuing HUD assistance or financing in exceptional circumstances to existing HUD-assisted or HUD-financed projects (
This final rule makes various other changes to part 55 to update terminology and references and restructures part 55 for readability and accuracy. Additionally, this final rule removes various provisions codified in part 55 that are outdated or underutilized.
The final rule removes § 55.24, “Aggregation,” because this provision is redundant with aggregation principles described more clearly in 24 CFR parts 50 and 58, which also apply to projects processed under 24 CFR part 55.
The final rule also removes the current § 55.25, “Areawide compliance.” Areawide decision making described in this section requires a complex notification process involving publications, and HUD has no record of the provision's use in a HUD-assisted activity since the promulgation of 24 CFR part 55. This provision is unnecessary because HUD has well-established procedures for tiering of environmental review records that similarly facilitate compliance with part
The final rule relocates instructions on documenting 24 CFR part 55 decision making in the HUD environmental review record from § 55.27 to § 55.6 so that the instructions appear in context with general instructions on compliance with 24 CFR part 55 and a description of its structure. Additionally, the final rule revises the documentation requirements for consideration of alternatives to the proposed action to remove the requirement to compile a list of alternative properties in the local market. This information may be unavailable for some project types or not relevant to consideration of viable alternatives to achieve the goals of the decision making process within a given HUD program context.
The final rule removes § 55.28, which, in concept, provides relief from five of the eight steps in the wetlands decision making process when a permit has been secured from the United States Army Corps of Engineers (USACE) under Section 404 of the Clean Water Act for a proposed HUD-assisted construction activity in a jurisdictional wetland outside of the floodplain. The final rule removes this section because practitioners have not historically found it useful, and part 55 already contains another section that offers similar relief from the 8-step decision making process where USACE (or any other Federal agency) has already completed the 8-step decision making process for the same action. Section 55.26, which the final rule retains with revisions, allows HUD or responsible entities to adopt another agency or responsible entity's 8-step decision making process under conditions that are less restrictive than those in § 55.28, which apply to decision making under E.O. 11988 or E.O. 11990 carried out by USACE.
This final rule applies a new elevation standard to one-to-four-family residential structures with mortgages insured by FHA. Generally, in HUD's single family mortgage insurance programs, Direct Endorsement mortgagees submit applications for mortgage insurance to HUD, and Lender Insurance mortgagees endorse loans for insurance after the structure has been built. Thus, there is no HUD review or approval before the completion of construction. In these instances, HUD is not undertaking, financing, or assisting construction or improvements. Thus, the FHA single family mortgage insurance program is not subject to review under E.O. 11988, NEPA, or related environmental laws or authorities. However, newly constructed single family properties in HUD's mortgage insurance programs are generally required to meet HUD's Minimum Property Standards under 24 CFR 200.926 through 200.926e. These property standards require that when HUD insures a mortgage on a property, the property meets basic livability and safety standards and is code compliant. The section relating to construction in flood hazard areas, § 200.926d(c)(4), has long been included as a property standard.
In alignment with the revisions in this final rule that address FFRMS under E.O. 11988, this final rule also amends the Minimum Property Standards on site design, specifically the standards addressing drainage and flood hazard exposure at § 200.926d(c)(4). The purpose of the amendment of the property standards is to decrease potential damage from floods, increase the safety and soundness of the property for residents, and provide for more resilient communities in flood hazard areas. The final rule revises § 200.926d(c)(4) by requiring the lowest floor (including basements and other permanent enclosures) of newly constructed dwellings, within the 1-percent-annual-chance floodplain, to be at least 2 feet above the base flood elevation as determined by best available information. For one- to four-unit housing under HUD's mortgage insurance and low-rent public housing programs, HUD's Minimum Property Standards in 24 CFR part 200 currently require that a one- to four-unit property involving new construction, located in the 1 percent-annual-chance floodplain in the effective FIRM, be elevated to the effective FIRM base flood elevation. This final rule adds two feet of additional elevation to the base flood elevation as a resilience standard and applies this standard only to new construction of such properties and not to substantial improvement. This final rule does not require consideration of the horizontally expanded FFRMS floodplain for single family mortgage insurance projects governed by the requirements in the Minimum Property Standards.
This final rule amends § 50.20(a)(2)(i) to revise the categorical exclusion from further environmental review under NEPA for minor rehabilitation of one- to four-unit residential properties. Specifically, this final rule removes the qualification that the footprint of the structure may not be increased in a floodplain or wetland when HUD performs the review. In 2013, HUD removed the footprint trigger from the corresponding categorical exclusion at § 58.35(a)(3)(i) for rehabilitations reviewed by responsible entities. This change makes the review standard the same regardless of whether HUD or a responsible entity is performing the review. Moreover, when HUD performs a review under 24 CFR part 50, the categorical exclusion in § 50.20(a)(3) applies to construction, but not rehabilitation, of up to four units in a floodplain or wetland as an individual action such that an environmental assessment or environmental impact statement is normally not required. Rehabilitated structures in a floodplain or wetland with an increased footprint currently require an environmental assessment or environmental impact statement.
Actions under this revised categorical exclusion remain subject to E.O. 11988, E.O. 11990, and part 55, and any impact resulting from an increased footprint in a floodplain or wetland will be fully addressed by the 8-step decision making process in part 55.
This final rule updates §§ 50.23, 58.43, 58.45, and 58.59 to allow public notices to be posted on an appropriate government website as an alternative to publication in local news media if the appropriate government website is accessible to individuals with disabilities and provides meaningful access to individuals with Limited English Proficiency. This change makes parts 50 and 58 consistent with revised § 55.20, which allows public notices required as part of the 8-step decision making process to be posted on a government website instead of in a newspaper.
This final rule incorporates a new severability provision in a new subpart D, at § 55.30. As described in § 55.30, it is HUD's intent that each provision of this final rule has effect to its fullest extent permitted by law, including by ensuring the severability of any provision affected by a judicial order. Should a court find any specific portion of this final rule unenforceable, the
HUD's Government-to-Government Tribal Consultation Policy calls for consultation with Tribal Nations and Tribal Leaders early in the rulemaking process on matters that have Tribal implications. Accordingly, on June 10, 2021, HUD sent letters to all eligible funding recipients under the Native American Housing Assistance and Self Determination Act of 1996 (NAHASDA) and their tribally designated housing entities informing them of the nature of the forthcoming rule and soliciting comments. This letter announced a 30-day comment period and a webinar and conference call consultation session regarding the forthcoming rule. On August 18, 2021, HUD sent a second letter with a 60-day comment period to review an early draft of the proposed regulatory changes. During this period, HUD held an additional consultation session via webinar and conference call. This letter was posted on Codetalk, the HUD Office of Native American Programs' website, along with an early outline of the rule. During this draft review period, HUD received one written comment, suggesting that HUD explicitly recognize the right to Tribal self-governance in part 55. HUD acknowledges the sovereignty of federally recognized American Indian and Alaska Native Tribes and is committed to operate within a Government-to-Government relationship to allow Tribes the maximum amount of responsibility for administering their housing programs. Tribes had the opportunity to comment on this rule at the proposed rule stage.
During the comment period of the proposed rule, HUD engaged in additional stakeholder outreach through four live listening sessions held April 17, 2023, May 2, 2023, May 4, 2023, and May 15, 2023. While all sessions were free and open to the public, local government officials, Tribal representatives, housing industry representatives, and the general public each had a session targeted towards their respective organizations or groups. These sessions were intended as informative listening sessions in which HUD provided an overview of the proposed rule and an opportunity for members of the public to comment. Notes from the listening sessions can be found at
This final rule has an effective date of
After reviewing public comments, HUD has determined, in certain instances, to provide a delayed compliance period to allow entities regulated by this rule a grace period to come into compliance with the revised requirements. As described, compliance with the amendments to part 200 of this rule is required for new construction where building permit applications are submitted on or after January 1, 2025. This delay is intended to provide home builders ample opportunity to adapt and prepare for the requirements of this rule, including the increased elevation standards. Setting a delayed compliance period for the amended requirements for part 200 is appropriate to address public comments received expressing concern that the rule could limit the availability of single family affordable housing. Applications for single family FHA insurance are submitted to HUD after housing construction is completed. As a result, for new construction located in Special Flood Hazard Areas, applications submitted to HUD following implementation of this rule will be rejected if they do not meet the elevation requirements in the Minimum Property Standards. HUD is extending the compliance date for the part 200 revisions to allow time for housing developers to incorporate the new Minimum Property Standards into the planning process for new construction.
Similarly, after reviewing public comments, HUD has determined to provide a delayed compliance period until January 1, 2025, for entities to come into compliance with the revisions this final rule makes to part 55 for the following programs: (1) Programs subject to chapter 9 of the MAP Guide (Multifamily FHA, Section 202 and 811 capital advance grants, transfers under Section 8(bb) and under Section 209 of HUD's annual appropriations (or subsequent provisions), Section 8 Renewals with Capital Repairs, RAD conversions to PBRA, and the Green and Resilient Retrofit Program); and (2) The other mortgage insurance programs subject to part 55 (FHA Healthcare and FHA Risk Share). Setting a delayed compliance period for the revised part 55 is appropriate for these programs to account for the extensive lead time required for site design, planning, and environmental analysis, all of which are required prior to submitting an application for FHA mortgage insurance. Many mortgage insurance projects include large-scale development that requires significant time and monetary investment in planning initiatives, thereby requiring a longer compliance period to incorporate part 55 revisions into the planning process. Additional programs subject to the MAP Guide have similar project planning timelines. The delayed compliance period poses limited increased flood risk for these programs in the interim because the MAP Guide currently requires elevation to BFE +2 feet for new construction, which is one of the methods for defining the FFRMS floodplain under this rule.
In response to comments received during the proposed rule stage of this rulemaking, HUD is making several revisions to the final rule:
This public comments section contains a summary of the public comments that HUD received in response to the proposed rule.
In section III.Q of the proposed rule, HUD included several specific questions for public comment. Those specific questions from the proposed rule and public comments received in response to those specific questions are summarized here, along with HUD's responses to the public comments received.
Several commenters generally expressed support for HUD's goals outlined in the proposed rule, such as protecting safety, health and welfare, preserving natural floodplains, considering environmental justice impacts, preventing the significant impact of flooding on underserved communities, and more accurately measuring flood risk. One commenter emphasized that it was HUD's fiscal obligation to regulate the FFRMS floodplain using CISA to reduce the Federal government's fiscal exposure to climate change. Another commenter strongly supported HUD's assessment to subject more of the floodplain area to the 8-step decision making process and encouraged HUD to solidify the basic purpose and guidance in 24 CFR 55.1(a)(5) of the proposed rule. The commenter emphasized the importance of HUD's commitment because flooding—even inland flooding—is becoming more frequent across the U.S. coastline, due to climate change, no matter how it is measured.
Several commenters expressed support for the three-tiered approach for defining the FFRMS floodplain outlined in the proposed rule. These commenters also agreed that CISA should remain the primary method for determining the FFRMS floodplain. Commenters noted a preference for CISA because it is forward-looking, acknowledges ongoing advances in climate science, is more dynamic, and provides a more complete picture of flood risk over the lifetime of a project.
Several commenters also expressed their support for HUD's proposal to utilize the 0.2-Percent-Annual-Chance Flood Approach and the Freeboard Value Approach when CISA maps and analyses are not available. One commenter noted that where CISA floodplains cannot be implemented in the short- and medium-term, it is important to rely on proven standards that will give stakeholders tools that are well-understood and widely available.
Another commenter agreed with HUD that FEMA flood maps are often out of date and cited the White House Flood Resilience Interagency Working Group's Federal Flood Risk Management Standard CISA State of the Science Report in noting that the maps reflect that efforts to prioritize modernizing and implementing the NFIP are overdue. This commenter believed that the latest science on flood risk hazards demonstrates that there is sufficient data to regulate the FFRMS based on climate science and that it is critical the Federal government do so when the data are available in order to prevent risky planning and investment decisions.
One commenter emphasized that they support HUD's CISA-centered approach because it is likely that FEMA's 1-percent-annual-chance flood hazard measurements underestimate the number of assisted housing units within those areas. This commenter encouraged HUD to use CISA to the maximum extent possible. Another commenter agreed that continuing to use the 1-percent-annual-chance or even the 0.2-percent-annual-chance floodplain in place of CISA is irresponsible especially given HUD's mission of serving low-income families who are particularly ill-equipped to recover from flood-related hardships.
One commenter supported HUD's three-tiered approach prioritizing CISA, and added that since flood elevations are not static, a cautionary statement of reviewing the characteristics of flooding (velocity, debris, and flashiness) should also be considered for all proposals. Another commenter emphasized that no matter what approach was ultimately taken, it is important to streamline the FFRMS floodplain determination process and limit room for conjecture.
One commenter urged HUD to go further in its rule by requiring the evaluation of potential flooding throughout the design lifetime of structures using the best available risk modeling and science. This commenter said HUD should require project plans to account for expected flood heights and other mitigation measures. Another commenter requested HUD consider at minimum a 50-year projection for CISA and suggested HUD project larger floodplains because of the time necessary for climate instability to manifest. Another commenter recommended HUD use the same lower level of risk tolerance for critical and non-critical actions, arguing that the Federal government has a moral imperative to safeguard new and updated affordable housing by ensuring affordable housing can withstand climate change.
Several commenters asked HUD to incorporate some clarity in its final rule surrounding the meaning of “anticipated life of the project.” One commenter noted that it is not unusual for projects to extend beyond their anticipated life for years or even decades and that a project's extended life could impact the elevation for which they should be designed. Another commenter asked that HUD require CISA criteria to be extended over the entire life of a project—a minimum of 50 years, which is the length of time used for most building life cycle assessments.
HUD also appreciates the commenters' considerations that FEMA FIRMs are static and based on a snapshot of data in time. HUD believes that its preferred approach, CISA, provides a significant advantage to provide future flood risk management.
Several commenters also wrote in with concerns about HUD's approach for defining the FFRMS floodplain in its proposed rule.
One commenter stated that the three-tiered definition of FFRMS floodplain was too confusing and burdensome. This commenter noted that establishing whether an action was in a floodplain or not is a critical first step in HUD's regulatory process given that if the action does occur in a floodplain, additional analysis and mitigation requirements are triggered. The commenter went on to say that without established floodplain maps, stakeholders will have a difficult time completing this first step and these material unknowns and uncertainties will generate increased project delays, increased project costs, and increased project cancelations—all at the expense of much-needed housing.
One commenter was specifically concerned with the horizontal floodplain definition. The commenter stated that FEMA's FIRMs are well-established and have clearly depicted the 1-percent-annual-chance floodplain in most communities across the Nation to the extent that many Federal, State, and local regulations are tied to the 1-percent-annual-chance floodplain. FEMA's maps regularly provide certainty to property owners to know when and where they must comply with a multitude of rules, codes, ordinances, and grant conditions.
Several commenters noted that some communities lack local, State, or Federal elevation data to establish the FFRMS floodplain with any of the three methods outlined in the proposed rule. These commenters suggested that this lack of available data could discourage developers and disproportionately impact rural communities that already have a lack of affordable housing. One commenter noted specifically that professional surveyors will not generally provide the 0.2-percent-annual-chance flood elevation without a formal flood study, which is not only very expensive but is also time-consuming. This commenter urged HUD to consider an alternative elevation for use in these circumstances. Another commenter also noted the expense of land surveys and the resulting decrease in housing that may result.
Conversely, one commenter noted they have created their own mapping tools to evaluate flood risk. This commenter is hoping to be able to continue using their tools and would like HUD to provide an approval process for using them. This commenter reiterated that one of HUD's stated goals is to better align with local standards that have already been strengthened and to take “a flexible approach to adapt to the needs of . . . the local community.” Commenters asked HUD to provide up to date maps and data to local communities and asked HUD to model FFRMS requirements after local codes.
One commenter hoped the FFRMS rule would encourage partnerships at all levels of government to adopt floodplain management policies. Another commenter suggested that HUD collaborate with state-level data providers to ensure that local data products meet CISA requirements and receive HUD approval. One commenter used the fact that many localities have made significant investments in “down-scaled” mapping of future flood risk as evidence that the availability of technically credible data on future flood risks has developed significantly since HUD's last proposed rule.
Another commenter urged HUD to incorporate local data that considers climate change by considering flood risk information available in each State's Hazard Mitigation Plan.
As described earlier in this preamble, HUD appreciates that some State, Tribal, and local governments have created CISA tools capable of determining the extent of the FFRMS floodplain in their respective jurisdictions. As such, HUD has adjusted the language of this rule to voluntarily permit the use of local tools where they result in an elevation at least as high as the lowest of (1) the 0.2-percent-annual-chance floodplain elevation; (2) the elevation that results from adding an additional two feet to the base flood elevation or (3) the elevation required by paragraph (b) or (c) of § 55.7, if CISA data is available and actionable under paragraphs (b)(1) or (c)(1). While HUD will not model the FFRMS floodplain around local code requirements because it would lead to uneven protection standards nationwide, this change will better recognize the efforts many localities have made to address their own climate risks.
As part of the White House Flood Resilience Interagency Working Group helping to develop CISA tools nationwide, HUD appreciates the sentiment of commenters who wish to
Several commenters agreed that, though they support forward-looking risk projections that consider climate change, it is premature to rely on CISA maps with national coverage, which may take years to develop. One commenter suggested that without stakeholder approval and practical application of tools, any proposed higher elevation requirements may be too severe and result in unintended, adverse consequences. Another commenter noted the opposite concern, that while CISA maps are being developed, older maps will need to be relied upon, which are insufficient. This commenter also noted that no funding is attached to HUD's proposed rulemaking.
One commenter stated that because a BFE based on CISA data cannot be used if the elevation is lower than the current FIRM or FIS and because there may be other environmental disclosure rules regarding climate flooding risk, this multilayered approach, reliant on maps that are not yet available, would create an impractical and untenable level of uncertainty for builders and developers. The commenter urged HUD to withdraw the proposed rule until maps of the floodplains were available and to release a CISA tool for public comment on the data, methodology, functionality, accuracy, and user friendliness of the model before it is implemented. The commenter also recommended the rule be subject to peer-review. If not, they predicted builders would have to do a lot of research and expend resources trying to determine if they were in a floodplain.
One commenter emphasized the complexity of developing a CISA mapping tool and recommended that HUD provide additional clarification on what process it will use to approve maps developed using CISA. The commenter suggested that this proposed rule should have focused more on the development of the mapping tool, and HUD may need to issue a separate notice seeking comment from the public on the tool's development given the complexity of the development process. Specifically, the commenter recommends HUD seek input from stakeholders and industry participants, as their input is critical for the tool's eventual success.
Several other commenters also requested the opportunity to provide feedback on CISA maps. One commenter noted that they would like to provide further comment on a focused handful of HUD's actionable modeling criteria. Other commenters asked whether CISA maps would be available for stakeholders to identify the FFRMS floodplains and whether HUD would require approval for a process that would result in FFRMS floodplain boundaries different than what a user would generate using CISA mapping. These commenters also asked who would approve CISA maps and by what process and what qualifications HUD's approver would have to determine the CISA maps' sufficiency.
Another commenter noted that it is critical for HUD to define the specific circumstances in which it will approve CISA maps. While the commenter stated that might be best done in guidance, they emphasized that HUD's final rule must define some “high-level guardrails” as well. The commenter suggested the following guardrails: (1) all maps must, at a minimum, be consistent with current CISA guidelines issued by the Water Resources Council,
Other commenters agreed that the proposed rule cannot be fully evaluated without CISA mapping being available for review and that it should not be implemented before the public can review the CISA mapping tools and provide comments. One commenter asked when the tools would be available to make nationwide determinations. Other commenters asked whether there will be a process for the public to refute the CISA maps.
One commenter emphasized the need to analyze granular property-specific data, including structure-specific identifications, first-floor height (FFH) assessments, and 1-meter digital elevation model data, in order to develop a reliable flood risk model. This commenter recommended that HUD use its co-chair position on the National Climate Task Force's FFRMS Science Subgroup to advocate for the addition of `granular' as a necessary characteristic for “best available data and science.”
One commenter requested that HUD develop its CISA maps with the following in mind to ensure they are developed properly: use currently established catastrophe models that have been recognized by State agencies and insurance commissions; do not extrapolate results; do not downscale data except through dynamic downscaling; do not rely on steady-state assumptions of the future; and display information on uncertainty and provide understandable outputs. The commenter emphasized that adoption by standard-setting organizations demonstrates model reliability as does peer-review. To that end, the commenter asked HUD to clarify what standard of peer-review would be effective and to follow up to confirm this standard has been met.
One commenter asked if CISA flood risk areas would be publicly available online. This commenter encouraged the development of a singular, publicly available website that reflects FFRMS approved methodologies.
Several commenters expressed concern about how HUD's CISA maps will be kept up to date. Commenters noted that these forward-looking maps should be required to be updated regularly as more data becomes available. Another commenter asked whether there will be a budget to make sure the CISA tool remains up to date.
One commenter requested HUD rename CISA to CISA-F to avoid confusion with another Federal tool called CISA for the Critical Infrastructure Act.
HUD made the proposed rule available for both public comment and comment through interagency review. Through the proposed rule, the public had opportunity to comment on, for example, whether the FFRMS floodplain should be defined using CISA where data is available. HUD received numerous comments on utilizing CISA to determine the FFRMS floodplain and other topics. As discussed more thoroughly elsewhere in this final rule, the public also had opportunity to comment on the use of CISA outside of this rulemaking through the guidelines.
HUD intends to release subregulatory guidance to help communities better understand the CISA process and how they can use acceptable tools to map the FFRMS floodplain. While HUD will not be releasing any CISA maps of its own, HUD does intend to accept maps, tools, or resources developed through Federal or local CISA data, when that data is available and actionable, as long as those maps, tools, and resources meet the requirements outlined in § 55.7(b), (c), and (f).
HUD disagrees that the proposed rule could not be evaluated or reviewed without CISA mapping being available. The concept of CISA and associated data is well established, as outlined in the FFRMS, the Guidelines, and the White House State of the Science Report, for instance.
HUD appreciates the commenter's thoughts regarding the need to analyze granular property-specific data and encourages grantees to utilize best-available data when complying with this rule. HUD notes that its outlined CISA approach for identifying the floodplain is consistent with the recommended approach from the Water Resources Council Guidelines.
HUD disagrees that renaming CISA to CISA-F is necessary to avoid confusion and suggests that grantees use context to help differentiate between the acronyms.
Several commenters had concerns about limitations to the 0.2-percent-annual-chance flood approach. Several commenters pointed out that FEMA maps do not usually provide an elevation for the 0.2-percent-annual-chance floodplain. One commenter noted that FEMA does not regularly produce maps that incorporate wave modeling, which makes it difficult to plan projects and for residents to understand how regulations may impact their homes. This commenter encouraged HUD to work with FEMA to incorporate wave modeling in its 0.2-percent-annual-chance floodplain maps.
One commenter asked that HUD's final rule clearly define what 0.2-percent-annual-chance floodplain can be used, wondering whether its limits need to contain the structure, be within the subject property parcel, or be within 500 feet of the nearest structure. Several other commenters wondered what data would be used to determine the 0.2-percent-annual-chance floodplain.
One commenter asked if the addition of 2 or 3 feet to existing BFE to calculate a revised flood hazard area and flood elevation results in any changes to the extent of area considered seaward of the LiMWA. This commenter asked that the 0.2-percent-annual-chance flood method reflect the potential of the LiMWA to shift, as a result of sea level rise.
One commenter worried that the effects of using the 0.2-percent-annual-chance floodplain for properties with no known or previously occurring flood risk would reduce density and property values.
One commenter asked HUD to clarify if the 5/8-step process would be triggered by improvements in a 0.2-percent-annual-chance floodplain, and asked HUD to make the FFRMS guidance clear.
In coastal areas, actionably accurate wave models can be difficult and expensive for jurisdictions to obtain. HUD would generally agree with the commenter that including wave modeling in coastal area flood maps is beneficial to accurately depicting flood risk which is why the CISA method is preferred. HUD will continue to work with its Federal partners to support their efforts toward increasing availability of mapping and modeling in coastal areas so that the best available data may be utilized for HUD projects.
For the 0.2-percent-annual-chance flood approach with non-critical actions, the final rule requires that the FEMA-mapped 0.2-percent-annual-chance floodplain must be utilized to determine if the structure is within the floodplain of concern. Additional technical assistance and guidance will be released alongside the rule to help grantees and practitioners make appropriate determinations for their projects and help them understand when the 8-step decision making process is required. As the 0.2-percent-annual-chance floodplain is not based on climate informed data but on current FEMA mapping, it would therefore be unable to account for sea level rise over time. Additionally, HUD notes that the rule does not change the FEMA-defined Base Flood Elevation.
The RIA found no evidence that the 0.2-percent-annual-chance flood approach would reduce property values and HUD expects any density loss to be intentional based on the goal of reducing flood risk.
Several commenters encouraged HUD to adopt the FVA as the primary approach for defining the FFRMS floodplain. Several commenters recommended use of the FVA over CISA because CISA mapping is not available for public review and the public has not been provided adequate information to assess its impacts and implications. One commenter suggested the NEPA process cannot be completed correctly using CISA maps. One commenter concluded that given the uncertainties, relying on the FVA would be most likely to ensure
Another commenter reasoned that FVA is the most accurate method of identifying flood risk and would be the most efficient use of government resources. Additionally, the commenter said FVA could be even more protective by adding two or three feet to the base flood elevation. This commenter urged HUD to consider further research into the FVA to compare the flood resiliency of HUD projects built to this increased standard to those that were not and into the possible benefits of using information in State Hazard Mitigation Plans.
Other commenters supported the FVA over the 0.2-percent-annual-chance flood approach because many sites do not have the 0.2-percent-annual-chance floodplain mapped and using the FVA across the board would result in a more consistent approach. Another commenter agreed that FVA is familiar to most stakeholders and supported its continued use given that it was HUD's previously selected method in 2016.
One commenter supported the inclusion of the horizontal floodplain when using the FVA.
Several commenters critiqued the requirement to add three feet to the BFE for critical actions, regardless of known or previous flood risk, and predicted this would lead to a reduction in density, higher costs, higher rents, and lower valuation of properties.
One commenter asked how the FVA method would account for high hazard areas that are subject to sea level rise and concurrent land subsidence.
HUD disagrees that utilizing FVA as the preferred approach would be the most efficient use of government resources. HUD believes that the additional resilience provided by utilizing the hierarchy of CISA, then 0.2-percent-annual-chance flood approach, and finally FVA provides for a more resilient and effective use of resources than using a single approach across the board.
HUD appreciates the commenter's support for the inclusion of the added horizontal area under the FVA approach.
E.O. 13690 directs HUD to elevate critical actions at least three feet above freeboard value when using the FVA regardless of any previous flood risk at the site. While the FVA does not necessarily consider climate change because it is based on FEMA mapping of the BFE, a Federal tool for CISA is expected to be available in coastal and high-risk areas in FY24. As HUD's preferred methodology, CISA will better be able to account for sea level rise over time than other methodologies, even if they are more protective than current standards.
One commenter suggested that HUD should consider looking to nearby areas that do have CISA resources available rather than solely relying on the two alternative approaches in the proposed rule.
One commenter requested certain public facilities such as fire and police stations, emergency medical facilities, and schools be given a heightened level of protection, and that HUD could look to more stringent standards for such structures from other entities.
One commenter asked HUD to reconsider using Advisory Base Flood Elevations (ABFE) to assess risk. ABFEs established after major flood events are often much higher than the 0.2-percent-annual-chance flood elevation, thus ABFE may result in situations where development would be required to elevate well above what the other proposed approaches would require. The commenter asked HUD to exclude ABFE from establishing elevations though, as it may not represent the true floodplain and could result in excessive fill or loss of opportunities to develop affordable housing.
One commenter noted that 0.2-percent-annual-chance floodplain elevation is not noted on FIRMS, which could lead to subjective elevation determinations by the technical experts required.
Another commenter recommended a new approach entirely, given that FEMA FIRM maps fail to account for forward-looking climate change and are not necessarily reliable with respect to historical flood risk either.
HUD believes that use of interim flood hazard data such as ABFEs is acceptable and that they can provide a realistic picture of the true floodplain when drawn by FEMA. While FEMA does not yet have comprehensive coverage of elevations on the 0.2-percent-annual-chance floodplain published maps, grantees will have the option of utilizing the FVA or calculating the 0.2-percent-annual-chance elevation when those elevations are unavailable from FEMA sources.
One commenter asked how maps would address the unpredictability of elevation sinking and if the maps would be adjusted yearly. Another commenter asked how HUD will decide what FIRM to go by and how a lender can be assured that the benchmark is accurate. This commenter also asked what happens when the FIRM is changed. Other commenters asked if flood studies would be required if there was insufficient information to establish FFRMS floodplains with one of the three approaches.
One commenter asked HUD to confirm whether the new rules apply to existing HUD-insured projects or federally funded projects seeking refinancing or acquisition and to detail all HUD Multifamily Housing programs that are expected to comply with this new guidance or any exceptions that make projects exempt or require compliance with these new rules.
HUD intends that the CISA provisions of the final rule will apply to any project funded by programs subject to part 55 review, including Multifamily FHA programs, in accordance with the compliance dates described in the Compliance Date section of this final rule.
Several commenters expressed support for whichever approach would offer the most protection when CISA is not available. Several of these commenters emphasized that the alternative proposed in Question #2 could significantly reduce flood resilience in some areas especially given that flood events are likely to become deeper and more frequent and because livelihoods, resident health, and safe homes are at stake. Another commenter said that any reduced short-term cost in using the less stringent approach would come at greater long-term expenses and would run counter to the risk management approach identified by the Government Accountability Office. The commenter also noted that models may underrate flood risk and the more protective approach is justified by the precautionary principle.
Another commenter urged HUD to consider collaboration with other agencies to gather data for critical actions in the proposed FFRMS floodplain.
For critical actions, where comparison between the 0.2-percent-annual-chance flood approach and the FVA +3 feet elevations is necessary, HUD believes the extra analysis is warranted to ensure more protection for those actions for which any risk of flooding is simply too great. HUD is also supportive of further collaboration with other agencies to analyze data on critical actions as it becomes available.
Several commenters asked HUD to allow for the lower standard for non-critical actions. These commenters were concerned about incentivizing excessive fill in 0.2-percent-annual-chance floodplains.
Several commenters suggested that the FVA method should take preference over the 0.2-percent-annual-chance flood approach as it is easier to calculate. Some of these commenters went onto suggest that a site-specific flood study would be the best option.
HUD disagrees that the FVA method is easier for grantees and practitioners to calculate than the 0.2-percent-annual-chance flood approach. The 0.2-percent-annual-chance floodplain is mapped by FEMA and where it is available for non-critical actions, grantees would not need to calculate anything. While HUD agrees that site-specific flood studies can be helpful, requiring them for all projects would be prohibitively expensive.
Several commenters supported HUD using FFRMS boundaries established by other agencies to reduce redundancy in Federal oversight. These commenters also requested a process by which a stakeholder could request a reconsideration of HUD's floodplain boundaries.
Several commenters urged a cohesive and consistent Federal vision when there are multiple flood risk related efforts occurring simultaneously to avoid conflicting standards and potential noncompliance. One commenter noted the weaknesses inherent in not having a comprehensive nationwide approach to defining floodplains. This commenter encouraged HUD to include requirements for tracking the location and quantity of developments in floodplains as part of its 8-step decision making process. The commenter urged collaboration among Federal agencies to track and quantify the effectiveness of E.O. 11988 and E.O. 13690. Specifically, this commenter recommended that Federal agencies collaborate with the National Floodplain Functions Alliance.
One commenter suggested Federal agencies align their resilience and disaster response policies, including building codes and elevation requirements.
One commenter expressed support for a process whereby a project's lead Federal agency's implementation of FFRMS is sufficient for the entire project, as long as such approach looked at long-term risks.
More broadly, several commenters asked that HUD participate in collaboration with other agencies, affiliations, and interagency groups.
Several commenters stated that the Federal Interagency Floodplain Management Task Force (FIFM-TF) is an existing interagency body to facilitate collaboration and ensure that all agencies are using a forward-thinking, climate-informed approach. One commenter noted that HUD should rely on FIFM-TF policies, as long as its deliberations are more transparent and accessible to interested non-Federal stakeholders. This commenter suggested that since various Federal agencies have developed tools, data, and expertise, that collaboration would lead to more consistent CISA floodplain definition methods.
Several other commenters endorsed HUD's cooperation with the White House Flood Resilience Interagency Working Group. Some of these commenters said HUD should prioritize funding and interagency coordination, including continued participation in this working group. One commenter was concerned that the working group would not have enough resources available to accurately identify flood risks throughout the country. Another commenter asked who in this working group is preparing the CISA tools and whether they have any conflicts of interest between potential consultants working on these resources.
Several commenters urged HUD to rely on FEMA and its flood-risk data and to engage with FEMA to ensure complementary approaches as the agencies implement FFRMS through rulemaking. Another commenter emphasized that FEMA has spent billions of dollars on flood engineering studies and that adopting an alternative flood map dataset would waste previous Federal investments. The commenter went on to say that other entities, such as States, cities, and communities, have come to rely on FEMA's flood map data for various purposes. Another commenter noted that because FEMA is actively working to incorporate climate risk and future conditions into its data and mapping program, HUD should delay finalizing the proposed rule and continue to rely on FEMA's flood risk and mapping tools until its formal release of climate-informed flood risk data and flood maps.
One commenter supported coordination between HUD, FEMA, USACE, and other agencies to consistently articulate flood risks and best practices. This commenter reasoned that a comprehensive Federal narrative would allow for consistency and transparency for owners, local decision makers, and regulators as opposed to the current contradicting flood risk identification efforts.
One commenter suggested that HUD align its disaster recovery and mitigation construction standards with FEMA's Building Resilient Infrastructure and Communities and Public Assistance Programs, which have been successfully implemented for several years. The commenter said that adopting the flood provisions captured in modern building codes consistently across like programs would help the Federal government reduce complexity and increase programmatic efficiency.
One commenter asked that HUD share what it learns from developing CISA mapping tools with other Federal agencies.
Where Federal CISA data is not available and actionable, as provided in § 55.7, and grantees or practitioners use local, State, or Tribal CISA data, the 0.2-percent-annual-chance flood approach, and/or FVA, there may be some variation in the exact horizontal and vertical extents of the FFRMS floodplain depending on the approach that is utilized. HUD does not believe that these variations are likely to be significant and further believes that minor floodplain variation is worth the greater protection that the methodology in HUD's rule provides. HUD's rule does not define the boundary of the floodplain, only a methodology for determining where that boundary is. HUD does not intend to implement a formal process to contest the methodology used to define the floodplain at this time but will continue to monitor and make changes to policy, as necessary, to ensure effective determination of the FFRMS floodplain.
HUD agrees with the commenter that Federal disaster response policies, inclusive of their floodplain management policies, should be complementary and cohesive. As such, HUD drafted this rule to align with the E.O. 13690 guidance. Additionally, HUD appreciates the commenter's encouragement for HUD to continue cooperating with the White House Flood Resilience Interagency Working Group.
HUD's Federal partners are also engaging in rulemaking to update FFRMS floodplain requirements to comply with E.O. 13690. HUD cannot wait for these other agencies' rules and must act to protect its own investments which are otherwise at risk. However, each agency, including HUD, is developing these regulations with feedback provided through a required interagency review process which occurs prior to publication of any proposed and final rulemaking.
In cases where a Federal project is funded by multiple Federal funding sources, HUD plans to utilize the Unified Federal Review (UFR) to assist in the collaborative cross-agency/Department discussions to resolve compliance issues and ensure cohesion in project funding and goals. Additionally, HUD has procedures in place to adopt the environmental reviews of other Federal agencies to avoid unnecessary duplication of effort.
HUD supports its interagency partners and is always looking for new opportunities to work with other industry leaders in addition to other Federal agencies. While HUD agrees with the general sentiment behind adopting resilient building codes, HUD does not believe this rule is the proper place to include them.
Several commenters expressed concerns regarding HUD relying on another agency's definition of FFRMS floodplains.
Several commenters said that HUD must ensure it is addressing resident health and safety as well as economic-related flood disaster relief in setting its floodplain determination, urging HUD to only rely on another agency's designation of FFRMS floodplain where that agency's methodology is at least as rigorous as HUD's; in other words, rely on whichever generates the highest elevation and most expansive horizontal floodplain. Another commenter similarly expressed concern for adopting other agencies' floodplain policies because they believe that HUD's proposed rule likely better protects wetlands. The commenter said that HUD should not rely on other Federal agencies at a time when the USACE's analysis for wetlands has changed through proposed rulemaking and the Supreme Court case
Several commenters suggested that by not relying on FEMA's maps in its
HUD is looking for the most scientifically prudent elevation based on available data that will provide protection of life, property, and the Federal investment. Using the CISA approach, HUD's preferred method, will likely result in the most protective elevation based on scientific data compared to other methods.
HUD believes that FIRMs provide an accurate point in time snapshot of flood risk. Unfortunately, these risks are continually changing and given the time horizon for FIRM updates they may be generally less accurate than HUD would prefer. The FFRMS approaches outlined in HUD's final rule allow for greater protection in the face of changing needs and uncertainty than a floodplain management approach solely based on FEMA's mapped BFE boundary.
Several commenters urged HUD to extend the effective date of implementation to at least one year after issuing this rule to avoid unforeseen expenses and delays for projects already in planning stages because development planning often begins years prior to land acquisition and formal planning processes. Of those commenters, several raised concerns that absent extension, developers would bear unequitable financial losses due to changes in land value purchased, revisions to plans, and resulting delays.
One commenter specifically urged HUD to include a grandfathering provision that would allow new Community Development Block Grants (CDBG) and HOME Investment Partnerships Program (HOME) awards, as well as FHA multi- and single family projects already under development and applications submitted prior to the effective date to proceed under current regulations. This commenter reasoned that if developers had to repeat the lengthy planning, platting, and government approval process for new development under changed regulations, they would be forced to engage in more consultation, negotiation, and compromise among all project stakeholders. This commenter added that the planning process for FHA insured projects is particularly lengthy.
Several commenters urged HUD to consider stakeholders' need to access the CISA maps prior to implementation, stating that it is impossible to examine implications of the rule absent sufficient review of the CISA method that the rule relies upon. Several commenters suggested that stakeholders needed at least one year to access the CISA maps prior to implementation. One commenter urged HUD to delay implementation until the CISA maps are available and approved and asked when HUD expected the tools will be made available.
Several other commenters went further, asking HUD to factor in time to engage industry stakeholders in developing the CISA mapping tool prior to implementing this rule. One commenter reasoned that improper development of this tool, or reliance on problematic data, could negatively impact industry stakeholders (
One commenter sought HUD's consideration that large public housing authorities need time to determine the impact of the regulation on costs of rehabilitation and repair, including a portfolio-wide review of covered properties and a building-by-building analysis. This commenter estimated that this review would take at least a year after final rule issuance.
One commenter suggested that HUD consider the potential positive result that proposed FHA mortgage requirements may incentivize communities to adopt 2-foot freeboard standards matching the HUD Minimum Property Standards, so that all development in special flood hazard areas will maintain qualification for FHA-insured mortgages. This commenter suggested that HUD extend the effective date for FHA mortgage requirements by one year to allow this commenter and other stakeholders to assist communities in updating their floodplain management codes. For all other aspects of the rule, this commenter urged HUD not to extend the effective date.
HUD disagrees that stakeholders require access to CISA maps prior to implementation. After this rule becomes effective, CISA maps will not be used if they are not available and actionable. The three-tiered approach to define the FFRMS floodplain adopted by this rule will allow responsible entities to utilize the best available data and tools in their area to understand and mitigate their flood risk. As described in § 55.7, where State, Tribal, or local jurisdictions have already invested in data and modeling and created CISA data and tools, HUD permits the voluntary use of those tools if they result in an elevation that is at least as high as the lowest of (1) the 0.2-percent-annual-chance floodplain elevation; (2) the elevation that results from adding an additional two feet to the base flood elevation; or (3) the elevation required by paragraph (b) or (c) of § 55.7, if CISA data is available and actionable under paragraphs (b)(1) or (c)(1).
Federally assisted multifamily housing, especially housing for low-income and vulnerable populations, including the public housing portfolio, is currently in need of the additional flood mitigation and resilience requirements the rule requires. The rule will ensure that as properties undergo rehabilitation, flood mitigation and resilience will be incorporated. HUD does not believe it is appropriate or necessary to delay the implementation
Several commenters asked HUD to consider the urgent need to mitigate loss of properties and lives, along with the health and financial inequalities exacerbated by increasing flooding events, citing statistics on projected increases in flooding and disparate impacts of these events. Another commenter asserted that an effective date no later than January 1, 2025, would provide ample time for development stakeholders to prepare for implementation.
One commenter urged consideration of the number of HUD-supported new construction and substantial improvement projects that will or will not have enhanced resiliency and flood protections, depending on any delays to implementing this rule.
Another commenter suggested that HUD should consider the regulatory impact findings that the reduction in financial damages over the life of the project is greater than the one-time construction cost increases necessary for implementing the rule. This commentor also urged HUD to consider its knowledge of these impending requirements since at least 2015 as a factor supporting prompt implementation, with an effective date of no later than one year.
One commenter suggested that HUD consider the Supreme Court's decision on the Clean Water Act's definition of “waters of the United States” in
Several commenters continued to recommend the most protective standard, supporting HUD's excepted use of the FVA standard in coastal areas. One commenter reasoned that wave action, sea level rise, land subsidence, warmer seas, and intensification of tropical storms/hurricanes compound uncertainty in coastal areas. Another commenter supported the higher standard to increase flood protection in areas where the mapped floodplain may not accurately reflect risks from wave action. Another commenter reasoned that the higher standard for coastal areas is necessary due to particular vulnerabilities of coastal communities to tidal flooding.
One commenter suggested that HUD's final rule should allow for the flexibility to use the most protective and up to date science in coastal regions or where higher quality data and analytics are available.
One commenter asked about HUD's plan for renovations in order to eventually have all projects in accordance with the new standards, and what the projected date is to achieve that plan. The commenter also asked, if there is no plan, whether one can be added to protect sustainability of coastal projects.
Other commenters opposed the higher standard for coastal areas, urging HUD to use a consistent approach in defining the FFRMS floodplain. These commenters suggested that compliance is stronger when the rules are consistently applied and easy to understand and recommended the FVA approach in all circumstances.
HUD believes that a tiered approach with a preference for using CISA, where possible, before considering the 0.2-percent-annual-chance flood approach and/or FVA approaches, allows for the best outcome of both protectiveness and functionality for HUD grantees and recipients.
It should also be noted that the Federal funding action is the trigger for NEPA and part 55 compliance. Where a HUD-funded or -insured action is proposed, an environmental review meeting part 55 requirements is required. HUD will not be enforcing these requirements retroactively for projects with a completed environmental review.
Several commenters raised concerns that development restrictions and/or increased costs to comply with proposed requirements would chill interest and ability to develop, operate, or rehabilitate affordable housing, resulting in higher rents and housing costs, limited ability to borrow, and/or unattainable loans. Additionally, several commenters stated that increased compliance costs will result in borrowers deferring or foregoing repairs and upgrades to existing affordable housing.
One commenter disagreed with HUD's projected construction costs, asserting that HUD relied upon an outdated 2013 FEMA study, which fails to account for inflated input prices, supply chain challenges, and labor challenges. This commenter also questioned HUD's certification that there is no significant economic impact on small entities, citing that 88 percent of homebuilders and specialty contract firms are self-employed independent contractors. The commenter provided its own survey of builders, finding that elevating single-
Several commenters explained that elevation requirements would cause increased transportation costs for soil import from certified fill sites and earthwork and compacting costs of the additional fill.
Several commenters specifically identified the requirement to maintain flood insurance as causing additional operating costs, which will be passed along to residents in the form of higher rents and housing costs. Several commenters stated that it is unlikely that insurance costs for homeowners or multifamily owners will decrease sufficiently to offset the increased construction costs, asserting that HUD did not provide evidence that insurance costs will decline.
One commenter stated that limiting the current streamlined 203(k) loan to $35,000 in renovations means that it may not be a lending option for borrowers mandated to raise substantially damaged properties to BFE +2 feet.
Several commenters noted that affordable multifamily building and rehabilitation projects may be deferred, scaled back, or foregone where increased costs cannot be offset by increased rent, preventing delivery of needed housing supply. Several of these commenters reasoned that there is a direct correlation between Federal housing policies impacting housing supply and affordability and homebuilding stakeholders' willingness to create affordable housing supply.
One commenter noted that underproduction of housing has translated into higher housing costs, resulting in a decline in the number of affordable units currently available. This commenter outlined difficulties facing housing providers—narrow margins, ongoing labor and material challenges, elevated regulatory costs—and cited recent surveys indicating that 79 percent of developers reported construction delays, with almost half citing project infeasibility as the cause.
One commenter stated that the proposed rule's floodplain expansion will reduce opportunities to develop HUD projects in low-lying areas and thus reduce housing for low-income families, who are in turn less likely to be able to afford relocation.
Short term market volatility in prices and labor is a poor indicator for regulatory decisions and those factors are instead looked at in aggregate over longer study periods. HUD reviewed the best available studies and stands by the construction costs and potential impacts on builders of all sizes as outlined in the RIA.
HUD strongly disagrees that elevation requirements would cause any change in transportation costs for fill. In its rule, HUD is not mandating how elevation is achieved; therefore, grantees are free to utilize methods of elevation that do not involve fill. Additionally, with the removal of the exemption for LOMRs based on fill, HUD is actively discouraging its use as a method for elevation.
With this rule, HUD is not changing its requirements for maintaining flood insurance, which are mandated by statute. Therefore, HUD disagrees that utilizing existing requirements will increase operating costs. HUD grantees have also always had the ability to extend flood insurance requirements beyond those established as the minimum by HUD. Additionally, HUD notes that HUD's encouragement for the purchase of flood insurance outside the 1-percent-annual-chance floodplain is not a requirement.
HUD has decided to remove the elevation requirement for substantial improvement under the Minimum Property Standards to avoid adversely impacting homeowners renovating existing single-family homes. While HUD appreciates the commenter's feedback regarding 203(k) loans, Standard 203(k) financing allows a homeowner to finance improvements with an insured mortgage that may be based on a loan-to-value ratio using 110 percent of after improved value of the property. Regarding Limited 203(k), on November 29, 2023, HUD published a draft Mortgagee Letter (ML),
Several commenters asserted that property resilience investments are necessary to increase affordable housing at individual and/or government-wide levels.
Several commenters suggested that reduced property damage and broader socio-economic costs (
Several commenters stated that it is incorrect to measure the costs of flood resilience requirements solely by increased construction costs/home prices because the cost of homeownership also includes costs to live in, maintain, and insure a home over time, especially homes subject to recurrent natural disasters that may become uninhabitable (and the broader cost of communities becoming uninhabitable).
Another commenter cited evidence that the savings benefits of building to modern building codes come without negatively impacting housing affordability, stating that no peer reviewed research finds otherwise. This commenter cited findings that insurance savings from meeting mitigation requirements can reduce homeowners' net monthly mortgage and flood insurance costs by at least 5 percent, balanced against about half a percentage point increase in home purchase price for improvements to model resilience codes in an area affected by riverine floods.
Another commenter suggested that the proposed rule mitigates increased construction costs through its identification of practicable alternatives and provision of technical assistance to help recipients comply with new standards.
One commenter argued that disaster resiliency standards will lessen reliance on HUD to rebuild and replace community assets damaged by natural disasters, allowing HUD to prioritize programs that increase the stock of affordable housing and availability of mortgage insurance. This commenter provided examples of post-flood closures of multifamily units precipitating negative shocks to local housing markets.
Several commenters pointed to jurisdictions and programs that already require greater elevation standards and requirements than HUD as demonstrating that stronger standards are feasible and cost-effective.
One commenter urged that the demonstrated long-term financial benefits of flood adaptation (citing a 6:1 benefit-cost ratio for HUD- and FEMA-supported mitigation measures) should be extended to affordable housing residents.
Another commenter supported measuring/scoring property-level risks across the spectrum of environmental hazards, providing government and private stakeholders with insight to balance the costs and benefits of adding finely tuned/tailored resiliency measures to building codes.
HUD appreciates commenters' feedback regarding the measurement of the cost of flood resilience. While HUD agrees that the cost of a community becoming uninhabitable over time would have more devastating effects than simply more expensive housing, it is unfortunately difficult to quantify those consequences outside of their direct economic impact. Generally, HUD agrees with the commenter's sentiment that the savings benefits of modern building codes on housing outweigh any impacts on housing affordability. HUD has previously and will continue to help grantees review practicable alternatives when project costs are too high to build due to elevation requirements.
HUD generally agrees with the commenter's feedback that the increased resilience standards should help avoid damages from future flood disasters and thus increase the longevity of new affordable housing. HUD appreciates its local partners that have already demonstrated the effectiveness and feasibility of higher standards in their communities.
One commenter suggested that HUD amend the rule to provide greater financial flexibility to design and construction firms by quantifying design/construction-related costs to achieve the FFRMS as deferred maintenance instead of substantial improvements.
Another commenter suggested that HUD proactively target financial and technical assistance to support low-income and historically disadvantaged communities, stating that opportunities recently codified by the Community Disaster Resilience Zones Act, Public Law No. 117-225 could be instrumental.
One commenter urged HUD to increase per unit maximums and provide waivers where necessary (
One commenter urged HUD to revise the flood elevation measurement for manufactured homes to be consistent with the site-built homes measurement, to ensure that manufactured homes remain cost effective. This commenter reasoned that expanding the supply of manufactured housing is a crucial component of preserving affordable housing and that a large number of manufactured homes are located on floodplains.
HUD agrees with the commenter's feedback that HUD funding programs and technical assistance should benefit low-income and historically disadvantaged communities. Such benefits are explicit requirements for many HUD funding programs and are included in Goals 1 and 2 of HUD's Strategic Plan: Support Underserved Communities and Ensure Access to and Increase the Production of Affordable Housing.
HUD agrees with the commenter about consistent regulations and HUD has and will continue to require that manufactured housing requirements be consistent with those for stick-built homes with regards to part 55 elevation requirements. Under part 55, new siting and substantial improvement of manufactured housing units (MHUs) are considered the same as new construction and substantial improvement for stick-built homes and therefore subject to the part 55 elevation requirements. To clarify this policy, HUD has revised the rule language to reference MHUs in the definitions for new construction and substantial improvement.
Further, for both manufactured homes and stick-built homes subject to part 55, to determine the lowest floor, HUD looks to FEMA's regulations in 44 CFR 59.1 and FEMA's Elevation Certificate guidance or other applicable current FEMA guidance. For manufactured homes in A Zones, FEMA recommends measurement of MHU elevation from the I-beam as a best practice. HUD recommends following FEMA best practice where feasible. For manufactured homes in coastal high
It is important to note that FHA-insured single family housing is not subject to part 55 and that FHA-insured manufactured housing is not subject to part 55 or to the 24 CFR 200.926d elevation standards under this final rule. Eligibility requirements, including elevation standards, for FHA-insured manufactured housing can be found at 24 CFR part 3285: Manufactured Home Installation Standards and 24 CFR 203.43f: Eligibility of Mortgages Covering Manufactured Homes, as applicable, which are outside the scope of this rulemaking. HUD understands that the part 55 elevation requirements for MHUs differing from the FHA insured MHU requirements may lead to confusion where HUD programs subject to part 55 are installing MHUs. To address this, HUD intends to release guidance and technical assistance material focused on these MHU requirements which should help project sponsors and responsible entities ensure compliant programs.
HUD agrees with commenters that wish to minimize the disruption to the delivery of affordable housing. As such, after reviewing public comments, HUD has determined to provide a delayed compliance period to allow entities regulated by this rule a grace period to come into compliance with the revised requirements. Compliance with the amendments to part 200 of this rule, including the update to the Minimum Property Standards, is required for new construction where building permit applications are submitted on or after January 1, 2025. This delay is intended to allow home builders and developers ample opportunity to adapt and prepare for the requirements of this rule. For FHA programs and programs subject to the MAP Guide, compliance with the amendments to 24 CFR part 55 is similarly required no later than January 1, 2025, as more thoroughly described in the Compliance Date section of this rule. Compliance with all other parts of this rule and for all other programs, except for those noted for parts 200 and 55, is required no later than 30 days after the rule becomes effective.
Several commenters urged HUD to pair efforts to make floodplain housing more resilient with a focus on affordable housing development outside of floodplains and solving how to accommodate growing housing need as floodplain housing becomes increasingly uninhabitable. One commenter reasoned that focusing affordable housing development outside floodplains and wetlands will counter longtime exclusionary zoning practices and direct scarce financial resources to building affordable housing instead of mitigation activities. However, this commenter stated that HUD should still fund rehabilitation of existing affordable housing in floodplains through programs like Community Development Block Grants for Disaster Recovery (CDBG-DR) to prevent displacement. This commenter outlined their view of three root causes of the current shortage of affordable housing—Congress consistently underfunding housing subsidies; Congress's decade's long divestment in existing public housing; and a severe lack of disaster housing resources and the use of those limited funds for non-housing costs, and those funds disproportionately benefit homeowners over renters. Another commenter suggested that HUD proactively fund buyouts with relocation assistance for persons living at properties that have experienced severe repetitive losses.
One commenter urged HUD to take the following additional measures to promote production and availability of affordable housing: (1) require HUD CDBG-DR and Community Development Block Grants for Mitigation (CDBG-MIT) grantees to rebuild public and affordable housing on a one-for-one basis, deeply affordable in lower-risk areas and in a manner that affirmatively furthers fair housing (AFFH); (2) ensure that the right to return to communities is not conditioned on returning to high-risk area; (3) ensure that grantees are using funding to redress historical disinvestment in infrastructure—including flood protection infrastructure—in low-income communities and communities of color; (4) carry out Department AFFH obligations and ensure that HUD holds grantees accountable for complying with civil rights obligations on which Federal funding is conditioned; and (5) ensure that subsidies, including Housing Assistance Payments (HAP) contracts, can be easily transferred to new sites and require a new assessment before HAP contracts are renewed following a flooding event.
Another commenter urged HUD to consider ways to expedite the regulatory process for affordable housing projects, while ensuring they follow proposed requirements.
While HUD does not consider this rulemaking the appropriate place to consider changes to disaster assistance funding or other HUD programs, HUD appreciates the commenters' enthusiasm for Federal assistance directed towards increasing affordable and resilient housing. HUD notes that individual HUD programs may introduce program specific guidance or policy to more efficiently implement FFRMS requirements.
A discussion of the comments received regarding the FHA single family Minimum Property Standards can be found in this Public Comments section of this final rule in the subsection titled
Several commenters stated that the proposed rule's blended climate and equity lens will contribute to redressing disproportionate adverse impacts faced by protected classes; and that allowing communities of color and low-income communities to endure elevated flood risk would perpetuate systemic inequalities.
Several commenters specifically supported requiring inclusion of environmental justice public engagement in the 8-step decision making process. Several commenters added support for HUD's plan to issue policy guidance on environmental justice.
Several commenters stated that replacing the misleading 1-percent-annual-chance flood approach with the CISA approach will ensure more
Several commenters raised concerns with provisions of the proposed rule that they assert would perpetuate or create disproportionate adverse impacts on protected classes, citing evidence showing the following: a disproportionately high percentage of low-income, minority, and other communities that are vulnerable to flooding live in high-risk areas; communities of color face disparate adverse impacts of flooding (both in rate of flooding and damage caused by flooding), as well as face challenges with access to post-disaster resources and rehabilitation. One commenter cited evidence that flood risk will increase by 26 percent by midcentury and would be disproportionately high for Black communities, with population growth in flood-prone areas accounting for 75 percent of that increased risk (and 19 percent caused by climate-related flood impacts).
Several commenters asserted that even with the administrative steps of § 55.20, the exemptions in part 55 allowing continued housing development in high-risk areas will perpetuate and create disproportionate adverse impacts on several protected classes of people, especially considering that its primary application is subsidized housing units. Several commenters noted that along with placing residents in danger, this will cause HUD and other public entities to spend limited resources on disaster recovery for all citizens, taking away from investments in affordable housing and programs to redress historical disparities. Several commenters cited FEMA risk data that 32 percent of federally assisted housing stock (1.5 million housing units) is at high risk of negative impact for natural hazards, compared to 24 percent of market rent homes and 14 percent of owner-occupied homes. These commenters noted that underestimates in FEMA's 1-percent-annual-chance flood hazard measurements mean that many more federally assisted homes are at risk, which supports the need for the new FFRMS standard to better assess risk. Another commenter presented evidence on how maladaptation measures—such as new infrastructure that cannot be improved without significant investment—entrench inequities.
One commenter explained that racial disparities in flood vulnerability are a direct result of local, State, and Federal exclusionary policies and practices, perpetuated by this rule. This commenter asked HUD to revise the 8-step decision making process to directly account for historical patterns and practices of affordable housing placement. This commenter caveated their response by adding that HUD must continue to provide funding to rehabilitate and improve the resilience of existing subsidized units in high-risk areas and honor residents' right to return to prevent post-disaster displacement.
This commenter also emphasized that households with low incomes are negatively impacted by flooding even if all mitigation and floodproofing measures are taken. The commenter explained that flooding damage takes a variety of forms such as the destruction of vehicles and personal property, toxins spread by floodwaters, and disruption of employment or childcare. As such, people with low incomes may experience significant negative impacts from flooding that are not related to damage to a housing unit. The commenter added that FEMA is shifting resources away from “small disasters,” reducing the resources available for replacing personal property, and that residents of homes built in FFRMS floodplains will continue to be significantly impacted even with the floodproofing and mitigation steps outlined in this proposed rule.
Several commenters asserted the alternative processing for existing nonconforming sites under § 55.21 will perpetuate or exacerbate inequalities. One commenter explained that exceptions are typically granted based on the condition under § 55.21(a)(1) that it's not “practicable to transfer . . . under existing program rules, financial limitations, and site availability,” by relying on historical discriminatory policies and practices that resulted in the disproportionately high rates of affordable housing in the high-risk locations. Providing two examples of HUD supporting development repair in unsafe areas, this commenter argued that HUD cannot excuse its obligation to redress discriminatory government policies and practices because those policies have, for example, increased property values in lower risk areas. Another commenter asserted that HUD failed to support the existing non-conforming sites with evidence that the floodway and adjacent areas will be safe over the next 20-40 years, also the relevant term of years for several listed forms of HUD assistance. This commenter referenced four HUD Inspector General reports finding problems with HUD's assessment of environmental and health risks. This commenter posed the following questions to HUD as important considerations in understanding the impacts of this provision on protected classes:
(1) Did HUD perform analysis on potential complete impacts related to floodways?
(2) How will the floodway analysis occur on an individual site basis?
(3) How is HUD projecting floodway expansion related to increased atmospheric water vapor over coming decades?
(4) How will HUD use climate science to project floodways' potential instability?
(5) How will HUD's site analysis consider climate-induced increase in pluvial flooding?
(6) How will HUD's site analysis consider potential sea level and associated groundwater rise?
(7) What is the universe of these floodway projects?
(8) What is HUD's estimate of how many HUD-assisted projects have buildings in floodways?
(9) How many similar projects has HUD found with floodway impacts?
(10) What racial equity and environmental justice considerations did HUD account for in drafting this provision?
(11) How will racial equity and environmental justice analysis apply to individual sites?
Another commenter asked HUD to address its decision to allow public housing residents to stay in or near a floodway in a rule acknowledging the dangerous and increasing impacts of climate change.
Another commenter added that stronger protections would lessen reliance on HUD to rebuild and replace community assets damaged by natural disasters, which currently divert funds away from programs targeting low-income families, aging populations, and persons with disabilities.
Separate from this rulemaking, a critical part of HUD's mission is to fully implement the Fair Housing Act, which not only prohibits discrimination but also directs HUD to ensure that the Department and its program participants proactively take meaningful actions to overcome patterns of segregation, promote fair housing choice, eliminate disparities in housing-related opportunities, and foster inclusive communities that are free from discrimination. In keeping with this mission, HUD also notes that under the new rule, § 55.20(b)(4) requires that any activity in a community with environmental justice concerns must coordinate its consultation and decision making from §§ 50.4(l) and 58.5(j). HUD disagrees that this rule perpetuates exclusionary policy that exacerbates racial disparities in vulnerable communities. HUD is working on fully implementing the goals of E.O. 14096 on revitalizing the nation's commitment to addressing environmental justice, which includes implementing practices that address or prevent exacerbating disparities in vulnerable or other affected local communities, along with other relevant E.O.s. In keeping with the goals of E.O. 14096, this rule will align other HUD programs with existing disaster recovery program requirements for elevation and will continue to allow projects to proceed in the floodplain so long as mitigation is incorporated into the project scope. HUD believes this alignment will help to increase the resiliency of vulnerable communities in high-risk areas.
HUD appreciates that no flood mitigation except for buyouts is entirely safe over time and that some households with low incomes can be negatively impacted despite the best mitigation efforts. The RIA considered the benefits of losses avoided from flooding. While HUD maintains no authority over FEMA's disaster assistance efforts, it is the objective of HUD for this rule to significantly improve resilience of newly built structures in the floodplain.
HUD appreciates the specific questions provided by commenters regarding implementation of the rule and will work to address these questions through future guidance. Regarding increases in atmospheric vapor and the expansion of the floodway, HUD relies on FEMA to determine and define the floodway as part of its FIRM process. HUD also intends to continue to rely on CISA data as it becomes more readily available. Over the next 20-40 years, HUD anticipates a significant development in flood resilience data, which will bolster the availability of CISA data nationwide. This in turn will result in better flood resilience outcomes. HUD notes that the rule's RIA contains equity and environmental justice analyses.
Several commenters urged HUD to go beyond proposed public engagement and notice requirements in the proposed rule, mandating more accessible and transparent public notice to prospective buyers and renters in floodplains; community-led planning and decision making; and full accounting for long-term and indirect risks. These commenters reiterated that community engagement in planning and the floodplain hazard notice is a critical requirement that will allow for informed decisions but identified issues that they believe will perpetuate inequalities.
Several commenters stated the proposed 8-step decision making process and transparency requirements only account for short-term, direct damages of flooding and must be improved to account for long-term and indirect safety risks to those considering living in flood-prone areas. One commenter specified several indirect harms of flood events that have a disproportionate impact on marginalized communities not addressed by the proposed mitigation and floodproofing measures—toxins spread through floodwaters; disruption of employment, education, healthcare access; and infrastructure damage. More broadly, another commenter urged HUD to specifically account for the holistic cost of homeownership/rental value over the life of a home in assessing economic impact of requirements and disparate burdens throughout this rule, including the cost to live in, maintain, and insure a home over time, especially homes subject to recurrent natural disasters that may become uninhabitable. This commenter cited several sources finding that race, ethnicity, physical disability, and age are factors that significantly impact disaster vulnerabilities.
Another commenter urged HUD to amend §§ 55.20(f)(2)(iii) and 55.4 to ensure that environmental justice reviews require both public participation and a substantive analysis of the proposed action to ensure it does not overly burden existing communities. This commenter opposed exempting environmental justice outreach when data or mapping does not identify a particular community of concern. This commenter asserted that such flexibility: (1) incentivizes developers to save money by foregoing robust environmental justice review alongside communities historically underrepresented by land use decisions; and (2) shifts the burden onto community members. Specifically, this commenter urged HUD to delete the parenthetical “if conducted” from Step 6 under § 55.20(f)(2)(iii). This commenter stated that this proposed revision aligns with other HUD guidance, such as the environmental justice worksheet.
This commenter also asked HUD to amend § 55.4, § 50.23, § 58.43, or § 58.59 by adopting language access requirements from the voting rights context to ensure that immigrant and other non-English speaking communities have access to hazard notifications and can participate in community engagement. This commenter recommended that HUD model requirements after Section 203 of
Another commenter asked HUD to add notification requirements for actions involving repossession, receivership, foreclosures, and similar property acquisitions; and where issuance of rental subsidies is not associated with a project. This commenter reasoned that that HUD-associated foreclosed homes are often resold with scant information.
Another commenter urged HUD to strengthen the flood risk management and project design criteria in the following ways: (1) mandate proactive outreach to affected communities; (2) require both early resident and community leader engagement and engagement carried forward throughout project design and implementation; and (3) specify that communities' lived experiences—regarding community priorities, intended uses, flood susceptibility, and population specific concerns—are given equal weight as technical modeling in flood mitigation options assessments. This commenter reasoned that co-producing these assessments and planning processes will make residents more likely to support projects and help to address any obstacles, improve community understanding of flood risks and how they can individually prepare, and reinforce a sense of community.
Another commenter encouraged HUD to include additional flood insurance resources for those who may have difficulty understanding these insurance policies.
Another commenter urged HUD to amend §§ 55.20(f)(2)(iii) and 55.4 by incorporating other agencies' guidance (
Several commenters stated that while allowing online posting improves accessibility in some ways, it still puts the onus on residents to identify projects that may affect them.
One commenter asked how HUD plans to remove barriers that low-income and protected stakeholders face that may make it more difficult for them to participate stakeholder meetings.
HUD believes that Step 4 of the 8-step decision making process specifically requires responsible entities to look at direct and indirect impacts of building their project in the floodplain or wetland and that the requirements in the rule and the existing 8-step decision making process are not limited to the short-term impacts of living in flood-prone areas.
While HUD appreciates the comments on economic impacts associated with living in the floodplain, it would be inappropriate under the rule for HUD to address the holistic cost of home ownership in areas prone to natural disasters. There are innumerable potential influences of the holistic costs and indirect safety risks associated with homeownership/renting and it is impossible to account for all possible factors. HUD feels strongly that the RIA analyzes all relevant costs and benefits associated with this rulemaking. HUD appreciates the commenters' feedback that environmental justice reviews should be included more broadly, applying additional study and review is something the Department may consider in the future, contingent on the availability of resources. HUD also notes that consideration of environmental justice is a requirement for grantees under § 58.5(j), consistent with HUD's policy goals, including pursuant to E.O. 14096, as well as the consideration for environmental justice requirements under NEPA. HUD notes that responsible entities are required to complete an acceptable 8-step decision making process, that public input must be captured throughout that process, and that such process avoids placing the burden of compliance on community members.
HUD agrees that providing language from the Voting Rights Act or a 60-day public comment period could further public awareness. However, HUD believes that using requirements similar to Section 203 of the Voting Rights Act and quadrupling the required public comment period would cause significant economic harm to projects ready to complete environmental reviews and move towards construction. Additionally, while HUD would encourage grantees to utilize the tools of Federal partners in the completion of their environmental justice reviews, HUD has no plans to mandate the use of any particular tool for environmental justice analysis with this regulation as no one tool is suitable for every type of project HUD funds.
Under § 55.4 of the final rule, HUD-acquired properties sold after foreclosure would include the same notification requirements as those sold in other manners even where no rental subsidies were applied. HUD contends that the final rule will cut down on the properties sold where little information on flood hazard status was available so that homebuyers could make better informed decisions.
HUD notes that public participation in planning and implementation projects subject to review under NEPA is strongly encouraged. HUD believes that communities need to play a substantive role in the development of these plans and implementation of these actions because helps to ensure those communities are taking positive steps to be a part of their own solutions. That said, while HUD appreciates accounts of community members' lived experiences, flood modeling and mapping based on the standards described in this rule, like the FFRMS Federal agency tool in development by the White House Flood Resilience Interagency Working Group and the FFRMS Science Subgroup, with input from CEQ, OSTP, FEMA, NOAA, and HUD, is expected to be available at a consistent and nation-wide scale.
HUD appreciates the commenters' feedback regarding flood insurance resources for homeowners and notes that while this rule does not require flood insurance to be obtained beyond the FEMA-mapped 1-percent-annual-chance floodplain, it does encourage it. As has always been the case, grantees may extend additional requirements for flood insurance beyond the HUD minimum. Additionally, many HUD programs, like CDBG-DR, do allow for flood insurance to be subsidized for a period where it is a required mitigation post construction completion.
HUD appreciates the commenters' feedback that online posting improves accessibility for public noticing. HUD suggests that project sponsors work with their regional HUD representatives to help them achieve greater levels of accessibility and remove any other barriers their potentially affected project populations may face in their attempts at participation in the 8-step decision making process.
Several commenters pointed to disparate standards and requirements that they assert will exacerbate disproportionate adverse impacts on affordable housing residents and communities of color.
One commenter urged HUD to adopt the same higher floodplain management standards Department-wide, stating that not expanding higher standards across HUD programs may exacerbate inequalities.
Another commenter offered a direct and specific critique of the higher floodplain management standards FHA-insured market rate multifamily housing is subject to under the MAP Guide as compared to public housing. This commenter also urged HUD to increase resilience for manufactured housing residents (
HUD appreciates the commenters' concerns regarding higher floodplain standards Department-wide beyond those programs covered by the Minimum Property Standards. The vast majority of other HUD programs are subject to floodplain management standards laid out in the revisions to part 55. While some HUD programs have historically implemented higher floodplain management standards, all HUD programs subject to part 55 will now be required to implement the same more protective FFRMS standard. Following implementation of the final part 55 and part 200 rules, HUD programs may issue program-specific guidance to implement these more protective requirements.
While HUD agrees with the commenter that FHA insured multifamily programs are currently subject to the standard from the MAP Guide and thus, a higher standard than public housing programs which are subject to part 55, HUD notes that the part 55 revisions align floodplain management standards across these programs—both FHA insured multifamily and public housing programs will be subject to the FFRMS floodplain management requirements.
HUD appreciates the commenter's feedback regarding increasing resilience for manufactured housing residents. It should be noted that under part 55, HUD has historically considered MHUs as site-built housing and therefore subject to the same part 55 requirements under various HUD programs. Part 55 does not apply to FHA's Single Family insured mortgage programs. In this final rule, HUD has made a small revision to clarify the Department's historical position that using HUD assistance for the new siting of MHUs has the same environmental requirements as building and substantially improving site-built housing under 24 CFR part 55.
Several commenters raised concerns that restricting affordable housing development and rehabilitation in floodplains, along with a lack of elevation data available to establish the FFRMS, will disproportionately harm low-income and rural communities who are less likely to be able to afford relocation outside floodplains, unless HUD provides additional funding and waivers and increases the per-unit maximum limits. One commenter urged HUD to provide waivers for those most impacted by the rule's curtail of development. Another commenter stated that HUD should consider a practical alternative for developing in floodplains in these areas to avoid excluding rural communities in need of affordable housing.
Several commenters recommended that HUD prohibit use of fill dirt to achieve elevation requirements to avoid the damaging consequences of stormwater runoff on adjacent properties and communities, which are often lower-lying and most vulnerable. One commenter stated that where fill is necessary, HUD should require projects to retain the volume of water on site equivalent to the volume of fill used.
Several commenters asked HUD to provide additional and inclusive opportunities for communities historically disproportionately affected by flooding to provide feedback to the Department, during and beyond the public comment period.
One commenter asked that outreach include: clear communication of implementation timelines; broad and extensive training for public officials and stakeholders; and stakeholder partnerships across mitigation, housing, land use, floodplain management, and education sectors focused on engineering, architecture, and environmental science curricula nationwide. This commenter explained that education and clear implementation timelines are essential to prevent potential negative real-estate market impacts, especially in communities that already experience disproportionate adverse impacts of flooding. Another commenter asked HUD to provide additional detail and public engagement on how HUD will consider environmental justice impacts of Department actions.
Several commenters urged HUD to provide additional financial and robust technical assistance targeted to communities of color and low-income communities to help offset costs and break down barriers to implementing the rule. One commenter encouraged
Another commenter urged HUD to commit substantial funding and staff to the following actions to ensure equity goals are met: communicating flood risks, potential loss, and environmental justice implications across its portfolio and monitoring and enforcing implementation and compliance.
One commenter described the requirement to coordinate the 8-step decision making process with public engagement associated with environmental justice as a good first step in working towards considering environmental justice impacts, which must be paired with greater affordable housing development outside of the floodplain. This commenter encouraged HUD to proactively provide buyout funding with relocation assistance for repetitive loss properties.
HUD will continue to work with our local partners and stakeholders to ensure the best possible technical assistance and support can be provided which helps our partners achieve efficient, compliant, and effective floodplain management. HUD intends to provide specific technical assistance to responsible entities to ensure a smooth transition to any new requirements. HUD agrees that clearly communicated requirements and implementation timelines are a necessary part of any successful regulatory update.
HUD notes that the rule does maintain but does not expand previously instituted flood insurance requirements for HUD projects within the 1-percent-annual-chance floodplain. HUD strongly encourages flood insurance for projects located in the FFRMS floodplain to minimize financial losses, but it is not mandated. HUD or the responsible entity may also require flood insurance beyond the minimums established by the FDPA when necessary to minimize financial risk. Renter's insurance does not generally cover floods and is not considered a requirement under the rule.
HUD appreciates the commenters' sentiment that additional funding should be made available to HUD to ensure flood risks are adequately addressed throughout its portfolio. Should funds be congressionally appropriated for flood resilience, HUD would enthusiastically utilize them.
Some commenters requested that HUD “put all definitions at the top of 24 CFR part 55.”
One commenter found the definition of “critical action” in § 55.2 to be vague. The commenter said this vagueness would make it challenging to align with the standards set forth in this proposed rule and recommended revising the definition, both to make it clearer as to what facilities would be included and to expand its reach.
Several commenters supported the inclusion of “community stormwater management infrastructure” and water treatment plants under the “critical action” definition. Other commenters requested that HUD define “community stormwater management infrastructure.” Commenters said that if the definition includes any stormwater development associated with multifamily construction, including offsite, the definition could be applied to any site at or below the 0.2-percent-annual-chance floodplain elevation, based on the definitions for FFRMS included in the proposed language.
HUD disagrees that the definition of “community stormwater management” could be applied to any stormwater development associated with multifamily construction. As discussed in the proposed rule, the revised definition of critical actions specifically references water treatment plants as examples of a utility or service that would be considered as critical actions. This makes evident that the change is intended to focus on larger infrastructure level projects and not smaller upgrades to most individual structures.
One commenter suggested including a very clear definition of what is meant by the “horizontal floodplain” for each approach where it applies. The commenter went on to suggest that New York State's guidance document for the Community Risk and Resiliency Act could provide model language.
Another commenter expressed concern that HUD is proposing to use a different definition of “floodplain” than is used by FEMA to establish FIRMs. The commenter urged HUD to consider applying terminology and standards consistent with FEMA's. Another commenter asked HUD to clarify if the definition of floodplain applies to a FEMA-recognized 1-percent-annual-chance floodplain or the HUD-recognized FFRMS floodplain. This commenter said that assuming the latter, this represents additional administrative burden and can result in reduced property values compared to similarly located multifamily properties.
Under Executive Orders 13690 and 14030, HUD, like all Federal agencies, is directed to update its floodplain regulations to be consistent with the FFRMS. Though all agencies are required to comply, not all are able to comply at the same pace. HUD continues to work closely with our interagency partners to ensure that our rules are as aligned as possible and that tools developed by NOAA and FEMA are compatible with our regulatory framework. HUD and FEMA continue to work closely together in these efforts to ensure consistency of guidance. In addition, FEMA has already begun implementation of the FFRMS, in part, through policy and guidance, thereby this regulatory revision will better align with FEMA's current approach to FFRMS requirements.
One commenter stated that runoff coefficients vary greatly among surfaces, including lawn and other surfaces not generally associated with “impervious surface.” The commenter recommended that when calculating the effects of projects on receiving waters, metrics be utilized to assess the pre- and post-project runoff calculations to determine appropriate mitigative efforts to minimize impacts to receiving waters and downstream communities.
Another commenter noted that it can be difficult to define whether an entire area is an “impervious surface” because some parts of the area fit the definition and some do not. The commenter asked how such a situation would affect the management of an area.
Many commenters wrote to support expanding the definition of wetlands. One commenter said that with the expanded definition, HUD can more safely and sustainably carry out its mission in a more streamlined manner. Another commenter reasoned that the expanded definition would provide benefits for soil retention by avoiding flooding. This commenter went on to say that there is greater specificity in how soils may determine which areas are wetlands but that the new definition is a good starting point.
Another commenter stated that the definition of “wetlands” in the proposed rule is very similar to the definition in the 1987 Army Corps of Engineers manual, which is employed by the Clean Water Act (CWA) Section 404 regulatory program and Natural Resources Conservation Service. However, the commenter says that such definition does not capture all areas performing wetland functions that benefit storm flow augmentation and enhance resiliency.
The commenter argued that the part of the proposed definition that states “This definition includes those wetland areas separated from their natural supply of water as a result of activities such as the construction of structural flood protection methods or solid fill roadbeds and activities such as mineral extraction and navigation improvements,” is unnecessary since the wetland definition is based on “in-situ” information rather than geographic location or genesis. The commenter said it is also not clear why the rule states that “This definition includes both wetlands subject to and those not subject to Section 404 of the Clean Water Act as well as constructed wetlands.”
This commenter suggested that the linkage of wetlands defined under this proposed rule and Section 404 of the CWA, or the Food Securities Act, be removed and that a functional analysis methodology be employed for aquatic resources proposed to be impacted by HUD actions. The commenter said this method would better protect communities and natural infrastructure from the effects of climate change and better preserve those resources functioning to the benefit of the watershed. This commenter further explained that while there are resource areas which may “overlap” with other Federal, State, and Tribal regulatory programs, it is worth noting that the intent should be the broad protections of floodplains and their function to ameliorate the effects of climate induced flooding and not merely to replicate Federal program standards.
Several commenters expressed support for a uniform definition of “wetlands” across Federal agencies to avoid inconsistent and unpredictable wetland delineations and ultimately unequal application of mitigation measures. Several commenters said wetlands would likely be better protected if the definition of wetlands among Federal agencies could be consistent. Several commenters stated that human error based on misunderstanding of what a wetland is likely results in compliance issues related to unauthorized filling of wetlands.
One commenter argued that HUD should follow the U.S. Army Corps of Engineers and EPA definition of “wetlands.”
Other commenters wrote that HUD should use the consistent definition of a wetland as defined by the NWI.
Several commenters recommended a clarifying change to the definition of “wetlands.” The commenters stated that the definition does not differentiate between ephemeral, intermittent, or perennial streams. They asked HUD to please include the definition of deep-water aquatic habitat in the final rule as it would be helpful to avoid confusion as to whether these mentioned aquatic resources qualify as wetland.
While HUD agrees that a functional analysis model could be useful in limited circumstances, the benefits are outweighed by the general complexity of the approach. HUD does not want the rule to be burdensome to its grantees in a way that could limit funding towards necessary programs.
HUD disagrees that all Federal agencies should utilize the same definition for wetlands and that HUD's
HUD amended its definition of wetlands to remove reference to things that do not constitute wetlands. This change was made both because it is not necessary to list things that the definition does not cover and avoid confusion about certain areas around deep water aquatic habitats that may be considered wetlands.
HUD intends to release subregulatory implementation guidance to ensure responsible entities utilize compliant processes in their environmental reviews.
Several commenters requested that HUD provide a clear definition of the incidental floodplain for public comment. One commenter said this proposed rule would maintain a narrower version of the existing incidental floodplain exception as applied to the FFRMS floodplain (not including floodways, coastal high hazard areas, or within the LiMWA) in proposed § 55.12(g). This commenter said this section would allow projects to proceed without completing the 8-step decision making process where an incidental portion of the project site includes the FFRMS floodplain.
Several commenters requested that HUD define “de minimis improvements” in detail.
One commenter described the new § 55.6 as a useful process for practitioners. This commenter asked HUD to strengthen compliance in the following ways: (1) emphasize floodplain avoidance; (2) require reporting on quality of functional floodplain and wetlands impacted by a floodplain action; and (3) develop methods for tracking cumulative loss of functional floodplains and wetlands.
Several commenters asked HUD to provide the “Roadmap to complying with this part” for public comment once available.
Several commenters urged HUD to ensure State, local, Tribal, and regional entities have the tools they need to comply with this proposed rule.
Several commenters expressed support for proposed § 55.8(c) requiring that HUD or the responsible identity address severe repetitive loss (SRL) properties.
One commenter urged HUD to pay close attention to rehabilitation of multifamily units where residents have needed evacuation and rescue by emergency personnel (in addition to those who have lost property and/or experienced displacement). This commenter recommended that HUD prioritize protections that break the cycle of loss faced by residents, particularly in communities where SRL properties comprise a significant portion of affordable housing stock. This commenter also noted that FEMA determined that repetitive loss is “the single most important factor that affects stability of the National Flood Insurance Fund.”
Another commenter stated the threshold for a property being designated as SRL is relatively low and therefore suggested that under proposed requirements at § 55.8(c), HUD or the responsible entity should be required to provide this information to the third party conducting the 5- or 8-step review.
Another commenter encouraged HUD to proactively designate funding for buyers with relocation assistance for SRL properties that will otherwise be subject to increasingly frequent and intense damage due to climate change.
Another commenter stated that properties experiencing repetitive loss should be rebuilt to modern standards that mitigate flood risk.
HUD does not have congressionally appropriated funds specifically for SRL properties, but relocation or other mitigation activities at SRL properties may be eligible under multiple HUD grant programs that fund relocation and other mitigation assistance.
Several commenters asked how HUD will monitor, enforce, and address violations of the proposed rule.
One commenter posed the following specific questions about HUD's current and proposed monitoring practices: (1) What types, and to what extent, do offices outside of HUD's Office of Environment and Energy perform monitoring to ensure assisted properties and proposed sites do not occupy floodways in violation of part 55? (2) How does HUD monitor housing authorities outside of Community Planning and Development (CPD) entitlement communities for environmental compliance? (3) Outside those performed by HUD's Office of Environment and Energy, how does HUD monitor flood insurance for programs administered by FHA Multifamily, the Office of Disaster Recovery, and the Office of Public and Indian Housing? (4) What steps did HUD take following the 2015 HUD Inspector General report, “Buildings at Three Public Housing Authorities Did Not Have Flood Insurance Before Hurricane Sandy” to ensure compliance with mandatory flood insurance maintenance under the Flood Disaster Protection Act of 1973? (5) How will HUD exercise its oversight responsibility over properties approved under the proposed § 55.21 to ensure residents are not subject to flooding or repeated floods, or to monitor changes in the mapped floodways, especially increased flood risk over time? (6) Does HUD have staff with the qualifications to review hydrological, hydraulic, and hydrostatic threats to structures from floodways?
Another commenter explained that strong code enforcement—including adequate staffing numbers/expertise and continuing education on code updates and best practices—is necessary to realize public safety and resilience goals, citing evidence that strong code enforcement can contribute to loss reduction by 15-25 percent.
Another commenter urged HUD to commit the following to ensuring compliance with the FFRMS and protections: funds, additional staff, and a comprehensive implementation plan that strategizes data collation on flood risk communications and environmental justice.
HUD has floodplain and wetlands subject matter experts who will review and make recommendations for exemptions requested under the § 55.21 provision. HUD may rely on project engineers, Federal science agencies (
HUD agrees that code enforcement is an important piece of meeting public safety and resilience goals and works with its local partners to ensure HUD programs are compliant with local requirements. HUD also agrees that increased capacity to implement FFRMS via funding, staffing capacity, and data collection is critical and will continue to emphasize this need through proper appropriation and hiring channels. HUD is addressing the 2015 HUD OIG report referenced by the commenter outside of this rulemaking.
Several commenters expressed support for the proposed changes to notification of floodplain hazard requirements as a critical requirement to ensure buyers, developers, renters, and other stakeholders are fully informed of a site's flood risk and potential direct and indirect costs. One commenter explained that increased transparency of flood risk and benefits of flood insurance creates stronger consumer protection. Another commenter described the notification requirements as morally right.
One commenter stated that the notice of floodplain hazard requirements remedies deficiencies and inconsistencies in State protections, explaining that 21 States have no requirements to disclose to prospective homebuyers past incidents of flooding, flood risk, or flood insurance information, and only 8 States require prospective tenants receive any of these disclosures.
Another commenter explained that these requirements are particularly necessary for publicly subsidized housing, which prospective renters and buyers may assume is safe by virtue of being built by a public agency or housing authority and in accordance with Federal requirements, despite most affordable housing being located in vulnerable areas.
Another commenter stated that HUD's inclusion of detailed notice contents requirements and lease acknowledgements will support consistent implementation of this protection.
Another commenter expressed support for the new proposed § 55.6, which outlines the required process that HUD or another responsible entity must follow in carrying out notification requirements. This commenter urged HUD to commit necessary resources to effectively fulfill notification of floodplain risk obligations across its portfolio.
Another commenter encouraged HUD to require notification as early in the process as possible and in a method and language appropriate to potentially impacted communities.
Several commenters asked HUD to strengthen the rule to require that notifications are written in accessible, plain language that is tailored to impacted communities. One commenter asked HUD to amend §§ 55.4, 50.23, 58.43 or 58.59 by adding language access requirements mirroring Section 203 of the Voting Rights Act to ensure that immigrant and other non-English speaking communities have access to hazard notifications and can participate in community engagement. Another commenter stated that notice should be given in as many forms/methods as necessary to reach the community, which may include methods beyond government websites or newspapers of general circulation. Several other commenters encouraged HUD to specifically encourage publication in resources that are free to the public.
One commenter recommended that notification include flood disaster mitigation plans. Another commenter recommended adding emergency preparedness information to the required notification contents on emergency procedures under proposed § 55.4(b).
Several commenters encouraged HUD to work with FEMA to provide useful information to buyers and renters about the value of flood insurance and resources to help people understand how flood insurance policies work.
Another commenter urged HUD to revise the list of exceptions in § 55.12 to include notification of floodplain hazard requirements for property transactions involving repossession, receivership, foreclosure, etc.; as well as HCVs and rental subsidies not associated with a project. This commenter reasoned that HUD-associated foreclosed homes are often resold with scant information.
Another commenter asked HUD to revise the rule to apply the notification requirements beyond floodplain boundaries. This commenter explained that this suggestion is based on this commenter's experience during a tropical storm and projected expansion of flood risk due to climate change.
Another commenter suggested expanding the effort to make sure prospective buyers and renters have adequate information about flood risk and insurance, beyond those living in the floodplain.
HUD guidance and trainings instruct grantees to translate environmental review public notice documents for relevant limited English proficiency (LEP) populations to meet Title VI requirements for LEP.
HUD notes that while it encourages property owners to share all pertinent information surrounding flood risk for their properties, many communities do not have formal mitigation plans in place. That said, the rule does require evacuation information to be included along with ingress and egress routes.
HUD does not intend to expand the list of exceptions at § 55.12 currently and notes that certain property dispositions are subject to analysis under part 55. While HUD encourages notification of flood risk, HUD does not intend to require that notification for properties outside of the floodplain. HUD encourages grantees to work with Federal partners and disseminate relevant information regarding flood insurance to those in the floodplain.
HUD appreciates the commenters' feedback regarding the expanded notification requirements for renters within the floodplain. HUD believes the notice requirements will help without overly increasing the administrative burden on landlords.
Several commenters objected to expanded floodplain hazard notification requirements, stating that the resulting administrative burden on property owners and management agents could result in reduced occupancy at covered properties compared to similarly located housing.
One commenter added that since regional HUD offices can also require flood insurance, including for properties not within the 1-percent-annual-chance floodplain per HUD's MAP Guide, the fact that flood insurance is available or required does not necessarily indicate a property is within a floodplain. Another commenter urged HUD to strike “and flood insurance is available for their personal property” from renter notification requirements at § 55.4(b) and “the availability of flood insurance on the contents of their dwelling unit or business” from conveyance restrictions for disposition of real property in § 55.4(c)(2)(i)(B), reasoning that housing providers are not positioned to make definitive statements about flood insurance availability to renters.
HUD disagrees also that property owners are not positioned to make statements about flood insurance availability for structures that they own. HUD encourages responsible entities and project partners to implement flood insurance requirements beyond the minimums established by the Flood Disaster Protection Act where they feel it is appropriate to minimize financial risk, but going beyond the minimum standard is not required.
One commenter asked if “floodplain” covered by hazard notification requirements under the new § 55.4 means FEMA-recognized 1-percent-annual-chance floodplains or HUD-recognized FFRMS floodplains. This commenter stated that if the notification of floodplain hazard applies to FFRMS floodplains, the additional administrative burden caused by this expanded application can result in reduced property values compared to similarly located multifamily properties.
Several commenters asked HUD to provide a standard tenant notification form that meets the hazard notification requirements.
Additionally, several commenters asked HUD to revise the rule to clarify aspects of the notification requirements, which they stated was necessary to carry out the requirements. Several commenters asked HUD to more clearly define the conveyance restrictions moved from current 24 CFR 55.22 to the new 24 CFR 55.4. Several commenters asked for clearer details on the process, including: (1) the method for providing the notification to prospective homebuyers/renters; (2) whether the notification is signed; and (3) who prepares the notification.
One commenter stated that additional guidance or specificity to required notification content is needed to provide any of the information listed (
One commenter asked HUD what type of notice residents would receive that a floodway is proximate to the site, the risk it poses, and how to relocate during a flooding event.
HUD intends to release additional guidance and technical assistance to assist grantees to better understand and utilize the conveyance restrictions outlined in § 55.4. HUD intends to provide technical assistance and guidance for compliance with the hazard notification requirements which may include some form templates that grantees can use and what information regarding proximity to the floodplain should be included. Use of these forms will not be mandated in keeping with other public notice documents HUD provides for part 55. HUD contends that any administrative effort necessary to inform renters of their flood risk is not only minimal but necessary for the health and safety of residents. Given the existing requirements necessary in a rental agreement, HUD believes the additional costs of this notification to be de minimis.
HUD intends to provide guidance and technical assistance to grantees, applicants, and responsible entities to help ensure consistent and compliant notice is provided to tenants when their buildings are in the floodplain of concern.
Several commenters expressed their support for the new flood insurance provisions in the proposed rule. One commenter suggested the changes will increase transparency and communication of flood risk and the benefits of flood insurance.
Another commenter supported HUD requiring flood insurance beyond the minimum requirements established in the FDPA and said it was prudent and necessarily minimized financial risk. This commenter said that the existing FDPA is insufficient due to inadequate policy limits in an era of rapidly rising home valuations, the fact that the need for flood insurance in flood-prone areas that may be located just “outside” of a designated Special Flood Hazard Area (“SFHA”), and the fact that FEMA has only mapped 1/3 of the Nation's floodplains.
Another commenter said that the flood insurance provisions in the proposed rule are an important step to ensuring the sustainability of America's housing stock. Incorporating concepts such as CISA, additional freeboard protection, open space foundation systems and the limitation of the use of fill within SFHAs are higher standards proven to reduce risk.
Another commenter agreed that HUD must “prudently” manage its FHA-insured mortgages by first understanding the portfolio's actual exposure to flood risk and the extent to which FHA homeowners must purchase flood insurance policies. The commenter said flood risk management policies at all levels of government are critical to reducing national flood losses.
Another commenter said that all consumers should be encouraged to obtain flood insurance, especially given the increasing flood risk due to climate change.
One commenter suggested that HUD expand the requirement for flood insurance for all assisted properties that have previously flooded, especially CDBG-DR projects.
HUD appreciates the commenters' sentiment regarding the need to improve flood risk management policies at all levels of government. The Federal government can help set a national regulatory floor for things like elevation and insurance standards, but local and State governments are encouraged to evaluate their own regions and develop code requirements that suit their needs if they go beyond the minimum set at the Federal level. This rule, which applies to the CDBG-DR program, explicitly encourages flood insurance for all properties within the FFRMS floodplain and beyond the 1-percent-annual-chance floodplain mapped by FEMA. Additionally, the rule clarifies that HUD, or the responsible entity, may require flood insurance coverage beyond the minimums to minimize financial risk.
One commenter urged HUD to allow flexibility for Public Housing Authorities to use different methods of transferring or retaining risk in proposed § 55.5(b). This commenter said that requiring flood insurance up to replacement value for such entities may impact the market for flood insurance nationwide.
Another commenter asked that any floodplain requirements be limited only to “Federally funded projects.” This commenter said that since HUD does not originate loans or fund projects through the FHA Multifamily Program, but rather, it insures those loans through the FHA, projects insured by these programs should not be required to meet the mandates of the FFRMS.
For FHA multifamily mortgage insurance, the project is submitted to HUD as an application for approval prior to construction or rehabilitation. Therefore, the project is subject to NEPA and part 55. In contrast, newly constructed single family homes have already been constructed when an application for mortgage insurance is submitted to HUD. Therefore, newly constructed FHA insured single family properties are only subject to the Minimum Property Standards—NEPA and part 55 do not apply.
Several commenters opposed the proposed rule's changes to flood insurance requirements and language in the proposed rule stating that HUD “strongly encourages” flood insurance for all structures within the FFRMS floodplain. These commenters argued that maintaining flood insurance for all structures within the FFRMS floodplain will make it prohibitively expensive to build and operate necessary housing, and the costs will be passed along to residents in the form of higher rents and higher housing costs. Several of these commenters went on to say that though purchasing flood insurance beyond what is required may mitigate future financial losses, it may require some consumers to suffer current financial losses in the form of higher operating expenses. One commenter emphasized that they agree that flood insurance is an essential tool to manage potential future costs but that it can also make homes in risky areas less affordable.
Several commenters urged HUD not to expand its requirements beyond FEMA mapping, asking HUD to limit flood insurance requirements to only structures located in the SFHA per FEMA maps. These commenters said that utilizing CISA maps would create a disjointed approach to flood insurance.
Another commenter urged HUD to work with and support FEMA in its recommendations to reform the NFIP.
One commenter suggested HUD rephrase the statement “. . . the NFIP plays an important role in minimization measures to reduce flood losses,” reasoning that flood insurance does not minimize losses but enables the insured to recoup some of the material losses.
HUD appreciates the comment but believes that the recoupment of flood damages may be considered a reduction of flood losses.
One commenter supported increasing coverage limits but asked that HUD recognize the limitations on coverage in more expensive areas, particularly for multifamily buildings. This commenter explained that while some large residential buildings may be able to purchase private excess coverage, options in most areas are limited and often cost-prohibitive for affordable housing providers. This commenter also said that NFIP coverage limits are insufficient to cover the costs of flood damage in multifamily homes, as well as in mixed-use buildings, and urged HUD to support efforts to increase coverage for such buildings. This commenter added that private insurers can refuse coverage to at-risk buildings.
Another commenter emphasized that the insurance industry is increasingly refusing coverage in high-risk areas.
Other commenters said there are unique challenges for flood insurance for multifamily housing. Commenters said stories of multifamily buildings are usually elevated ten or more feet and if the first floor of a multifamily building is already elevated 2-4 feet above the Base Flood Elevation per the FEMA flood elevation, providing increased flood coverage for units located some 22-24 feet+ above the Base Flood Elevation would create unnecessary financial burdens to developers of multifamily projects in cases where no practical alternative to locating a project in the floodplain may be identified.
One commenter expressed confusion over the language “strongly encourages” and asked HUD to consider replacing this language and to make clear what its expectations would be for flood insurance for those properties outside the FFRMS floodplain.
Several commenters sought clarity on how HUD would determine if flood coverage equivalent to the full replacement cost of the structure would be required. These commenters recommended that the final rule make it clear for developers to know exactly what will be required for flood insurance when making decisions to acquire or develop land for housing use and not to leave it up to the individual developer's discretion.
Other commenters wondered how HUD would enforce the acquisition and maintenance of flood insurance if it is not required by regulation. Who at HUD will have that authority and what training will they receive in order to make them qualified to make this determination?
HUD will continue to utilize the direction of the MAP guide to determine the flood insurance coverage requirements for Multifamily FHA projects and the Section 232 Handbook for Healthcare FHA projects.
Several commenters expressed support for the exceptions at § 55.8(a)(2) for floodplain restoration activities, explaining that the proposed language is more flexible than the current standards, while incurring de minimis impacts to the floodway.
One commenter expressed their support for proposed language to clarify and ensure that floodways assistance would only be allowed for limited floodplain restoration activities and only after engaging in the 8-step decision making process and justifying that there are no practicable alternatives. This commenter explained, citing FEMA guidance, that floodways naturally convey floodwaters downstream and thus designing a floodway and regulating development within that floodway is necessary because any obstruction increases likelihood and elevation of flooding both upstream and downstream.
Several commenters supported allowing safe installation of utility lines to cross floodways where it is the most practicable method for connecting existing lines, reasoning that this is practical because utility mains are often in low-elevation areas and likely to be safe because development codes often require tie ins in these areas and utility line instillation causes only temporary impacts.
One commenter supported allowing removal of man-made structures from the floodway/floodplain. This commenter recommended that HUD amend the rule to make clear that projects restoring wetlands, floodplains, rivers, or other aquatic habitats in alignment with FFRMS objectives are exempt from the 8-step decision making process.
One commenter supported equivalent protections in the LiMWA as the V Zones. Another commenter endorsed the improved protections in Coastal A zones or areas within the LiMWA.
HUD appreciates the support for the equivalent protections across the V zones and the LiMWA. HUD's intent with this revision is to increase the resilience of coastal construction.
Several commenters expressed concerns that proposed exceptions provide insufficient floodway protection. Several commenters urged HUD to prohibit all development and reconstruction within floodways, the deepest and highest velocity portion of drainage, to avoid certain continued losses to HUD projects and safety risks to residents.
One commenter urged HUD to prohibit both critical and noncritical building actions in floodways and coastal high hazard areas, instead of allowing noncritical actions under the circumstances listed in the proposed rule. This commenter reasoned that the focus must not only be on ceasing development in floodways, but also on restoring and re-establishing natural infrastructure. This commenter supports the proposed rule permitting noncritical actions within the remaining two categories—wetlands/1-percent-annual-chance floodplain outside floodways and non-wetlands area outside of the 1-percent-annual-chance and within the 0.2-percent-annual-chance floodplain—but only on a case-by-case basis and requiring the 8-step decision making process.
This commenter supported the proposed amendment prohibiting placing “community stormwater management infrastructure and water treatment plants” in floodways due to high risk of becoming inoperative in a flooding event. However, this commenter urged HUD to go further by amending § 55.1(c)(2) to read: “any critical action located in a coastal high hazard area
Several commenters asserted that new construction in floodplains, even under the 8-step decision making process, will have the following negative impacts: (1) waste scarce financial resources on resilience and mitigation activities; (2) subject households, predominantly low-income families, to damage and danger; and (3) continue legacies of exclusionary zoning practices.
One commenter urged HUD to remove floodplain exceptions for residential structural infrastructure (utility lines, pipelines) from the proposed rule. This commenter explained that flooding results in catastrophic impacts to nearby residential drinking water when water, sewer, and wastewater utilities are in flood-prone areas, citing joint EPA and FEMA guidance that these utilities face unique risks in flood-prone areas and that it is cost intensive to build them to resilient standards.
Several commenters asked HUD to provide a clear definition of the incidental floodplain for public comment. One commenter asked HUD to clarify whether part 55 requirements would be triggered if an undeveloped portion of a property is within the floodplain, while the structure itself is not.
One commenter posed the following questions: (1) How did HUD determine that paving floodway areas for basketball and tennis courts is de minimis? (2) Is there a critical number
Several commenters requested explicit guidance on the methods of utility installation that are permitted/prohibited.
Several commenters stated that HUD should defer to NFIP/local regulations for floodway actions.
HUD disagrees that funding spent on any mitigation determined necessary through an 8-step decision making process would be considered a “waste of resources.” Mitigation that reduces risk and protects life and property can only be seen as a benefit for populations that would otherwise be at increased risk of flooding. Additionally, HUD contends that supporting the resilience of structures in the floodplain better protects those structures against future loss and disagrees that increasing community resilience continues the legacy of exclusionary zoning.
HUD notes the commenters' feedback regarding wastewater treatment and stormwater facilities; however, these facilities, while critical actions, are also functionally dependent on being near water. HUD did not intend to disallow functionally dependent facilities from receiving funding with this rule and as such has allowed an exception for functionally dependent projects which meet the mitigation requirements at § 55.8(a)(2) and complete an 8-step decision making process in accordance with 24 CFR 55.20. This change brings HUD in line with its Federal partners like FEMA in allowing the funding of certain types of functionally dependent facilities.
HUD disagrees that all schools need to be included as critical actions because schools do not have permanent residents and will not be occupied during an emergency.
Examples of de minimis improvements listed in § 55.8(a)(1)(ii)(B) include activities that have minimal ground disturbance or placement of impervious surface area to ensure accessibility where permitted by local ordinances and where it does not increase flood risk to the property. HUD intends to provide grantees, applicants, and responsible entities with technical assistance and guidance to ensure any improvements in a floodway are de minimis and that only compliant work is allowable under this part.
Any action allowed by HUD would also need to be compliant with NFIP and local regulations.
HUD intends to release technical assistance and guidance to help grantees, applicants, and responsible entities better determine when it is appropriate to utilize the incidental floodplain exception at § 55.12(g). HUD notes that projects with an undeveloped portion of the property located within the floodplain will be exempted from part 55 analysis if all requirements under § 55.12(g) are met.
Several commenters expressed support for the expanded flexibility for parks and recreation uses in combination with restoration and preservation activities. Several commenters explained that the proposed exception will increase the quality of life for HUD-assisted tenants by providing opportunities to connect with nature and the floodplain and wetland habitat where they live, without significant disruption to those areas' function.
One commenter urged HUD to amend the rule to add incentives or favor parks and greenspace projects that incorporate green infrastructure to restore/protect natural ecosystems like wetlands, prairie, riparian corridors, and bayous. This commenter explained that preserving remaining riparian and wetland infrastructure is proven to slow flood waters avoiding future flooding damages, while also providing communities with necessary parks and green space for communities. This commenter cited a study showing that affluent bayou communities received greater government investment in flood protection following Hurricane Harvey than low-income communities as reasoning for going beyond the proposed mandated process towards an incentive model.
Another commenter asked if HUD could expand the flexibility for restoration activities compatible with beneficial floodplain and wetland function beyond parks and recreation activities.
Several commenters asked HUD to explain what kinds of “structures and improvements designed to be compatible with the beneficial floodplain or wetland function” would be allowed and asked for this clarification to be included for public comment.
HUD believes that by allowing greenspace restoration within the floodway, HUD can better incentivize restoration and protection of riparian buffer spaces and wetlands which provide compounding resilience benefits across the floodplain.
HUD does not currently have plans to expand the flexibility for restoration activities beyond what the rule allows because there is no funding for HUD to provide additional incentives. HUD intends to provide additional guidance and technical assistance to help grantees, applicants, and responsible entities discern which improvements and structures are allowed and compatible with beneficial floodplain or wetland function.
Several commenters expressed support for removing both part 55 exceptions for sites that have received LOMAs/LOMRs. Several commenters specifically supported the removal of the conditional LOMA/LOMR exception, explaining that provisions to disincentivize the use of fill will protect natural and beneficial floodplain and wetland functions. Several commenters further reasoned that adding fill to floodplains causes increased flood risk to surrounding properties/areas and expansion of the floodplain. One commenter stated that disincentivizing the use of fill will protect neighboring residents, property, and the environment. Another commenter expressed support for limiting fill within special flood hazard areas. Conversely, several other commenters opposed removing the LOMA/LOMR exceptions. Several argued that doing so would result in an unnecessary administrative burden on borrowers and lenders; and that additional government agencies—HUD and the USACE—would add unnecessary bureaucratic processes. Several commenters asked HUD to define which governmental agency would have final authority to determine if a floodplain change is required. One commenter added that the additional layer of bureaucracy created by requiring projects that are outside the 1-percent-annual-chance floodplain under FEMA's requirements to complete the 8-step decision making process will create confusion and regulatory conflicts and delay much needed housing. This commenter urged HUD to defer to FEMA's expertise on whether a property is outside of a floodplain.
Several commenters asked HUD to clarify whether the requirement to elevate sites with no known or previously occurring flood risk to the respective required standards under each approach will result in requiring completion of the 8-step decision making process before adding fill, per § 55.12(c)(8). These commenters added that if this would trigger the 8-step decision making process, it would cause administrative burden on borrowers and lenders.
Several commenters specifically urged HUD to retain the conditional LOMA/LOMR exception. Several commenters stated that the current conditional LOMR/LOMA system is more effective for determining when fill may be added to remove sites from the 1 percent annual chance floodplain because FEMA, civil engineers, and local authorities understand the impact to adjoining sites and provide sufficient governmental oversight. These commenters stated that HUD's reasoning for removing the exception on conditional LOMAs/LOMRs to avoid incentivizing adding fill is contradictory or is a moot point, considering that other portions of the proposed rule require the use of fill without limits due to the impact on adjoining areas.
Several commenters disagreed that excepting conditional LOMA/LOMR projects from the 8-step decision making process incentivizes filing floodplain areas, stating that the exception allows developers to incorporate plans to minimize floodplain impacts in the early stages of planning, prior to civil plans required as part of the 8-step decision making process.
HUD disagrees with commenters' feedback that removing the LOMA/LOMR exemption creates an unnecessary administrative burden on borrowers and lenders because LOMAs/LOMRs do not remove sites from the FFRMS floodplain. Regardless of whether or not exempting conditional LOMA/LOMR projects from the 8-step decision making process incentivizes the use of fill, misaligned Federal processes and policies inherently create a greater burden on practitioners attempting to comply with conflicting rules, so the exemption must be removed to reduce these burdens. As the FFRMS floodplain is defined by the processes laid out in the rule, HUD or the responsible entity has final authority to determine if a site is located in the FFRMS floodplain, based on the appropriate FFRMS definition for the locality. HUD agrees that the rule will expand HUD's regulatory footprint beyond the FEMA-mapped 1-percent-annual-chance floodplain. However, under E.O. 13690 HUD is directed to review a broader area and account for an increasing flood risk over time through the use of the FFRMS floodplain. While LOMAs/LOMRs can be effective tools at determining when sites have been removed from the FEMA mapped 1-percent-annual-chance floodplain, they have no bearing on the state of a site with regards to the FFRMS floodplain.
Additionally, HUD notes that other Federal agencies like FEMA are working on updating their own floodplain management regulations to account for E.O. 13690 and increasing flood risks to Federal investments.
HUD notes that § 55.12(c)(8) is being removed but if a project were to add fill to a site located in the FFRMS floodplain, it would likely trigger the 8-step decision making process under the rule. That said, the rule does not require that elevation be completed with fill and in fact, discourages its use for compliance.
HUD disagrees with commenters' feedback that removing the existing LOMA/LOMR exemption will affect the ability of developers to incorporate mitigation in the early stages of planning. Because the NEPA process mandates that environmental review be complete prior to any choice limiting actions being taken, any mitigations for a project site must be considered prior to construction regardless of the status of a FEMA FIRM change.
Several commenters expressed support for the proposed exception for special renewable energy projects, stating that the exception is forward-thinking and will likely result in increased use of energy-efficient technology in HUD projects.
One commenter urged HUD to revise the rule to provide the following limits on this exception: (1) do not permit a streamlined 8-step decision making process for energy efficiency projects that replace systems or appliances with fossil fuel-fired system or appliance under 24 CFR 50.13 and 50.14; and (2) add language to 24 CFR 55.13(f) requiring that proposals to install fossil fuel infrastructure to improve energy efficiency have no feasible electric alternative.
One commenter asked HUD to clarify the threshold for “limited potential to adversely affect floodplains or wetlands” for energy efficiency projects seeking the § 55.13(f) exception.
HUD intends to provide guidance and technical assistance to grantees,
One commenter expressed support for proposed revisions that allow timelier remediation of existing floodplain properties if HUD ensures that any impact resulting from an increased footprint would be fully addressed in the 8-step decision making process. This commenter provided maps of existing affordable housing units overlaid with FEMA flood maps showing many single family homes in flood zones that have already lost money and explained that allowing remediation for these homeowners will allow more low-income homeowners to decide for themselves whether to rehabilitate their homes. This commenter further explained that they would not support this amendment but for the “hard look” required by the 8-step decision making process that this commenter hopes will discourage floodplain development.
Another commenter stated that if the 8-step decision making process is part of a full environmental review, the information sought is addressed under NEPA and HUD should avoid repetition.
HUD notes that compliance with part 55, including completion of the 8-step decision making process when required, is included as part of HUD's NEPA compliance regulations under parts 50 and 58.
One commenter opposed removing the qualification to categorical exclusion where a rehabilitation project would increase the footprint of a structure within a floodplain or wetland under § 50.20(a)(2)(i). This commenter reasoned that foregoing full NEPA analysis of projects receiving HUD funds that would adversely impact critical habitat and flood mitigation services is counterproductive. This commenter also asked HUD to expand wetland identification protocols beyond the National Wetlands Inventory where necessary.
This commenter also suggested the following revisions to the categorical exclusion list at § 50.19: (1) require environmental review when HUD supports new construction projects with fossil fuel utility service or homebuying assistance for homes that are not all-electric, and (2) qualify equipment purchase and operating costs under § 50.19(b)(13) and (14) to exclude costs associated with newly installed fossil fuel-fired systems and appliances. This commenter explained that fossil fuel extraction and combustion contribute to climate change, increasing the likelihood and severity of flooding and that further government subsidy of climate change inducing housing is an irresponsible use of taxpayer funds. Further, this commenter suggested that HUD could reallocate savings to increase sustainable affordable housing.
Several commenters opposed the proposed removal of § 55.28 when a permit has been obtained from the USACE for a proposed HUD-assisted construction activity in a jurisdictional wetland outside of the floodplain. These commenters questioned whether the USACE consistently implements the 8-step decision making process per FEMA guidance in implementing E.O. 11988 and urged HUD to revise the rule to require that prior to granting relief, HUD confirm that other agencies have adequately completed the 8-step decision making process.
Several commenters supported HUD's changes to § 55.9, broadening its approach for identifying wetlands. Several other commenters acknowledged their support and cited the important biodiversity wetlands provide, along with the ways that wetlands naturally regulate the climate. One commenter supported HUD for looking beyond a “desktop review” of landscapes to determine wetlands.
Several commenters specifically supported HUD's proposal to broaden the screening of wetlands beyond the use of USFWS' NWI. One commenter quoted from the USFWS' explanation that the NWI methodology does not effectively identify all types of wetlands and a “margin of error is inherent.” Noting this plus the United States Supreme Court's rollback of wetlands protections under the Clean Water Act, the commenter supported backup protocol for identifying wetlands and urged HUD to use the full extent of its legal authority to protect these critical habitats and the important flood mitigation functions they provide.
One commenter stated that the NWI data varies in accuracy and that in order to ensure the accuracy of wetlands determinations, such a determination should be confirmed by an on-site analysis that includes an assessment of the functions of the ecosystem. This commenter went on to say that the analysis should be confirmed with the
One commenter stated that resource identification needs to be done in combination with other geospatial tools, such as Light Detection and Ranging (LiDAR) technology. The commenter stated that NWI should not be a primary presence/absence indicator of wetlands, but rather used as part of a suite of remote tools and “on the ground” analysis including a functional analysis method to determine the role the resource is playing in flood resiliency and abatement. This commenter recommended additional consultation with the USACE, the EPA, and/or State or Tribal aquatic resource regulators.
Other commenters added that the NWI indicates the general presence of wetlands on a site but fails to accurately capture the full delineation of wetlands at ground-scale, especially for the identification of smaller wetlands of an acre or less. These commenters also supported the proposed requirement for a “visual assessment” of a site to help identify wetlands. The commenters suggested that HUD revise the requirement to require evaluation of all undeveloped sites using one of the three proposed methods to ensure that wetlands identification on an undeveloped tract is not left to the visual assessment of an untrained practitioner.
One commenter urged HUD to clearly articulate that a physical review of a property by a qualified wetland scientist is necessary by adding the word “physically” to § 55.9(b). If not, this commenter asked HUD to add language explaining in detail how the development community should meet the proposed rule's intent of slowing the destruction of wetlands within communities.
Several commenters emphasized the importance of trained professionals conducting the visual assessment. Other commenters asked whether there are any qualification requirements for the personnel performing the visual screening and whether an environmental review consultant would be acceptable. One commenter asked who at HUD would be adequately trained to perform the visual observation and what this training will consist of.
HUD disagrees that either an on-site wetlands delineation or LiDAR assessment is necessary or appropriate for every wetland review. NWI maps and visual observations of a site provide sufficient information for responsible entities to preliminarily determine if further investigations are warranted. Requiring fully detailed delineations by certified wetland scientists for all projects on undeveloped land would constitute a significant financial and administrative burden that HUD does not wish to impose on its grantees at this time.
It is HUD's intent to provide subregulatory guidance to help grantees navigate the wetland review process including desktop review, visual inspection, and when delineation performed by a certified wetland scientist would be considered necessary and appropriate. Any of these options may be appropriate and will depend on the associated needs of the project involved. Additionally, HUD may consult with other agencies like USACE, EPA, or USFWS as necessary to ensure potential impacts are appropriately mitigated and/or any necessary permits are obtained. During the 8-step decision making process, HUD also requires responsible entities to engage with the public and interested parties like local, Tribal, and non-profit groups with an interest in the resource.
HUD has floodplain and wetlands subject matter experts who will work with grantees, applicants, and responsible entities to ensure compliant reviews are performed in accordance with E.O. 11990.
Some commenters suggested if a wetland is suspected, sites should be evaluated by the NWI, State, and local wetland and stream maps, hydric soil maps, topographic maps, and historical imagery. These commenters said hydric soil maps should be included in the environmental review as part of wetlands protection, similarly to the United States Department of Agriculture (USDA) requirements. The commenters went on to say that if suspected wetlands are identified through these desktop methodologies, the property should be reviewed by a wetlands consultant and receive comment from the USACE.
Another commenter wrote that the several approaches to identifying wetlands in this proposed rule will produce inconsistent and unpredictable results. The commenter said HUD's goal in updating its wetland regulations is “to streamline them, improve overall clarity, and modernize standards.” This commenter believes the most effective approach to realizing these goals is through the adoption of the universally recognized definition of wetlands developed by the USACE and EPA.
Several commenters submitted a more specific concern that the meaning and intent of “visual indication” is not clear. The commenters urged HUD to clarify the “visual indication,” and said such vague terminology may lead to widespread inconsistency in the application of the wetland identification process.
These commenters also asked whether the use of just one of the evaluations (USFWS consultation or NRCS Soil Survey with further evaluation performed by the environmental review preparer) would be sufficient to rule out the presence of wetlands, without the need to complete a wetland delineation.
Several commenters recommended that HUD completely remove the first method from its final rule. The commenters argued that the job of the USFWS is not to consult on wetlands, rather sites should be evaluated by the NWI, State, and local wetland and stream maps, hydric soil maps, topographic maps, and historical imagery and the property should be reviewed by a wetlands consultant with comment from the USACE.
One commenter pointed out that it is not clear in the proposed rule whether the three methods provided are in order of preference or if any one of them can be selected to rule out the presence of wetlands. Commenters also requested that HUD clarify whether once a site has screened inconclusive for potential wetlands, a developer may rely on citing just one of the three methods outlined to conclude there are no wetlands onsite.
It is HUD's intent to provide subregulatory guidance which will help grantees navigate the wetland review process including visual inspection and when delineation would be considered necessary and appropriate.
As the Federal agency tasked with managing the NWI mapper, USFWS is the first agency consulted if a potential issue or deficiency with the NWI is identified.
Several commenters argued that the rule should prohibit all new construction in wetlands. One commenter said that subjecting construction in wetlands to the 8-step decision making process is not enough and that the importance of wetlands in lessening the impact of both riverine and coastal flooding should spur HUD to take additional steps to prevent new construction within them. The commenter emphasized that wetlands and wetland vegetation provide low-maintenance storm mitigation by storing water and slowing the speed of flood waters, along with serving as storm surge protectors. This commenter also noted that coastal wetlands are often viewed as cultural resources by the surrounding communities who view the continued encroachment of development into these areas as a destruction of their heritage. One commenter urged HUD to use stronger language prioritizing the preservation of wetlands and firmly assert that wetland and riparian corridors should be avoided. The commenter opined that Federal dollars should not be used to develop properties that put people in harm's way.
Several commenters emphasized the importance of nature-based solutions and existing green infrastructure known to slow flood waters and protect communities such as wetlands, prairies, riparian corridors and/or bayous as well as reconfiguration of the project footprint and incorporating resilient building standards. One commenter asked HUD to add specific provisions to the proposed rule protecting wetlands and incorporating green infrastructure and to conduct an economic analysis through case studies on various high-flood-prone communities to show that protecting the riparian corridors and wetland green infrastructure would be more cost beneficial than allowing development and covering properties with insurance.
One commenter recommended that all Federal agencies calculate the effects of wetland loss through funding and permitting programs in accordance with E.O.s 11988 and 13690. The commenter noted that Step 5 in FEMA's “Guidelines for Implementing E.O. 11988 and E.O. 13690,” published October 8, 2015, states that the concepts of “Minimize, Restore, Preserve . . . apply if a proposed action will result in harm to or within the floodplain” and defines “harm” to apply to both lives and property, and natural and beneficial floodplain functions. Therefore, the commenter went on to say, it would seem logical that any unavoidable impacts to natural infrastructure within a floodplain, including wetlands, should be mitigated for within the sub-watershed effected and provide ecosystem services to the same locality where the impacts occurred.
Another commenter asked if the impact to one or more acres of non-jurisdictional wetlands is proposed, how HUD will manage the mitigation requirement. This commenter urged HUD to define the one-acre mitigation policy. The commenter noted that compensatory mitigation for jurisdictional wetlands is well-established and widely understood but the prescription of compensatory mitigation for disturbance to more than one acre of non-jurisdictional wetlands is not clear in the proposed rule, and HUD should indicate that it is not required for non-jurisdictional wetlands.
Another commenter asked for clearer information about the costs and process of purchasing compensatory mitigation for non-jurisdictional wetlands.
Another commenter stated that they do not agree that wetlands mitigation should be limited to impacts greater than one acre since any loss of wetlands and floodplains impacts communities and water quality by impairing the ability of watersheds to provide resiliency and flood storage capacity during storm events. This commenter also said that they do not agree with an approach whereby mitigation would be translocated to an in-lieu-fee or banking instrument which is not providing direct benefits to the impacted reach of the waterway and associated floodplain.
HUD agrees with commenters on the importance of nature-based solutions. HUD is seeking to strengthen the commitment to use nature-based floodplain management approaches where practicable by identifying specific strategies and practices that have proven effective in increasing flood resilience and environmental quality, identified in § 55.20(e). These strategies include encouraging the use of natural systems, ecosystem processes, and nature-based approaches when developing alternatives for consideration where possible.
HUD continues to work with FEMA and other Federal partners to minimize any adverse impacts to wetlands from HUD funded projects. In addition, in cases where multiple funding sources are anticipated, HUD recommends utilizing the Unified Federal Review (UFR) to assist in the collaborative cross-agency/Department discussions to resolve any differences across the agencies and ensure cohesion in funding and goals for the project. Additionally, it should be noted that HUD has procedures in place to adopt the environmental reviews of other Federal agencies to avoid unnecessary duplication of effort.
HUD intends to provide grantees, applicants, and responsible entities training and technical assistance to assist them in utilizing appropriate mitigation measures when non-jurisdictional wetlands have unavoidable impacts. Historically, these mitigations have included various forms of compensatory mitigation, and the rule is not intended to change this provision. The use of any compensatory
One commenter asked HUD to clarify who will conduct encroachment and other floodway analysis and how that analysis is to be done under the new § 55.21. This commenter stated that FEMA's current guidance is for the community or developer to conduct it and explained that most local permit officials are not qualified and thus require the developer to pay for an engineer to conduct encroachment analysis.
One commenter expressed support for the proposed updates to the 8-step decision making process to provide clarity and alignment with the FFRMS.
One commenter recommended that wherever HUD defines FFRMS floodplain identification methods, it should consistently use terms referring to both elements of the definition—flood elevation and floodplain extent.
Several commenters asked for clarification whether improvements within the 0.2-percent-annual-chance floodplain will trigger the 5- or 8-step decision making process considering that CISA maps are not currently available and HUD does not predict national coverage for years. These commenters urged HUD to make FFRMS guidance clear and methodical to avoid leaving room for interpretation.
Several commenters suggested that HUD define “areas required for ingress and egress,” a triggering “action” under § 55.20(a), and that the definition should exclude public thoroughfares, which these commenters reasoned including could stretch the covered area further from a development than necessary. One commenter cautioned that including ingress/egress to an action may increase HUD or property owner liability for harm to residents occurring on roads off the subject property. This commenter stated that neither HUD nor borrowers are authorized or responsible for road conditions of the subject property, citing that a majority of flood-related fatalities occur on roads during floods.
Several commenters urged HUD to address how the FFRMS applies to infrastructure projects by incorporating mitigation considerations (
As described in the proposed rule, where CISA is unavailable to define the FFRMS floodplain, grantees, applicants, and responsible entities will use the 0.2-percent-annual-chance floodplain if it is available for non-critical actions and FVA +2 feet when it is not. Note that it is the FFRMS floodplain that will trigger the need for a 5- or 8-step decision making process, regardless of the method used to define it. For critical actions, projects must utilize the higher of FVA +3 feet or the 0.2-percent-annual-chance floodplain if it is available. HUD expects to provide training and technical assistance covering the various methods for defining the FFRMS floodplain along with the 8-step decision making processes to grantees, applicants, and responsible entities which should help them maintain compliance across their project portfolios. HUD disagrees that the 8-step decision making process is insufficient for infrastructure projects and notes that elevating infrastructure is often not practicable. In these cases, HUD requires infrastructure be floodproofed and protected through other means than strictly elevating it. CPD-17-013 outlines that critical infrastructure like bridges needs to be elevated or floodproofed to the 0.2-percent-annual-chance floodplain. This is also in keeping with the FEMA requirements for critical facilities.
HUD notes that the 8-step decision making process for critical actions does require projects to consider ingress and egress along with alternative locations for the project with the intent of removing it from the floodplain if practicable. Access to sites is vital to the functional use and safe evacuation of a site during a flood and therefore must be considered as part of the 8-step decision making process. HUD disagrees that consideration of ingress and egress will create any greater liability for property owners than otherwise would exist if they maintained unsafe conditions. Road conditions during a flood are not considered in this analysis beyond their ability to function as ingress and egress to a site.
Several commenters urged HUD to shift the onus from residents having to look to newspapers or government websites to identify projects that may affect them. One commenter urged HUD to require providing comprehensive proposal details to impacted communities and soliciting their feedback in as many forms/methods necessary, beyond posting to a government website or newspaper. Several commenters urged HUD to shift notice and comment requirements to a community-led planning model, mandating earlier engagement of impacted communities, carried through project lifecycles. These commenters asserted that more substantive participation of impacted communities will: increase likelihood that residents will support projects and help to address any obstacles; improve community understanding of flood risks and how they can individually prepare; reinforce a sense of community; and lead to better project outcomes.
One commenter specifically sought revisions to § 55.20 to require that flood risk assessment and project design criteria steps be co-produced with impacted residents and require flood mitigation assessment to weigh community members' lived experiences (
Several commenters sought clarification on the deadline meant by “earliest possible time of a proposal” for sending required Initial Notice required under § 55.20(b). In clarifying “earliest possible time,” these commenters asked HUD to consider a developer's planning process, explaining that developers would need detailed plans to prepare the initial notice and that developers may not be able to respond to comments until later in a project timeline. Another commenter asked if the proposed rule would change public notice publication timing.
One commenter urged HUD to amend § 55.20(b)(2) from providing “a minimum of 15 calendar days . . . for comment on the public notice” to a minimum of sixty (60) calendar days, which this commenter stated will create no additional delay to the lengthy building process or economic harm, while providing necessary opportunity for public awareness.
Several commenters expressed support for the option to publish Steps 2 and 7 notices on an appropriate government website as an alternative to local news outlets.
Several commenters raised concerns that the public's lack of access to, or knowledge of, government-operated websites may decrease the efficacy of public notices. One commenter asked HUD to consider requiring publication in local newspapers circulated in print and online, characterizing this as a more practical alternative to government websites.
Several commenters sought clarification on what classifies as an “approved government website” for public notices and who at HUD would be authorized to “approve” websites. Several commenters asked if “government website” refers to local, State, or Federal government websites. Commenters also asked HUD to clarify who at HUD has the authority to determine what is or is not an “approved” site. Several commenters asked HUD to detail the roles and responsibilities for public notice.
Several commenters asked whether HUD would publish the 8-step analysis and Finding of No Significant Impact (FONSI) on HUD's website for public comment. One commenter asked what the required length of comment periods for a FONSI for choice-limiting actions under part 50 would be and what the typical comment period length for these actions is. Another commenter asked HUD to describe its current notice and comment process for floodway projects under part 50 at both the environmental assessment and “categorically excluded subject to” levels of review.
HUD disagrees with the commenters' statement that increasing the early notice publication timeframe from 15 to 60 days would cause no additional project delays. HUD believes an increase of this magnitude at this time would cause significant project delays and provide little benefit for public awareness. HUD does not intend to increase the early public notice period at § 55.20 to 60 days at this time.
HUD appreciates the commenters' support for the use of government websites to distribute public notices under part 55. This rule requires that an official government website used for public notification must include accessibility features and languages necessary to ensure the affected community has access to provide meaningful public feedback. The rule clarifies responsibility for public notices falls to the responsible entities who complete the 8-step decision making process. HUD intends to provide grantees with necessary training and guidance to support their efforts at ensuring any government websites used are appropriate. Additionally, under Title VI of the Civil Rights Act of 1964, Executive Order 13166, and in accordance with the U.S. Supreme Court ruling in
One commenter expressed support for the proposed Step 4 impact evaluation language, while stressing that in addition to evaluating the impacts, the evaluation process must include mitigating loss of natural functions within the impacted watershed where avoidance is not feasible.
Several commenters sought clarification in the rule of what information is needed to meet the requirement to demonstrate that runoff from a proposed development would not impact surrounding properties under § 55.20(d)(1)(ii)(C), and whether it would be sufficient to document compliance with local requirements. These commenters explained that many local ordinances require total stormwater volume not increase from pre- to post-construction; however, the addition of fill to any floodplain will generally result in watershed changes, including increased stormwater volume.
One commenter asked HUD to work with Federal partners to develop post-regulatory guidance and training to inform Steps 4 and 5 that clearly define: the values of floodplains, wetlands, and nature-based solutions; the ecosystem process/functions that generate these values; and the bio-geomorphology (ecological interactions between hydrology, geomorphology, and biology of floodplain environments) and attributes of “functional” floodplains. This commenter stated that the proposed rule and Guidelines for Implementing Executive Orders 11988 and 13690 fail to adequately describe these values and attributes, resulting in this commenter regularly seeing local agencies incorrectly interpret “functional” floodplains and allow projects to proceed that fail to protect and restore floodplain functions (
HUD intends to provide technical assistance and guidance to grantees, applicants, and responsible entities for all 8 steps of the 8-step decision making process to help ensure compliance with E.O. 11988, E.O. 11990, and E.O. 13690.
Due to the potential for an increased regulatory burden, HUD does not intend to require grantees, applicants, and responsible entities to track the locations and quantities of growth and development in the floodplain over time as part of their 8-step analysis.
HUD notes that § 55.20(d)(ii)(C) does not forbid a project from impacting surrounding properties; however, those impacts must be considered and documented. HUD projects are required to follow all relevant laws and authorities.
Several commenters expressed support for this provision as a step towards HUD's responsibility to address environmental justice and equity impacts of floodplain management and decision making processes.
One commenter urged HUD to target robust technical assistance towards communities with limited resources to implement the 8-step decision making process.
Another commenter urged HUD to engage the public in developing guidance, and for that guidance to address the following topics: (1) detail how HUD will weigh environmental justice impacts; (2) provide streamlined decision making for activities that mitigate flood risk or wetland loss or that provide co-benefits; and (3) detailed actions manifesting HUD's commitment to nature-based floodplain management approaches.
One commenter raised concerns that the proposed environmental justice review provisions fail to mandate public participation and substantive analysis of proposed actions by including flexible language that incentivizes not engaging historically underrepresented communities in land decisions that impact them. Specifically, this commenter urged HUD to delete “(if conducted)” from § 55.20(f)(2)(iii) (“If the proposed activity is located in or affects a community with environmental justice concerns . . . the reevaluation must address public input provided during environmental justice outreach (if conducted) . . . .”). This commenter reasoned that permitting developers to forego environmental justice outreach where census data/mapping programs do not identify a community of concern inappropriately shifts the burden onto community members to identify and mitigate hazards and could result in HUD supporting development near hazardous sites that are not yet documented on a map. This commenter also stated that non-discretionary public outreach requirements align with other HUD rules, citing HUD's environmental justice worksheet's instruction that project planners should always mitigate environmental justice impacts.
The same commenter also urged HUD to revise the proposed rule to clearly define the substantive analysis necessary to adequately conduct an environmental justice review, suggesting that HUD incorporate guidance from other administrative agencies, citing the EPA's Legal Tools to Advance Environmental Justice as an example. This commenter explained that analysis must account for the cumulative risks from all environmental hazards, beyond flooding itself, illustrating with the example that discriminatory zoning, concentration of hazardous uses, and disinvestment in infrastructure mean that when flooding occurs, communities also experience hazard contamination and harmful emissions from producers' increased emergency outputs.
Several commenters stated that if the 8-step decision making process is part of a full environmental review, NEPA will address environmental justice information and discouraged requiring duplication.
HUD disagrees that the requirement for engaging communities facing environmental justice issues inappropriately shifts the burden of identifying and mitigating hazards onto those communities that are not identified as communities of concern. HUD mandates public participation in the 8-step decision making process in Steps 2 and 7 which require an early and final public notice respectively regardless of the community affected. Feedback received as part of the public participation process is intended to inform decision making related to site locations and mitigation measures, but the responsibility for identifying and mitigating hazards is limited to HUD and the responsible entity. HUD also notes that environmental justice is a required consideration as listed at 24 CFR 50.4 and 58.5 and is not limited to part 55. The rule simply requires coordination of public outreach efforts if they exist.
Several commenters urged HUD to keep in mind that FFRMS is more than just an elevation standard, but rather a broad framework to increase flood resilience and preserve floodplains.
One commenter urged HUD to focus more on the overall health of the floodplain itself rather than the ability of a structure to withstand a flooding event. This commenter said that focusing on the effects an activity has on floodplains and analyzing and mitigating for the benefit of the watershed effected would comply with the intent of E.O. 11988 and E.O. 13690.
One commenter asked HUD to revise the rule to encourage a wide range of resilience measures, to better conform with E.O. 13690's requirement that agencies use nature-based approaches wherever possible. This commenter reasoned that while the proposed elevation standards have a potential to significantly reduce damage, nature-based measures like wetlands restoration are more effective over a large area, in cost and environmental values, citing a case study comparing cost effectiveness of nature-based and coastal adaptation. Another commenter pointed out that “resilience” is not
Another commenter noted that for some projects, including those deemed as “critical” (such as community assets like hospitals, fire stations, and water treatment facilities) elevation alone might not offer the most cost-effective or durable protections. This commenter urged HUD to require careful consideration for what constitutes “critical” and assure protection of ingress, egress, and continued functioning rather than simply protection of the structure itself.
One commenter urged HUD to draw a firm line against allowing “floodproofing” in the FFRMS floodplain for any “new” build or substantial improvement, or alternatively, clarify that floodproofing through elevation be accomplished through pier and beam construction and not by pouring concrete slabs. The commenter noted that this was especially important given HUD's shift to CISA maps because, without additional funding, those maps could take many years to update and release. The commenter also believed that HUD's attempt to mitigate by adopting the 8-step decision making process is insufficient and would allow continued development within the current 1-percent-annual-chance floodplain maps.
HUD notes that the 8-step decision making process for critical actions does require projects to consider ingress and egress along with alternative locations for the project with the intent of removing it from the floodplain if practicable.
HUD disagrees with the commenter that floodproofing fails to provide adequate flood mitigation for non-residential structures in the floodplain. HUD also notes that floodproofing can be done on any number of foundation types and does not require the use of poured concrete slabs. Additionally, HUD contends that CISA will provide a more realistic value for future risk than existing processes as it will address climate change over time. HUD disagrees that all development within the 1-percent-annual-chance floodplain should be forbidden so long as that development is subject to the requirements and protectiveness of a thorough evaluation through the 8-step decision making process.
Several commenters suggested a different set of strategies beyond elevation for substantial rehabilitation that would allow for more design upgrades to promote flood resiliency rather than elevating alone.
For example, some commenters recommended that HUD allow floodproofing to be used on residential buildings where there are units below the FFRMS floodplain. The commenters were concerned that the proposed rule could result in reducing the number of garden-style multifamily residential communities in urban locations that cannot comply with the elevation standards. The commenters went onto say that there are other ways such developments can support flood resiliency such as elevated machinery through design initiatives.
One commenter recommended that HUD consider the characteristics of the specific floodplain in addition to flood stage. The commenter said that elevation should incorporate evacuation planning, including evacuation prior to a flood event for resident and first responder safety.
Another commenter wrote to raise the importance of the International Code Council's model codes (“I-Codes”), which are developed in an open forum with a balance of interests represented and due process. The commenter strongly encouraged HUD to require numerous provisions within the I-Codes that provide flood mitigation benefits, including the latest International Residential Code and International Building Code, in order to ensure the most stringent flood provisions for federally assisted construction in flood zones and an enhanced level of resilience for both structures and communities. The commenter went on to emphasize that the National Institute of Building Sciences estimates that building to modern building codes saves $11 for every $1 invested (including earthquake, flood, and wind mitigation benefits) and retrofitting structures to current flood mitigation requirements can provide $6 in mitigation benefits for every $1 invested.
Another commenter supported the adoption of up-to-date modern building codes and standards and urged HUD to adopt the ASCE 7 Minimum Design Loads and Associated Criteria for Buildings and Other Structures, especially Chapter 5 Flood Loads.
HUD appreciates the commenters' feedback regarding evacuation planning and notes that for critical actions, ingress and egress must be considered in the 8-step decision making process. HUD notes that additional hydrology characteristics of any individual floodplain and associated impacts should also be considered during the 8-step decision making process.
While HUD appreciates the efforts of the International Code Council, ASCE and others to increase building resilience and the importance of building codes generally, HUD currently has no intention of adding them into the part 55 requirements. HUD is separately coordinating with an interagency group in an effort to address building codes for HUD-assisted properties.
One commenter suggested that because the proposed rule allows “floodproofing” instead of elevation, for example, for parking garages, it would cause individuals to potentially lose access to not only their homes but also their vehicles during a major weather event. This commenter suggested this
Another commenter suggested that HUD's proposal unnecessarily expands floodplain management requirements and threatens access to FHA mortgage insurance programs for single family home buyers and multifamily builders. This commenter said that by establishing a higher flood risk standard, the proposed rule is inconsistent with NFIP and creates unwarranted and expansive flood mitigation requirements beyond those established by FEMA.
HUD disagrees that the rule unnecessarily expands floodplain management requirements. The increasing risk to housing structures and associated risks to human life posed by climate change are well documented. Under E.O. 11988, HUD is directed to protect the public's investment in housing and ensure a resilient housing stock. As such, HUD believes that increasing elevation standards for FHA backed new construction within the 1-percent-annual-chance floodplain is necessary in the Minimum Property Standards. As the Minimum Property Standards update is limited to the 1-percent-annual-chance floodplain, the horizontal extent of the floodplain of concern remains consistent with NFIP.
Several commenters were concerned about the use of fill within floodplains. Some commenters emphasized that the use of fill could redirect flood waters onto other properties with existing structures or otherwise cause expansion of the mapped floodplain elsewhere. One commenter worried this impact could lead local municipalities to decline to support FHA-financed projects. Another commenter was also concerned that the elevation requirements may cause cities and counties to reject development of HUD-insured or HUD-assisted housing if the sites are required to be elevated above neighboring sites.
Several commenters said that the proposed rule's floodproofing requirement for sites with no known or previously occurring flood risk will be prohibitively expensive. Some commenters noted it may result in reduced density allowable on the site to accommodate increased retention requirements and therefore a further reduction of property value. One commenter emphasized that elevation by fill has become common in the coastal plain of the Southeast and many communities have suffered worsening flooding and septic tank failures as a result of more water being pushed into their yards.
Several commenters suggested alternatives where fill is necessary to achieve elevation requirements, such as requiring that a project retain the volume of water onsite that is equivalent to the volume of fill used. Another commenter suggested that HUD should consider alternatives that would allow exceptions through which the local Floodplain Administrator may provide input on other design considerations for promoting flood resiliency; elevating residential structures above the FFRMS should not be the only option. Another commenter asked HUD to include guidance for how to remedy if neighboring properties are negatively impacted by improvements. Another commenter asked that HUD include what type of information would be needed to demonstrate runoff from a proposed development would not impact surrounding properties.
One commenter pointed out that using fill material to elevate structures will add significant cost to new construction including transport, earthwork, and compacting costs. Such an increase in costs, the commenter noted, might be passed onto low-income homeowners and renters.
Several commenters urged HUD to prohibit the use of fill to achieve elevation requirements altogether.
According to the RIA, the cost of elevating and floodproofing structures is outweighed by the benefits of flood risk reduction and flood loss avoidance.
One commenter felt that HUD provided compelling data that the benefits of the proposed two-foot-above standard far exceed the costs, and without a standard, property owners would tend to under-insure and under-mitigate relative to the flood risk.
Another commenter argued, contrary to the proposed rule, that the cost of elevating properties is a financial burden to homeowners that would not be made up in saved insurance premiums. One commenter referenced HUD's RIA, which notes that the construction cost to elevate a new residential structure two feet does not pose a significant burden to small entities in the single family housing development industry and contended that more research is needed to come to that determination. The commenter cited one recent analysis that such costs are anywhere from $20,000-$80,000 and encouraged consideration of HUD's proposal to include the basement in the minimum elevation determination.
One commenter expressed their concern that one-story homeowners would not be able to reserve their only floor for a non-residential use to reduce their compliance costs and do not have the same flexibilities as builders to locate new projects outside floodplains.
One commenter noted that it is difficult to predict if the revised elevation standard is viable because land is forever shifting and changing, especially in wetlands.
Some commenters expressed their concern that requiring existing structures to elevate to 2-feet above the BFE may result in significant pushback from borrowers especially those associated with low-income housing transactions. These commenters were concerned that as a result, needed repairs and upgrades to low-income housing will not happen thus placing an undue burden on existing low-income housing.
Other commenters also expressed concern that it will be infeasible to
One comment focused specifically on communities that may have restrictions on building heights for multifamily developments. Since, in those cases, the proposed rule's increased elevation requirements may result in a development exceeding building height requirements, this commenter urged HUD to work with FEMA to develop incentives within the “Community Rating System” for building additional stories on multifamily buildings located in floodplains instead of building horizontally. The commenter suggested that additional stories may be possible if they would increase a building's Community Rating System rating and result in cost savings to the community.
Several commenters asked for HUD to clarify how an existing multifamily structure with a basement could be practicably elevated above BFE.
HUD notes that per the rule, residential units will need to be elevated and not floodproofed for new construction and substantial improvement activities if they are located in the FFRMS floodplain. HUD disagrees that any potential changes in the land make it impossible to determine if the elevation standard is effective. HUD notes that non-residential floors can be floodproofed without elevation.
HUD contends that elevation and floodproofing of low-income housing is a needed repair or upgrade for these facilities, so funding spent on elevating and floodproofing these facilities is necessary. Any repairs that meet the threshold for substantial improvement as defined at § 55.2(b)(12) will trigger requirements for elevation. HUD does not currently have any plans to allow exceptions for buildings which can be elevated to BFE but not the FFRMS floodplain. HUD appreciates the feedback regarding populations living near the coasts as it highlights the need for the rule.
HUD notes that HUD funded projects must also be in compliance with local ordinances including those on height restrictions for design. Additionally, the Community Rating System is a function of NFIP regulations which fall under the purview of FEMA. HUD has no authority to grant incentives under the Community Rating System.
Several commenters expressed support for HUD's commitment to nature-based floodplain management solutions through proposed § 55.20(e) and asked HUD to encourage projects to assess mitigation opportunities that restore natural floodplain and wetland functions proximate to project sites wherever practicable. One commenter expressed support for streamlining decision making for nature-based approaches.
Several commenters explained that nature-based approaches retain excess water and slowly release it back to natural drainage systems while improving water and air quality, recreational function, heat mitigation, and property aesthetics (citing FEMA and National Wildlife Federation research). One commenter described the strategies deployed for three successful nature-based mitigation projects of varying scope—a wetland and shoreline stabilization project, a creek restoration project in a residential and business development, and a stormwater resilience project in a flood-prone residential neighborhood. Several commenters reasoned that this rule's focus on nature-based solutions aligns with Federal adaptation strategy outlined in E.O. 14072, E.O. 13960, and the Biden-Harris Administration's Roadmap to Accelerate Nature-Based Solutions, encouraging HUD to use the Roadmap and its companion resource guide to further identify specific practices proven effective.
Several commenters encouraged HUD to include the following in mitigation guidance and training: (1) promote effectiveness of landscape-level practices encompassing the full property, including natural stormwater strategies (
Several commenters expressed support for HUD's efforts to better communicate the ecosystem services that natural systems provide through proposed § 55.20(e)(3), defining restoration and preservation of wetlands and the beneficial functions of floodplains. One commenter provided an Association of State Wetland Managers manual prepared for agency floodplain management staff and others to assess, protect, and restore floodplain “natural and beneficial” functions.
One commenter suggested that providing more details on the ecosystem services and economic benefits that wetlands and floodplains provide will increase public acceptance of the rule.
HUD not only encourages grantees to utilize nature-based solutions for floodplain management where possible, but § 55.20(e) requires the restoration and preservation of the natural and beneficial functions of the FFRMS floodplain where practicable. HUD believes these projects can provide significant value to both people in the built environment and the floodplain. Additionally, HUD strongly encourages floodways to be returned to greenspace when feasible.
HUD intends to provide guidance and technical assistance to grantees, applicants, and responsible entities to help them restore and preserve the natural and beneficial functions of the floodplain as part of their project. Additionally, HUD staff from the Office of Environment and Energy are available to help individual projects integrate mitigation into their projects.
Commenters asked HUD to confirm that the requirement for elevation of a site to or above a 0.2-percent-annual-chance floodplain with no known or previously occurring flood risk will not result in the requirement for completion of the 8-step decision making process before adding fill to modify a floodplain per section § 55.12(c)(8). If the 8-step decision making process would result, this commenter objects to the administrative burden it would place on
One commenter asked whether FHA Multifamily will allow lenders to avoid the FFRMS requirements and add risk to FHA by building with non-HUD funds and refinancing with FHA in a few years.
Some commenters noted that they did not understand the need to use a FEMA Elevation Certificate or FEMA Floodproofing Certificate to document elevations when CISA mapping is used because these tools are used in conjunction with FEMA maps rather than CISA maps.
Commenters also asked HUD to clarify what it means by “by other means” and “from time to time” when discussing documentation of elevation to avoid inconsistent or unequitable prescription of unknown data requirements.
Another commenter suggested HUD adopt the standard jointly developed by the Association of State Floodplain Managers, the USACE, and FM Approvals for floodproofing non-residential areas below the FFRMS floodplain elevation, which has existed for about 10 years and ensures that floodproofing products perform as designed and advertised.
FEMA elevation certificates, floodproofing certificates, or other documentation as directed by HUD, provides the official elevation of structures. This elevation is necessary to compare structures with the FFRMS floodplain and determine if they are subject to part 55 and/or any elevation mitigation requirements. HUD programs must also follow any local or State requirements for documenting elevation if they exist. HUD notes that any documentation HUD directs the use of must at least meet the minimum elevation requirement of the FFRMS floodplain. HUD appreciates the commenter's thoughtful ideas and considerations for use of floodproofing standards; however, this rule requires alignment with FEMA's floodproofing standards at 44 CFR 60.3(c)(3)(ii) and 60.3(c)(4)(i).
The FHA Multifamily program strongly discourages lenders building with non-HUD funds and refinancing with FHA later to skirt HUD requirements as the FFRMS requirements under this rule are critical to protecting the safety of HUD-assisted residents and the long-term resilience of HUD investments.
One commenter recommended that tested and certified engineered flood barriers be used for floodproofing, where applicable. This commenter also recommended that HUD amend its proposed rule to be effective for the “lowest habitable” floor of the building.
One commenter suggested that funding be provided via FEMA to provide low interest loans for house raising. The commenter noted the average cost of house raising is over $100,000.
One commenter recommended that HUD incorporate a requirement that parking areas be built to the BFE to ensure a consistent practice that can be anticipated by all stakeholders during project planning.
One commenter emphasized that the residents of communities impacted by floods possess a right of return consistent with human rights law that must be honored. The commenter said that such residents should be provided assistance in recovering via programs such as CDBG-DR.
One commenter recommended that HUD make it clear that elevation requirements apply to the new installation of manufactured housing. The commenter urged HUD to prioritize department-wide actions that increase climate resilience for manufactured housing, including facilitating public investments in flood adaptation projects that would protect manufactured housing, mandating stricter building codes including foundation anchoring standards, increasing access to Disaster Recovery funds, and creating incentives to move manufactured housing to safer sites outside of the FFRMS floodplain. Citing several studies, this commenter explained that manufactured and mobile homes have a higher risk of flooding than other housing types due to location and foundation types; and that natural disasters disproportionately adversely affect these residents due to limited legal protections, limited access to disaster relief, and higher poverty rates and mobility limitations.
One commenter encouraged HUD to implement enhanced construction standards consistently across its programs. The commenter said this would reduce complexity and increase programmatic efficiency.
One commenter recommended HUD exclude FHA multifamily mortgage insurance programs from the FFRMS and any elevation and/or flood proofing requirements outside of the 1-percent-annual-chance floodplain. This commenter pointed out that HUD's Office of Multifamily Housing already promotes resilience against flooding in the absence of a new FFRMS, and these changes, as well as State and local code requirements, increase resiliency for FHA-insured multifamily properties without the confusing and costly FFRMS requirements. This commenter urged HUD to defer to State and local governments to decide what resiliency measures are necessary and workable for multifamily developments in their communities, especially if those properties are not HUD-funded or HUD-assisted. This commenter reasoned that State and local governments typically adopt nationally recognized model codes, tailored to reflect local practices and needs, and that residences are built to these codes to withstand natural hazards while maintaining affordability.
HUD notes that it has no control over FEMA's budget or funding program design. HUD also notes that CDBG-DR is funded through individual supplemental appropriations and, when available, grantees have broad discretion in determining how to use the funds. Homeowners that apply for CDBG-DR funding through grantee-run programs and are deemed ineligible for assistance are still welcome to fund their own repairs.
HUD does not believe that parking areas need to be built to BFE. While HUD would encourage projects to build outside of the 1-percent-annual-chance floodplain where practicable, HUD does not believe it is necessary to elevate parking lots.
HUD appreciates the commenters' request to make it clear that elevation requirements apply to the installation of new manufactured housing that is subject to part 55. HUD has historically interpreted the rule related to the
As discussed earlier in this preamble, it is important to note that FHA-insured single family housing is not subject to part 55 and that FHA-insured single family manufactured housing is not subject to the 24 CFR 200.926d elevation standards of this final rule. Eligibility requirements, including elevation requirements, for FHA-insured manufactured housing can be found at 24 CFR part 3285: Manufactured Home Installation Standards and 24 CFR 203.43f: Eligibility of Mortgages Covering Manufactured Homes, as applicable, which are outside the scope of this rulemaking.
Several commenters expressed general opposition towards HUD's proposed process for existing nonconforming sites. One commenter urged HUD to seriously consider disallowing construction and reconstruction within the floodway altogether. Another commenter remarked that § 55.21 appears to be a backdoor for HUD to continue subsidizing risky properties. This commenter felt that the provision was too vague and asked a number of questions such as: whether it will apply to buildings built in violation of NFIP or State, local, or Tribal law or ordinances; whether it will apply to buildings below the current FFRMS standard; how will financial risk be assessed for FHA projects; will it apply to hospitals and nursing homes; how will ingress and egress be analyzed; will HUD coordinate with first responders and emergency rescuers; will it apply to buildings with a history of flooding; how much staff time will it take to conduct this process and would that time be better used finding a safe site; whether HUD believes properties with improvements in floodways comply with the requirements of 24 CFR 5.703, especially paragraphs (a) and (f) and whether HUD is waiving 24 CFR 5.703 for applicable programs as well; and whether there is potential for greater litigation. The commenter said that this provision keeps the most vulnerable in harm's way and recommended it be removed from the final rule.
Several other commenters asked for clarity surrounding the process for existing nonconforming sites. One commenter said they found the change to § 55.21 confusing and asked whether the change means that HUD will continue to assist properties in the floodway in violation of its own regulations. Another commenter said the language of § 55.21(b) is confusing and potentially misleading and asked whether HUD would allow buildings with residential units to occupy the floodway as long as the individual units are out of the floodway or whether HUD will exclude buildings containing residential units from occupying the floodway. Additionally, this commenter asked how HUD will ensure building foundations that remain in the floodway are safe. Another commenter wanted clarity as to what stage HUD would be conducting a “close look” at the site to determine whether to continue assistance. This commenter was concerned that applicants will be reluctant to proceed with applications without assurance that HUD mortgage insurance will be possible. Other commenters asked whether HUD has examined its FHA and public housing portfolios to understand how many floodway projects will be subject to the “very rare” process. This commenter asked whether the alternative process would be used in lieu of oversight and whether any engineers or building science experts were involved in formulating this proposed provision.
Several other commenters supported the proposed provisions relating to existing nonconforming sites. One commenter wrote that they strongly believe that housing preservation and sustainability are complementary and that they recommend HUD pay particular attention to the preservation of existing affordable housing units and the buildings in which they reside. Another commenter welcomed HUD's proposal to address repeatedly flooded properties and urged HUD to pay close attention to repair and reconstruction of multifamily units and to prioritize new protections in communities where residents have been displaced, lost belongings, and required evacuation and rescue. This commenter emphasized that HUD should pay particular attention to communities where such existing structures are a significant portion of the affordable housing stock.
Several other commenters had recommendations for how to change or improve the existing nonconforming site process. One commenter recommended that the footprint of any building located in a FEMA floodway not be allowed to increase in size for rehabilitation purposes. This commenter also discouraged HUD from demolishing existing buildings and instead supported conducting detailed risk assessments to determine the viability of elevation, floodproofing, and relocation. Another commenter urged HUD to defer to NFIP or local regulations for actions within a floodway. Another commenter also suggested that an effective form of mitigation can be the implementation and enforcement of modern building codes for properties being rebuilt due to repetitive losses. Another commenter encouraged HUD to provide funding for buyouts with relocation assistance for properties experiencing repeated loss due to flood damage. This commenter supported HUD policies that increase resilience of existing housing stock but asked HUD to recognize that that is a short-term, temporary measure and that HUD should work towards the long-term goal of eliminating more housing in places at risk of flooding and erosion.
HUD disagrees that this provision will keep the most vulnerable populations in harm's way. HUD contends that by requiring all residential units be removed from the floodway, completion of the 8-step decision making process, and incorporation of all practicable measures to meaningfully reduce flood risk and increase resilience, residents will be protected from future harm. HUD intends to review projects on a case-by-case basis and reserves the right to refuse to approve the project if it believes mitigation is inadequate to reduce the risk sufficiently for resident safety. This alternative processing for existing nonconforming sites is not intended to be used in lieu of oversight at any particular property and it should be noted that the NSPIRE inspection standards require grantees to ensure that all residents live in safe, habitable dwellings, and that the items and components located inside the building, outside the building, and within the units of HUD housing are to be functionally adequate, operable, and free of health and safety hazards.
HUD appreciates the commenter's sentiment that housing preservation and sustainability are inextricably linked and complimentary of one another. HUD also appreciates the feedback from the commenter regarding FEMA designated SRL properties, and HUD agrees that communities with a high percentage of SRL properties are worth particular attention. These properties represent some of the highest risk and HUD wishes to ensure any Federal investment is well protected.
HUD appreciates the commenter's thoughtful ideas and considerations for alteration of this section of the rule. HUD has revised the language of § 55.21 to provide additional clarity and to more explicitly state that all residential units are required to be removed from the floodway under this provision.
HUD does not expressly forbid the expansion of buildings in the floodway under § 55.21; however, any expansion would need to meet a strict set of minimum standards including no residential units, identified evacuation routes, a no-rise certification (as defined by FEMA), and elevation to the FFRMS floodplain. Additionally, HUD may impose any other requirements it deems necessary to ensure the safety of the structure and its occupants. HUD contends that while the section doesn't forbid construction, the requirements laid out will make it exceptionally difficult to expand a building in the floodway. The purpose of § 55.21 is to allow existing buildings to continue to provide safe housing to residents where no feasible alternatives currently exist. HUD notes that changes in local building codes or funding of additional buyout programs exist outside the scope of this rulemaking and require either local governance or acts of Congress to fund.
Several commenters expressed support for the proposed elevation standards for the FHA Minimum Property Standards. One commenter predicted that the new standards would likely decrease flood losses for families who may be particularly impacted by flooding as they do not have the resources to respond or recover. Another commenter urged HUD to work with the White House Flood Resilience Interagency Working Group to monitor whether the new standard will adequately protect the structures in question. Another commenter supported the BFE plus two feet proposal but said that the 0.2-percent-annual-chance flood approach would be even better. Another commenter hoped that the new elevation standards would incentivize adoption of a freeboard standard matching the HUD Minimum Property Standard to ensure that all new development in special flood hazard areas will continue to qualify for FHA-insured mortgages. The commenter emphasized that such a result would have a tremendous positive impact on improving nationwide resilience to flooding.
One commenter supported the new standards but noted that they may be unachievable by certain properties such as row houses and small lots in high-cost areas where substantial improvements may be cost prohibitive especially for low and middle-income homeowners. This commenter went on to encourage HUD to look to a wider suite of mitigation measures in such circumstances, such as elevation of mechanical systems and installation of backwater valves, which can improve resilience while also being more cost effective. Additionally, this commenter noted that new elevation standards could impact building height limitations and recommended that the revised regulations acknowledge that building height may need to be measured on an appropriate reference plane that is not the ground surface to support resilient construction without putting undue restrictions on building height.
One commenter asked HUD to revise the proposed rule to make the standards for elevation consistent for site-built and manufactured homes. This commenter said that current NFIP standards measure the elevation of site-built homes from the bottom of the lowest floor but measure the elevation of manufactured homes from the bottom of the I-beam. The commenter noted that the space between the I-beam and the lowest floor in a manufactured home is usually used for insulation and duct work, which would be expensive to move versus the cost of the extra elevation of the home. The commenter did not see any evidence to support a higher BFE measurement for manufactured homes and said if the standards were more uniform, it would help manufactured home properties meet the BFE requirements.
One commenter pointed out that HUD's proposed rule speaks to substantial improvements but does not speak to requirements for repairs to homes that are substantially damaged by flooding. This commenter was concerned about the costs of elevating an existing home an additional two feet following substantial damage, especially given that NFIP's Increased Cost of Compliance coverage only provides up to $30,000 for such elevation. Another commenter also expressed concern that elevating a site may negatively impact adjoining sites as previously established draining patterns will be altered, which could lead to objections by local municipalities and rejection of FHA-financed projects.
Another commenter was concerned that even the new proposed Minimum Property Standards were inadequate. This commenter suggested that new construction within the floodplain should be avoided, and existing structures should be removed over time. The commenter went on to suggest that HUD's final rule also include an option or incentive for managed retreat from floodplains whereby new construction in a floodplain is prohibited, and once a HUD-funded property experiences a loss from flooding it should be given the opportunity for a buyout or a one-time replacement for existing loss plus a withdrawal of future Federal funding for the property. The commenter suggested that the managed retreat option is cost-effective, would reduce disaster loss and displacement of tenant and owners, and would improve tenant safety and the quality of floodplain function.
One commenter emphasized the need for a consistent Federal narrative on the required minimal development standard for constructing or insuring a structure with known flood risk, noting that the minimal standard for communities within an NFIP SFHA is the lowest floor at or above the BFE. This commenter was concerned about the potential for confusion if HUD changes its Minimum
One commenter requested to see the proposed rule as it will be implemented—at least at 90 percent completion—prior to final publication in order to provide final comments.
HUD appreciates the commenters' feedback about properties where elevation may be difficult or infeasible. HUD contends these difficulties are present in only a limited number of structures substantially improved through FHA-insured loans which sit in the FEMA mapped 1-percent-annual-chance floodplain. To avoid this issue, HUD has removed elevation requirements for substantial improvement activities from the Minimum Property Standards update. While newly constructed units purchased with FHA-insured mortgages would still be subject to the elevation requirements, this change would alleviate much of the concern facing homeowners of existing structures which may need to undergo substantial improvements. HUD also contends that not all Federal programs fund the same types of projects; therefore, not all Federal agencies need to regulate to the same elevation requirements. HUD also notes that some programs, such as CDBG-DR, have already imposed higher elevation standards than the NFIP minimums for years. The increased elevation standard for FHA-insured single family new construction will increase the nation's resilient housing stock and help protect the communities that HUD serves.
Also, HUD notes that FHA-insured single family manufactured housing is not subject to part 55 or 24 CFR 200.926d elevation standards under the final rule. Flood elevation standards for FHA-insured manufactured housing can be found at 24 CFR 3285: Manufactured Home Installation Standards and 24 CFR 203.43f: Eligibility of Mortgages Covering Manufactured Homes, as applicable, and are outside the scope of this rulemaking.
Further, for both manufactured homes and stick-built homes subject to part 55, to determine the lowest floor, HUD looks to FEMA's regulations in 44 CFR 59.1 and FEMA's Elevation Certificate guidance or other applicable current FEMA guidance. For manufactured homes in A Zones, FEMA recommends measurement of MHU elevation from the I-beam as a best practice. HUD recommends following FEMA best practice where feasible. For manufactured homes in coastal high hazard areas (Zone V), FEMA requires measurement of MHU elevation from the bottom of the lowest horizontal structural member (
HUD strongly disagrees that elevation inherently impacts drainage patterns on a given lot. HUD does not require elevation to be completed using any particular method and there are many methods that have no impact on the impervious surface or general slope of a lot. For example, homes may be elevated using pier and beam, knee wall, or crawl space construction methods.
While HUD appreciates the commenters' sentiment that new construction within a floodplain should be avoided, the need for new affordable housing nationwide can necessitate construction in these areas. HUD feels that a ban on new construction in all floodplain areas would have a significant impact on affordable housing availability. Instead, while HUD agrees that avoidance is generally preferred to mitigation, HUD also believes in resilient design and ensuring that construction which does occur is done with appropriate resilient measures. Managed retreat through buyout is an allowable option for local jurisdictions to utilize under existing rules. It should be noted that the rule is intended to incentivize floodplain restoration and preservation activities via an existing exemption from part 55 applicability for such activities. Funding and program eligibility for programs and projects focused on buyout or managed retreat fall outside the scope of this rulemaking and require changes to individual program regulations and/or Congressional funding acts to proceed.
HUD will not release an additional 90 percent draft proposal of the rule for public comment. HUD intends to continuously update and monitor all of its rules and regulations as it sees fit to ensure the continued pursuit of its missions and directives. This includes continued discussions with Federal interagency partners and the White House Flood Resilience Interagency Working Group that may provide useful outside perspectives on any shortcomings or limitations of existing regulations.
Several commenters supported HUD applying the same FHA single family Minimum Property Standards as were proposed in 2016.
Another commenter encouraged HUD to engage with additional scientific and model experts, home builders and developers, community officials, lenders, realtors, consumer groups, and other Federal agencies before changing how it determines which homes are subject to the Minimum Property Standards requirements. This commenter recognized that single family homes in many communities face the potential for increased severity and frequency of flooding events due to climate change but was concerned that more certainty around the proposed FFRMS floodplain approach is needed before major housing programs are impacted.
One commenter asked HUD to exempt FHA single family newly constructed and substantially improved structures located within the 1-percent-annual-chance (100-year) floodplain from any elevation and/or flood proofing requirements.
One commenter stated that HUD's RIA falls short of its mandate under E.O. 12866 because it does not analyze the most readily available alternative to this proposed rule, which is to raise the elevation standard one-foot-above instead of two. This commenter suggested HUD re-release the proposed rule with this analysis before publishing a final rule. Moreover, this commenter said that HUD also used a 2013 new construction study to calculate the costs of retrofitting existing homes, despite recognizing that the cost for substantial improvement projects is significantly higher than for new construction.
The same commenter suggested that HUD measured the proposed rule's benefits using the decreased insurance premiums from an outdated and inaccurate methodology that has been replaced by Risk Rating 2.0. Several other commenters also wrote in regarding FEMA's Risk Rating 2.0 program. One commenter requested that HUD support the reinstallation of flood insurance premium discounts for buildings mitigated through elevation or floodproofing within the Risk Rating 2.0 program. The commenter said these discounts are effective in driving mitigation to reduce flood risk and incentivize mitigation to at-risk buildings.
One commenter recommended that HUD conduct a study of the potential future impacts of implementing the new standards before issuing a final rule. This commenter expressed a lack of confidence in HUD's summary view that the impact is minimal in relation to the actual costs to elevate a home—particularly an existing home—under local building codes and Federal regulations. One commenter noted that the real-world impacts on individuals protected from flood related harms were not factored into the damage reduction found through HUD's regulatory impact analysis.
Another commenter noted that the Risk Rating 2.0 premium reductions for elevating properties should be more transparent. This commenter also noted HUD should consider working with FEMA to clarify financial benefits of elevating properties on flood insurance premiums. Following up on comments made during a listening event, another commenter stated that the expected 30 percent reduction in flood insurance described in the RIA resulting from building a home to base flood elevation plus one, is incorrect. The commenter also stated that HUD has not been transparent with the formula for calculating Risk Rating 2.0 pricing and so there is no easy way to determine if the 30 percent is accurate or inaccurate without obtaining full quotes. The commenter then attached multiple supporting documents that outline an example structure receiving flood insurance rate discounts for elevation that are lower than expected elevation discounts provided in the RIA.
One commenter requested more detailed information as to all aspects of the cost benefit analysis completed for the proposed rule that relate to the value of requiring flood coverage up to the full replacement cost of a building compared to a lesser degree of flood insurance. The commenter asked for more information regarding the value of full replacement cost coverage versus limiting the amount of flood insurance. Another commenter also requested more detail in the RIA (and in the FONSI) before a final rule is implemented. This commenter would like stakeholders to have access to CISA mapping, and clearer information as to when increased flood insurance requirements would apply.
Another commenter asked for clarification because the proposed rule states that CISA methodology would be the required methodology to define the FFRMS floodplain “if HUD-approved maps are available”; however, the RIA describes the process as the developer being able to enter the project location, the anticipated life of the project, and the project criticality to generate an appropriate amount of climate-informed freeboard.
HUD supports its Federal partners' efforts to increase the resilience of housing nationwide and believes that FEMA will have good cause to support any rating system used by NFIP. HUD has no direct authority over the management or implementation of elevation discounts for flood insurance policies. The discounts used in the RIA are based on the best available information and studies at the time of HUD's review. HUD has published all available information used in its decision making in the RIA attachment to the proposed and final rule. HUD encourages stakeholders to review CISA mapping tools as they become available from FEMA and NOAA and other Federal sources. Alternatively, HUD has revised the rule to clarify its position that it permits the voluntary use of formally adopted State, Tribal, and local CISA data, as described in § 55.7(f) and section II.B. of this preamble.
HUD intends to produce implementation guidance for grantees, applicants, and responsible entities to help them correctly utilize available tools to implement CISA. Additionally, HUD intends to provide technical assistance training to help grantees walk through particularly difficult cases.
Under E.O. 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and, therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. E.O. 13563 (Improving Regulations and Regulatory Review) directs Executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline,
As discussed in this preamble, the regulatory amendments will, based on E.O. 13690 and the Guidelines, require, as part of the decision making process established to ensure compliance with E.O. 11988 (Floodplain Management), that new construction or substantial improvement in a floodplain be elevated above the FFRMS floodplain or floodproofed. HUD notes that E.O. 13690 amended E.O. 11988, Floodplain Management, which was originally issued in furtherance of the National Flood Insurance Act of 1968, as amended (42 U.S.C. 4001
This final rule is part of HUD's commitment under HUD's Climate Action Plan. Building to the standards discussed in this final rule will increase resiliency, reduce the risk of flood loss, minimize the impact of floods on human safety, health, and welfare, and promote sound, sustainable, long-term planning informed by a more accurate evaluation of risk that considers possible sea level rise and increased development associated with population growth.
Elevating HUD-assisted structures located in and around the FFRMS floodplain will lessen damage caused by flooding and avoid relocation costs to tenants associated with temporary moves when HUD-assisted structures sustain flood damage and are temporarily uninhabitable. These benefits, which are realized throughout the life of HUD-assisted structures, are offset by the one-time increase in construction costs, borne only at the time of construction.
In addition, the likelihood that floods in coastal areas will become more frequent and damaging due to rising sea levels in future decades necessitates a stricter standard than the one currently in place. Sea level along the contiguous U.S. coastline is expected to rise, on average, 10 to 12 inches (0.25 to 0.30 meters) over the next 30 years (2020 to 2050).
As discussed in the regulatory impact analysis (RIA) that accompanies this rule, HUD estimates that requiring developers to construct or floodproof HUD-funded or insured properties to two feet above base flood elevation for FHA-insured single family homes subject to part 200 and at or above the FFRMS floodplain for single and multi-family properties subject to part 55 will increase construction costs by $4.492 million to $85.036 million per annual cohort. These are one-time costs which occur at the time of construction. Benefits of the increased standard include avoided damage to buildings, as measured by decreased insurance premiums, and avoided costs associated with homeowners and tenants being displaced. These benefits occur annually over the life of the structures. Over a 40-year period, HUD estimates the net present value of aggregate benefits will total $56.4 million to $324.3 million for each annual cohort of new construction.
These estimates are based on the annual production and rehabilitation of HUD-assisted and insured structures in the floodplain and accounts for the 40 States (in addition to the District of Columbia and Puerto Rico) with existing freeboard requirements. The cost of compliance and expected benefits are lower in these States than in States that have no minimum elevation requirements above base flood elevation. HUD's analysis does not consider benefits due to further coastal sea level or riverine rise. Further increases in sea level rise or inland and riverine flooding would increase the benefits of this rule. For a complete description of HUD's analysis, please see the accompanying RIA for this rule on
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601
With respect to all entities, including small entities, it is unlikely that the economic impact would be significant. As the RIA explains, the benefits of reduced damage offset the construction costs. Further, small entities may benefit more since they are less likely to be able to endure financial hardships caused by severe flooding.
Based on an engineering study conducted for FEMA,
These costs are likely higher than would be caused by the increased standards in this final rule because most HUD-assisted substantial improvement projects already involve elevation to comply with the current standard, elevation to the base flood elevation (base flood elevation +0). Thus, elevating a structure an additional two feet would be marginal compared to the initial cost of elevation to the floodplain level.
For these reasons, the undersigned certifies that this rule would not have a significant economic impact on a substantial number of small entities.
A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available through the Federal eRulemaking Portal at
E.O. 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either: (1) imposes substantial direct compliance costs on State and local governments and is not required by statute, or (2) preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Order. This rule does not have federalism implications and would not impose substantial direct compliance costs on State and local governments nor preempts State law within the meaning of the Order.
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, and on the private sector. This rule does not impose any Federal mandates on any State, local, or Tribal governments, or on the private sector, within the meaning of UMRA.
The information collection requirements contained in this rule were reviewed by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2506-0151. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a valid control number.
Environmental impact statements.
Environmental impact statements, Floodplains, Wetlands.
Community development block grants, Environmental impact statements, Grant programs—housing and community development, Reporting and recordkeeping requirements.
Administrative practice and procedure, Claims, Equal employment opportunity, Fair housing, Housing standards, Lead poisoning, Loan programs—housing and community development, Mortgage insurance, Organization and functions (Government agencies), Penalties, Reporting and recordkeeping requirements, Social Security, Unemployment compensation, Wages.
For the reasons stated in this preamble, HUD amends 24 CFR parts 50, 55, 58, and 200 as follows:
42 U.S.C. 3535(d) and 4321-4336e; and Executive Order 11991, 3 CFR, 1977 Comp., p.123.
(a) * * *
(2) * * *
(i) In the case of a building for residential use (with one to four units), the density is not increased beyond four units and the land use is not changed;
(c) All required notices shall be published in an appropriate local printed news medium or on an appropriate government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency. The required notices shall be sent to individuals and groups known to be interested in the proposed action.
42 U.S.C. 3535(d), 4001-4128, and 5154a; 42 U.S.C. 4321
The revisions read as follows:
(a) * * *
(3) This part implements requirements consistent with Executive
(a) With the exception of those terms defined in paragraph (b) of this section, the terms used in this part shall follow the definitions contained in section 6 of Executive Order 11988, section 7 of Executive Order 11990, and the “Guidelines for Implementing Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input”; the terms “special flood hazard area,” “criteria,” and “Regular Program” shall follow the definitions contained in FEMA regulations at 44 CFR 59.1; and the terms “Letter of Map Revision” and “Letter of Map Amendment” shall refer to letters issued by FEMA, as provided in 44 CFR part 65 and 44 CFR part 70, respectively.
(b) For purposes of this part, the following definitions apply:
(1)
(2)
(i)
(ii)
(iii)
(3)(i)
(A) Produce, use or store highly volatile, flammable, explosive, toxic or water-reactive materials;
(B) Provide essential and irreplaceable records or utility or emergency services that may become lost or inoperative during flood and storm events (
(C) Are likely to contain occupants who may not be sufficiently mobile to avoid loss of life or injury during flood or storm events,
(ii) Critical actions shall not be approved in floodways, LiMWAs, or coastal high hazard areas unless they meet an exception at § 55.8 or § 55.21.
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(A) Any repair, reconstruction, modernization, or improvement of a structure, including a manufactured housing unit, the cost of which equals or exceeds 50 percent of the market value of the structure either:
(
(
(B) Any repair, reconstruction, modernization, or improvement of a structure, including a manufactured
(ii)
(A) Any project for improvement of a structure to comply with existing state or local health, sanitary or safety code specifications that is solely necessary to assure safe living conditions, or
(B) Any alteration of a structure listed on the National Register of Historical Places or on a State Inventory of Historic Places.
(iii) Structural repairs, reconstruction, or improvements not meeting this definition are considered “minor improvements”.
(13)
The revisions and additions read as follows:
(a)
(c) * * *
(1) Ensure compliance with this part for all actions under their jurisdiction that are proposed to be conducted, supported, or permitted in a floodplain or wetland, including taking full responsibility for all decisions made under their jurisdiction that are made pursuant to § 55.20 for environmental reviews completed pursuant to 24 CFR part 50;
(4) Incorporate in departmental regulations, handbooks, and project and site standards those criteria, standards, and procedures related to compliance with this part.
(d)
(e)
(1) Supply HUD (or the responsible entity authorized by 24 CFR part 58) with all available, relevant information necessary for HUD (or the responsible entity) to perform the compliance required by this part, including environmental review record documentation described in 24 CFR 58.38, as applicable;
(2) Implement mitigating measures required by HUD (or the responsible entity authorized by 24 CFR part 58) under this part or select alternate eligible property; and
(3) Monitor approved actions and ensure that any prescribed mitigation is implemented.
(f)
(1) Receipt of public or agency comments;
(2) Selection or rejection of alternatives analyzed in Step 3 of the 8-step decision making process in § 55.20;
(3) Selection or rejection of minimization measures analyzed in Step 5 of the 8-step decision making process in § 55.20;
(4) Determination whether avoidance of floodplain or wetland impacts, according to the purpose of Executive Orders 11988 and 11990, is or is not practicable.
(a)
(b)
(c)
(i) Refer to those uses that are restricted under identified Federal, State, or local floodplain regulations; and
(ii) Include any land use restrictions limiting the use of the property by a
(2)(i) For disposition of multifamily properties acquired by HUD that are located in the FFRMS floodplain and contain critical actions, HUD shall, as a condition of approval of the disposition, require by covenant or comparable restriction on the property's use that the property owner and successive owners provide written notification to each current and prospective tenant concerning:
(A) The hazards to life and to property for those persons who reside or work in a structure located within the FFRMS floodplain, and
(B) The availability of flood insurance on the contents of their dwelling unit or business.
(ii) The notice described in paragraph (c)(2)(i) of this section shall also be posted in the building so that it will be legible at all times and easily visible to all persons entering or using the building.
(a)(1) As required by section 102(a) of the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4012a), when HUD financial assistance (including mortgage insurance) is proposed for acquisition or construction purposes in any special flood hazard area (as designated by the Federal Emergency Management Agency (FEMA) on an effective Flood Insurance Rate Map (FIRM) or Flood Insurance Study (FIS)), structures for which HUD financial assistance is provided must be covered by flood insurance in an amount at least equal to the project cost less estimated land cost, the outstanding principal balance of any HUD-assisted or HUD-insured loan, or the maximum limit of coverage available under the National Flood Insurance Program, whichever is least. Under section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), such proposed assistance in any special flood hazard area shall not be approved in communities identified by FEMA as eligible for flood insurance but which are not participating in the National Flood Insurance Program. This prohibition only applies to proposed HUD financial assistance in a FEMA-designated special flood hazard area one year after the community has been formally notified by FEMA of the designation of the affected area. This requirement is not applicable to HUD financial assistance in the form of formula grants to States, including financial assistance under the State-administered CDBG Program (24 CFR part 570, subpart I), Emergency Solutions Grant amounts allocated to States (24 CFR part 576), and HOME funds provided to a State under Title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12701-12839). HUD strongly encourages that flood insurance be obtained and maintained for all HUD-assisted structures in the FFRMS floodplain, sites that have previously flooded, or sites in close proximity to a floodplain.
(2) Under section 582 of the National Flood Insurance Reform Act of 1994 (42 U.S.C. 5154a), HUD disaster assistance that is made available in a special flood hazard area may not be used to make a payment (including any loan assistance payment) to a person for repair, replacement, or restoration of damage to any personal, residential, or commercial property if:
(i) The person had previously received Federal flood disaster assistance conditioned on obtaining and maintaining flood insurance; and
(ii) The person failed to obtain and maintain the flood insurance.
(b) HUD or the responsible entity may impose flood insurance requirements that exceed the minimums established by the Flood Disaster Protection Act of 1973 or by Tribal, State, or local requirements when needed to minimize financial risk from flood hazards. HUD and responsible entities have discretion to require that flood insurance be maintained for structures outside of the FEMA-mapped floodplain but within the FFRMS floodplain and/or that structures be insured up to the full replacement cost of the structure when needed to minimize financial risk from flood hazards. Nothing in this part limits additional flood insurance requirements that may be imposed by a mortgagee participating in a HUD assistance or mortgage insurance or guarantee program.
(a)
(1) HUD or the responsible entity shall determine whether compliance with this part is required. Refer to § 55.12 for a list of activities that do not require further compliance with this part beyond the provisions of paragraph (c) of this section.
(2) HUD or the responsible entity shall refer to § 55.8 to determine whether the proposed action is eligible for HUD assistance or if it must be rejected as proposed.
(3) If the project requires compliance under this part and is not prohibited by § 55.8, HUD or the responsible entity shall refer to § 55.13 to determine whether the 8-step decision making process in § 55.20 is required.
(4) HUD or the responsible entity shall refer to § 55.10 to determine whether the 8-step decision making process in § 55.20 for wetland protection is required or whether best practices to minimize potential indirect impacts to wetlands should be pursued.
(5) HUD or the responsible entity shall determine whether an exception in § 55.14 applies that would allow them to complete an abbreviated decision-making process under § 55.20.
(6) Where the decision-making process is required, HUD or the responsible entity shall follow the decision-making process described in § 55.20, eliminating any steps as permitted under § 55.14.
(b)
(c)
(d)
(a) HUD or the responsible entity shall determine all compliance with the
(b) For a non-critical action, HUD or the responsible entity shall define the FFRMS floodplain using the following process:
(1) The climate-informed science approach (CISA) to identify the area having an elevated flood risk during the anticipated life of the project if data is available and actionable. Data is available and actionable for a particular project where:
(i) The data can be accessed via a tool, resource, or other process developed or identified by a Federal agency or agencies to define the floodplain using the CISA, and
(ii) HUD has adopted the particular tool, resource, or other process through a
(2) If CISA data is not available or actionable but FEMA has defined the 0.2-percent-annual-chance floodplain, those areas that FEMA has designated as within the 0.2-percent-annual-chance floodplain; or
(3) If neither CISA data nor FEMA-mapped 0.2-percent-annual-chance floodplain data is available, those areas that result from adding an additional two feet to the base flood elevation as established by the effective FIRM or FIS or—if available—FEMA-provided interim or preliminary maps or studies or advisory base flood elevations.
(4) FFRMS floodplain determinations under paragraphs (b)(2) and (3) of this section shall be made using the information provided in the latest FEMA resources. Elevation determinations based on CISA data or an interim or preliminary FEMA map cannot be used as a basis for a lower elevation than the base flood elevation on the current FIRM or FIS.
(c) For a critical action, the FFRMS floodplain is either:
(1) Those areas designated as having an elevated flood risk identified by the climate-informed science approach (CISA)—as determined based on the criticality of the action—during the anticipated life of the project if the data is available and actionable, as available and actionable is described in paragraph (b)(1) of this section; or
(2) If CISA data as described above is not available or actionable, an area either within the 0.2-percent-annual-chance floodplain or within the area that results from adding an additional three feet to the base flood elevation. The larger floodplain and higher elevation must be applied where the 0.2-percent-annual-chance floodplain is mapped. If FEMA resources do not map the 0.2-percent-annual-chance floodplain, the FFRMS floodplain is the area that results from adding an additional three feet to the base flood elevation based on best available information.
(3) FFRMS floodplain determinations under paragraph (c)(2) of this section shall be made using the information provided in the latest FEMA resources.
(d) If CISA data is not available or actionable and if FEMA FIRMS, FIS, preliminary maps or advisory base flood elevations are unavailable or insufficiently detailed to determine base flood elevation, other Federal, Tribal, State, or local data shall be used as “best available information.” If best available information is based only on past flooding and does not consider future flood risk:
(1) For non-critical actions, the FFRMS floodplain includes those areas that result from adding an additional two feet to the base flood elevation based on best available information.
(2) For critical actions, the FFRMS floodplain includes those areas that result from adding an additional three feet to the base flood elevation based on best available information.
(e) When preparing an Environmental Impact Statement (EIS), an analysis of the best available, actionable climate science, where available and actionable data exists or can be generated in accordance with 42 U.S.C. 4336(b)(3), as determined by HUD or the responsible entity, must be performed to define the FFRMS floodplain. These sources may supplement the FIRM or Advisory Base Flood Elevation (ABFE) in order to better minimize impacts to projects or to elevate or floodproof structures above the risk adjusted floodplain. These sources may not be used as a basis for a lower elevation than otherwise required under this section.
(f)(1) Regardless of whether HUD has adopted a particular tool, resource, or other process to define the floodplain using CISA, as described in paragraphs (b)(1) and (c)(1) of this section, HUD or a responsible entity may voluntarily define the FFRMS floodplain utilizing CISA when:
(i) A State, Tribal, or local government formally adopts, through code or other formal adoption measures, a tool, resource, or other written standard developed or utilized by the State, Tribal, or local government that provides data or other methods to identify the FFRMS floodplain using CISA for a particular project; or
(ii) HUD publishes guidance identifying a particular tool, resource, or other process that may be used to define the floodplain using CISA, and the tool, resource, or other process identified in the HUD-published guidance contains the necessary data or information to define the floodplain for the project being considered.
(2)(i) The approach in this paragraph (f) may not be used as a basis for a lower elevation than the lowest of:
(A) The 0.2-percent-annual-chance floodplain elevation;
(B) The elevation that results from adding an additional two feet to the base flood elevation; or
(C) The elevation required by paragraph (b) or (c) of this section, if CISA data is available and actionable under paragraph (b)(1) or (c)(1).
(ii) Where HUD or a responsible entity voluntarily defines the FFRMS floodplain using the options in paragraph (f)(1)(i) or (ii) of this section, the criticality of the action must be considered when determining the appropriate elevation of the FFRMS floodplain.
(a) HUD financial assistance (including mortgage insurance) may not be approved with respect to:
(1) Any action located in a floodway unless one of the following applies:
(i) An exception listed in § 55.12 applies; or
(ii) A permanent covenant or comparable restriction will preserve all onsite FFRMS floodplain and/or wetland areas from future development or expansion of existing uses in the floodplain and/or wetland areas. Any rehabilitation, including reconstruction in the case of properties affected by Presidentially declared disasters, that does not expand the footprint of the buildings or the number of units on the site would be allowed within the FFRMS floodplain outside of the floodway. No buildings or improvements may modify or occupy the floodway, with the exception of:
(A) Functionally dependent uses (as defined in § 55.2(b)(7)) and utility lines;
(B) De minimis improvements, including minimal ground disturbance or placement of impervious surface area to ensure accessibility where this is permitted by local ordinances and does not increase flood risk to the property; or
(C) Buildings and improvements that will be removed as part of the proposed action.
(2) Any critical action located in a floodway, other than a functionally dependent use where any existing or new structure has been or will be elevated or floodproofed to the FFRMS elevation for critical actions; or any critical action in a coastal high hazard
(3) Any noncritical action located in a coastal high hazard area, or LiMWA, unless the action is a functionally dependent use, is limited to existing structures or improvements, or is reconstruction following destruction caused by a Presidentially declared disaster. If the action is not a functionally dependent use, the action must be designed for location in a coastal high hazard area. An action will be considered designed for a coastal high hazard area if:
(i) In the case of reconstruction following destruction caused by a disaster, or substantial improvement, the work meets the current standards for V zones in FEMA regulations (44 CFR 60.3(e)) and, if applicable, the Minimum Property Standards for such construction in 24 CFR 200.926d(c)(4)(iii); or
(ii) In the case of existing construction (including any minor improvements that are not substantial improvements):
(A) The work met FEMA elevation and construction standards for a coastal high hazard area (or if such a zone or such standards were not designated, the 1-percent-annual-chance floodplain) applicable at the time the original improvements were constructed; or
(B) If the original improvements were constructed before FEMA standards for the 1-percent-annual-chance floodplain became effective or before FEMA designated the location of the action as within the 1-percent-annual-chance floodplain, the work would meet at least the earliest FEMA standards for construction in the 1-percent-annual-chance floodplain.
(b) All determinations made pursuant to this section shall be based on the effective FIRM or FIS unless FEMA has provided more current information. When FEMA provides interim flood hazard data, such as ABFE or preliminary maps and studies, HUD or the responsible entity shall use the latest of these sources. However, a base flood elevation from an interim or preliminary source cannot be used if it is lower than the base flood elevation on the current FIRM and FIS.
(c) Where HUD assistance is proposed for actions subject to § 55.20 on structures designated by FEMA as Severe Repetitive Loss (SRL) properties, and FEMA has approved measures that if implemented would qualify the property for a status of “Mitigated” as to the SRL list, HUD or the responsible entity will ensure that FEMA-identified mitigation measures are identified and implemented as part of the decision making process under § 55.20(e).
The following process shall be followed in making the wetlands determination:
(a) HUD or the responsible entity shall determine whether the action involves new construction that is located in or impacts a wetland.
(b) As primary screening, HUD or the responsible entity shall verify whether the project area is located in proximity to wetlands identified on the National Wetlands Inventory (NWI) and assess the site for visual indication of the presence of wetlands such as hydrology (water), hydric soils, or wetland vegetation. Where the primary screening is inconclusive, potential wetlands should be further evaluated using one or more of the following methods:
(1) Consultation with the Department of the Interior, U.S. Fish and Wildlife Service (USFWS), for information concerning the location, boundaries, scale, and classification of wetlands within the area.
(2) Reference to the Department of Agriculture, Natural Resources Conservation Service (NRCS) National Soil Survey (NSS), and any Tribal, State, or local information concerning the location, boundaries, scale, and classification of wetlands within the action area and further site study by the environmental review preparer with reference to Federal guidance on field identification of the biological (rather than jurisdictional) characteristics of wetlands.
(3) Evaluation by a qualified wetlands scientist to delineate the wetland boundaries on site.
(a) When the proposed project includes new construction activities (including grading, clearing, draining, filling, diking, impounding, and related activities for any structure or facilities including the siting of new manufactured housing units) that will have a direct impact to onsite wetlands identified by the process described in § 55.9, compliance with this part requires completion of the 8-step decision making process in § 55.20 to address wetland impacts.
(b) When the proposed project may indirectly affect wetlands by modifying the flow of stormwater, releasing pollutants, or otherwise changing conditions that contribute to wetlands viability, the significance of these impacts must be evaluated and the impacts minimized through best management practices. If the project site includes wetlands that will not be impacted by new construction, HUD strongly encourages measures to preserve such wetlands from future impacts, including by obtaining a restrictive covenant, conservation easement, or other mechanism.
(c) When the proposed project may indirectly affect off-site wetlands, impacts should be minimized to the extent practicable. While this part does not require further decision making to address these effects under the authority of Executive Order 11990, measures to address offsite wetlands impacts may be necessary to comply with related laws and authorities including the Endangered Species Act or to address significant impacts under the National Environmental Policy Act.
With the exception of the flood insurance requirements in § 55.5, this part shall not apply to the following categories of proposed HUD actions:
(a) HUD-assisted activities described in 24 CFR 58.34 and 58.35(b);
(b) HUD-assisted activities described in 24 CFR 50.19, except as otherwise indicated in § 50.19;
(c) The approval of financial assistance for restoring and preserving the natural and beneficial functions and values of floodplains and wetlands, including through acquisition of such floodplain and wetland property, where a permanent covenant or comparable restriction is placed on the property's continued use for flood control, wetland protection, open space, or park land, but only if:
(1) The property is cleared of all existing buildings and walled structures; and
(2) The property is cleared of related improvements except those which:
(i) Are directly related to flood control, wetland protection, open space, or park land (including playgrounds and recreation areas);
(ii) Do not modify existing wetland areas or involve fill, paving, or other
(iii) Are designed to be compatible with the beneficial floodplain or wetland function of the property.
(d) An action involving a repossession, receivership, foreclosure, or similar acquisition of property to protect or enforce HUD's financial interests under previously approved loans, grants, mortgage insurance, or other HUD assistance;
(e) Policy-level actions described at 24 CFR 50.16 that do not involve site-based decisions;
(f) A minor amendment to a previously approved action with no additional adverse impact on or from a floodplain or wetland;
(g) HUD's or the responsible entity's approval of a project site, an incidental portion of which is situated in the FFRMS floodplain (not including the floodway, LiMWA, or coastal high hazard area), but only if:
(1) The proposed project site does not include any existing or proposed buildings or improvements that modify or occupy the FFRMS floodplain except de minimis improvements such as recreation areas and trails; and
(2) The proposed project will not result in any new construction in or modifications of a wetland.
(h) Issuance or use of Housing Vouchers or other forms of rental subsidy where HUD, the awarding community, or the public housing agency that administers the contract awards rental subsidies that are not project-based (
(i) Special projects directed to the removal of material and architectural barriers that restrict the mobility of and accessibility to elderly and persons with disabilities.
The decision-making process in § 55.20 shall not apply to the following categories of proposed actions:
(a) HUD's mortgage insurance actions and other financial assistance for the purchasing, mortgaging, or refinancing of existing one- to four-family properties in communities that are in the Regular Program of the National Flood Insurance Program (NFIP) and in good standing (
(b) Financial assistance for minor repairs or improvements on one- to four-family properties that do not meet the thresholds for “substantial improvement” under § 55.2(b)(12);
(c) HUD or a recipient's actions involving the disposition of individual HUD or recipient held one- to four-family properties;
(d) HUD guarantees under the Loan Guarantee Recovery Fund Program (24 CFR part 573), where any new construction or rehabilitation financed by the existing loan or mortgage has been completed prior to the filing of an application under the program, and the refinancing will not allow further construction or rehabilitation, nor result in any physical impacts or changes except for routine maintenance;
(e) The approval of financial assistance to lease an existing structure and/or units within an existing structure located within the floodplain, but only if;
(1) The structure is located outside the floodway or coastal high hazard area, and is in a community that is in the Regular Program of the NFIP and in good standing (
(2) The project is not a critical action; and
(3) The entire structure is or will be fully insured or insured to the maximum extent available under the NFIP for at least the term of the lease.
(f) Special projects for the purpose of improving the energy or water efficiency of utilities or installing renewable energy that involve the repair, rehabilitation, modernization, weatherization, or improvement of existing structures or infrastructure, do not meet the thresholds for “substantial improvement” under § 55.2(b)(12), and do not include the installation of equipment below the FFRMS floodplain elevation; and
The decision making steps in § 55.20(b), (c), and (g) (Steps 2, 3, and 7) do not apply to the following categories of proposed actions:
(a) HUD's or the recipient's actions involving the disposition of acquired multifamily housing projects or “bulk sales” of HUD-acquired (or under part 58 of recipients') one- to four-family properties in communities that are in the Regular Program of the NFIP and in good standing (
(b) HUD's actions under the National Housing Act (12 U.S.C. 1701
(c) HUD's or the recipient's actions under any HUD program involving the repair, rehabilitation, modernization, weatherization, or improvement of existing multifamily housing projects, hospitals, nursing homes, assisted living facilities, board and care facilities, intermediate care facilities, and one- to four-family properties, in communities that are in the Regular Program of the NFIP and are in good standing (
(d) HUD's or the recipient's actions under any HUD program involving the repair, rehabilitation, modernization, weatherization, or improvement of existing nonresidential buildings and structures, in communities that are in the Regular Program of the NFIP and are in good standing (
(e) HUD's or the recipient's actions under any HUD program involving the repair, rehabilitation, or replacement of existing nonstructural improvements including streets, curbs, and gutters, where any increase of the total impervious surface area of the facility is de minimis. This provision does not include critical actions, levee systems, chemical storage facilities (including any tanks), wastewater facilities, or sewer lagoons.
Table 1 to this section indicates the applicability, by location and type of action, of the decision making process for implementing Executive Order 11988 and Executive Order 11990 under this subpart.
The revisions and additions read as follows:
Except for actions covered by § 55.14, the decision making process for compliance with this part contains eight steps, including public notices and an examination of practicable alternatives when addressing floodplains and wetlands. Third parties may provide analysis and information to support the decision making process; however, final determinations for each step, authorization of public notices, and receipt of public comments, are the responsibility of HUD or the responsible entity. The steps to be followed in the decision making process are as follows:
(a)
(b)
(1) The public notices required by paragraphs (b) and (g) of this section may be combined with other project notices wherever appropriate. Notices required under this part must be bilingual or multilingual, as appropriate, if the affected public has Limited English Proficiency. In addition, all notices must be published in a newspaper of general circulation in the affected community or on an appropriate government website that is accessible to individuals with disabilities and provides meaningful access for individuals with Limited English Proficiency, and must be sent to Federal, State, and local public agencies, organizations, and, where not otherwise covered, individuals known to be interested in the proposed action.
(2) A minimum of 15 calendar days shall be allowed for comment on the public notice. The first day of a time period begins at 12:01 a.m. local time on the day following the publication or the mailing and posting date of the notice which initiates the time period.
(4) When the proposed activity is located in or affects a community with environmental justice concerns, public comment and decision making under this part shall be coordinated with consultation and decision making under HUD policies implementing 24 CFR 58.5(j) or 50.4(l).
(c)
(1) * * *
(i) Locations outside and not affecting the FFRMS floodplain or wetland;
(ii) Alternative methods to serve the identical project objective, including but not limited to design alternatives such as repositioning or reconfiguring proposed siting of structures and improvements or incorporating natural systems, ecosystem processes, and nature-based solutions to avoid floodplain and wetland impacts; and
(2) Practicability of alternatives should be addressed in light of the goals identified in the project description related to the following:
(iii) Economic values such as the cost of space, construction, services, relocation, potential property losses from flooding, and cost of flood insurance.
(3) For multifamily and healthcare projects involving HUD mortgage insurance that are initiated by third parties, HUD in its consideration of practicable alternatives is not required to consider alternative sites, but must include consideration of:
(i) A determination to approve the request without modification;
(ii) A determination to approve the request with modification; and
(iii) A determination not to approve the request.
(d)
(1)
(i) Floodplain characteristics include:
(A) Identification of portions of the site that are subject to flood risk, documented through mapping and, as required by § 55.7(e) or commensurate with the scale of the project and available resources as permitted by § 55.7(f), climate-informed analysis of factors including development patterns, streamflow, and hydrologic and hydraulic modeling;
(B) Topographic information that can inform flooding patterns and distance to flood sources, as described in flood mapping, Flood Insurance Studies, and other data sources; and
(C) Public safety communications and data related to flood risk including available information on structures such as dams, levees, or other flood protection infrastructure located in proximity to the site.
(ii) Impacts to lives and property include:
(A) Potential loss of life, injury, or hardship to residents of the subject property during a flood event;
(B) Damage to the subject property during a flood event;
(C) Damage to surrounding properties from increased runoff or reduction in floodplain function during a flood event due to modification of the subject site;
(D) Health impacts due to exposure to toxic substance releases that may be caused or exacerbated by flood events; and
(E) Damage to a community as a result of project failure (
(iii) Impacts to natural and beneficial values include changes to:
(A) Water resources such as natural moderation of floods, water quality maintenance, and groundwater recharge;
(B) Living resources such as flora and fauna (if the project requires consultation under 24 CFR 50.4(e) or 58.5(e), consultation with the U.S. Fish and Wildlife Service or National Marine Fisheries Service must include a description of impacts evaluated under this part);
(C) Cultural resources such as archaeological, historic, aesthetic and recreational aspects; and
(D) Agricultural, aquacultural, and forestry resources.
(2)
(i) Public health, safety, and welfare, including water supply, quality, recharge, and discharge; pollution; flood and storm hazards and hazard protection; and sediment and erosion, including the impact of increased quantity or velocity of stormwater runoff on, or to areas outside of, the proposed site;
(e)
(1)
(i) If a residential structure undergoing new construction or substantial improvement is located in the FFRMS floodplain, the lowest floor or FEMA-approved equivalent must be designed using the elevation of the FFRMS floodplain as the baseline standard for elevation, except where higher elevations are required by Tribal, State, or locally adopted code or standards, in which case those higher elevations apply. Where non-elevation standards such as setbacks or other flood risk reduction standards that have been issued to identify, communicate, or reduce the risks and costs of floods are required by Tribal, State, or locally adopted code or standards, those standards shall apply in addition to the FFRMS baseline elevation standard.
(ii) New construction and substantial improvement of residential structures that have no dwelling units below the FFRMS floodplain and that are not critical actions as defined at § 55.2(b)(3), or of non-residential structures, shall be designed either:
(A) With the lowest floor, including basement, elevated to or above the elevation of the FFRMS floodplain; or
(B) With the structure floodproofed at least up to the elevation of the FFRMS floodplain. Floodproofing standards are as stated in FEMA's regulations at 44 CFR 60.3(c)(3)(ii) and (c)(4)(i), or such other regulatory standard as FEMA may issue, and applicable guidance, except that where the standard refers to base flood level, floodproofing is required at or above the FFRMS floodplain, as defined in this part.
(iii) The term “lowest floor” must be applied consistent with FEMA regulations in 44 CFR 59.1 and FEMA's Elevation Certificate guidance or other applicable current FEMA guidance.
(2)
(i)
(ii)
(iii)
(iv)
(3)
(i) Natural Resource Conservation Service or other conservation easements;
(ii) Appropriate and practicable compensatory mitigation, which is required for unavoidable adverse impacts to more than one acre of wetlands. Compensatory mitigation includes but is not limited to: permittee-responsible mitigation, mitigation banking, in-lieu fee mitigation, the use of preservation easements or protective covenants, and any form of mitigation promoted by State or Federal agencies. The use of compensatory mitigation may not substitute for the requirement to avoid and minimize impacts to the maximum extent practicable.
(4)
(ii) For all healthcare facilities, evacuation route(s) out of the FFRMS floodplain must be identified and clearly communicated to all residents and employees. Such actions must include a plan for emergency evacuation and relocation to a facility of like capacity that is equipped to provide required critical needs-related care and services at a level similar to the originating facility.
(iii) All critical actions in the FFRMS floodplain must operate and maintain an early warning system that serves all facility occupants.
(f)
(2) * * *
(ii) A reevaluation of alternatives under this step should include a discussion of economic costs. For floodplains, the cost estimates should include savings or the costs of flood insurance, where applicable; flood proofing; replacement of services or functions of critical actions that might be lost; and elevation to at least the elevation of the FFRMS floodplain, as appropriate based on the applicable source under § 55.7. For wetlands, the cost estimates should include the cost of filling the wetlands and mitigation.
(iii) If the proposed activity is located in or affects a community with environmental justice concerns, the reevaluation must address public input provided during environmental justice outreach, if conducted, and must document the ways in which the activity, in light of information analyzed, mitigation measures applied, and alternatives selected, serves to reduce any historical environmental disparities related to flood risk or wetlands impacts in the community.
(g) * * *
(1) If the reevaluation results in a determination that there is no practicable alternative to locating the proposal in the FFRMS floodplain or the wetland, publish a final notice that includes:
Notwithstanding the limitations on HUD assistance defined in § 55.8, in exceptional circumstances, the Assistant Secretary for Community Planning and Development may approve HUD assistance or insurance to improve an existing property with ongoing HUD assistance or mortgage insurance if the following conditions are satisfied:
(a) HUD completes an environmental review pursuant to 24 CFR part 50, including the 8-step decision making process pursuant to § 55.20, that:
(1) Documents that it is not practicable to transfer the HUD assistance to a site with lower flood risk under existing program rules, financial limitations, and site availability; and
(2) Mandates measures to ensure that the elevated flood risk is the only environmental hazard or impact that does not comply or that requires mitigation to comply, with HUD's environmental requirements at 24 CFR parts 50, 51, 55, and 58; and
(b) The proposed project incorporates all practicable measures to minimize flood risk, preserve the function of the floodplain and any impacted wetlands as described in § 55.20(e), and increase the overall resilience of the site, as approved and/or required by HUD. At minimum, these measures must include:
(1) Removal of all residential units and critical action structures from the floodway;
(2) Identification of evacuation routes out of the FFRMS floodplain;
(3) A No-Rise Certification for any new improvements in the floodway; and
(4) Elevation (or floodproofing pursuant to § 55.20(e)(1)) of existing structures within the FFRMS Floodplain, where practicable.
If a proposed action covered under this part is already covered in a prior review performed under Executive Order 11988 or Executive Order 11990 by another agency, including HUD or a different responsible entity, that review may be adopted by HUD or by a responsible entity authorized under 24 CFR part 58 without further public notice, provided that:
(b) * * *
(1) The action currently proposed has not substantially changed in project description, scope, and magnitude from the action previously reviewed by the other agency; and
(c) HUD assistance must be conditioned on mitigation measures prescribed in the previous review.
Any provision of this part held to be invalid or unenforceable as applied to any action should be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding is that the provision of this part is invalid and unenforceable in all circumstances, in which event the provision should be severable from the remainder of this part and shall not affect the remainder thereof.
12 U.S.C. 1707 note, 1715z-13a(k); 25 U.S.C. 4115 and 4226; 42 U.S.C. 1437x, 3535(d), 3547, 4321-4336e, 4852, 5304(g), 12838, and 12905(h); title II of Pub. L. 105-276; E.O. 11514 as amended by E.O. 11991, 3 CFR, 1977 Comp., p. 123.
(b) * * *
(1) Executive Order 11988, Floodplain Management, as amended by Executive Order 13690, February 4, 2015 (3 CFR, 2016 Comp., p. 268), as implemented in HUD regulations at 24 CFR part 55, particularly section 2(a) of Executive Order 11988, as amended.
Required notices must afford the public the following minimum comment periods, counted in accordance with § 58.21:
12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
The revisions read as follows:
(c) * * *
(4) * * *
(i)
(ii)
(iii)
(
(
(
(B) Under the DE program, these mortgages are not eligible for insurance unless the DE mortgagee submits the LOMA, LOMR, or Elevation Certificate to HUD with the mortgagee's request for endorsement.
Bureau of Land Management, Interior.
Final rule.
The Bureau of Land Management (BLM) is revising its oil and gas leasing regulations. Among other changes, the final rule implements provisions of the Inflation Reduction Act (IRA) pertaining to royalty rates, rentals, and minimum bids; updates the bonding requirements for leasing, development, and production; and revises some operating requirements. The final rule will improve the BLM's leasing process by ensuring proper stewardship of public lands and resources.
The final rule is effective on June 22, 2024.
Yvette M. Fields, Division Chief, Fluid Minerals Division, telephone: 240-712-8358, email:
Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States. For a summary of the final rule, please see the final rule summary document in docket BLM-2023-0005 on
On July 24, 2023, the BLM published a proposed rule to amend the regulations in 43 CFR parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160, 3170, and 3180 in the
Overall, this rule will enhance the BLM's administration of oil and gas-related activities on America's public lands and reflects Congress's changes to the oil and gas program in the IRA. Specifically, the rule will reflect requirements of the IRA by increasing royalty rates, rentals, and minimum bids for BLM-issued oil and gas leases, and by imposing a fee for the submittal of an expression of interest (EOI) for leasing Federal oil and gas. The rule also updates the bonding requirements for leasing, development, and production to address shortcomings identified in reports by the Government Accountability Office (GAO) and the Department of the Interior's (DOI's) Office of Inspector General (OIG). Collectively, the BLM proposed these changes to bring the regulations into compliance with the IRA and the Infrastructure Investment and Jobs Act (IIJA) mandates and to ensure that reclamation costs are not borne by the American public. The BLM is also adjusting its cost recovery mechanisms so that project applicants provide a more appropriate share of the BLM's up-front costs for processing these applications. Finally, the BLM is implementing several changes to focus leasing on areas with fewer resource conflicts. The BLM's final rule will be the first comprehensive update to the Federal onshore oil and gas program's regulatory framework since 1988.
The Secretary of the Interior manages the Federal onshore oil and gas program pursuant to the requirements of various statutes, including the Federal Land Policy and Management Act of 1976, as amended (43 U.S.C. 1701
The public comment period for the proposed rule ended on September 22, 2023. During the 60-day public comment period, the BLM received over 215,000 comments submitted by Federal, State, and local governments, local agencies, Tribal organizations, industry representatives, individuals, and other external stakeholders. The vast majority of submissions were form letters. Commenters also submitted roughly 1,000 unique letters. From all submissions, the BLM identified approximately 1,200 unique comments
The BLM carefully reviewed all comments received on the proposed rule. Certain comments suggesting that the BLM address issues outside the scope of this rulemaking are discussed in Section III.A.
The BLM categorized the remaining comments received and provides an overview of those categories and associated responses in Section III.B. The BLM provides more detailed discussions of those comments in Section IV.B. The Federal Government posts all comments at the Federal eRulemaking portal:
The BLM received many comments directed at matters outside of the scope of this rulemaking, including those regarding: project-specific considerations; the BLM's existing website or computer application programs (
A commenter stated that the BLM failed to write this entire rule in a manner that is easily understood without providing any examples to support the assertion. When drafting the proposed and final rules, the BLM reviewed the rule text to identify areas where the regulations could be written more clearly and made changes as necessary.
This section of the preamble summarizes the major categories of public comments that the BLM received in response to the proposed rule, as well as the BLM's responses.
During the comment period, the BLM received comments requesting additional updates to parts 3160 and 3170. As part of its review under Executive Order (E.O.) 14008, issued on January 27, 2021, the Department reviewed the onshore oil and gas leasing program and published the
As noted above in the summary of comments outside the scope of this rulemaking effort, the BLM received a comment requesting the development of a blueprint for outdoor recreation. Such a revision is beyond the scope of this rulemaking as it would involve revising regulations in Title 43 of the CFR, Subchapter H, and those regulations do not pertain to oil and gas leasing and development, which is the focus of this effort. Finally, a joint rulemaking between the BLM and the Bureau of Indian Affairs is outside the scope of this rulemaking effort.
• Not changing the rule to address GHG emissions and climate change on the grounds that the NEPA review process at the project level provides a sufficient review for climate change issues, and that refraining from leasing Federal minerals will not change the demand for oil and gas production;
• Amending the rule to forgo future leasing based upon the need to avoid exceeding the world's pre-industrial global temperature level by 1.5 degree Celsius;
• Setting lease rates based on the Social Cost of Carbon calculated by the U.S. Environmental Protection Agency in November 2022 at a discount rate of 1.5 percent;
• Aligning the oil and gas program with President Biden's climate goals;
• Limiting GHG emissions via emissions monitoring;
• Implementing a three-stage leasing process to prioritize lands for leasing with a final climate screening;
• Creating a carbon budget for the Federal onshore oil and gas program;
• Requiring climate change mitigation, analyzing climate impacts across BLM-managed lands, or implementing a rule to ensure climate protection for all new leasing and permitting decisions;
• Initiating a programmatic environmental impact statement for the onshore oil and gas program to assess the potential GHG impacts;
• Establishing a quantitative climate test tool to evaluate the relative impact and significance of GHG emissions at the project level; and
• Expanding the competitive leasing preference criteria for conformity with State policies on GHG emissions.
The BLM takes its responsibilities to Tribes seriously and respects Tribal sovereignty and treaty rights. Where there are such opportunities, the BLM is committed to exploring co-stewardship opportunities with Tribes. However, co-stewardship is outside the scope of this rulemaking.
Comments asserting that the application of the preference criteria will result in the closure of any lands to oil and gas leasing are incorrect. The BLM has and will continue to make land use decisions at the land use planning stage and document those decisions in the applicable RMP. The preference criteria, on the other hand, were proposed consistent with the MLA to direct the BLM's administrative resources to leasing tracts most likely to be developed, to reduce conflicts between oil and gas development and other public land uses that were not resolved in the resource management plans, and to “take[ ] into account the long-term needs of future generations for renewable and nonrenewable resources,” 43 U.S.C. 1702. These criteria may be considered on a case-by-case basis in light of specific circumstances. Even if the BLM were to apply such criteria and decide to defer including particular lands from any particular lease sale, nothing in this rule prevents those lands from being offered in future sales. The RMPs do not always resolve all conflicts, especially those that may be unforeseen or arise due to a change in circumstances. In many cases, this calls for a more specific site review, and the MLA provides the necessary discretion, apart from FLPMA, to engage in this type of site-specific review.
Accordingly, the BLM is adjusting its oil and gas bonding requirements, including by increasing minimum bond amounts for the first time in decades. The BLM is proposing to adjust its cost recovery mechanisms to account for changes in the leasing process since the fees were initially set in 2005. The BLM drafted the proposed rule to: (1) reflect the requirements of the IRA; and (2) enhance the administration of the onshore program, to direct leasing to lands with a higher development potential, and in response to the GAO's and OIG's numerous reports identifying shortcomings in the program, as discussed in the November 2021
The BLM did not make any changes to the final rule based upon the comments expressing concerns that the increased bonding and fees could result in the potential movement of production from Federal to State or private lands. The royalty rates on State and private lands are often higher than those for Federal lands as are the rental rates.
The BLM made changes to the rule in response to comments and for accuracy, clarity, or grammar.
The BLM received numerous comments on the proposed changes to the bonding regulations under subpart 3104, and in response to these comments, the BLM reinstated an operators' ability to post personal bonds secured with letters of credit (LOCs) and
The BLM deleted the existing and proposed sections governing the formal lease nomination process under part 3120.
The BLM revised the final rule to clarify that it will consider the preference criteria in § 3120.32 as part of the scoping process and will apply the criteria after the conclusion of scoping but before issuing the draft NEPA document for the lease sale, consistent with the BLM's existing policy and implementation of IM 2023-007,
The BLM also revised the final rule to extend an approved APD's term based on a lease suspension.
These revisions are discussed in more detail in the Section-by-Section Discussion.
Sections that did not receive any comments, or that only received comments in support of the proposed changes, are not discussed in this Section-by-Section analysis and are adopted in the final rule as proposed. In addition, throughout the final rule, the BLM replaced the words “he,” “she,” or “he/she” with the appropriate title or entity to comply with Executive Order 13988,
The BLM received a number of comments on the definition of the terms “Acreage for which expressions of interest have been submitted,” “Person,” and “Surface Management Agency.”
With respect to the phrase “Acreage for which expressions of interest have been submitted,” a comment stated the BLM should change the definition to “acreage that is identified in an EOI on land eligible and available for leasing” to ensure that the BLM accurately determines which EOIs have been properly submitted. No further changes are made to the final rule as the definition already states, “and for which the BLM may lawfully issue an oil and gas lease.”
Comments on the term “Person” recommended that the BLM use the definition in the Federal Oil and Gas Royalty Management Act, 30 U.S.C. 1702, to avoid any unnecessary confusion. The BLM adopts this recommendation and has revised the definition of the term “person” in the final rule accordingly.
Comments on the term “surface management agency” focused on the assertion that the definition improperly required the BLM to obtain consent from other agencies within the DOI in order to lease lands managed by those agencies, and therefore, that the BLM should not adopt the proposed changes to this definition. Based on these comments, the BLM made additional changes to § 3101.51 to provide that public domain and acquired lands that are open to the operation of the Mineral Leasing Act will be leased only with the consent of the surface managing agency, which, upon receipt of a description of the lands from the authorized officer, can report to the authorized officer that it consents to leasing with stipulations, if any, or withholds consent or objects to leasing.
The existing § 3000.4 details the appeal rights and exceptions for parts 3000 through 3930. The BLM received suggestions that this section be amended to include State Director Reviews, with an option to further appeal to the Interior Board of Land Appeals (IBLA). The commenters asserted that, without the intermediary appeal to the State Director, there would effectively be no opportunity to appeal in light of average times for IBLA decisions. The BLM does not believe any change to this section is needed. Decisions that are signed at the state office level, which are usually decisions that affect the administration of a lease under parts 3100 and 3120, are signed on behalf of the State Director, meaning that State Director review is not applicable. In addition, 43 CFR subpart 3165 already states that onshore oil and gas operational decisions made under the authority of part 3160 are subject to the State Director Review process and any decision of the State Director is appealable to the IBLA.
This is a new section that the BLM has added in response to comments. The BLM received comments suggesting that it should include a severability clause in the final rule similar to that found in the BLM's realty regulations (43 CFR 2801.8). The final rulemaking adopts this recommendation by adding a new section addressing severability. This section will read, “If a court holds any provisions of the regulations in parts 3000 through 3180 or their applicability to any person or circumstances invalid, the remainder of these rules and their applicability to other people or circumstances will not be affected.” The BLM published the proposed rule, in large part, to address the changes required by the IRA, various reports by the GAO and OIG, and the Department's report in response to section 208 of E.O. 14008. Those sections implementing the IRA can and do function separately from those sections proposing new bonding amounts or the competitive leasing preference criteria.
One commenter stated that the courts will determine if a provision is or is not severable from the rule. The comment is correct in that a court will ultimately determine whether portions of the rule can be severed from others in the event a court determines a provision was improperly promulgated. This section is designed to aid that review by demonstrating that the BLM intends the various components of the rule, with various provenances and independent functions, to continue to operate even if one or more of the provisions is declared unlawful.
The existing § 3000.5 reiterates the 90-day statute of limitations for judicial challenges to certain BLM decisions under the MLA. The BLM received comments on this section suggesting that the BLM clarify that the regulation does not apply to claims brought under statutes other than the MLA. The final rule does not adopt this recommendation, as this section also applies to other minerals management programs, such as mining claims, which are managed under the general mining laws (see part 3800).
The existing § 3000.6 specifies where and when documents filed under these regulations must be submitted and provides for filing by electronic means in addition to the hard copy or delivery service, as was previously authorized. Commenters generally supported the proposed changes to this section. Commenters suggested revising the provision to include a requirement that each BLM office designate an email address for filing, and that an e-filing should be deemed timely if it is
The existing § 3000.10 provides general information on the types of fees the BLM may assess, how the fees are calculated, when the fees must be paid and how and when the BLM will adjust any fees. The BLM received a comment recommending a change to paragraph (c), which addresses adjustment of fees, recommending that any adjustments to fixed fees be subject to notice and comment. The BLM declines to make this change as further explained in the discussion of § 3000.120 below.
The existing § 3000.12 lists the fixed fees that must be paid for each transaction requiring a fixed fee and includes transactions that previously did not require a fee, such as the designation of a successor operator; unit agreement applications; subsurface storage agreement applications; unit agreement expansion applications; and formal lease nominations. The final rule removes the formal lease nominations process, consistent with the changes made under § 3120. The BLM received several comments on this section. Some comments supported the BLM's proposal to incorporate processing fees for new actions that were not previously subject to a fee, stating that the fees were appropriate given the BLM's limited resources, or stating that the proposed fees were not sufficient to cover the BLM's costs. Other comments opposed the increased fees, asserting they were excessive, disproportionate, unwarranted, and designed to be a deterrent to Federal oil and gas leasing activities. In addition, some commenters stated that the analysis in the preamble to the proposed rule failed to comprehensively analyze the BLM's fee system, and, specifically, failed to compare the fees to the increased bonus bids, rentals, and bonding. Another comment objected to the application of the new filing fees, royalty, and rental provisions to leases sold before the enactment of the IRA but issued after the IRA.
The preamble to the proposed rule outlined the processing steps considered by the BLM in calculating each of the fees. The general comments only criticized the processing steps associated with the BLM's review of a competitive lease application fee, as discussed below. No comments criticized the processing steps for the other application fees; therefore, the BLM will implement the proposed fixed filing fees as stated in the preamble to reimburse the BLM for its processing costs. With respect to the fixed filing fees, the preamble specifically stated that the BLM would not charge a new fixed filing fee under this rule for processing a document that the BLM received before the effective date of the rule. Documents submitted before the effective date of the final rule will be processed based on the fee that was in effect when the document was submitted.
One comment recommended that the competitive lease application fee, which includes the cost for the BLM to undertake any necessary NEPA review, should not be a fixed fee and instead should be determined on a case-by-case basis under § 3000.110, or, alternatively, that the cost should be fixed but that the applicant should have the option to request a case-by-case fee determination to establish a fee for a particular lease application. Although the BLM understands the impetus for suggesting that the fee be determined for a particular lease, the BLM cannot adopt the proposed change, because the NEPA analysis prepared for each lease sale covers all of the parcels offered in a given sale and is not for each individual parcel. Moreover, the competitive lease application fee is collected after the NEPA review has been completed, and after the lease sale has been held. Therefore, the applicant would not be able to help pay for the preparation of any BLM NEPA document before performing any case processing on a parcel-by-parcel basis.
Other comments stated that the BLM should charge fixed filing fees for compensatory royalty agreements and communitization agreements (CAs). The final rule includes a fixed fee for compensatory royalty agreements under ROW pursuant to subpart 3109 where the processing steps are the same for leases. The BLM added the following clarifying language to this provision in the final rule: “Leasing and compensatory royalty agreements applications under right-of-way pursuant to subpart 3109.” The BLM does not adopt the recommendation to require a fixed filing fee for CAs. The BLM explained in the preamble to the proposed rule that new fixed filing fees were considered for Federal CAs (§ 3105), Federal participating area applications (§ 3180), and royalty rate reduction applications (§ 3103), but it ultimately declined to propose these fees due to the low value and the public benefit related to these items.
The BLM received suggestions that the Bureau clarify requirements for the fixed filing fee for designation of successor operator for Federal agreements, such that the fee would not be required when a successor operator is designated for contracted unit agreements that do not contain Federal lands. The BLM adopts the suggestion and has revised the Processing and Filing Fee table in this section of the final rule to include the following language: “Designation of successor operator for all Federal agreements, except for contracted unit agreements that contain no Federal lands.”
The BLM also received several comments stating the BLM erred in adding the fee for EOIs to the fixed filing fee table, because these fees are adjusted for inflation every year; and section 50262(d) of the IRA expressly authorizes the Secretary to only adjust the EOI fee “not less frequently than every 4 years . . . to reflect the changes in inflation.” The BLM concurs with this comment and has moved the EOI fee to the new § 3103.1(a) where it will be adjusted based on inflation every 4 years.
Another comment stated that the BLM did not explain its authority to impose an annual inflation adjustment and that for the annual inflation adjustment, the BLM must re-apply all of the factors set out in section 304(b) of FLPMA, make a new determination as to whether the fee warrants an adjustment, and similarly codify the determination via
Section 304 of FLPMA, 43 U.S.C. 1734, authorizes the BLM to establish fees intended to reimburse the government for reasonable costs and authorizes the Secretary to change or abolish such fees. The BLM establishes fees based upon the reasonableness factors at section 304(b) of FLPMA, which include “actual costs (exclusive of management overhead), the monetary value of the rights or privileges sought by the applicant, the efficiency to the government processing involved, that portion of the cost incurred for the benefit of the general public interest rather than for the exclusive benefit of the applicant, the public service provided, and other factors relevant to determining the reasonableness of the costs.” Once the BLM establishes a fee, the BLM adjusts the fees for inflation annually to effectively keep fees in line with current costs. This process comports with the broad authority given to the BLM in section 304 to set reasonable fees. The BLM did not propose changes to this method, or how the fees are adjusted annually for inflation in this proposed rule. The BLM will not use an alternative method for annual fee adjustments as it would require collecting data periodically for each fee, which is inefficient, costly, and impractical. However, as recommended by the GAO,
Furthermore, to verify the accuracy of the BLM's method for determining fees, the BLM reviewed a common oil and gas fixed filing fee—assignments and transfers—which has not experienced changes to the process since 2005. The BLM intentionally selected the assignment and transfer fixed filing fee as the most representative filing fee to review because (1) assignments and transfers are the most common application received by the BLM; (2) the other applications that require filing fees are more rarely used; and 3) all state offices are familiar with the assignment and transfer application. After completing the review of the assignment and transfer fixed filing fee for the proposed rule, the BLM compared the outcome of that review with the inflation adjustments (86 FR 54636 (Oct. 4, 2021)). The review identified that the assignment and transfer fixed filing fee should be $100 in FY2022 based upon the FLPMA factors. This amount matched the inflation-adjusted fixed filing fee for FY2022, which was also $100. Therefore, the FY2022 inflation adjustment matched the calculated fixed filing fee based upon the FLPMA factors in FY2022. If the BLM's review process changes for an application, and thus there is the potential that reasonable costs may change outside of the cost of inflation, the BLM would update the fixed filing fees based upon the FLPMA factors and provide the opportunity for notice and comment.
Finally, the BLM requested comments related to changing its current process, which requires publishing the annual fee adjustments as a final rule in the
Commenters stated that since the fixed filing fees are not subject to appeal, the BLM should remove this provision; that adjustment of the fees should include a notice and comment period; and that the BLM should continue to publish the annual fee adjustments in the
The BLM is updating the final rule to state that the BLM will “announce annually in the
Additionally, as stated above, if the BLM's review process for any application changes, and thus there is the potential that the BLM's reasonable costs may change outside of the cost of inflation, the BLM would review the FLPMA factors to update the fixed filing fees and provide the opportunity for notice and comment.
The BLM adopts the proposed change to publish the fixed filing fees on the BLM's web page and to publish the adjusted fees each year in the
The provisions within § 3000.130 only apply to oil and gas leasing; therefore, the BLM moved the fiscal terms for new leases to a new section under subpart 3103 for Fees, Rentals and Royalty in the final rule in response to comments stating that failure to specify the rental amounts, within the context of the regulation on annual
The BLM received a recommendation to reference its legal authority and duties under FLPMA and NEPA in all authority citations in the regulation. The BLM concurred in part and added a full reference to FLPMA into the authority introduction to the regulatory text, which changes “43 U.S.C. 1732(b), 1733, and 1740” to now state, “43 U.S.C. 1701
The existing § 3100.0-3 sets out the BLM's authority for leasing on various types of lands, such as public domain land and acquired lands. During the comment review period, the BLM decided to add clarifying language in the final rule on Wild and Scenic Rivers to comply with the Wild and Scenic Rivers Act (16 U.S.C. 1280). Therefore, the final rule makes the following adjustments to the language for the Wild and Scenic Rivers exceptions listed under both Public Domain and Acquired lands: “subject to valid existing rights,” is moved to the beginning of the sentence to clarify that this applies to all types of National Wild and Scenic Rivers Systems lands. The following clarifying language is added to the end of the sentence “lands within designated Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-quarter mile of the bank of certain rivers designated as scenic or recreational, and in some cases, designating legislation may apply a different boundary extent. Lands within the National Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-half mile of the bank of any river designated a wild river by the Alaska National Interest Lands Conservation Act (16 U.S.C. 3148).”
The BLM received a comment on paragraphs (a)(1) and (b)(1), suggesting that the BLM change the phrase “are subject to lease” to “may be subject to lease” to align with the discretion afforded the Interior Secretary under the MLA, 30 U.S.C. 226(a), that lands “may be leased.” The final rule does not adopt this recommendation. In 1920, Congress enacted the MLA to facilitate the exploration and development of oil and gas and other federally owned minerals. The MLA specifies the lands that are subject to the statute, and then provides discretion to the Secretary to determine which of those lands may be leased. The first step in exercising that discretion is making decisions in the BLM's resource management plans under FLPMA. The BLM declines to change this phrase so as not to confuse this section on the authority to lease, including the exceptions listed under both public domain and acquired lands, where there is no discretion to lease ineligible lands.
A comment recommended that paragraphs (a)(2) and (b)(2) rely solely on the subhead—Exceptions—to indicate what the provisions in the sections mean and, for clarity, that the BLM should consider inserting language to the effect of: “The following lands are not subject to lease.” The final rule adopts this recommendation.
The BLM received a comment requesting that the BLM identify additional exceptions for both public domain and acquired lands. This exception would specify that the BLM cannot lease lands identified in the land use plans as unavailable for oil and gas leasing or otherwise determined by the authorized officer to be inappropriate for leasing to protect other multiple use resources and values. The final rule does not adopt this recommendation. As stated in the proposed rule, the purpose of this section is to describe lands subject to leasing, and changes proposed to this section were made to provide clarity and to conform the regulations to exceptions identified in various other laws. The change requested by the comment does not meet this requirement, as the comment addresses discretionary decisions regarding leasing. Moreover, the concerns represented by this comment are already addressed in the BLM's land use planning process, NEPA reviews, and other processes that identify suitable areas for leasing.
The existing § 3100.0-5 sets out the definitions applicable to part 3100. The BLM added new proposed definitions for “competitive auction,” “exception,” “modification,” “oil and gas agreement,” “qualified bidder,” “qualified lessee,” “responsible bidder,” “responsible lessee,” and “waiver.” The BLM received several comments on this section requesting additional definitions for “bad actors,” “current land use plan,” “exclusion area,” “mitigation,” “permanent impairment,” and “preferred leasing area.” Since these terms are not used in parts 3000, 3100, and 3120, the BLM has not adopted these recommendations.
In addition, a comment recommended adding a definition for “restoration.” The BLM declines to make this change given that § 3104.10, where this term is used, specifically states that the restoration is to be “in accordance with, but not limited to, the standards and requirements set forth in 43 CFR 3162.3 and 3162.5 and orders issued by the authorized officer.” This flexible definition does not warrant modification at this time.
Some comments recommended that the BLM expand the definitions in this section to include the terms “eligible” and “available.” The BLM declines to define those terms by regulation at this time and may revisit the issue in future rulemakings.
One commenter requested that the BLM remove the definition for “modification” to avoid confusion where this term is used in contexts other than changes to lease stipulations. The BLM agrees there is a potential for confusion given the numerous different contexts in which the word “modification” is used and has therefore revised the definition to clarify that it only applies to lease stipulations. For similar reasons, the BLM has made changes to “exception” and “waiver” in the final rule. Each definition now includes the phrase “as used for lease stipulations.”
A comment recommended modifying the term “oil and gas agreement” to reflect the fact that an agreement may in some instances include unleased lands. The BLM adopts this recommendation.
The BLM received a comment suggesting that the term “operator” should be revised to explicitly state that the operator holds operating rights and thus has the same obligations as the operating rights owners to plug wells and remediate the well sites. The BLM does not concur with the recommendation, as an operator could be a lessee and may or may not own operating rights. The current definition for “operator” states, “including, but not limited to, the lessee or operating rights owner, who has stated in writing to the authorized officer that it is responsible under the terms and conditions of the lease for the operations conducted on the leased lands or a portion thereof.” Therefore, the BLM kept the existing definition of “operator” in the final rule.
The BLM received several comments on the proposed definitions for the terms “qualified bidder,” “qualified lessee,” “responsible bidder,” and “responsible lessee.” Those comments that supported the inclusion of these
The BLM declines to include this language, which is too vague and overlooks existing enforcement tools. For example, when a company fails to make timely payments, such as rental payments, the Act already dictates that the lease will automatically terminate through operation of law. In addition, if a company fails to make royalty payments after being notified such payments are due and exhausting its legal remedies, the Office of Natural Resources Revenue (ONRR) may refer an entity to the Federal suspension and debarment list. It is the BLM's policy to check SAM.gov (the Federal suspension and debarment site) before issuing a lease or approving an entity to acquire a lease interest through an assignment or transfer of operating rights. The BLM may also take enforcement actions when lessees violate the terms of a lease, including environmental, worker safety, or labor standards. The BLM does not agree that a company's decision to not drill a well or develop leases should determine if they are responsible or qualified, because such fact-specific business decisions do not, by themselves, determine whether a lessee has acted irresponsibly or incompetently. The BLM generally lacks the capacity to investigate and evaluate State law reclamation violations; however, the current definition for responsible lessee provides for the lessee to be in compliance with statutes applicable to oil and gas development. While it is not the BLM's practice to investigate a person's compliance with State law reclamation requirements, the BLM would not ignore a person's noncompliance when it has been brought to the BLM's attention for consideration if a person is a responsible lessee prior to lease issuance.
Other comments suggested that, in connection with these definitions, the BLM should: (1) create a public registry of individuals and companies currently identified as not being responsible bidders and/or lessees, and make the list of “Entities in Noncompliance with Reclamation Requirements of section 17(g) of the MLA” public and updated on a regular basis; (2) clarify, in § 3108.30, that leases are subject to cancellation if the lessee is found not to be a “qualified lessee” or a “responsible lessee”; and (3) implement a system that allows States, local government, Tribal governments, and individuals to report behavior or conduct that warrants investigation.
The BLM updates the list of “Entities in Noncompliance with Reclamation Requirements of section 17(g) of the MLA” on an as needed basis, and then forwards the names of the entities to the Federal Government's suspension and debarment program. SAM.gov is a publicly available website. In turn, when a company returns to compliance, the BLM notifies the suspension and debarment program that the entity should be removed from SAM.gov. The cancellation provisions in § 3108.30 contains language for entities that fail to comply with the laws and regulations. The BLM also notes that any entity or individual can contact the BLM to report behavior or conduct that warrants investigation, and the BLM declines to create a separate regulatory system for this purpose at this time.
The BLM also received comments regarding the new definitions for “qualified bidder,” “qualified lessee,” “responsible bidder,” and “responsible lessee.” One comment suggested that the term “qualified bidder” does not take into account that brokers or non-operating partners bid on leases, and that the new term could substantially impede bidding if it were to mandate that bonding or similar bidder requirements that historically only applied to a lessee be in place prior to bidding. The BLM considered the involvement of brokers or non-operating partners when it drafted these definitions, which is evidenced by the separate definitions for “qualified bidder” and “responsible bidder”, as well as to whom the lease is issued (“qualified lessee” and “responsible lessee”), since these may not be the same entities. In addition, there is no mandate, in either the proposed or final rules, for bonding or similar requirements prior to bidding.
Another comment suggested that the BLM should clarify in the definitions (and in proposed § 3102.51) that it will continue to adhere only to the factors in MLA section 17(g), 30 U.S.C. 226(g), in determining who may hold a lease. The BLM disagrees. The MLA, 30 U.S.C. 226(b)(1)(A), refers to responsible qualified bidders and specifically states that: “[a]ll lands to be leased which are not subject to leasing under paragraph (2) shall be leased as provided in this paragraph to the highest responsible qualified bidder by competitive bidding under general regulations in units of not more than 2,560 acres, except in Alaska, where units shall be not more than 5,760 acres.” The MLA also states that “[t]he Secretary shall accept the highest bid from a responsible qualified bidder which is equal to or greater than the national minimum acceptable bid, without evaluation of the value of the lands proposed for lease.” The BLM's regulations reiterate and rely on these statutory terms. Specifically, because a person who bids on a lease is not necessarily the same person to whom the lease is issued, it is appropriate to include definitions for “qualified bidder” and “responsible bidder,” as well as definitions for whom the lease is issued,
Another comment on the definitions for “responsible bidder” and “responsible lessee” questioned the inclusion of the phrase “history of noncompliance” with applicable regulations and lease terms, stating that the meaning of a “history of noncompliance” is unclear. The comment suggested that the phrase could be construed broadly to mean that, if a person ever was found to have been in noncompliance with the terms of its Federal oil and gas lease or applicable regulations, that person could be precluded from obtaining future Federal lease interests, even if they corrected the alleged noncompliance or disputed the alleged violation and won.
The BLM agrees the term is imprecise and has revised the definitions by changing the phrase “does not have a history of noncompliance” to “is in compliance.” A lessee would not be precluded from obtaining future Federal lease interests if it corrected the noncompliance. A lessee's noncompliance ends: (1) when the entity has paid all civil penalties and performed the required reclamation; (2) the BLM accepts the required reclamation performed under contract, and the entity reimburses the U.S. for all costs associated with the required reclamation, including the costs associated with the BLM's issuing and overseeing the performance contract during its life; and (3) if the bond is collected and is insufficient to cover the total costs, the entity pays the entire amount due to the U.S. and the BLM accepts compliance. This is outlined in
The BLM proposed to separate the definitions for “assignment” and “sublease” from the current definition of “transfer” in the existing regulations. One comment stated that a greater understanding of the differences between assignment and transfer of operating rights is long overdue. Another comment stated that the BLM's definitions for “assignment” and “transfer” have corresponding, but different, meanings; that the Bureau of Ocean Energy Management (BOEM) recently issued a proposed rule stating that the terms are interchangeable; and that the BLM should ensure consistency and clarity in use of these terms between the two bureaus regulating Federal oil and gas leasing onshore and on the Outer Continental Shelf. The BLM reviewed its definitions and believes the two terms are distinct and should remain separate. An assignment of record title conveys both record title and operating rights and is limited under § 3106.10 to certain restrictions that do not apply to transfers. The BOEM regulations do not have this distinction, which is why the BLM is retaining the separate definitions.
Comments recommended adding a definition for “unnecessary or undue degradation.” The BLM declines to define this phrase in this rule because it is used only once, in § 3120.32, and such a definition would benefit from public input before promulgation. As used in § 3120.32, the phrase reflects the ordinary meaning of the terms used in section 302(b) of FLPMA.
The existing § 3100.2-2 addresses drainage protection, an express covenant of the lease agreement. Under the terms of Federal leases, the lessee has the obligation to protect the leased land from drainage by drilling and producing any well that is necessary to protect the lease from drainage, or, in lieu thereof and with the consent of the authorized officer, by paying a compensatory royalty assessment to the Federal government. The BLM did not propose changes to this section but did receive a comment stating that the BLM should consider using this opportunity to amend this section to (1) clarify when drainage involving two Federal leases with different fund distribution codes occurs; and (2) specify that the lessee may resolve drainage by creating a federally approved agreement for sharing production among the affected leases. These proposals already reflect current policy; refer to the BLM Manual Section 3160,
The proposed rule stated that the BLM was considering adding language that would provide notice that names and addresses of the nominator, lessee, operating rights holders, and operators would be made public on the BLM's Mineral & Land Records System (MLRS). The BLM's lease and agreement case files are already public records, and any change to the existing § 3100.4 would merely reflect the BLM's current practice. The BLM received comments supporting additional changes to this section, stating that it should be made clear to nominators, lessees, operating rights holders, and lessees that their identities will be made public through the MLRS rather than the current practice, which requires a member of the public to be at the BLM state office to submit a paper request to document the case file. The BLM will continue to release the names and addresses of nominators, lessees, operating rights holders, and lessees to the extent allowed by the Privacy Act to ensure there is a transparent onshore leasing process and does not believe any further changes to this section are needed. The names and addresses of individuals were redacted from all reports, including Serial Register Pages, as a result of a recent privacy review. The redacted information only applies to individuals (MLRS personal accounts) and not companies (MLRS business accounts). Specifically, the privacy review determined that all personal accounts regardless of type of case are considered to contain Personally Identifiable Information (PII). In order to release this PII—specifically names and addresses that are collected of our applicants/interest holders—the BLM must meet two requirements. First, the BLM must establish and disclose a routine use for the information—which, in other words, is establishing that the public need and benefit outweighs the need for the protection of the privacy information and notifies that the PII may potentially be released. This has been completed by disclosing the routine uses contained in BLM System of Records Notice (SORN) LLM32 in accordance with the Privacy Act. The SORN LLM32 is for Lands & Minerals Authorization Tracking System and covers the data from both LR2000 and MLRS. Most requests made in the Information Access Center at the state offices fall under routine use number “(2) to Federal, State, or local agencies or a member of the general public in response to a specific request for pertinent information.” Second, to meet Privacy Act requirements, the BLM must be able to track who received the information, when, and for what purpose to satisfy the Privacy Act's requirement that the information was released in accordance with a “specific request for pertinent information.” A member of the public can create an MLRS account to view unredacted information. This log in method allows for the BLM to meet this requirement through a logging system.
The BLM received a comment stating that the BLM provides no justification for publishing information on all entities registered to bid during a lease sale, rather than providing this information only for issued leases. Publishing participants in oil and gas lease sales has been a long-standing Bureau policy to provide transparency in the competitive leasing process. Refer to H-3120-1
Another comment stated that the final rule should also authorize researchers to use lease and production data to analyze market-level royalty, bid, and rental rates. The comment then stated that independent, professional analysis would provide the BLM with critical data on the appropriate market-level rates for Federal mineral charges. In addition, the commenter also stated that the final rule should authorize the BLM to provide a quarterly report to the
The proposed rule revised the existing § 3101.1-2, which was originally promulgated in 1988, to provide that the BLM could impose reasonable measures under the lease terms to avoid, minimize, or mitigate adverse impacts to other resource values, land uses or users, federally recognized Tribes, and underserved communities. Those reasonable measures include site-specific minimum siting and timing parameters that the BLM may impose on lessees to protect the public interest.
The BLM received numerous comments on this section, including: (1) support for the proposed changes, and statements that the changes are critical to mitigate impacts when the relevant RMP is outdated; (2) requests for clarification that leases are contingent on NEPA analysis and not a lessee's expectation; (3) requests for clarification that a lessee's surface use rights are subject to a land use plan's term, including terms provided for by land use plans either revised or amended after a lease is issued; and (4) requests for the BLM to clarify that the agency retains its full authority to condition development and production on leases after the lease is issued in order to respond to findings of site-specific NEPA analyses or changing conditions between the time a lease is issued and when it is developed. These changes are unwarranted as the BLM has the authority to impose measures that are more stringent than those in the regulations as long as they constitute reasonable measures to minimize adverse impacts,
Some comments opposed the proposed changes to this section, including by asserting that: (1) distance/siting requirements could lead to the BLM exceeding its authority to regulate air quality; (2) the BLM did not reference a lease provision that grants the agency the proposed new authority to constrain or deny lease operations; and (3) the BLM should consider public welfare when determining which measures may be reasonable. The BLM has the authority to use terms and conditions under Section 6 of the standard lease form to control site-specific environmental or public welfare impacts on leaseholds, as opposed to using lease-specific protective measures in lease stipulations from the RMPs.
Comments requested (1) the removal of language that arguably suggests that the BLM could require a lessee to “avoid” or “mitigate” all adverse impacts of developing mineral rights; and (2) that the final rule specify how water sources will be protected. The BLM has revised this section by clarifying that not all surface impacts must be mitigated and by clarifying the distance the BLM may require operations to be moved. The final rule strikes the words “avoid, minimize, or” since this is not needed as avoidance and minimization are integral to mitigating adverse impacts.
Some comments requested changes to require the relocation distances to be either a maximum of or be at least 1 mile and requested the BLM to prohibit new surface disturbing operations. The language in this section has been in place since at least 1988 and does not prohibit new surface disturbance. The BLM proposed to change only the minimum siting and timing parameters to account for changes in technology. The BLM declines to further increase or set a maximum parameter as this would not allow the flexibility that may be required to avoid resource conflict. The final rule amends the last sentence of the section to clarify the intent of the proposed rule. The proposed rule removed the phrase “At a minimum” from the existing regulations but retained the phrase “by more than.” The final rule is amended to state, “At a minimum, modifications that are consistent with lease rights include, but are not limited to, requiring relocation of proposed operations by up to 800 meters,”, which allows the BLM to require a lessee to relocate proposed operations by up to 800 meters to avoid a resource conflict that may not have been identified at the time the BLM issued the lease. For example, the BLM may need to move operations to avoid a sage grouse lek, a contingency that may not be encompassed by standard lease terms. In that circumstance, this provision would allow the BLM to move the operations up to 800 meters to minimize the impacts to the sage grouse lek. As stated in the 1988 final rule preamble for the existing regulations, “Similarly, the authority of the BLM to prescribe “reasonable,” but more stringent, protection measures is not affected by the final rulemaking,” see 53 FR 17341 (May 16, 1988). This section does not apply to the protection of resource values that are already addressed in lease stipulations.
Comments requested that the BLM strike the word “specific” as a modifier for “nondiscretionary statutes” that provide post-lease restrictions on surface use rights. The final rule adopts the recommendation to strike the word “specific” as a modifier to nondiscretionary statutes.
Comments stated that the language explicitly allowing a BLM officer to restrict the development of a project to proactively avoid impacts to “land users” or “underserved communities,” is improper because, the commenter contended, such language is vague and would improperly expand the BLM's authority, potentially encroach upon a lessee's lease rights, and cause uncertainty. Other comments requested that the BLM add “overburdened and” before “underserved communities” in the final rule, and that the BLM better specify procedures the BLM could use to protect multiple use standards and Native Americans' land rights in areas near reservations. For the reasons explained below, the BLM does not agree with these comments and retains its proposed language to proactively avoid impacts to “land users” or “underserved communities.”
The term “land users” is already used in the existing 43 CFR 3101.1-2 and is specifically included in Section 6 of the
The BLM proposed to split the existing § 3101.13 into two separate provisions and add a new paragraph (a), stating the BLM would consider the sensitivity and importance of a resource when developing stipulations without regard to the restrictiveness of the stipulation.
One comment on this section recommended that the consideration of affected resources and potential uncertainty be made mandatory by substituting “shall” or “must” for “may” in the final rule text to remove any uncertainty. The BLM declines to make this change so as to maintain discretion when considering potential stipulations. The BLM requires this discretion because the BLM need not consider every potentially affected resource for each parcel. Instead, the BLM will use its discretion to determine, based on the sensitivity, importance, and any uncertainty, which resources should be considered, and will then assess whether those resources are adequately protected by stipulation.
Some comments stated that the BLM should delete the proposed paragraph (a)
As stated in the proposed rule, the BLM added this paragraph to more explicitly recognize its mandate to manage the Federal lands for multiple use. Stipulations do not prevent oil and gas operations from occurring under a lease. Rather, stipulations that allow, but control, surface use are a valuable management tool to achieve balanced multiple resource use, including oil and gas development. As stated above, the BLM retains discretion in this section and will rely on its expertise when making these site-specific decisions regarding stipulations. Consistent with these objectives, the BLM agrees that the bureau should consider the restrictiveness of a stipulation on operations. In the final rule, the BLM deletes the phrase “without regard for” and inserts instead “while considering” to recognize the BLM's mandate to manage the Federal lands for multiple use and to provide for the protection of the resources on those lands.
The BLM also received a comment on proposed paragraph (c), which specified that the BLM may attach an information notice to the lease. That comment requested that the BLM remove the last sentence in the paragraph—which reads, “Information notices may not be a basis for denial of lease operations”—because it undermines the BLM's management authority. Another comment recommended that this paragraph incorporate a requirement that information notices highlight potential conflicts with other resource values and be accompanied by full lease stipulations specifying how those conflicts will be resolved. The final rule does not adopt these recommendations, as the information notice is a method of informing lessees of requirements that may be imposed by an existing law or regulation, not of imposing new requirements.
Finally, the BLM received comments recommending the development of specific stipulations and considerations for all leases, including a no surface occupancy within 2 miles of developed recreation sites and a 1-mile no surface occupancy from key recreation areas. The BLM disagrees and declines to adopt one-size-fits-all stipulations for all leases. The BLM historically has identified the appropriate stipulations through RMPs, ensuring that the BLM ties the appropriate stipulations to the lease under consideration. That approach allows the BLM to develop and set forth lease stipulations in the land-use planning documents/RMPs so that the public is aware of the balance that will exist between environmental protection and opportunities for development of oil and gas resources in advance of offering the lands for lease.
This section describes the standards that the BLM will use when evaluating modifications, waivers, or exceptions. The BLM proposed changes to the existing § 3101.14 to more explicitly recognize its mandate to manage the Federal lands for multiple use and to provide for the protection of the resources on those lands. The proposed rule also split the existing provision into two components: one to address modifications prior to lease issuance and one for modifications after lease issuance.
The BLM received multiple comments on the BLM's proposed approach. For example, comments: (1) expressed concern that the language broadened the ability of surface management agencies to object to the inclusion of parcels in an oil and gas lease sale; (2) requested a revision to paragraph (a) to state that requests for modification, waivers, or exceptions would not be posted for public comment; (3) suggested the BLM should clarify that this paragraph does not alter or affect criteria for modification, waivers, and exceptions of stipulations in the BLM's RMPs; (4) suggested that the proposed rule introduced new subjective standards, such as a “major concern to the public;” and (5) recommended that the BLM should not remove the language “or if proposed operations would not cause unacceptable impacts,”, since, in the commentors' view, that edit would curtail the BLM's flexibility for addressing circumstances where the BLM's granting of the modification or waiver would not result in unacceptable impacts.
After consideration of these comments, the final rule splits paragraph (a) into two paragraphs for clarity. The first sentence in proposed paragraph (a) now appears at the end of the section in new final paragraph (d), since modifications, waivers, and exceptions to a stipulation are considered later at the APD stage, not at the leasing stage. The restructuring of this provision addresses concerns that the paragraph alters or affects criteria for modification, waivers, and exceptions of stipulations in the BLM's RMPs.
As stated in the proposed rule, the BLM removed the existing provision—allowing the granting of modifications, waivers, or exceptions to lease stipulations if the authorized officer
The BLM has concluded that it is appropriate to exempt situations based on time-sensitive information from the review requirement. For example, if a survey is completed for nesting raptors and it can be confirmed that there are no raptors present, then an exception from a timing stipulation based on the presence of nesting raptors would be appropriate. However, if the 30-day review period applied, the conditions would no longer be in effect to support the exception. Final paragraph (a), which applies to lease terms and stipulations, now states, “If the authorized officer determines that a change to a lease term or stipulation is substantial or a stipulation involves an issue of major concern to the public, except time-sensitive exceptions based on verified data, the changes will be subject to public review for at least 30 calendar days.” As stated in the proposed rule, the BLM would consider a change to the lease terms to be substantial if the change would have an important, considerable, consequential, major, or meaningful effect on the environment that was not previously considered, thus requiring public notification (30-day public review) of a lease term or stipulation.
The language in this section does not broaden surface management agencies' ability to object to the inclusion of parcels in an oil and gas lease sale, because lands requiring the consent of other surface management agencies is addressed under § 3101.51. This rulemaking does not introduce new subjective standards. Language such as a “major concern to the public” appears in existing regulations and has not caused issues.
One commenter stated paragraph (b) presents potential disruption to the competitive lease sale process as all lease conditions or stipulations must be disclosed prior to a lease sale. The BLM revised this paragraph to reflect IBLA decisions, which have stated that if a lease is issued without prior notice of an additional stipulation, the stipulation is not binding on the potential lessee and is without effect in the absence of the potential lessee's acceptance of the stipulation, see
One comment on paragraph (c) recommended striking the phrase “was inadvertently omitted,” and adding “to comply with a nondiscretionary legal requirement, or to address an adverse effect that was not reasonably foreseeable at the time of lease issuance or whose analysis was otherwise expressly deferred to the site-specific proposal stage,” and changing “may” to “will” in reference to lease cancellation. These recommendations would substantially change the meaning of the paragraph, which was intended to address situations when the BLM inadvertently omits a stipulation when preparing parcels for a lease sale. The intent of the modified language is to reflect IBLA decisions on this issue. The BLM has not made any changes based on this comment.
The BLM did not propose any changes to the existing § 3101.2-1; however, the BLM received a comment stating that the BLM should not only rely on the section title to convey to readers that the language in the section applies to public domain lands (whereas the next section applies to acquired lands). The BLM concurs with this recommendation and inserts in final paragraph (a) “on public domain lands.”
The BLM did not propose any changes to the existing § 3101.2-2; however, the BLM received a comment stating that the BLM should not only rely on the section title to convey to readers that the language applies to acquired lands. Another comment stated that the BLM should specify that the acquired lands limitation is separate from, and in addition to, the limitation for public domain lands. The BLM concurs with these recommendations and inserts in final paragraph (a) “on acquired lands” as well as “separate from, and in addition to, the limitation for public domain lands.”
Because of other proposed changes to part 3100, the BLM proposed to redesignate and consolidate the provisions under this heading. The BLM received several comments suggesting that the new definition for “surface management agency” under § 3000.5 of this chapter, which includes Interior agencies such as the Fish and Wildlife Service and the Bureau of Reclamation, conflicts with and causes confusion with the provisions under this heading. The BLM concurs and changes the title of this heading from “Federal Lands Administered by an Agency Outside of the Department of the Interior” to “Federal Lands Administered by an Agency Other than the Bureau of Land Management.”
The BLM received numerous comments on proposed revisions, which, collectively, would replicate several paragraphs in the existing regulations requiring the BLM to seek and, in some cases, obtain the consent of surface management agencies prior to leasing acquired or public domain lands into one paragraph. Some comments supported the change. Several comments opposed the change, asserting that it expands the authority of some surface managing agencies, such as the Fish and Wildlife Service and the Bureau of Reclamation, beyond that which is provided under the applicable statute.
The BLM disagrees that the proposed change improperly expands the authority of certain surface management agencies, such as the Fish and Wildlife Service. Instead, this change merely consolidates and clarifies the BLM's duties with respect to prohibitions provided elsewhere in statute or regulation. The BLM has a longstanding practice of consultation with all Federal surface management agencies before authorizing subsurface mineral leasing. For example, the existing regulation at 43 CFR 3101.7-1 recognizes that in some cases the Secretary may lease over the objection of the surface management
Commentors stated that, under the MLAAL, 30 U.S.C. 352, only the head of an executive department has the authority to consent to leasing covered by that statute, such that it necessarily does not embrace “consent” by subdivisions of the DOI. The BLM agrees, particularly because the Department's sub-agencies ordinarily enjoy their authority only be virtue of delegation from the Secretary. As set forth above, the proposed text does not alter the balance of authority and discretion among agencies within the Department, but instead simply clarifies that the BLM shall, as a procedural matter, confer with surface management agencies.
The BLM proposed to revise the existing § 3102.2 to remove the reference to the outdated term “alien.” The BLM received a comment stating that this section should be amended to include more stringent language that would require prospective, non-U.S. citizen bidders, lessees, or interest holders to submit to the BLM a certification of compliance with Federal foreign ownership laws and procedures, including the final rule from the Office of Investment Security, Department of the Treasury, implementing the provisions relating to real estate transactions in section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment Risk Review Modernization Act of 2018, prior to the BLM granting such entities a lease. The BLM declines to adopt this change, which is unnecessary. In 1982, the BLM eliminated the requirement for entities to submit documents substantiating their qualifications to hold a lease or an interest in a lease and now requires entities to certify their compliance, including those relating to foreign investment in Federal land, on the lease or assignment application. Any false statements on these documents are subject to the criminal sanctions in 18 U.S.C. 1001 (see 47 FR 8544, February 28, 1982).
The BLM proposed changes to the existing § 3102.4 to clarify that it applies to all applications submitted to the BLM and to allow for electronic signatures. The BLM received a comment in support of the proposal to remove paragraph (b) from this section. The commenter also said the BLM erred, as the submission of three hard copies of any transfer of record title or operating rights is required by the MLA. 30 U.S.C. 187a. The BLM agrees and makes the appropriate changes to the final § 3106.41. The BLM declines to reinstate paragraph (b) in this section to avoid confusion when the BLM starts accepting transfers electronically.
The BLM proposed revising the existing § 3102.5-1 to clarify who is entitled to hold a lease and that the reclamation obligations under the lease reside with the lessee, operating rights owners, and operators, and not the American taxpayer. The BLM received comments in support of the proposed changes to this section and a recommendation in a comment that the BLM publish and regularly update the list of entities that are not in noncompliance with reclamation requirements of section 17(g) of the MLA. Many comments opposed the proposed changes, citing a lack of due process, fairness, the BLM's ability to take enforcement actions to address any compliance deficiencies, and the need to provide entities the ability to remedy any alleged compliance issues before the BLM turns to cancelling a lease, among other concerns.
To address the comments, the BLM is revising the phrase “will be subject to cancellation” to “may be subject to cancellation” to clarify that cancellation is only one of the enforcement tools the BLM could apply and allows for due process. As provided under § 3000.40 of this chapter, any decision issued by the BLM pursuant to this section would be subject to appeal. In addition, the BLM updates the list of “Entities in Noncompliance with Reclamation Requirements of section 17(g) of the MLA” on an as-needed basis, and then forwards the names of the entities to the Federal Government's suspension and debarment program.
The BLM proposed a minor change to the existing § 3102.5-2: the removal of the word “offer” to reflect Congress' elimination of the noncompetitive leasing process. The BLM received a comment on this section recommending additional language to explicitly state that any false certification is subject to the criminal penalties contained in 18 U.S.C. 1001. The BLM declines to adopt this proposal, which is unnecessary. Section 3000.20 of this chapter already informs all entities that they are subject to criminal penalties if they provide false statements to the BLM. In addition, the standard forms used by the BLM under these regulations, such as the bid form (3000-002), assignment of record title form (3000-003) and the transfer of operating rights (3000-003a), and the lease form (3100-011), all include similar statements and references to 18 U.S.C. 1001 for any false statements.
The BLM removes the proposed § 3000.130 from the final rule and moves the information in that section into final § 3103.1, since this section addresses oil and gas fiscal terms and does not impact other minerals management programs. Therefore, the BLM determined that it is more appropriate to codify this section in subpart 3103 instead of part 3000. As a result of this change, the BLM updated all cross references in the final rule from § 3000.130 to § 3103.1.
Based upon the comments received, the BLM also incorporates additional updates that include: (1) adding the EOI filing fee from the IRA to this section and (2) changing the timeframe that the BLM will adjust the fees for inflation from annually to once every 4 years.
First, the BLM moved the new EOI filing fee, established by the IRA, from proposed § 3000.120 to final § 3103.1(a). The BLM cannot update the EOI fee annually. The MLA at 30 U.S.C. 226(q)(2)(B) states, “The Secretary shall, by regulation, not less frequently than every 4 years, adjust the amount of the fee under subparagraph (A) to reflect the change in inflation.” Therefore, the final
One commenter stated that the BLM should tie all costs and returns associated with oil and gas leasing to an inflation index. The BLM did not make any changes in response to this comment, as all fees in § 3000.120, the fiscal terms in § 3103.1, and the minimum bond amounts are tied to changes in the Implicit Price Deflator for Gross Domestic Product, which is published quarterly by the U.S. Department of Commerce. Finally, a comment stated that the BLM should clarify that the inflation adjustment as described in this section will include adjustments for inflation occurring over any period of multiple years after August 16, 2022, during which bid and rental rates were left unchanged despite inflation. The BLM concurs with this recommendation, which is reflected in the existing regulations and its use of the Implicit Price Deflator for Gross Domestic Product.
Another commentor stated that the proposed rule references no authority that would support annual inflation adjustments for the rental and bonus as the IRA precludes the adjustment of these fiscal terms until after August 16, 2032. The BLM agrees that the rental and minimum bonus bids must remain at the current rate until August 16, 2032; however, after this date, the IRA changes these amounts to minimums. Therefore, the BLM proposed and is implementing inflation adjustments for rental amounts and minimum bonus bids after August 16, 2032. To reduce confusion, the BLM updates paragraph (a) by adding the sentence, “Per the Inflation Reduction Act, the BLM will not adjust the rental nor the minimum bonus bids until after August 16, 2032.”
The BLM proposed to update the existing § 3103.1-2 to clarify that fees set out in the fee schedule in § 3000.120 of this chapter and all first-year rentals and bonuses for leases issued under 43 CFR part 3100 must be paid to the proper BLM office. This final section also removes outdated references to the former Minerals Management Service and mailing address for payments. The BLM received a related comment on lease reinstatements, in which the commenter stated that references in the BLM regulations to rental payments through the ONRR's online system should also acknowledge ONRR's continuing practice of accepting non-electronic rental payments in some circumstances. The BLM concurs and changes the language in paragraph (a)(2) from “through its online system” to “refer to 30 CFR 1218.51” that lists the methods by which lessees and operators may submit payments to the ONRR.
The BLM requested comments on adding a new requirement for diligent development obligations.
Comments that supported a diligent development provision included recommendations that the BLM: (1) implement further leasing reforms, such as increasing production from existing leases by ensuring diligent development, implementing specific diligent operations standards, and adopting a mechanism to hold private companies accountable when they fail to meet the requirements; (2) tie the diligent development requirement to the definitions of “qualified lessee,” “responsible bidder,” and “responsible lessee;” and (3) impose a diligent operator standard with reporting requirements, and absent a rental rate increase, clarify what consequences an operator may face when it fails to operate diligently including lease termination. Comments also asserted that the proposed lease rentals are insufficient and leases that are not pursued for development within 5 years should be permanently revoked and should not be transferable to another entity.
Comments that opposed a diligent development provision included statements that: (1) failure to act diligently to develop a lease has no adverse impacts on the environment; (2) adding diligent development obligations would result in additional work for the BLM and an unnecessary burden on lessees; (3) the increased rental rates prescribed by Congress in the IRA and adopted in the final regulations will encourage diligent development on their own and encourage prudent development or lease surrender; (4) the diligent development obligations would impact business decisions that are based on markets, investment capital, supply chains, labor and equipment availability, and other factors; (5) geophysical exploration does not always result in lease development; (6) new diligent development terms would impose large cost increases on many leases and inhibit operator flexibility to properly evaluate and commence operations in a responsible developmental situation and economic manner consistent with lease requirements; (7) a diligent development requirement could exacerbate the climate crisis; (8) the BLM should consider delays that are out of an operator's control, such as the time certain Federal processes or lawsuits can take; (9) the proposed rule's list of alternatives is overly lenient and promotes speculative ventures; and (10) the BLM should not apply too broad an interpretation of diligent development.
After careful consideration of the comments received, the BLM did not implement a diligent development requirement with an escalating rental rate in the final rule. The BLM believes the existing increasing rental rates prescribed by Congress in the IRA will encourage diligent development on their own by incentivizing lessees and operators to develop a lease to avoid the increased costs. The BLM will continue to assess the oil and gas leasing program, and if the BLM determines Congress' rental rate increases are not as effective as expected at encouraging diligent development, the BLM may consider additional rulemaking. The BLM further clarifies final paragraph (a) by adding, “for that lease” after the words “total acreage” to clarify the basis for calculating the first-year rental. No further changes have been made to this section.
The BLM proposed changes to the existing § 3103.2-2 to implement changes made by Congress in the IRA and clarify what constitutes a timely payment of rental by tying the payment to the lease anniversary date. The BLM received numerous comments on this section. The comments encouraged the BLM to: (1) set out the actual required rental amounts, as provided by the current regulations, rather than referring to the lease terms; (2) set a policy determining when rental rates should be higher than the statutory minimums; (3) implement the regular rate increases; and (4) further increase the rental rates, on the theory that the rental rates in the IRA are too low.
In the IRA, Congress set rentals at $3 per acre, or fraction thereof, for lease years 1 and 2; $5 per acre, or fraction thereof, for years 3 through 8; and $15 per acre, or fraction thereof, thereafter. Ten years after the enactment of the
Another comment objected to the application of these rentals to leases sold before the passage of the IRA but issued after the IRA was signed into law. The commenter explained that companies bid on those parcels relying on the rental and royalty rates that were in effect at the time of the lease sale and contended that lease issuance was only delayed due to the BLM's failure to timely resolve protests.
As explained in the preamble to the proposed rule, the IRA amended the rental rate for all new oil and gas leases
The BLM proposed changes to the existing § 3103.3-1 to implement the requirements of the IRA and received numerous comments.
Supportive comments recommended that the final rule address plans, specify criteria, or include a procedure for increasing the royalty rate after 2032. These comments suggested various ways to implement this recommendation, including codifying a higher royalty rate of at least 18.75 percent, or 20 percent; increasing the royalty rate consistent with the previous 10-years' worth of inflation, but not deflation, and indexing the royalty rate to raise at prescribed intervals; or adjusting all rates to market levels on a regular basis to better ensure fair return. Supportive comments also requested a termination provision, similar to that for failure to pay rentals, for the failure to pay royalties. Other supportive comments stated that the BLM should limit changes to just those required by the IRA, as the new rate could affect the competitiveness of the U.S. minerals program.
Comments that opposed the changes included statements that: (1) higher royalty rates have consistently led to increased revenues without discouraging oil and gas development and the new rate of 16.67 percent is still well below the rate that is charged for offshore drilling in Federal waters (18.75 percent) and imposed by leading oil-and gas-producing States, including Texas (20-25 percent), Colorado (20 percent), and New Mexico (18.75 to 20 percent); (2) the final rule should refrain from setting a minimum rate because the cost of operating on Federal lands is higher than on State or private lands, and a higher royalty will make it uneconomic to operate on most Federal lands; (3) the higher minimum, and any increased royalty rate, will disincentivize operations on Federal lands, harming small business, local governments, and States; (4) the BLM failed to provide a justification for making the royalty rate the minimum, and the bureau should consider establishing 16.67 percent as the maximum with a mechanism for determining a lower rate when the 10-year statutory requirement expires; (5) the BLM should not comply with the IRA's mandate or adopt a permanent royalty relief rule for onshore production; (6) raising oil and gas royalty rates will directly reduce well operators' revenue margins, risking well closures and deliberate attempts to devalue oil fields; (7) higher royalty rates affect long term project economics by reducing the expected revenue and making them less financially feasible; (8) higher rates will deter small operators from investing in expensive enhanced oil recovery methods that can extend the productive life of a well; and (9) raising the Federal royalty rate encourages cheating and requires greater Federal investment in compliance enforcement at taxpayer expense.
As stated in the proposed rule, the BLM updated this section to implement IRA section 50262, which set royalty rates at 16.67 percent for the 10 years following the Act's enactment. Final paragraph (a)(3) of the regulation states that for leases issued after the 10-year period following the passage of the IRA, the royalty rate will be not less than 16.67 percent, which is the rate Congress required in the IRA. The BLM declines to set post-2032 rates now (or to implement associated procedures) so far in advance of any authorized increase. However, the BLM may consider further adjustments after 2032. The BLM also declines the suggestion to implement an automatic termination provision for the nonpayment of royalties. The procedures for lease forfeiture and cancellation are set forth in section 31(a) of the Act (30 U.S.C. 188) and § 3108.30(b) of the regulations. The BLM adopts this section into the final rule without any further changes.
The BLM proposed revising the existing § 3103.4-1 to clarify that production in paying quantities is a prerequisite to obtaining royalty relief under this section. The BLM also solicited feedback to improve the royalty rate reduction section.
Comments recommended that the BLM: (1) describe the specific circumstances for justifying a reduction and clarify that the reductions will terminate as soon as the conditions justifying the reduction have passed; (2) explicitly state that a royalty rate reduction would transfer to the new lessee when a lease is assigned; (3) provide specific criteria for lowering the rate; (4) set a limit on the lower end of the reduced rate; (5) limit the period for the reduction to apply; (6) specify that reduced royalties transfer to assignees only on a case-by-case basis; (7) extend royalty relief to all producers at any point of production; (8) extend the royalty relief to any field where operators are seeking to conduct or are conducting waterfloods or other enhanced oil recovery methods; (9) not set a floor for royalty reductions because a universal rate, even a low one, cannot account for the varying productivity within a formation; (10) determine the royalty relief by the field productivity and the crude grade produced; (11) determine the appropriate royalty rate reductions based upon a critical review of the economic data for reasonableness and clearly enumerate the costs that are allowed for the economic evaluation to ensure operators send unbiased data; (12) closely monitor any approved royalty reduction; (13) clearly define under what circumstance/criteria royalty reduction terminates; (14) revise the phrase “royalty reductions at the discretion of the Secretary” to convey that reductions are the exception, not the norm; and (15) add language to require notification to the State when royalty reductions take place, given the State's interest in the royalty rate and the economic health of the industry and local communities.
The BLM rarely grants royalty rate reductions, and after careful review of the comments, has decided against making any further changes. The regulation states that the Secretary may waive, suspend, or reduce the rental or royalty upon a “determination that it is necessary to promote development or that the leases cannot be produced in paying quantities under the terms provided therein.” Thus, the BLM only
The factors the BLM considers when evaluating a reduction are case-specific, and the BLM must review each application. Given this and the exceptional nature of circumstances that may warrant royalty reductions, the BLM declines to further specify the circumstances or specific criteria for lowering a royalty rate in the regulation in order to retain the discretion of the authorized officer to address case specific situations that may occur. The BLM is committed to adhering to the existing rules and policy and will ensure that they are consistently and faithfully applied to future royalty relief applications.
Second, the BLM declines to codify language stating that a royalty rate reduction would transfer to a new lessee when a lessee assigns its lease. The operating costs for the lease may change with the new lessee; therefore, the BLM would need to complete a new review to determine if the royalty rate reduction is appropriate.
Third, some commenters opposed and some supported implementing a lower limit for royalty reductions, but no lower limit was proposed. The BLM has decided not to implement a lower limit and will instead continue to rely on the economics of each lease to determine the appropriate royalty reduction, if warranted.
Fourth, the BLM will not provide royalty relief based only upon operators conducting or seeking to conduct waterfloods or other enhanced oil recovery methods. These operations will return a profit to the operators and in most cases a royalty reduction would not be appropriate as the gross income exceeds the operating costs.
Fifth, the requirements to monitor royalty rate reductions or to send notice to States are better suited to be addressed through policy as these requirements would apply only to the BLM and not the regulated community. The BLM already tracks royalty rate reductions in MLRS and will continue to closely monitor reductions. Given how rare royalty rate reductions are, the BLM has not established a requirement to notify the States. The BLM will consider whether a notification to the States should become a matter of policy in the future.
Sixth, the existing regulations and Bureau policy reserve the BLM's right to terminate a royalty reduction, re-adjust the amount of reduction, or restore the royalty rate to the rate required by the lease terms and/or regulations at any time for the entire lease or for any portion thereof. Given that the grant of a royalty rate reduction is uncommon, the BLM is declining to add any blanket provisions to the regulations that would remove this flexibility. For example, the BLM may need to terminate relief retroactively if such relief was based on manipulation of normal production or adulteration of oil sold.
The BLM proposed to eliminate both of §§ 3103.4-2 and 3103.4-3 in their entirety because they are obsolete for the reasons described below. The BLM received a comment stating the BLM's removal for obsolescence ignores the fact that over the next decade, the number of stripper wells on Federal lands will rise along with necessary oil exploration and production.
As stated in the proposed rule, the BLM revised both sections on October 6, 2010 (75 FR 61624), to eliminate these types of royalty relief, because Congress enacted separate relief in section 343 of the Energy Policy Act of 2005 (42 U.S.C. 15903). However, the BLM retained the regulations because, while these types of royalty relief were no longer available for current production, prior production subject to this relief continued to be subject to audits. This is no longer the case; therefore, these provisions serve no purpose. To the extent relief is required in the future, the BLM would promulgate any necessary regulations under section 343 of the Energy Policy Act of 2005 rather than relying on these provisions. In addition, the BLM has the authority under section 39 of the MLA to waive, suspend, or reduce the royalty for a lease.
The BLM proposed redesignating this section from 43 CFR 3103.4-4 to 43 CFR 3103.42 and clarifying how a lease term will be adjusted once the suspension ends.
The BLM received a comment on paragraph (a) stating that the BLM should broaden the circumstances for which a lease would be eligible for a suspension of operations only or a suspension of production only beyond force majeure, or at a minimum should acknowledge that the BLM's own delays constitute such a force majeure for the purposes of these types of suspensions. The regulations clarify that a force majeure is “matters beyond the reasonable control of the lessee.” Because this encompasses an administrative delay, the BLM already takes such delays into consideration when evaluating a suspension. The BLM is not revising the regulation to further specify instances that may be considered force majeure; BLM Manual 3160-10,
Some comments stated that lease suspensions, whether requested by the lessee or directed by the BLM, should be made public as soon as they are submitted and should be subject to public review and comment in accordance with NEPA. The BLM disagrees with this recommendation. NEPA is only triggered if there is a proposal for a major Federal action that potentially affects the environment. Although the approval or direction of a suspension is a Federal action, lease suspensions are categorically excluded from NEPA review as administrative actions taken on an already existing authorized lease. See the BLM's National Environmental Policy Act Handbook H-1790-1, Appendix 4.
Some comments stated that the BLM should clarify that both the suspension request and the decision by the BLM must be made in writing and published on a BLM website, and that the proposed rule fails to provide the transparency and public access to information about lease suspensions that is guaranteed by the Administrative Procedure Act. The BLM disagrees with this comment, as suspension decisions have always been publicly available through review of the case file located in the relevant BLM state offices or through the BLM's reporting application at
Another comment stated that the BLM should clarify in paragraph (d) that any lease production is prohibited while a suspension of operations and production is in effect. The BLM agrees, and it is BLM policy that production from a lease is prohibited if there is a suspension of operations and production.
Multiple commenters stated that the BLM should: (1) clarify that lease suspensions are the exception and not the rule; (2) provide limited and specific criteria that would justify a suspension; and (3) offer guidance on how the BLM plans to deal with existing lease suspensions. The BLM declines to modify the regulations as detailed in the three comments above. The MLA provides direction, and the BLM has set guidance on when a lease suspension is appropriate. First, the BLM currently has approximately 3,000 suspended leases of the over 33,000 authorized onshore oil and gas leases. While suspensions are not a common occurrence, the number of lease suspensions has increased based upon the large number of leases litigated in court after lease issuance over the past decade. Second, the BLM declines to provide limited and specific criteria in the regulations. The BLM provides guidance to its employees in IMs and MS-3160-10,
A commenter was concerned that changing the word “terminating” in existing paragraph (e) to “lifting” in final paragraph (g) will be interpreted by lessees and others to require the BLM to take affirmative action to end a suspension. The comment states that a lease suspension should lift automatically—without any subsequent administrative action by the BLM—when certain regulatory events occur or as otherwise stated in the approval letter, and the BLM should avoid any change that would increase the administrative burden on the agency. The BLM disagrees with this comment. While it is true that, in some cases, the BLM's decision to suspend a lease will document a particular event or action that will eventually lift a suspension, the BLM always issues a decision for the official record when lifting a suspension, allowing for the expiration date of the lease to be properly adjusted and facilitating any reconciliation of the rental amount that may be due, see
In subpart 3104, the BLM proposed to revise its bonding regulations by increasing the minimum amount of bonds, removing nationwide and unit operator bonds, adding surface owner protection bonds, and removing letters of credit (LOCs) and CDs as options that lessees can use to secure the required bond amounts. The BLM received several comments on the proposed bond amounts. Some comments supported the higher amounts, with some stating these amounts do not reflect the full reclamation costs of oil and gas wells. Other commenters recommended the final rule establish a full-liability, individual lease bond or tie the bond amount to the number of wells covered by a bond. The MLA does not require the BLM to impose full cost reclamation bonds but does require the Secretary to ensure the bonding is adequate to ensure reclamation. Requiring a full liability bond would require increased staffing at the field and state offices to manage increased workloads for the review of changing conditions and the adjudication of additional bond riders to either raise or reduce the bond amount. In addition, the BLM's APD processing time would slow due to waits for additional bond riders. The BLM has opted to keep to a higher minimum bond amount and depend upon its policy guidance and future adjudications for increasing the bond amount for specific operations that pose additional risk, which will allow the BLM to direct its limited resources to where they can have the most impact.
Comments also recommended that the BLM review its average costs for reclaiming orphaned wells, noting that the States have identified a higher average cost for their orphaned wells. The BLM reviewed its costs related to cleaning up orphaned wells that were plugged since the BLM calculated the average cost as part of this rulemaking effort. Due to the limited number of additional orphaned wells that have been plugged in that time, there is not enough additional data to warrant a recalculation. Therefore, the BLM did not adjust the minimum bond amount based on a new average orphaned well cost.
Some comments stated the BLM should not have used the median number of wells to determine the new minimum bond amounts but rather should have considered the probability of the number of wells to be orphaned. The BLM is unable to predict whether any particular well will become an orphan well due to many factors that can lead to a well becoming orphaned (
Several comments opposed the higher minimum bond amounts and requested that the BLM remove the proposed bonding changes, explaining that the BLM rarely needs to access a bond to plug a well. Comments also asserted that the BLM's own statistics do not justify the bonding provisions in light of the MLA's requirement for an adequate bond. As stated in the proposed rule, the minimum bond amounts have not been increased since 1951 (for statewide and nationwide bonds) and 1960 (for lease bonds), have been repeatedly
The BLM received several comments stating that the higher minimum bond amounts will be a significant financial burden on operators and small businesses, because sureties often require companies to post cash or security collateral. The BLM disagrees. The Small Business Administration (SBA) helps small businesses guarantee performance bonds issued by certain surety companies, which allows the companies to offer surety bonds to small businesses that might not meet the criteria for other sureties. The SBA's website states that all performance bond guarantees require small businesses to pay SBA a fee of 0.6% of the contract price. The operator would need to make a payment of $900 for an individual bond or $3,000 for a statewide bond to SBA, which would allow the small entity to obtain a surety bond without requiring the company to post cash or security collateral. The BLM encourages small businesses and operators to reach out to the resources available to them including those provided by the SBA and visit their web page:
In addition, the BLM conducted a review of small entities operating on Federal oil and gas leases based upon public data. If these companies paid sureties 3% of the additional bonding cost annually, their overall cost-to-revenue ratios would increase by less than one-tenth of one percent. If these companies instead chose to fund the full bonding amount out of revenues, their cost-to-revenue ratio would increase by at most 1.4% for one year. Based upon our analysis, the BLM certifies that there will not be a significant economic impact on small entities in the RFA; refer to section V.B. Please also review the RIA for more information.
Based upon the comments received, the BLM decided to implement inflation adjustments for minimum bond amounts. The BLM completed this action by (1) adding the minimum bond amounts to this section to provide for inflation adjustments; (2) moving the phase-in period for lease and statewide bonds into this section; (3) providing a longer implementation for small operators to increase or replace their bonds; and (4) providing information to operators on the penalties they could incur if they fail to increase or replace existing bonds that do not meet the new minimum bond amounts.
First, the BLM requested comments on whether it should adjust the minimum bond amounts to keep up with inflation. The BLM received multiple comments recommending the BLM periodically adjust the minimum bond amounts to better protect the taxpayer's interests in adequate reclamation. The BLM agrees with these comments and updates the final rule to include inflation adjustments to bond amounts by way of a final rule and titled this § 3104.1 “Bond amounts.” This update will allow the BLM to periodically update bond amounts based upon the rates of inflation.
Second, the BLM moved the phase-in period for statewide and individual bonds from proposed § 3104.90 to final § 3104.1(c). The phase-in period for lessees to replace unit and nationwide bonds remains in final § 3104.90. This change allows the BLM to easily update the phase-in periods for individual or lease bonds and statewide bonds upon adjusting the minimum bond amounts for inflation. The BLM anticipates that when the minimum bond amounts are adjusted for inflation in the future, the phase-in periods will occur over 2 years:
• One year for statewide bonds, and
• Two years for individual bonds.
This phase-in follows the initial proposed timeframes. The BLM has calculated the staffing needs required to process all bond increases for a 1-year phase-in period and concluded the BLM will require 2 years to provide sufficient time to ensure all bonds are brought into compliance.
Third, the BLM considered comments regarding the impact to small operators from increasing the minimum bond amounts. Larger companies usually hold nationwide or statewide bonds, while smaller companies usually hold individual bonds. Initially, the BLM proposed to require individual bond holders to come into compliance with the new bond amounts first. Commenters expressed concerns that the higher minimum bond amounts may force small operators out of business. To alleviate some of the concerns expressed by commenters with respect to the impact on small operators and given the large number of individual bonds, the BLM has revised the final paragraph (c) to give those with individual bonds more time by phasing in this requirement over a 3-year period, instead of over a 2-year period. The longer phase-in period for individual bonds will provide more time for smaller operators, who predominantly rely on individual bonds, to research and obtain the appropriate bond amount. When minimum statewide and individual bond amounts are adjusted for inflation in the future, the BLM anticipates the shorter phase-in periods (2 years for individual bonds) will be sufficient for all bond holders to come into compliance because the bond amount increase will not be as significant a change.
A comment expressed concern regarding which penalties could accrue to lessees who do not increase the bond amounts within the time allowed. The BLM reviewed its existing regulations and added a new paragraph (d) to this section to address this comment. Paragraph (d) now refers to the existing regulations that the BLM may use if an operator fails to increase or replace an existing bond as required by the regulations. The potential penalties include shut down of operations under 43 CFR 3163.1(a)(3), lease cancellation under 43 CFR 3108.30, or referral of the obligor or principal to the Department's Suspension and Debarment Program under 2 CFR part 1400.
The BLM considered shorter timeframes for inflation adjustments to the minimum bond amounts, including annual adjustments, but concluded that shorter timeframes are unworkable given the BLM's workload associated with possible enforcement. Instead, the BLM has opted to update the minimum bond amounts in the final § 3104.1 table every 10 years. The final rule for the updated bond amounts in the 3104.1 table will also indicate the new deadlines for compliance. This 10-year timeframe will provide sufficient time for entities to come into compliance, for adjudication of the financial assurances, and for the BLM to ensure such compliance prior to the implementation of new minimum bond amounts.
The BLM received other comments related to adjusting the fiscal terms for inflation. One commenter stated that the BLM should not attempt to automatically adjust existing bonds for inflation without the surety's consent. The phase-in periods will provide time for the bonded principal to work with the surety to increase the amount or replace the bond. Another commenter recommended that the BLM conduct annual reviews and commit to increases in line with larger economic trends and not just inflation. The BLM will move forward with updating the minimum bond amounts based upon inflation every 10 years as part of the final rule; however, the BLM maintains the right to conduct reviews of bonds to determine if additional increases are necessary and in the public interest.
The BLM requested comments on the proposed revisions to § 3104.1 along with any supporting information on whether the final rule should provide for any other types of financial arrangements that the BLM should consider.
The BLM received several comments stating the BLM should not eliminate CDs and LOCs from the options available to satisfy bonding requirements, reasoning that the elimination would impose an unwarranted burden on lessees and operators, particularly small operators, and that the BLM should provide more options to post the bonds rather than eliminating options.
Based on the comments, the BLM has decided to reinstate CDs and LOCs as acceptable forms of security for a personal bond. To resolve some of the issues that led the BLM to propose eliminating the securities, the BLM made changes to the regulations for CDs and LOCs. Given that CDs are now issued electronically by banks, they do not meet the existing requirement that Secretarial approval be indicated on the face of the document. Therefore, the BLM modifies paragraph (c)(1) for CDs by inserting “or through assignment” to provide for Secretarial approval prior to any redemption.
The BLM modifies paragraph (c)(5) for LOCs to change “shall” to “must” or “will” as appropriate and consistent with the similar changes made in the proposed rule. The BLM also removes the language “the deposits of which are federally insured,” as this phrase in the existing regulation has caused confusion to both operators submitting a bond and BLM staff who review bonds and their associated securities. The $250,000 Federal deposit insurance limit for deposits that a person may have with a financial institution does not apply to LOCs, because the guarantee of payment under a LOC is made by the financial institution directly to the BLM by demand, see 31 CFR part 28.204-3(b). LOCs are not depositor accounts to which the Federal Deposit Insurance Corporation (FDIC) insurance applies. Therefore, the BLM is not concerned with FDIC insurance when the amount of a LOC exceeds the FDIC limit.
Paragraph (c)(5)(ii) is modified to appropriately reference the types of bonds as “an individual lease or statewide bond,” and to change the term “attachment” to “collection” for clarity.
Paragraph (c)(5)(v) is modified to state, “In the event the BLM is notified of the financial institution's intent not to renew the letter of credit, the principal must extend the letter of credit or provide an adequate replacement bond with an assumption of liability rider. If the BLM does not receive an adequate notice or replacement bond with rider, the BLM will collect the letter of credit within 30 days of the expiration without further notification to the obligor.” The BLM is including this language to ease the administrative burden that results if an entity fails to maintain the LOC. Previously, when an entity failed to pay the premiums to the bank, the BLM, in turn, had to notify the obligor (the bonded party) to replace the bond within 60 days; monitor the timeframes to ensure the LOC is extended or replaced; adjudicate an acceptable form of replacement security or bond; and send a demand to collect on the letter of credit when all else fails. The new language will reduce the BLM's workload by obviating the initial notice to the obligor to replace the bond. To be clear, the BLM will send a demand to the bank to collect the funds from the LOC 30 days prior to the expiration date without further notice of the action from the BLM when the obligor fails to take corrective action on their own accord.
For other types of financial guarantees, one commenter recommended that the oil and gas program review the bonding requirements and language of the BLM's solar and wind energy regulations in 43 CFR 2801.5(b) for consistency, especially language regarding whether corporate guarantees are an acceptable or unacceptable bond instrument. Another commenter stated that alternative financial arrangements could include insurance policies as both an alternative and to complement surety bonds such as insurance accounts to pre-fund decommissioning costs, where sureties direct a portion of their annual premiums and payouts could be made to the operator or the BLM upon default.
The BLM carefully considered the comments and other forms of financial assurance to secure bonding and is declining to include any other forms of financial assurance because the BLM believes the current list, with the retention of LOCs and CDs, is sufficient. The BLM reviewed BOEM regulations, which provide for corporate guarantees, insurance, decommissioning accounts, and other forms of security approved by the Regional Director. The BLM also reviewed the solar and wind energy regulations, which provide for the same financial assurances listed in this final rule as well as insurance. As discussed below, the BLM has decided not to allow corporate guarantees and insurance as means to satisfy the bond requirements. The BLM has determined that corporate guarantees are not an acceptable form of bond security given the need to continually confirm the viability of the corporate guarantee. The BLM does not have the staff or expertise to perform this function, and, without the ability to closely monitor the financial stability of the corporation providing the guarantee, there is a risk the company may default or go bankrupt during the term of a lease, before plugging and reclamation of the existing well(s) and disturbance. To secure a replacement bond at that time would be difficult, if not impossible, thereby potentially leaving the Federal taxpayer to foot the bill for any necessary reclamation.
While insurance is an acceptable form of bond security used in other BLM programs, the BLM declines to use insurance for the oil and gas program given the risks and increased administrative workload for the following reasons.
First, the basic principle of insurance is the transfer of risk. It transfers the risk of financial losses as a result of specified but unpredictable events to an insurer in return for a fee or premium. While insurance is acceptable for unforeseen events such as spills or accidents, the BLM's performance bond secures the promise to fulfill a known, contractual obligation an entity has undertaken to perform at some point in the future.
Second, an insurance policy is usually a written contract between two parties, the policyholder (the person or company that gets the policy) and the insurer (the insurance company). The BLM would be a third-party beneficiary under this scheme, and considered appropriate language to that effect, but this arrangement is still significantly different from surety bonds where there is a contract between three parties (the BLM, the principal (or bonded party), and the surety where the BLM is a party to the agreement). Therefore, the BLM would hold more risk because it is not a party to the insurance.
Third, generally, either party to an insurance contract may cancel the contract unilaterally. To address this, the BLM considered regulatory language stating,
The BLM believes the revised regulations provide sufficient options
As mentioned above, BOEM's bonding regulations at 30 CFR 556.900 allow for the provision of “Another form of security approved by the Regional Director.” 30 CFR 556.902(e)(3). The BLM recognizes this option provides a level of flexibility that is not present in the BLM's regulations. However, the BLM has decided to refrain from including a similar provision in its regulations because the BLM does not have staff to implement such a provision. As of May 1, 2021, BOEM managed about 2,287 active oil and gas leases on approximately 12.1 million acres, while the BLM managed 35,871 leases on approximately 24.9 million acres. The BLM manages significantly more leases and significantly more bonds with no staff solely dedicated to bond adjudication. Instead, the BLM staff adjudicate both bonds and post-leasing actions. Therefore, the BLM does not have the staff nor expertise to implement a provision similar to 30 CFR 556.900.
The BLM considered decommissioning, abandonment, or trust accounts that can only be drawn upon to cover decommissioning expenses. Similar to corporate guarantees, allowing the use of these types of accounts would require continual review of constantly changing conditions and the expertise that BLM staff lack.
Some comments stated the BLM should require additional criteria for surety companies to ensure that bonded amounts will be available to the regulator if, and when, the operator defaults. The commenter recommended that the BLM should adopt additional criteria that (1) consider a surety's existing aggregate risk when determining whether that surety qualifies for certification, and (2) impose an underwriting limitation on the aggregate risk of all bonds issued by a surety. The BLM declines to make this change because the Department of Treasury already reviews the underwriting limitation and requires an excess risk reinsurance to protect the Federal Government. Please see Department of the Treasury Circular 570 for more information.
For the existing § 3104.2, the BLM proposed changing the specifications regarding who must post a bond to state that the operator must be covered by a bond in its name as principal or obligor. The BLM received a comment urging the BLM to analyze the bonding regime of the host State jurisdiction and decline further bond requirements where that State provides for bonding inclusive of Federal leases and wells. The BLM declines to adopt this proposal. Including such a provision in the BLM's rules would require the BLM to execute separate agreements between the BLM and the State to allow the BLM to access any funds available. Moreover, for such arrangements to work, the State bonding requirements must, at a minimum, cover all of the terms and conditions of a Federal lease, including the amount of uncollected royalties due to ONRR, plus the amount of money owed to the BLM, as the lessor, due to previous violations remaining outstanding. In the BLM's experience, these characteristics are uncommon. The BLM would be in favor of such an alternate bonding option if any State is interested in pursuing adequate arrangements, but the BLM cannot make or assume the existence of such commitments in this rulemaking.
A commenter stated that the BLM should modify this section because it is inconsistent with other sections and is confusing. For example, § 3104.10 states that, before the start of any surface disturbing activities, the lessee, operating rights owner, or operator must submit a bond, whereas this section states only that the operator must provide a bond in its name. The comment then stated that the BLM's primary concern should be that at least one person post the required financial assurance for a lease, and should leave it to the operator, lessee, and operating rights owner to determine among themselves who will provide the required bonding for a particular lease. The BLM concurs that its primary concern is that at least one person must post the required financial assurance for a lease and that the proposed changes to this section may cause confusion. Therefore, the BLM revised final § 3104.20 to be consistent with final § 3104.10, so that an operator, a lessee, or an owner of operating rights (sublessee) must be covered by a bond in its own name as principal or obligor. In order to be consistent with existing § 3171.9(a), the BLM added the following sentence to the final rule § 3104.20: “The operator shall be covered by a bond in his/her own name as principal, or a bond in the name of the lessee or sublessee, provided that a consent of the surety, or the obligor in the case of a personal bond, to include the operator under the coverage of the bond is furnished to the BLM office maintaining the bond.”
One commenter expressed concern that the proposed rule did not consider related operators or subsidiaries operating under a parent company and could cause a parent company to be required to provide multiple bonds with significantly greater total bonding. The BLM disagrees. Under the existing and final regulations, the BLM allows for co-principals to submit a bond or to be added through bond riders. Bond riders can accompany the original bond or be filed subsequent to the acceptance of the bond. Therefore, the BLM is not making any changes to the final rule based on this comment.
A commenter urged the BLM to require that an individual lease bond be increased if it is to cover more than two wells, and, in determining the lease bond amount to be posted, that the BLM must take into account a number of variables including the well depth, the presence of other resources, the number of wells, the number of low-producing or inactive wells, the capability of any responsible party to carry out the reclamation, the anticipated condition of the well site, the extent of reclamation and remediation to be required, and compliance with the laws. The BLM declines to make any changes based on this comment, which, if accepted, would require the BLM to calculate each bond amount based on constantly changing conditions. That practice is unworkable given the number of bonds the BLM is required to maintain. The BLM already prescribes when a bond will be increased in § 3104.50.
In the proposed rule, the BLM renamed the existing § 3104.3 due to the proposed elimination of nationwide bonds and proposed increase in the amount of statewide bonds to $500,000. The BLM received numerous comments suggesting a larger statewide bond amount if the bond: (a) covers more than seven wells; (b) is based on a number of variables; or (c) should be a set amount for each additional well. Another commenter recommended eliminating both nationwide and statewide bonds. The BLM declines to adopt these suggestions, which would require the BLM to calculate each bond amount based on constantly changing conditions; that practice is unworkable given the number of bonds the BLM is required to maintain. The regulations in § 3104.50 already specify when an increase might be required and provides the BLM with sufficient authority to review and ensure bond amounts are adequate.
The BLM proposed to remove nationwide bonding as an option due to the administrative burden they impose on the agency.
The BLM received comments supporting the removal of nationwide bonds. Those comments generally asserted that no nationwide option can fulfill the purposes of incentivizing operator reclamation and ensuring availability of adequate funds. Comments that opposed the removal of nationwide bonding stated there are benefits to continuing the nationwide tier for companies. Comments asserted that this change would deprive lessees and operators of a financial tool currently available to mitigate bonding costs by spreading them over a larger universe of leases and that the BLM's analysis that these bonds are administratively inefficient is not by itself a reason to remove nationwide bonds. Commenters pointed to language in a draft version of the IRA bill that included nationwide bonds, which Congress ultimately removed before the law was enacted.
The majority of the commenters who wanted the BLM to maintain nationwide bonds did not understand why the BLM considered nationwide bonds more difficult to manage and why the BLM proposed eliminating nationwide bonds. As stated in the proposed rule, for bond adequacy reviews, the BLM state office, which manages the nationwide bond, must coordinate with every field and state office with wells covered by this type of bond. The BLM administrative state office will usually contact between 4 (2 field offices and 2 state offices) and 40 (32 field offices and 8 state offices) offices and request these offices to conduct a bond adequacy review, which entails pulling the operator's well and inspection records. This is needed as the environmental and development situations may vary between offices. The administrative state office, while familiar with its field offices, would not be familiar with field offices in other administrative state offices. This will result in staff spending approximately 1 hour per office conducting the bond adequacy review and the administrative state office spending approximately 10 hours consolidating the reviews. With coordination required with between 4 and 40 offices, this would result in approximately $700 to $2,500 per bond adequacy review (assuming $50 hourly cost). Annually, this results in total costs of $33,740 to $120,500.
With this change, the BLM will no longer manage nationwide bonds and instead will have additional statewide bonds. The BLM estimates that the 243 nationwide bonds would become approximately 143 additional statewide bonds (see the Regulatory Impact Analysis for more information).
Additionally, the elimination of nationwide bonding in favor of the proposed increase in the amount of the statewide and lease bonds will allow the agency to focus on specific areas and fields to ensure the bonds are adequate to cover reclamation costs in the event an operator fails to complete proper plugging and abandonment. As of March 1, 2024, the BLM has identified 35 unplugged orphaned wells that were covered by nationwide bonds. The bonds covering these wells were insufficient, so the BLM must seek funds under the IIJA to plug these wells. Localized bonding to the individual or statewide level will allow the agency to ensure improved bonding reviews, reduces the administrative burden, and the BLM anticipates additional environmental benefits from this regulatory change. As discussed in the RIA, the BLM expects that the expedited timing for reclamation of orphaned wells from increased bonding could provide benefits related to wildlife, vegetation, soil erosion, climate change (reduced greenhouse gas emissions from unplugged orphaned wells), visual and aesthetic resources, ground water, and allowing the surface land to be utilized for other uses sooner (for example, for grazing purposes). The BLM cannot currently quantify these benefits using the information available to the BLM.
Finally, the BLM reviewed the concerns from some commenters that eliminating nationwide bonds would deprive lessees and operators of one financial tool for mitigating bonding costs. No additional data or support was provided beyond a statement that nationwide bonds mitigate bonding costs by spreading these costs over a larger number of leases. The BLM does not anticipate a large impact to lessees and operators from this change, given the other options available, such as reinstating CDs and LOCs. The RIA provides additional details on the impact of eliminating nationwide bonds.
Therefore, the BLM does not adopt the recommendation to reinstate nationwide bonds and is not making any further changes to this section. As stated in the proposed rule, the BLM will be able to better tailor statewide bond amounts to the local conditions and State-specific requirements when reviewing a bond for adequacy.
The BLM proposed eliminating operator bonds because they are seldom used and because the bonds are obsolete. The BLM has been treating and managing these bonds like statewide bonds and eliminating them would create efficiencies in the program. The BLM received several comments that supported the elimination of unit operator bonds for the reasons the BLM provided. The BLM also received a comment stating the BLM should keep unit operator bonds without providing a reason why these should be kept. The final rule eliminates unit operator bonds.
The BLM proposed adding this new surface owner protection bond section, which is cross-referenced to 43 CFR 3171.19, to provide for an additional type of acceptable bond that can be submitted when the operator is unable to reach a surface access agreement with the surface owner. The BLM requested comments on whether the BLM should increase the minimum bond amount. The BLM received numerous comments on § 3104.40.
The BLM received comments opposing the inclusion of this provision on the basis that it duplicates State law and should only apply to lands where the surface is private, or that the BLM also should address the interplay between existing § 3171.19(b)(2) that allows for an “agreement” with the surface owner in lieu of bonding, noting such an agreement does not necessarily require payment of “compensatory damages” as proposed in § 3104.40. Comments also stated the BLM should clarify that such bonds are not intended to cover reclamation, but rather only compensate a surface owner for inadvertent, limited purpose,
Some comments supported the proposed $1,000 minimum bond amount, while others stated the minimum bond amount must be raised to at least $10,000 per well to support adequate remediation, plus an additional $2,000 per acre of disturbed land, and the impacts covered under the surface owner protection bond must be expanded beyond “the reasonable and foreseeable damages to crops and tangible improvements.”
As stated in the proposed rule, the BLM promulgated the current requirements for surface owner protection bonds through Onshore Order 1 in 2007 and subsequently codified these requirements in 43 CFR subpart 3171. This bond is for the limited purpose of ensuring a private surface owner's crops and other tangible improvements are protected. In response to comments, the BLM has revised final paragraph (a) to remove the phrase “to pay compensatory damages to the surface owner,” to clarify the purpose of these bonds and added the phrase “under 43 CFR 3171.19” to encompass the situation where an agreement is reached with the surface owner. The BLM reviewed the surface owner protection bond amount and determined it appropriate for the narrow purposes of the bond. This bond covers “the payment of such damages to the crops or tangible improvements (
Finally, the BLM declines to incorporate a provision that requires the BLM to defer to State bonding requirements for surface owner protection bonds. First, not all States require a surface owner protection bond if the surface owner and Federal lessee cannot complete a surface use agreement for operations. In addition, a State's surface owner protection bond provisions may not provide the same coverage as required in the BLM's surface owner protection bond because the State bonds are required under the State's law and not under Federal law. See Wyoming Stat Ann. section 30-5-402, Colorado Code Regs. section 404-1-704, or New Mexico Stat. section 70-12-6. Therefore, the BLM declines to incorporate a provision that requires the BLM to defer to State bonding requirements for surface owner protection bonds.
Although the BLM did not propose any changes to the existing § 3104.5, it did receive the following comments and recommendations for the BLM to: (1) require an increase in the bond amount when the wells covered by the bond exceeds the number of wells that the BLM originally used to determine the new minimum bond amounts; (2) incorporate the BLM's bond adequacy review policy into the regulations; (3) require a bond review when an operator temporarily abandons or shuts-in a Federal well; (4) change or expand the risk factors described in paragraph (b); (5) state that an operator may satisfy a demand for an increased bond amount by providing another form of security; (6) state that any person aggrieved by a decision to increase bond amounts may seek review of a decision through State Director review and appeal to the IBLA; (7) remove “uncollected royalties due,” alleging that the bond amount should not include amounts demanded, payment of which is stayed pending appeals under 30 CFR part 1243; (8) explicitly state that operators do not need to provide a full liability bond; and (9) require bonds from record title and operating rights holders for unpaid royalty payments.
The MLA requires the Secretary to ensure that bonding is adequate, and, after review of the comments, the BLM has determined that no changes are needed to this section at this time. The BLM's proposed changes and additions in 43 CFR 3104.1 and existing regulations are sufficient to ensure compliance with the lease terms. Bonds given to the BLM are performance bonds to guarantee performance of the lease requirements. The performance bond protects the BLM, and ultimately the taxpayers, from financial loss should the operator fail to perform and comply with the regulations and laws governing lease operations. This financial loss includes unpaid royalty amounts; however, the BLM will first use the funds to address all outstanding plugging and reclamation costs. The BLM did not make any changes to the appeal language that already exists in the regulations and provides for both IBLA appeals in 43 CFR 3000.40 and State Director review when BLM staff recommend increased bond amounts pursuant to 43 CFR 3165.3(b).
In the proposed rule, the BLM requested comments on whether to require a bond adequacy review when a well is temporarily abandoned. The BLM received comments in support and opposition to this proposal. After reviewing the comments, the BLM has decided not to require a bond adequacy review for a change in well status, including temporary abandonment of a well. The BLM can review the adequacy of a bond at any time, and the new reporting and operational requirements for operators of temporarily abandoned wells will allow enhanced oversight of these wells. The BLM considers the discretionary authority to review a bond, combined with the new reporting and operational requirements, sufficient to effectively manage any risks to the environment associated with these types of wells without needing to require a bond adequacy review.
The BLM declines to change or expand the risk factors described in paragraph (b). The BLM considers the existing risk factors to provide an adequate basis for reviewing and identifying the appropriate bond amount. In addition, the BLM may consider additional risk factors on a case-by-case basis due to the language, which states, “including, but not limited to,” in the existing regulations and in the final rule.
Further, the BLM may need to require an entity to provide a full liability bond. It is the BLM's responsibility to take proactive measures to minimize the liability associated with high-risk operators. To mitigate the public's risk with a high-risk operator, the BLM may need to require a full liability bond on a case-by-case basis; therefore, the BLM declines to explicitly state that operators do not need to provide a full liability bond.
The BLM also declines to require bonds from record title and operating rights holders, in addition to operators, for unpaid royalty payments. The BLM's bonds required for operations cover both environmental liabilities and unpaid royalty payments. At one point, the BLM did require bonds from lessees; however, the BLM moved away from this practice in the 1980's due to the administrative burden related to requiring lessees and operators to maintain a bond. The BLM declines to require bonds from record title and operating rights holders, in addition to operators, for unpaid royalty payments.
While the BLM used the median number of wells to determine the new minimum bond amounts, an increase to the bond based solely on the number of wells is unwarranted. The BLM will capture the need for any bond increases
To improve clarity, the BLM proposed to divide the existing § 3104.7 into three separate paragraphs and included language to address what happens in the event a party fails to comply with the requirements. The BLM received a comment objecting to paragraph (b)(2), stating that the paragraph effectuates the equivalent of suspension or debarment even if the BLM does not pursue that route—with its corresponding procedural protections—under paragraph (b)(3). The BLM is not proceeding with proposed paragraph (b)(2), which refers to preventing the bonded principal from acquiring additional Federal leases, at this time. The BLM prefers to continue to address this situation through policy, as an operator can still come back into compliance even after the bond is collected once all reclamation has been completed and all monies owed the U.S. have been paid.
Because the BLM is deleting the proposed paragraph (b)(2), proposed (b)(3) is now redesignated as (b)(2) in the final rule.
The BLM did not propose any changes to existing § 3104.8 but did receive comments urging the BLM to revise the section to clarify that any new bond supersedes and replaces any prior bonds, and that the liability of the prior surety is terminated. The current language addresses this comment by stating the period of liability for a previous bond will terminate once the BLM receives a new bond meeting the regulatory requirements.
The BLM proposed this new section to address the elimination of unit operator and nationwide bonds and to provide the timeline by which entities must comply with the new bonding requirements. The BLM received a number of comments recommending that the BLM adjust the minimum bond amounts for inflation. The BLM has addressed comments directed at increasing bond amounts for inflation in § 3104.1.
A comment asked how the BLM plans to terminate the liability of sureties under unit operator and nationwide bonds that are being eliminated. After the final rules goes into effect, the BLM will send a notice to the principals maintaining the bond explaining the new requirement to replace their bond. Once an acceptable replacement bond is received, the period of liability will be terminated on the prior bond under § 3104.80. A replacement bond is not considered acceptable unless it also has an assumption of liability rider which assumes any outstanding liability accrued by the prior bond.
Multiple commenters requested that the BLM exempt existing operations and bond amounts as part of the final rule or provide more time to meet the increased bond amounts. The BLM declines to exempt existing bond amounts. The BLM, GAO, and OIG have concluded that the BLM's current bond amounts are inadequate to protect the Federal resources. If the BLM were to exempt those bonds covering existing operations, the problems identified by the GAO and the OIG would persist. The GAO, in report GAO-11-292,
While the BLM declines to expand the phase-in periods overall, swapping them in final § 3104.1 to give individual bonds the longer phase-in periods will allow additional time for smaller operators with individual bonds to come into compliance. The holders of nationwide bonds are larger companies, which have increased staff and can more easily comply with the updated phase-in period to convert their nationwide bonds to statewide and/or individual bonds. The BLM updated the phase-in period in the final rule by requiring lessees and operators that currently use nationwide and unit bonds to come into compliance within 1 year of the effective date of the final rule. This phase-in period provides time for the BLM and its staff to process the increased and new bond amounts expected. The BLM has a total of 3,234 bonds: 975 individual or lease bonds, 1,987 statewide bonds, 19 collective (unit) bonds, and 253 nationwide bonds. Upon identifying that the majority of the bonds are statewide and individual bonds, the BLM determined that it made more sense to revise the phase-in period by requiring current nationwide bonds to be brought into compliance first and the others as follows:
• 1 year for nationwide and unit bonds,
• 2 years for statewide bonds, and
• 3 years for individual bonds.
Specifically, this phase-in period will provide individual lease bond holders—the majority of those affected by the provision of the rule, many of which are small businesses—more time to prepare
The BLM proposed to remove the requirement in the existing § 3105.2-1 to file the agreement in triplicate and to specify the minimum contents for such an agreement. The BLM received comments on this section stating that the BLM should include a fixed filing fee for CAs. As previously stated, the BLM considered proposing new fixed filing fees for Federal CAs but ultimately declined to add a fee due to the public benefit of allowing Federal and State minerals that might otherwise be wasted to be developed.
A commenter stated that paragraph (c), which recommends that an application be submitted at least 90 days prior to first production, overlooks that CAs are commonly submitted only after production has been obtained, and are usually effective retroactively to the date of first production. The BLM's proposed language did consider this fact, which is why the proposed section says “should” instead of “must.”
The final rule does not make further changes in response to these comments. The final rule did remove the acronym “CA” from the final regulatory text and replace it with “communitization agreement” for clarity and consistency.
The BLM revised the existing the existing § 3105.4-2 to clarify that gas storage agreement applications must include a bond. The BLM received a comment stating that such agreements should also be subject to a significant rental fee and bond. No additional changes are warranted in response to this comment because this section already covers the rental and bonding requirements. A fee is also required in § 3105.41.
The BLM proposed to add one section, remove two sections, and update the headings of each section to remove the outdated question and answer format that appears in the existing regulations. The BLM received a comment on this subpart stating the BLM should, as a matter of transparency, codify the policies and procedures that the authorized officer is required to follow with regard to approving and overseeing lease transfers. The BLM did not make any changes to this subpart based on this comment. The BLM has a handbook, H-3106-1,
The BLM proposed splitting the existing § 3106.1 paragraph (a) to provide clarity, added a new paragraph (b) clarifying that the BLM will deny a transfer in certain situations, and added a new paragraph (c) limiting the transfer of operating rights. The BLM received a comment recommending the BLM address the impact of the severance of operating rights from record title interest. The BLM agrees with this comment. The BLM receives a multitude of transfers of operating rights that are unnecessary because those rights have never been severed from the record title. The final rule includes a new paragraph (b) to state that a record title assignment conveys both record title and operating rights unless operating rights have been previously severed. The remaining paragraphs are redesignated accordingly.
The BLM received comments on the proposed paragraph (b), which is final paragraph (c). The BLM added this paragraph to state an assignment of a separate zone, deposit, depth, formation, specific well, or of part of a legal subdivision, will be denied. One commenter supported this language, while another commenter stated that wellbore assignments are not ambiguous, because wellbores have API numbers that include bottom hole data and that are within approved drilling and spacing units specifying the acreage being drained by the wellbore. Wellbore rights are private agreements between private parties and need not be reported to the BLM. If the intent is to transfer a specific legal surface area and/or depth of the operating rights for a lease, a legal description of that area and depth is required.
A commenter stated that the language in the proposed paragraph (c), which is final paragraph (d), providing that operating rights interests may only be divided with respect to legal subdivisions is ill-advised, as it implicitly would preclude transfers of operating rights as to parts of legal subdivisions. The BLM disagrees with this comment. The paragraph must be read in conjunction with paragraph (a) that specifically states, “Leases may be transferred by assignment or sublease as to all or part of the acreage in the lease or as to either a divided or undivided interest therein.” The final rule adopts the proposed paragraph unchanged.
The BLM proposed revisions to the existing § 3106.2 to clarify that entities to whom record title or operating rights are being transferred must be qualified to hold a lease. The BLM received one comment on this section, requesting that the BLM revise the section to clarify that the new bonding requirements apply only to operators and not all lessees, assignees, and transferees. The BLM is not making any changes to the section in the final rule, because the bonding requirements may apply to any entity to whom an interest is being transferred and not just an operator.
The BLM proposed revising the existing § 3106.4-1 to require the use of an approved form to accomplish these transfers and to reduce the required number of copies the transferee must file with the BLM from three to two. The BLM received a comment on this section stating the BLM could not change from triplicate to duplicate filings as laid out in the proposed rule, because the required number of originally executed transfer forms is fixed at three by statute.
The BLM proposed this change in accordance with the Government Paperwork Elimination Act (GPEA), Public Law 105-227. Section 1707 of the GPEA specifically states, “Electronic records submitted or maintained in accordance with procedures developed under this title, or electronic signatures or other forms of electronic authentication used in accordance with such procedures, must not be denied legal effect, validity, or enforceability because such records are in electronic form.” After reviewing the comment and 30 U.S.C. 187a, the BLM determined that it should reinstate the triplicate filing until the BLM implements an electronic filing method. At that time, the BLM would only require one electronic filing per the GPEA. Therefore, the BLM reinstated the triplicate-filing requirement in this final section; however, the final rule also states the BLM will not require triplicate copies of the assignment or transfer when it is electronically submitted.
The BLM proposed revising the existing § 3106.4-2 to require transfers of overriding royalty interest to be submitted on the BLM's approved form. The BLM received a comment asserting that the use of a BLM-approved form should not be required, since the transfer is not subject to BLM approval.
Although transfers of overriding royalty interest do not require the BLM's approval, an overriding royalty interest is an interest in a Federal oil and gas lease. By requiring such transfers to be on an approved BLM form, the transferee is certifying that they are qualified to hold the interest. The BLM adopts this section in the final rule without further changes.
The BLM proposed changes to existing § 3106.6 to clarify that an entity to whom an interest in the lease is being transferred has the requisite level of bonding. The BLM received a comment questioning why—if the previous lessee is only transferring a portion of its leases—the transferee must maintain the same level of bonding in cases where the previous entity had many more leases and other reasons for an increased bond amount. A commenter stated, for example, that the proposed rule provision would result in a new lessee, record title owner, or operating rights owner being required to maintain a full statewide bond when the assignor or transferor only transferred a portion of its Federal wells.
The BLM does not intend to require such results. Therefore, the final rule removes the phrase “(including a statewide bond)” as a statewide bond may not be necessary. When a lessee or operating rights owner maintains a bond for a lease, the BLM expects the transferee or assignee to maintain the same level of bonding for operations
The BLM received a comment recommending a revision to this provision to include the following language: “to the same extent as the assignor's or transferor's bond, or to a greater amount if deemed necessary following a bond adequacy review.” This addition was recommended to ensure the adequacy of bonds at the time of lease transfer. The commenter also requested that the BLM adopt additional requirements expressly requiring bond adequacy review at the time of transfer. The comment went on to state that such a rule should require the assignor or transferor to furnish the BLM with information on the number, type, and depth of all wells existing on the lease to be transferred, and should require the BLM to use this information—and any other relevant information—to assess whether the existing bond amount is adequate to ensure prompt and complete reclamation of all existing wells and any new wells that may be drilled by the assignee or transferee.
The BLM received a comment stating the BLM should harmonize this section with § 3104.20, which places the bonding obligation for a lease on the operator. The BLM primarily requires bonds from the operator instead of the lease interest owners (record title or operating rights owner). However, the BLM will require a bond from the lessees when the operator's bond is insufficient.
The BLM received a comment stating the BLM should include a requirement that the assignee's or transferee's bond be in place prior to the approval of the assignment or transfer. The BLM concurs and already requires the bond to be in place prior to approving the assignment or transfer and therefore sees no need for the change.
The BLM received a comment recommending that the BLM examine and certify the transferee's or assignee's financial viability before approving the transfer or assignment. This recommendation is not adopted in the final rulemaking as the BLM does not currently have the staff or expertise to perform this function.
The BLM proposed revising the existing § 3106.7-2 by removing the question-and-answer format in the title and clarifying the responsibilities of the assignee or transferee. The BLM received a comment recommending that the BLM change the language in paragraph (b) to delete the references to “operating rights” and make it clear that in the case of the transfer of any interest in a lease, the transferor must maintain financial assurances subsequent to the approval of the transfer and that all transferors should be required to maintain financial assurances for a predetermined suitable period after a transfer is approved.
The BLM is not making any changes to the final rule based on this comment, as the proposed regulations already address the concerns expressed by the commenter. Under § 3104.80, when the BLM terminates the “period of liability” on a bond, this action sets an exact date after which no new liability may accrue under that bond. In addition, the BLM prefers to keep the phrases “assignment or transfer,” so it is clear this section applies to both.
The BLM received a comment on paragraph (b) requesting clarification on the obligations described. The BLM has revised this paragraph in the final rule to clarify the obligations of the assignor or transferor once the BLM approves an assignment or transfer. The last sentence in paragraph (b) now states “It also includes responsibility for plugging wells drilled and removing facilities installed or used before the effective date of the assignment or transfer.” The BLM has added this sentence to provide a more comprehensive list of lease obligations; however, this is not a complete list. The assignor or transferor will continue to be responsible for other lease obligations, not limited to the items enumerated in § 3106.72(b).
The BLM proposed changes to the existing § 3106.7-3 to remove the passive voice and to clarify that the lease account must be in good standing with all royalties paid and lease obligations met. The BLM received a comment recommending a change to this provision by providing 60 days to allow a transferor whose account is delinquent to remedy the delinquency before the BLM rejects a transfer.
This recommendation is not adopted in the final rule. While some state offices suffer from a backlog of transfers, the BLM aims to adjudicate transfers within 60 days as required by the MLA. Adding the suggested language would prolong the time it takes the BLM to adjudicate an assignment or transfer. The denial of a transfer for this reason does not preclude the assignor or transferor from filing a new transfer with the appropriate filing fee after the lease account has been brought into good standing.
The BLM proposed changes to the existing § 3106.7-6 to remove the question-and-answer format in the title and to update the language to be consistent with other changes being proposed. The BLM received a comment stating the regulation should also mandate the maintenance of financial assurances by the assignor of record and the transferor of operating rights for a
No changes to the rule are necessary because an assignor or transferor remains liable for reclamation of wells during the period of liability. The period of liability is fixed under § 3104.80, when the BLM terminates the “period of liability” on a bond. After this date, which is an exact date, no new liability may accrue under the bond. Even if the liability is not apparent at the time the liability terminates, the assignor or transferor would remain liable.
The BLM proposed to split the existing § 3106.8-1 paragraph (a) into two separate paragraphs for clarity and included a reference to the new filing fee in paragraph (b). The BLM received a comment on the proposed § 3106.81 stating the proposed rule should be revised to state that the deceased party's rights will be assigned or transferred to the appropriate successors, which implies an affirmative act—whereas such a transfer in fact takes place by operation of law, and so the term “assignment” is misused in this context.
The BLM agrees and has revised the final paragraph (a) to update the phrase “their rights will be assigned” and inserts instead “their rights would be assigned.” The BLM also removed the word “assignment” from paragraph (b) and inserted “transfer” instead.
The BLM proposed to revise and update the title of the existing § 3106.8-3 and proposed splitting the existing paragraph into three to improve clarity. The BLM received a comment on § 3106.83 stating the requirement for a filing fee is noted only as to corporate mergers, whereas the fee schedule in the proposed rules under § 3000.120 of this title lists a fee that covers corporate merger and corporate dissolution.
The BLM agrees with this comment and in the final rule has updated the phrase in paragraph (d) from “the processing fee for corporate merger” to “the processing fee for corporate merger or dissolution of corporation, partnership, or trust.”
The proposed rule revised the existing § 3107.1 for clarity by splitting the first paragraph into two and adding a new paragraph to address directional or horizontal wells drilled off lease. One commenter stated language should be added to confirm that a lease is held by production from a directional or horizontal well.
The BLM has not made any changes based on this comment, because this application is already clear. As stated in § 3107.21, a “lease will be extended so long as oil or gas is being produced in paying quantities.” This language is clear that production on and attributed to any lease will be held by production from a directional or horizontal well. In addition, the BLM's Handbook H-3107-1,
The BLM proposed changes to the existing § 3107.2-2 in response to IBLA decisions holding that the section conflicted with the MLA. In this final rule, the section now states that a lease in its extended term expires 60 days after production ceases, and not after the lessee receives notice from the BLM. A comment expressed concern that this change may cause confusion and unintended consequences, as the operator of the well may not be the same as the record title owner and timely notice of a cessation of production may not be received to remedy the non-production and preserve the lease.
The BLM understands this concern; however, as explained in the preamble to the proposed rule, multiple IBLA cases have held that the existing regulation directly conflicts with section 17(i) of the MLA (30 U.S.C. 226(i)).
The BLM received a comment stating the last sentence in this paragraph should be amended to clarify this section. The BLM agrees and has revised the final rule by inserting the word “paying” prior to “production”.
The BLM received a comment stating that the undesignated center heading that appeared immediately above proposed § 3107.31 is misleading and could easily be interpreted to mean the extension of agreement terms as opposed to the extension of leases within agreements.
The BLM agrees and the final rule adopts this recommendation and changes the heading from “Extension for Terms of Agreements” to “Extension of Leases Within Agreements.”
The BLM proposed to update the title of the existing § 3107.3-1, remove a reference to a provision that is no longer applicable, and add a new paragraph to address IBLA decisions pertaining to production in paying quantities. A comment stated the rule should clarify that unitized leases in an extended term cannot be further extended unless it is through production. The comment requested that the BLM clarify that the mere commitment of a lease to an agreement would not extend the Federal lease. No further changes are warranted to the final rule, because paragraph (a) already states “
Finally, the BLM deleted the second “for” to clarify that both conditions must exist for the leases to continue to receive the extension. For the leases to receive this extension, (1) the leases must be committed to the authorized unit agreement and (2) the well must continue to be capable of production in leasing paying quantities (able to pay out the operating costs of the well).
A comment stated that the undesignated center heading that appeared immediately above proposed § 3107.71 is meaningless and should be changed. The final rule adopts this recommendation and changes the title from “Other Types” to “Other Extension Types.”
The BLM proposed changes to the existing § 3108.2-1 to reflect policy changes by ONRR and to address IBLA decisions. The changes included adding a new paragraph (c) clarifying when the
That criticism is misplaced for the reasons discussed in the context of § 3103.42 in this preamble. To be clear, such a notice will depend on the timing of the lifting of the suspension in relation to the lease anniversary date. Consider the following hypothetical example: A lease is issued effective 7/1/90 with a five-year primary term, so it will expire on 6/30/95. The lessee paid the rental timely for the fourth lease year which ended on 6/30/94. The BLM granted a suspension of operations and production effective 4/1/94. The suspension was lifted effective 9/1/94. The revised expiration date of the lease is therefore 11/30/95, because the lease is extended an additional five months to account for the five months in which the suspension was in place. The rental paid for the 1993-94 lease year covers the remaining three-month period of the fourth lease year from 9/1/94 to 11/30/94. The prorated rental is to be requested from the lessee for the seven months from 12/1/94 through 6/30/95 (to bring the regular rental due date back to the lease anniversary date). No changes were made to the final rule based on this comment.
The BLM proposed changes to the existing § 3108.2-2 to reflect the fact that ONRR accepts rental payments through its online system. The BLM received a comment on paragraph (a)(2), asserting the change in this subparagraph would narrow the definition of “reasonable diligence” to include only rental payments made through ONRR's online system on or before the lease anniversary date and disregards ONRR's continuing practice of accepting non-electronic rental payments in some circumstances that would effectively eliminate reasonable diligence as grounds for Class I reinstatement. The BLM agrees and has revised the final rule by removing the phrase “through its online rental payment system” from paragraph (a)(2).
The BLM received a comment on paragraph (a)(3) stating that increasing the filing fee for Class I reinstatements from $90 to $1,260 is disproportionate to the administrative fee for Class II reinstatements which would remain at $500. As stated in the preamble to the proposed rule, the BLM considered moving the existing fee for Class II reinstatements to § 3000.120 for inclusion alongside the other fixed filing fees, increasing the fee to reflect the processing costs, and then adjusting the fee annually for inflation. However, the MLA, at 30 U.S.C. 188(e), specifically states for Class II lease reinstatements that “[t]he lessee of a reinstated lease shall reimburse the Secretary for the administrative costs of reinstating the lease, but not to exceed $500.” Accordingly, the BLM does not have the authority to increase this fee. The BLM also considered reducing the Class I reinstatement fee to $500 for parity with the Class II reinstatement fee and concluded that doing so would be insufficient to cover the BLM's administrative costs.
The BLM proposed revising the existing § 3108.3 to remove language in paragraph (a) that repeatedly called for the BLM to provide notice to the lessee prior to cancellation. The BLM received a comment stating that a provision should be added stating leases are subject to cancellation if the lessee is found not to be a “qualified lessee” or a “responsible lessee.” No changes have been made to the final rule as the BLM does not have the authority under the MLA to cancel a lease for these reasons. 30 U.S.C. 188. Further, the existing requirements at § 3102 would be applied prior to the issuance of a lease, and these requirements address this concern.
The BLM revised the existing § 3109.1-5 to align the terms of a lease issued under a ROW to those for a competitive lease. A commenter caught a technical error in subparagraph (c)(1) of the provisions of 43 CFR part 3100, where the BLM referenced a regulatory section number that does not exist (§ 3101.20). The BLM proposed and is removing the regulatory section numbers for headings that have no text associated with them, which included § 3101.2 in the previous regulations, and changed these sections to undesignated center headings. Therefore, the final rule makes a minor technical change to correct this error. The statement of “except § 3101.20” in paragraph (c)(1) has changed to “except §§ 3101.21, 3101.22, 3101.23, 3101.24, and 3101.25.”
In the final rule, the BLM removes the existing reserved §§ 3109.2-1 and 3109.2-2 as these sections do not need to be reserved. In the previous regulations, the BLM reserved § 3109.2-1 for the “Authority to lease” and § 3109.2-2 for the “Area subject to lease.” The BLM incorporated the authority to lease in 43 CFR 3100.3 and provides the area to lease in § 3109.20; therefore, the BLM no longer needs to reserve these sections in the final rule.
The final rule removes the existing 43 CFR part 3110 in its entirety. Multiple commenters expressed support for the elimination of 43 CFR 3110 to comply with Congress' repeal in the IRA of noncompetitive leasing for Federal onshore oil and gas minerals.
The BLM proposed to add two new sections and remove four sections from part 3120 to provide clarity and to ensure these provisions are consistent with other changes being made. The BLM received several comments on part 3120. Some comments specifically requested that the BLM not issue new leases in certain areas of the country. Some comments recommended additional paragraphs such as including denial criteria based on consideration of localized conditions and lands already subject to various types of adverse impacts. These comments are directed at the land use planning process, which is when the BLM evaluates whether lands should be open or not to leasing. Because these regulations govern the leasing and development process, these comments are outside the scope of this rulemaking.
The BLM proposed changes to the existing § 3120.1-1 to reflect Congress' repeal of noncompetitive leasing in the IRA and revised the language in the introductory paragraph such that it more closely aligns with the Act.
Some comments argued that the proposed changes give the BLM more discretion for leasing than granted by the MLA; however, these arguments were made in reference to the timing of holding quarterly lease sales and not with respect to the BLM's discretion regarding what lands may be offered for lease. The introductory paragraph in
One commenter objected to the addition of the term “eligible” to this section. The BLM has not made any changes based on this comment as the proposed language merely reflects the language in the MLA at 30 U.S.C 226(a) and (b).
Another comment recommended that the BLM consider issuing a protective lease covering open Federal acreage located in an existing drilling block to provide a mechanism for a unit operator to develop its drilling block, including the unleased Federal minerals. The BLM cannot issue a protective lease, as proposed in the comment, under the MLA. The BLM may only issue a protective lease through a competitive lease sale based upon the law at 30 U.S.C. 226 and due to drainage of the Federal minerals (see 43 U.S.C. 1457; see also Attorney General's Opinion of April 2, 1941 (Vol. 40 Op. Atty. Gen. 41)). The BLM did not make any changes to the final rule based on this comment.
One commenter recommended removing “including but not limited to” from the introductory paragraph and inserting a new subparagraph (a) to state “lands that have been identified as preferred leasing areas in a current land use plan as well as lands identified as exclusion areas in a current land use plan shall not be available for leasing.” The BLM did not make any changes to this section of the final rule. The BLM already identifies the lands closed to leasing or open to leasing in its land use plans. In addition, the BLM does not identify “preferred leasing areas” within its land use plans. Since the BLM did identify that the lands must be available for leasing at the beginning of the statement, the BLM declines to make the changes proposed by the comment.
The BLM proposed changes to the existing § 3120.1-2 to reflect current practices in holding lease sales via the internet, a new paragraph (c) to strengthen and revise the bidding process, the redesignation of paragraph (c) to (d), and inclusion of the new minimum bid amount. One comment recommended that the BLM add language clarifying that the BLM's discretion also applies to the timing of lease sales, and, specifically, that a sale need not be held if there are no eligible or available lands. The BLM has not made any changes to the final rule based on this comment, because paragraph (a) already states “Each BLM state office will hold sales at least quarterly if eligible lands are available for competitive leasing.”
The BLM received a comment stating that paragraph (d) should state the minimum bid amount instead of referring to the BLM's website and changes to the bid amount should be made through the regulatory process. The final rule does not adopt this recommendation, as the minimum is stated in regulation: the BLM has moved the minimum bid amount required to the Fiscal Terms Table at § 3103.1, and all of the fiscal terms will be adjusted every 4 years through the regulatory process. Please note that the BLM will not adjust the minimum bonus bid until the amount set by the IRA becomes a minimum after August 16, 2032.
The BLM requested comments on whether the formal nomination process should be retained in regulations and, if so, what changes to the formal nomination process should be made. The BLM received comments supporting the retention of the nomination process to promote leasing in areas with greater potential for fluid minerals to be produced. The BLM received comments stating the BLM should implement a single nominations process that combines elements of formal nominations and expressions of interest. These commenters contended that, by exercising its authority at the front end regarding what public lands it will consider for leasing, the BLM would reduce land speculation, save time and resources, and create greater certainty for all parties. The BLM received comments supporting the elimination of § 3120.30 stating this section is unclear, confusing, would only be used to limit lease areas, and that the BLM does not have the level of technical expertise required to adequately analyze lands for expected yields of oil and gas.
The final rule removes the formal nomination, existing §§ 3120.3 through 3120.3-7 and proposed §§ 3120.30 through 3120.33, which the BLM has never used and which generally increases the time and resources necessary to hold lease sales.
The BLM proposed adding a new section to address the process for EOIs, which previously had not been codified in regulation. The proposed rule also included the new filing fee requirement for EOIs in paragraph (d) as required by Congress in the IRA (see also the Fiscal Terms Table in final § 3103.1). The final rule redesignates the citation numbers throughout this section consistent with the removal of sections that pertained to the nomination process. The BLM received several comments on this section. Based on the BLM's review of the comments, the final rule splits the proposed § 3120.41 into two new sections. The first section describes the requirements for an EOI (proposed paragraphs (a) through (e), and (g)) and a new section is created for the preference criteria (proposed paragraph (f)).
The final rule renames the proposed section from “Process” to “Expression of interest process” and redesignates § 3120.31 from proposed § 3120.41 to final § 3120.31 as doing so will provide consistency with the previous regulations. This section contains paragraphs (a) through (d) of the proposed § 3120.41. Proposed paragraph (g) has been redesignated as paragraph (e).
One comment objected to the requirement that, for split estate lands under paragraph (b)(6), an EOI submitter must submit the private surface owner's name and address, even though there is no explicit and corresponding statutory requirement, and even though the information is often difficult and time consuming for submitters to obtain. The BLM has not made any changes to the regulation based on this comment. Under section 1835 of the Energy Policy Act of 2005 (43 U.S.C. 15801), Congress directed the Secretary of the Interior to review current policies and practices with respect to management of Federal subsurface oil and gas development activities and their effects on the privately owned surface. The Split Estate Report to Congress, submitted in December 2006, documents the findings resulting from consultation on the split estate issue with affected private surface owners, the oil and gas industry, and other interested parties. In the Report, the BLM identified in Issue 4 that “surface owners would like to be contacted when the BLM is leasing Federal mineral estate underlying their property. Notification is requested when parcels are nominated and offered on a
The BLM received a number of comments on paragraph (d), which requires payment of the per acre fee required by Congress in the IRA. Some commenters recommended that the BLM should require the fee to be payable by the winning bidder instead of the individual that submitted the EOI or that the fee should be refunded if: (1) the lands are not included in a sale; (2) the individual that submitted the EOI does not obtain the parcel at the lease sale; or (3) the individual submitted an EOI covering lands already submitted on a prior EOI submittal. The BLM cannot make any of these changes as Congress did not provide the Secretary with this discretion in the IRA. That Act requires the assessment of a nonrefundable fee payable by any person submitting an EOI.
In proposed paragraph (e), the BLM included language allowing the BLM to include lands in a sale on its own initiative. The BLM received comments objecting to the provision, asserting it would allow the BLM to include lands it knows to be unattractive and does not account for the BLM's policy on unleased lands within CAs. That policy directs the BLM to offer such lands for competitive leasing as soon as possible, such that the lands should not be subject to nomination limitations or EOI criteria set forth in the proposed rule. After reviewing these comments, the BLM is removing proposed paragraph (e) from the final rule. That paragraph is unnecessary because § 3120.11(f) already gives the BLM the option to include lands selected by the authorized officer in a sale. The removal of paragraph (e) from this section clarifies that Bureau motions are not considered or counted as EOIs for purposes of calculating the percent of EOI acreage offered on oil and gas lease sales during the past year for renewable development under 43 U.S.C. 3006.
As a final note, the BLM is clarifying that it only self-nominates lands to protect the Federal minerals and the public interest. The BLM calls self-nominated lands a Bureau motion. The BLM creates a Bureau motion to protect the Federal mineral estate from drainage or when there are unleased Federal minerals within an approved oil and gas agreement. The BLM tracks information on which parcels originate from an EOI or a Bureau motion within the BLM's National Fluid Lease Sale System. As of December 14, 2023, approximately 92 percent of the lands under review came from an EOI. The BLM identified that from the nominations received in calendar year 2023, the BLM has a total of 83,917.23 acres of pending lands under review with only 6,815.36 acres created from Bureau motions. The remaining 77,101.87 acres under review for future oil and gas leasing are created from EOIs.
The proposed paragraph (g) has been redesignated to paragraph (e) in the final rule and reflects the BLM's long-standing authority to determine which lands will ultimately be offered for sale. Therefore, the BLM makes no changes to this paragraph.
The BLM revised the final rule by creating new § 3120.32, which had appeared in proposed § 3120.41(f). Both the proposed and final sections address the preference criteria that the BLM may use when determining whether, when, and in what order certain lands specified in an EOI should be processed and offered in a lease sale. Creating the new section required certain redesignations and reorganizations.
The BLM received many comments on this proposed section. Most of the comments were generally supportive of the preference criteria, though some commenters were opposed to the use of the criteria. Some comments that expressed support for the preference criteria requested additional criteria be considered or requested an expansion of the proposed criteria to include greater specificity. As discussed in Section III.B.2 and III.B.7 of this preamble, these comments recommended revising the criteria to better account for impacts on GHG emissions and climate change, environmental justice, the environment (often suggesting criteria for specific habitat, natural resource areas, land or aquatic conditions, species, or other factors), cultural and Tribal resources, specific recreational uses, and protected areas such as special conservation areas, parks, and wilderness areas.
Other comments opposed the consideration of any criteria by: (1) stating that adding preference criteria to preliminary leasing decisions will lead to delays, create uncertainty, and detract from the predictability of the process; (2) expressing concern that the application of the preference criteria would exclude lands that would be considered exploratory and that such exploratory actions benefit the public at large; and (3) stating that the proposed criteria process was duplicative of other statutory processes, such as those under the Endangered Species Act and FLPMA.
Many commenters also expressed views on the proposed process for considering criteria before offering parcels. Some comments stated the application of the criteria is not a transparent process or could be subjective. Some commenters expressed concern that the BLM lacks the technical expertise and resources needed to apply some of the preference criteria and sought clarifying language to ensure consistent consideration of the criteria by BLM offices, including identifying the sources of information that offices are expected to use. Specifically, for example, some comments stated that the proposed rule does not explain how the criteria will be used when conflicts between development and other uses occur or how the preferences will be weighted. Commenters offered varied approaches for how the criteria should be applied. For example, some comments stated that lands with a low preference should be excluded from leasing, and other commenters suggested that an EOI should represent compelling evidence of some potential for development. Additionally, some comments stated the preference criteria should not be applied to lands administered by another Federal agency.
After careful consideration of the comments received, the BLM is clarifying in the regulatory text that the BLM will consider the preference criteria as part of the scoping process for leasing. During the leasing process, the BLM will apply the criteria after the conclusion of the scoping process but before issuing a draft NEPA document for a lease sale. As such, the BLM has revised the last sentence in the introductory paragraph. The BLM is inserting the phrase “In evaluating the lands to be offered, as part of the scoping process.”
Applying the preference criteria after scoping but before publication of the NEPA document allows the BLM to consider public comment on the environmental analysis for the lease sale
This procedural clarification also addresses many of the comments received. First, considering the criteria at the conclusion of the scoping process will allow the public to provide input that the BLM should consider when applying the criteria to the preliminary list of lands for a lease sale. Consistent with § 3120.42, the BLM will provide at least 30 calendar days for public comment on the preliminary parcel list as part of the scoping process. During this public scoping period, commenters can raise site-specific considerations that should be considered in selecting parcels. These could include many of the concerns commenters raised as potential additional criteria, such as the potential for development, environmental justice considerations, and other important uses or resources like watershed vitality. Public input also will help ensure that the BLM has the necessary data and information to evaluate the criteria. In response to public input, the BLM will be able to consider new information raised and announce its initial conclusions on the preference criteria in the draft NEPA document. Second, these steps provide transparency for the public to see how the BLM is considering the criteria on a case-by-case basis. For example, in some scenarios, it may allow the public to understand why low preference parcels are being offered for leasing or to recognize when there is a conflict between resources. This increased transparency and ability for public input are responsive to the comments received, including those that urged the BLM to add additional criteria that should be considered for the localized area and those that expressed concern that the process lacked clarity or transparency. At the same time, the BLM will more efficiently manage the process by applying the criteria before publishing the draft NEPA document. If the BLM applied the criteria to the parcels after publishing the draft NEPA document, the BLM may need to re-work or apply amendments and changes to both the draft NEPA documents and the competitive lease sale notice.
The BLM moved the statement “at minimum” to the end of the final sentence in § 3120.32. Consistent with the original wording in the proposed rule that directed the BLM to consider “at a minimum” the listed criteria, this language allows the BLM's authorized officer to consider other unenumerated criteria specific to local circumstances, including those raised in public comments. As such, the BLM declines to add, modify, or remove the preference criteria that were proposed. On a case-by-case basis, stakeholders and the public will be able to provide the BLM with pertinent information on the criteria or additional criteria to consider.
In addition, the BLM will not promulgate a specific weighting for the different criteria within § 3120.32 as the weighting will depend on the specific location and conditions in relation to local circumstances. Instead, the BLM will use the scoping process to inform the weighting for the different criteria. This will allow the BLM to incorporate public feedback on the parcels to be offered on the sale and ensure the BLM appropriately weighs the critical uses or resources. This will also allow the BLM to move forward with parcels that could be considered exploratory. The operator for the area can inform the BLM during the scoping period that it is interested in exploring for oil and gas in this area, which would provide for the BLM to weight the potential development criteria lower. The BLM disagrees that consideration of the preference criteria increases uncertainty or will lead to delays; rather, considering the criteria at the beginning of the leasing process will allow the BLM to more efficaciously select parcels for which to conduct environmental analysis and to offer at the lease sale. Ultimately, this will increase certainty and efficiency in the leasing process by decreasing the number of parcels offered that would not be leased, and relatedly, the number of parcels that are leased but never developed. By considering parcels that make the most sense to lease in terms of expected yields of oil and gas, the BLM is addressing concerns expressed in GAO's report, GAO 21-138,
Additionally, rather than duplicating provisions under other statutes, the preference criteria will provide the BLM with an additional tool, consistent with the Secretary's broad discretion to lease lands for oil and gas development, to direct leasing and better avoid or manage conflicting uses of public lands at the outset of the leasing process. Because scoping is part of the NEPA process, application of the criteria will not be duplicative of the NEPA process.
The MLA vests the Secretary with broad discretion to decide, up until the time of lease issuance, whether particular parcels of Federal land “may be leased” for oil and gas development, see 30 U.S.C. 226(a). The MLA does not specify how and when this decision is to be made, and courts have consistently recognized the Secretary's discretion.
Additionally, some comments sought clarification regarding the BLM's policy in IM 2023-007,
During the BLM's review of the final rule, the BLM identified an error in the proposed rule for § 3120.32(c). The language in the proposed rule described the evaluation of “the presence of historic properties, sacred sites, and other high value leasing lands, giving preference to lands that would not impair the cultural significance of such resources.” In its guidance, however, the BLM described the evaluation of “the presence of historic properties, sacred sites, or other high value cultural resources, giving preference to lands
Finally, the BLM concurs that the other surface management agencies will have extensive knowledge on the relevant parcels and the BLM should give deference to those agencies. Therefore, the BLM is not changing the language in the regulation; however, the BLM's policy going forward will be for the BLM to provide its proposed application of the preference criteria to the surface management agency when requesting consent. The surface management agency can use the information provided by the BLM to determine if it will grant consent. For a parcel with the surface management agency's consent, the BLM may move forward to offer the parcels on a lease sale, irrespective of the preference the BLM would otherwise afford the parcels. As noted above, the Secretary retains full authority under the Mineral Leasing Act to determine which parcels are offered for sale.
The BLM proposed this new § 3120.33 (redesignated from § 3120.42 in the proposed rule) to address the IRA's requirement (section 50265
Some comments noted the new provision provides no calculation method and requested that the BLM consider codifying some of the calculation process set forth in IM 2023-006,
Some comments suggested the rule be revised to require calculations to be performed on a quarterly basis, rather than leaving it unclear in the rule when to run such calculations. These comments asserted quarterly calculations would allow the BLM to determine the amount of public land acreage needed to be offered to allow wind and solar ROW permit issuance on an ongoing basis. Further, the comments suggested the BLM should only allow parcels receiving a low preference to be leased to allow wind or solar ROW issuance if additional acreage was needed based on the quarterly calculations. These calculations are only required on the day that the BLM would issue a wind or solar energy right-of-way; therefore, the BLM has not made any changes to the final rule based on this comment. The BLM will look at providing a mechanism for both the BLM and the public to generate reports and such calculations on demand.
Multiple comments stated the BLM should clarify in the final regulation that “the 1-year period refers to the year before the wind or solar energy right-of-way is issued.” The final rule adopts this recommendation and clarified that the 1-year period refers to the year before the BLM issues the wind or solar energy right-of-way in the final rule.
One comment stated the BLM should require that, before offering any parcel that receives a low preference designation for lease, the agency demonstrate that doing so is necessary to allow issuance of wind or solar ROW permits to comply with the IRA's provisions. The BLM declines to make any changes to the final rule based on this comment as it would needlessly restrict the BLM's discretion to determine which parcels to offer.
The BLM did not receive comments on its proposal to redesignate the following two sections based on the other changes made in the proposed rule.
The BLM proposed changes to the existing § 3120.4-2 to clarify its process for identifying parcels for a sale, the public's comment opportunities, and the timing of the BLM's posting of a notice prior to a sale.
Some comments recommended that the rule should: (1) require NEPA compliance documents to be made publicly available at the time the Notice of Competitive Lease Sale is posted; (2) specify that comment periods close at 11:59:59 p.m. (local time) on the last day of the comment period; (3) require key documents and information be translated into those languages that are the primary languages of communities impacted by the particular lease sale; (4) revise the rule to provide schedules for making data and information available to the public; and (5) require parcels to be in a format that both geographic information system (GIS) users and non-GIS users can easily understand. The BLM does not adopt these recommendations as these are provisions best addressed in a handbook as BLM policy guidance. The BLM will continue to allow the BLM state offices to manage the lease sales in a manner that works best for each office. The BLM already implements some of these recommendations and is committed to posting and making the NEPA compliance documents publicly available online. In addition, the BLM is continuing to develop the MLRS such that it will be capable of providing information spatially. Mapped views of the parcels are also displayed from the BLM's internet auction provider.
One commenter stated the key component of environmental justice is meaningful involvement of those most affected by a proposed project, agency action, or decision, while other commenters expressed the opinion that these changes are unwarranted and only serve to invite additional rounds of protests further delaying the leasing process. One commenter stated the BLM should issue the final NEPA documents prior to the lease sale to allow protests to be lodged before leases are sold. The BLM has not made any changes based on these comments. The BLM believes its codification of the opportunities for public comment on parcels to be included in a lease will allow for the meaningful involvement of those potentially most affected. Rather than providing for an additional round of protests, the changes to the regulation merely codify the BLM's current policy.
The final rule makes a minor technical change to include “or appeals” at the end of paragraph (a), which is consistent with the text of paragraph (b), and replaces the acronym “NEPA” with “National Environmental Policy Act” to assist readability of the final rule.
The final rule redesignated the following section numbers consistent with the removal of the nomination process from the final rule.
The BLM proposed changes to the existing § 3120.5-1 paragraph (a) to remove references to formal nominations, and to delete paragraph (c) for the same reason. The first sentence in paragraph (a) has been rewritten from “Parcels shall be offered by oral or internet-based bidding” to “Parcels will be offered by competitive auction” in the final rule. One commenter recommended that the BLM change its online auction format to allow parcels to remain open until bidding ceases, as under the current system the parcel is awarded to the highest bidder at the time the parcel times out.
The final rule does not adopt this recommendation. In the online bidding process, bidders are given ample time to review the parcels before a sale period opens for bidding. The bidding time is published, which will vary from sale to sale depending on the number of parcels offered, however the bid open and close time is clearly stated throughout the sale notice and in the auction. In the BLM's experience, most of the bidding occurs in the last few minutes of a parcel closing regardless of how long the bidding window is open. The BLM has found no data to support the assertion that the BLM will receive higher bids if the auction is allowed to run longer. Those bidding have a maximum amount they are willing to spend for a parcel and the amount of time allowed for bidding whether online or in person does not affect this.
The BLM proposed changes to the existing § 3120.5-2 to reflect changes enacted by Congress in the IRA and to be consistent with other changes made. The BLM received a comment recommending a change to paragraph (b) to clarify that the authorized officer can select a date other than the day of the sale for the payment.
The final rule adopts this recommendation and moves the phrase “on the day of the sale for the parcel” to earlier in the sentence to provide clarity. The final paragraph (b) now reads, “Each winning bidder must submit, by the close of official business hours on the day of the sale for the parcel, or such other time as may be specified by the authorized officer.”
Some comments expressed the belief that the minimum bid was still too low or should be at least $20 per acre. The final rule does not adopt this recommendation. As previously explained, the minimum bid was changed to reflect the IRA, which requires $10 per acre.
The final rule makes a technical change to the cross reference for the minimum bonus bid in paragraph (b)(1) consistent with other changes in this rulemaking.
The BLM proposed changes to the existing § 3120.5-3 to remove references to the noncompetitive lease process. The BLM received a comment recommending the BLM revise paragraph (b) to state that a “lease will be awarded to the highest responsible and qualified bidder unless contrary to the public interest.” The final rule does not adopt this recommendation. The BLM has historically used a public interest requirement in its oil and gas agreements, which require a drilling of a well into the target formation for a CA or drilling of the obligation well for an exploratory unit agreement. Adding a public interest requirement to this section may cause confusion related to the use of this same phrase with agreements. The Secretary still has the discretion to consider the public interest in the ultimate decision of which lands to lease.
A commenter stated that paragraph (d) should be revised to state that the lease will not be issued until all appeals are resolved in addition to the resolution of all protests. The final rule does not adopt this recommendation, because the MLA requires all leases to be issued within 60 days following the payment of any remaining bonus bid and rentals for the first year.
Comments opposing the inclusion of paragraph (e) stated that the BLM should not reject a lease offer without the bidder's consent if the protest is not timely resolved. In this section of the regulations, the BLM may reject a bid if the BLM cannot issue the lease within 60 days as required under 30 U.S.C. 226(b)(1)(A). However, the BLM concurs that it should not reject the bid without the successful bidder confirming that it would prefer its bid to be rejected rather than waiting longer than 60-days for the lease to be issued. Based on this comment, the BLM has revised this section in the final rule by inserting the phrase “with the consent of the bidder” to clarify the BLM's intent.
The final rule does not make any revisions to the section designations or the headings that appeared in the proposed 43 CFR subpart 3137 regulations. The BLM did not receive any comments on these sections and adopts the proposed changes in the final rule.
The final rule does not make any revisions to the section designations or the headings from the proposed rule for the 43 CFR subpart 3138 regulations. The BLM did not receive any comments on these sections and adopts the proposed changes in the final rule.
The final rule does not make any revisions to the section headings in the existing 43 CFR subpart 3140 regulations. It does redesignate the sections to make them conform to current Office of the Federal Register (OFR) Document Drafting Handbook requirements.
The BLM identified that paragraph (c) contained a technical error and referenced an outdated section number of the regulations. The final rule corrects the reference to § 3140.23. The BLM did not receive any comments on § 3140.13 and did not make any other changes to the final rule.
The BLM proposed changes to the existing § 3140.1-4 to update the rental and royalty provisions. The BLM identified that existing paragraph (a) contained a technical error and referenced an outdated section of the regulations. The final rule corrects the references to 43 CFR 3101.21 and 3101.22. One comment suggested that the current rule set out the actual required rental amounts to ensure the regulations serve as an orderly source for basic information. The BLM revised paragraph (b) to provide this reference.
The BLM received a comment on paragraph (d) referencing the unitization provisions in 43 CFR part 3180. The commenter recommended that the BLM revise the final rule to provide that a lease, or part of a leasehold, having been made part of a unitized area will not be sufficient to extend the primary term of the entire leasehold and if the lessee fails to take actions to extend those portions of the lease outside of the unitized portion of the leased lands, the lease should expire as to those excluded lands. The BLM reviewed this comment and determined the suggested revision is unnecessary as it is already addressed inf 43 CFR 3107.32.
The final rule does not make any revisions to section headings in the existing 43 CFR subpart 3141
The BLM did not receive any comments on the existing § 3141.0-8. However, when the BLM reviewed the regulations during drafting of the final rule, it identified that it needed to update § 3141.8(a)(1)(ii) to reflect the provisions in § 3140.14(a). Under 30 U.S.C. 226(b)(2)(A)(iv), “no lease issued under this paragraph shall be included in any chargeability limitation associated with oil and gas leases.” Therefore, the BLM updated this paragraph after reviewing the law and the applicable
In addition, the BLM corrected an incorrect cross reference in proposed § 3141.8(a)(1)(iv). This final rule changes the cross references in this section to §§ 3103.21, and 3103.31(a), (b), and (c).
In addition, the BLM updated the cross reference in § 3141.8(a)(1)(vii) because the final rule adds another paragraph, which changed the reference to § 3106.10(j).
Finally, the BLM updated the cross reference in § 3141.8(c)(1)(ii) because the proposed rule referenced an incorrect citation. The final rule will correct the references to §§ 3103.31 and 3103.32 instead of § 3103.30.
The BLM proposed changes to the existing § 3141.5-3 mainly to address changes required by Congress in the IRA. One commenter objected to royalty rate reductions for tar sand leases and recommended that the royalty rate not be reduced. The BLM understands the concern but cannot make this change as the reduction is allowed by the statute, see 30 U.S.C. 226(b)(2)(D).
The BLM proposed eliminating paragraph (a) and updating (b) to provide a consistent approach for combined hydrocarbon leases and tar sand leases. One commenter objected to the noncompetitive leasing of additional lands for tar sand development. The BLM can no longer issue noncompetitive tar sand leases after the passage of the IRA
The final rule does not make any revisions to the numbering or section headings from the proposed rule for the 43 CFR 3142 regulations. The BLM did not receive any comments on these sections and adopts the proposed changes in the final rule.
The final rule does not revise the proposed section designations or their headings in the 43 CFR subpart 3151 regulations.
The BLM proposed revising the existing § 3151.30 to require a permittee to submit to the BLM all data and information collected under a geophysical exploration permit. A commenter expressed concern related to the potential release of geophysical exploration data to competitors through a Freedom of Information Act (FOIA) request. The BLM understands the concern that geologic data be kept confidential. Geological and geophysical data is exempt from release under FOIA pursuant to exemption 9, 5 U.S.C. 552(b)(9). Although exemption 9 under FOIA would allow this information to be exempt from release, the BLM also updated the final regulations to ensure it is clear that the BLM would not release this information to the public by including new paragraph (b), which adds the statement that all information submitted under this section “is presumptively confidential business information.”
The commenter also stated that the BLM provided no basis for why the BLM needs this information, how it will be used, or with whom it will be shared. Such data will support the BLM's review and analysis of oil and gas agreement applications and oil and gas leasing decisions. The BLM will use this data to inform an area's oil and gas development potential. In addition, the geophysical exploration data will allow the BLM to make better decisions related to an exploratory unit agreement's boundary by ensuring that the unit area encompasses only those lands necessary for the proper development of the unitized resources. This information is exempt from release to the public under exemption 9 of FOIA, and the BLM will respect and maintain the confidentiality of the information.
The final rule does not make any revisions to the section designations or their headings in the existing 43 CFR subpart 3160 regulations.
The BLM proposed revising existing definitions and added some new definitions. The final rule does not make any changes from the proposed rule for the definitions within the existing § 3160.0-5.
One commenter requested that the BLM defer to the definitions and analysis from State regulatory bodies for what constitutes temporarily abandoned and shut-in wells, because the proposed regulations do not match State standards and could lead to inconsistency and confusion, particularly on Federal wells that are communitized with State or fee leases. The BLM understands the concern; however, the BLM declines to adopt this change because the BLM's definitions are in keeping with its statutory authority. For example, 30 U.S.C. 226(i) states that a lease will not expire if it contains a well capable of producing oil or gas in paying quantities. The BLM's proposed definition reflects this statutory requirement by defining “temporary abandoned well” as “a nonoperational well that is not physically or mechanically capable of production or injection without additional equipment or without servicing the well, but that may have future beneficial use.” Thus, a temporarily abandoned well would not be considered capable of production. This differs from, for example, the Wyoming Oil and Gas Conservation Commission's definition for “temporarily abandoned” that would not comport with the statutory framework. That definition is “a well in which the completion interval has been isolated from the wellbore above and the surface. The completion interval may be isolated by a retainer, bridge
A commenter requested that the rule provide a definition of “temporarily abandoned well” that includes a reference to a well that may have “future beneficial use” and provided a recommended definition of “a well that has the potential to produce oil and natural gas in the future as deemed by a reasonable operator including after recompletion, workover, and other maintenance activities. It also includes wells that have potential for geothermal, carbon management, scientific applications, technological advances, or other exploration and production related activities.” The BLM declines to provide the definition as proposed by the commenter in the final rule and notes that reuse or conversion of wells for other purposes is not the subject of this rule. Moreover, the commenter's proposed definition varies significantly from the BLM's current policy regarding whether a well is producing or is abandoned, as found in Attachment 4 of IM 2020-006,
Another commenter recommended that the BLM define idled well, orphaned well, and inactive wells. The BLM declines to define these terms because the BLM does not use these in the regulations. In addition, the law defines both idled wells at 42 U.S.C. 15907(a)(2) and orphaned wells at 42 U.S.C. 15907(a)(5).
Finally, a comment recommended updating the definition of maximum ultimate economic recovery to include references to the BLM's responsibilities under FLPMA. The BLM declines to update this definition at this time. The BLM uses this definition in parts 3160 and 3170 to identify the maximum amount of oil and gas that could be produced from the reservoir using existing technology. This definition already is used in conjunction with the FLPMA requirements in part 3160 (see 43 CFR 3162.1(a)). In part 3170, the term is used to determine if a variance is appropriate (see 43 CFR 3173.14(b)(4)) and in relation to off-lease measurement. Based upon a review of the usage of the maximum ultimate economic recovery in the regulations, the BLM determined that it was unnecessary to include references to the BLM's responsibilities under FLPMA as part of this definition.
The final rule does not make any revisions to the section designations or their headings in the existing 43 CFR 3162 regulations.
The BLM received many comments both in support of and expressing concern on the proposed revision of the requirements for operators to monitor, track, and report on shut-in and temporarily abandoned wells. After reviewing the comments, the BLM has made the following changes:
(1) Reorganized paragraphs (c) and (d) pertaining to temporarily abandoned wells to ensure they are easy to read;
(2) Matched the plugging requirement between shut-in and temporarily abandoned wells in paragraph (d);
(3) Clarified in paragraph (e) that an onshore operator will only need to report a well as shut-in if the well will be shut-in for 90 consecutive days; and
(4) Required mechanical integrity tests every 3 years after a well is shut-in or temporarily abandoned in paragraph (f).
For paragraph (b), one commenter objected to the requirement that “[a]ll costs over and above the normal plugging and abandonment expense will be paid by the party accepting the water well.” The commenter recommended that the BLM revise this paragraph to allow the operator of the well, the State, a grazing association, or any other non-Federal entity to pay the additional costs if a well is being conditioned into a water supply source. The BLM did not propose any changes to this paragraph and disagrees with the commenter. If the operator does not need the water well and it is not supporting on-lease activity, the BLM cannot require the operator to cover any additional costs related to setting up the well as a water well. If the operator of the well, the State, a grazing association, or any other non-Federal entity agrees to pay the additional costs for a well to be conditioned into a water supply source, the BLM will work with the funding entity and the party accepting the water well. In general, this would be a private arrangement between the party accepting the water well and the other entity. The BLM did not make any changes to the final rule based upon this comment.
In reviewing the final rule for clarity, the BLM identified that the requirements for temporarily abandoned wells were included in a single paragraph at paragraph (c) in the proposed rule and were difficult to follow. Therefore, the BLM split paragraph (c) into two paragraphs (c) and (d) in the final rule and re-structured paragraph (d) to match the format for the requirements for shut-in wells in the final rule with the format for the requirements for temporarily abandoned wells.
Although a few commenters expressed support for the 4-year requirement to plug temporarily abandoned wells, one commenter recommended a 2-year requirement, and other commenters expressed concerns that the 4 years proposed was too short. The BLM reviewed these comments and identified that there are legitimate reasons why a well may need to remain temporarily abandoned for longer than 4 years. For example, an operator may be looking at converting a field for enhanced recovery. Until the operator has constructed the infrastructure to support the operations, multiple wells may need to be temporarily abandoned since they will not be used until the operator starts injections. Based upon this scenario and other considerations expressed in the comments, the BLM updated the final rule in paragraph (d) (paragraph (c) in the proposed rule) to match the requirements for shut-in wells and temporarily abandoned wells for final abandonment. The final rule now provides an option to “provide the authorized officer with a detailed plan and timeline for future beneficial use of the well. If the authorized officer determines that there is a legitimate future beneficial use for the well, the officer may allow the operator to delay permanent abandonment by an additional 1 year. The authorized officer may grant additional delays in 1-year increments, provided that the operator confirms the future beneficial use of the well and is making verifiable progress
In revising the regulation to allow a well to be temporarily abandoned for longer than 4 years, the BLM determined that it needed to ensure that these nonoperational wells maintain their mechanical integrity. Therefore, the BLM added paragraph (f) to require mechanical integrity tests every 3 years, after the first mechanical integrity test is done. This section states, “All wells that are temporarily abandoned or shut-in must have mechanical integrity verified as required in (d)(1) and (e)(2) and must ensure that mechanical integrity is verified every 3 years thereafter. The operator must submit the results of each verification of mechanical integrity to the Authorized Officer within 30 days of the mechanical integrity test.”
One commenter requested that a provision be added to the regulations that allows recreational access to the reclaimed locations. Once the lands have been reclaimed and the BLM has accepted an abandonment notice, the public may use the lands for recreation, provided the applicable RMP allows for such use.
One commenter expressed concerns related to the proposed rule's requirement that “no well may be temporarily abandoned for more than 30 days without the prior approval of the authorized officer.” The commenter requested that the BLM extend the temporary abandonment period for which a notice and prior approval is required from 30 days to 90 days. The thirty-day period has been in place since 1988, and the BLM is unaware of evidence showing that it or operators have experienced hardship from the period. Therefore, the BLM kept the current requirement of 30 days for notice and prior approval.
The BLM requested comments on whether to require a bond adequacy review when a well is temporarily abandoned. The BLM received comments in support and opposition to this proposal. After reviewing the comments, the BLM has decided not to require a bond adequacy review for a change in well status, including temporary abandonment of a well. The BLM can review the adequacy of a bond at any time, and the new reporting and operational requirements for operators of temporarily abandoned wells will allow enhanced oversight of these wells. The BLM considers the discretionary authority to review a bond, combined with the new reporting and operational requirements, sufficient to effectively manage any risks to the environment associated with these types of wells without needing to require a bond adequacy review.
Commenters expressed concerns that the extra administrative requirements related to temporarily abandoned and shut-in wells will become overly burdensome for the BLM to administer and will result in contradictory guidance and confusion for operators balancing between State and Federal regulations. One commenter also mentioned the number of orphaned wells that have been identified on Federal lands. Another commenter suggested the BLM should not require operators to report a well status change to the BLM because ONRR requires operators to report on ONRR Form-4054 (“OGOR”) the well status (Well Status codes 12 (OSI) and 13 (GSI)) beginning with the last month of drilling and continuing until the operator abandons the well. Another commenter stated that the BLM should accept all sundry notices for temporarily abandoned or shut-in wells as prima facia rationale and timing parameters for these nonoperational wells. After reviewing the comments, the BLM identified that paragraph (d)(1) in the proposed rule required operators to report whenever a well is shut-in. The BLM did not intend for an operator to report each time a well is shut-in. Instead, the BLM need only be notified if the well would be shut-in for 90 consecutive days. Therefore, the BLM revised this section to state, “Notify the authorized officer of the well's shut-in status, if the well will be shut-in for 90 or more consecutive days, and provide the date the well was shut-in within 90 days of well shut-in.” As for the administrative burden concerns, the BLM has reduced the operator's administrative burden with this change since the operator would not need to submit a notice for each shut-in well. Instead, the operator will only submit a notice for each well shut-in for 90 or more consecutive days. The final rule will also reduce the BLM's burden as the BLM can use the notifications to update well status instead of requiring the BLM to inspect wells or review ONRR or State agency data on well status. The BLM will review notification of shut-in or temporarily abandoned status to determine if the rationale for shutting-in or temporarily abandoning the well are supported by the information provided in the notice. The BLM will accept the sundry notice and update the well status in its system; however, the BLM will not provide a guarantee that it will consider each sundry notice as prima facia rationale for the status change. The BLM has a responsibility to the American public to ensure that unplugged non-operational wells are still necessary to support lease operations. If the unplugged non-operational well will not support future lease production, then the BLM will request that the operator plug and abandon the well.
Finally, the BLM reorganized this section in the final rule. The BLM removed the requirements for temporarily abandoned wells from paragraph (d) and left the reclamation requirements for all wells permanently abandoned within paragraph (c). The BLM reorganized paragraph (d) for temporarily abandoned wells to add subparagraphs and ensure the language in the final rule was clear. The BLM redesignated the section for shut-in wells to paragraph (e). The BLM also added paragraph (f) to cover the requirements for mechanical integrity tests. The BLM makes these changes in the final rule to more clearly inform the regulated community of the requirements.
The final rule does not make any revisions to the section designations or their headings in the existing 43 CFR subpart 3164 regulations.
The BLM changed the existing paragraph (b) to clarify that there are no Onshore Oil and Gas Orders currently in effect. Since the BLM codified the Onshore Oil and Gas Orders in 43 CFR part 3170,
The proposed rule revised the heading for 43 CFR 3165.1 from “Relief from operating and producing requirements” to “Relief from operating and/or producing requirements.” The BLM did not receive any comments on this change and did not make any other changes in the final rule.
The BLM revised the existing § 3165.1 to encourage diligent development of leased lands and to ensure that any lease suspensions are justified and have a clearly stated end date. The BLM received many comments on the proposed rule related to changes to oil and gas lease suspensions. The final rule revises paragraph (c) to add the word “only” before “cites” and replace the acronym “APD” with “application for permit to drill.”
A commenter expressed concerns regarding the proposed changes in light of the BLM's own delays in processing APDs and lease suspensions and with agency policy against “premature suspensions.” The commenter asked the BLM to clarify its intent so that lessees can clearly understand the appropriate time by which they should submit any requests for suspensions. The BLM agrees and drafted paragraph (c) to specify the timeframe for a submission of an APD such that a lessee could seek a suspension based upon a pending APD. The BLM does not believe any other changes are necessary.
For paragraphs (a) and (b), one commenter recommended that the final rule should require the “full statement” to include a showing of leaseholder diligence, 2and absent a showing of diligence, the BLM would be required to deny the request for relief. The BLM's existing policy in Manual Section 3160-10,
One commenter stated that the BLM should not add paragraph (c) into the final regulations, but instead leave the substance of the paragraph in guidance. Additionally, multiple commenters claimed that the authorized officer should have flexibility to approve a lease suspension in spite of the timing of the APD, if the officer believes it would be appropriate given the circumstances. The commenter then stated that the BLM should not push the operator towards diligent development, as the submission of an APD is a business decision based on markets, investment capital, supply chains, labor and equipment availability, and other factors and that the failure to act “diligently” to develop a lease has no adverse impacts on the environment. This is outlined in existing policy at Instruction Memorandum 2023-012,
Other commenters stated that the 90-day threshold proposed by the BLM is arbitrary, because there is no recorded evidence that the BLM can approve an APD in 90 days. The BLM proposed the 90 days based upon the BLM's average processing time for an APD across all BLM offices. The BLM provided this information in the preamble. In fiscal year 2022, the BLM's average processing time did increase to 162 days; however, the BLM decided to keep with the 90-day limit as it represents an average over a period of 3 years.
The commenters also recommended that instead of a set timeframe, the BLM should deny suspension requests based on a proposed action necessitating NEPA analysis, which cannot reasonably be completed prior to the lease expiration date; based on events the lessee could have and should have foreseen or avoided; and based on unknown, speculative, and or future events. Finally, the commenters recommended that the BLM should deny suspensions based upon adjacent unleased lands as the commenter considered these types of suspensions ripe for abuse and mismanagement. The BLM declines to make any changes to the rule based on these recommendations given the existing discretion of the authorized officer. For example, if the operator nominates adjacent unleased lands that are needed for development and are scheduled to be offered on an upcoming lease sale within the few months, the BLM does not see this as an unreasonable request.
Comments demonstrated confusion with the application of paragraph (c), seemingly believing that the APD submission requirement applies to all suspensions. This provision only applies when the applicant cites the pending APD as the sole basis for the suspension. If a lease needs to be suspended in the interest of conservation or for force majeure due to reasons other than a pending APD, then the BLM will not require an APD to be filed at least 90 calendar days prior to the expiration date of the lease. To remove the confusion, the BLM modifies the final rule by inserting the word “only” prior to the word “cites.” In addition, to increase readability, the BLM replaced the acronym “APD” with the words “application for permit to drill” as the BLM has not defined the acronym “APD” in part 3160.
In addition, one commenter stated that approving suspensions for only 1 year is arbitrary. The 1-year time frame ensures that suspensions are not granted for a longer period than necessary, and it provides a clear and easily trackable timeframe for both the BLM and lessees, which allows both parties to ensure compliance with applicable lease terms, such as the resumption of paying rentals or royalties. The BLM implemented an annual review of lease suspensions in Permanent Instruction Memorandum 2019-007,
Other commenters supported approving suspensions for 1 year; however, they also recommended that the BLM modify the final regulations to allow for only one extension to an oil and gas lease suspension. One commenter stated that the BLM should
The BLM received several comments on paragraph (e) urging the BLM to modify this provision to only allow a directed suspension to last 1 year. The commenters claimed that long-term suspensions do not further the public interest or properly conserve natural resources and instead encumber public lands by making them unavailable for other uses and for other potential leaseholders, as well as fail to provide taxpayers with a fair return for the lease of public lands. The BLM declines to make this change. Given the reasons for which the BLM is authorized to issue a directed suspension, such as a court order, the suspension must remain in effect until the court allows operations.
The final rule does not make any revisions to the section designations or their headings in the existing 43 CFR subpart 3171 regulations.
The BLM received many comments on the proposed rule related to changing the term of an approved APD from the current 2 years with an optional 2-year extension to a 3-year term without extensions. The BLM received comments both in support and with concerns related to the proposed changes. After reviewing the comments, the BLM has made the following changes: (1) omitted the word “ordinarily” from paragraph (a); (2) clarified that the APD term in the regulations only applies to APDs approved after the effective date of the final rule; (3) clarified that the well must be drilled to total measured depth in paragraph (b); (4) clarified that paragraph (b)(1) includes wells drilled to approximate total measured depth and not yet completed; (5) stated that paragraph (b)(3) will only apply if the operator set the surface casing for the well and submits a plan to finish drilling and complete the well; (6) provided that the plan in paragraph (b)(3) must include the timeframe for continuously drilling and completing the well and any extenuating circumstances that may delay the continuous drilling and completion of the well; (7) specified that earthwork for reclamation must be completed within 6 months of the approved APD's expiration; and (8) added paragraph (e) to provide for the extension of an APD's term when the underlying lease is suspended.
Many commenters supported the BLM's proposal to extend the initial term of an approved APD from 2 to 3 years; however, multiple commenters recommended that the BLM establish a 4-year term for approved APDs. Commenters stated that a 4-year term for an approved APD would enable the BLM to process APDs efficiently and would provide consistency for industry. The BLM rejected this change, since approximately 95 percent of the approved APDs drilled under the existing regulations have been drilled within 3 years from the date of approval. By providing a set term without the option to extend, the BLM is providing more certainty for the industry to allow it to properly plan any operations. The remaining five percent may submit a new APD. Given the small percentage of operators who do not normally drill a well within 3 years of approval of an APD, the BLM believes the administrative burden on an operator of filing a new APD is justified in light of the BLM's interest in ensuring the public lands subject to an oil and gas lease are diligently developed.
One commenter encouraged the BLM to modify the rule and keep the current 2-year period for an approved APD with allowable extensions, stating the rule would have negative effects by increasing the BLM's administrative burden and requiring additional environmental review. The BLM disagrees. Currently, the BLM spends approximately 3,800 hours annually on processing APD extension requests. In some cases, the NEPA analysis is stale, and the BLM must complete a new analysis on the APD to verify that the impacts identified have not changed. This rule will reduce the administrative burden on both the BLM and the operator as extension requests would no longer be needed. The burden on the BLM would be further reduced by obviating the need for any potential additional NEPA analysis to support an extension. In addition, the 3 years in which to use an APD will provide sufficient time for 95 percent of the operators. Therefore, the BLM did not make any changes based upon this comment.
A commenter stated that changing the term of an approved APD from 2 years to 3 years without the possibility of an extension would kill many oil and gas projects before they ever get off the ground. The commenter supported this statement citing the length of time required to comply with NEPA. Without recourse to an extension, an operator is left without any means to maintain a lease. Often an operator is prevented from drilling due to circumstances completely out of their control. The comment encouraged the BLM to examine the negative effects the rule will have in this regard. The BLM believes the comment is confusing oil and gas lease suspensions and approved APD extensions. The BLM will still grant lease suspensions, which will allow an operator to maintain its lease if the suspension requirements are met, and which toll the running of the term of any previously issued permit to drill. This provision only addresses extensions for APDs. Moreover, even if a well is not drilled within the 3-year time period, as noted above, an operator can submit a new APD.
Another commenter recommended that the BLM omit the word “ordinarily” from paragraph (a) to avoid confusion. The comment stated that since “ordinarily” implies there is an exception, it is unnecessary with the “notwithstanding” clause, which is already addressed in paragraph (b). The BLM concurred with this recommendation and deleted the word “ordinarily” from paragraph (a).
In addition, one commenter requested that any change in terms to approved APDs only apply to the APDs approved and issued subsequent to the publication of a final rule. The BLM concurs with this recommendation. The BLM modified the final rule to clarify that the 3-year term only applies to APDs approved after the effective date of the rule. Consistent with general principles of retroactivity, any APD approved prior to the effective date of this rule will be eligible for a 2-year extension in accordance with the regulations in place when the BLM approved the APD.
For paragraph (b), a commenter requested that the rule specify either total vertical depth or total measured depth in the final rule. The BLM specifies total measured depth in the final rule as measured depths matches the requirements in an approved APD. A horizontal well drilled to total vertical depth would likely not be productive in paying quantities and would not meet the plans in the approved APD.
For paragraph (b)(1), a commenter requested that the BLM specify in the regulations that drilling, but not completing, would provide for the APD approval to remain valid. The BLM intended as much and has clarified the final rule by adding the statement “including wells drilled to approximate total measured depth and not yet completed” to paragraph (b)(1).
For paragraphs (b)(1) and (b)(2), a commenter recommended that the BLM set a time limit of one-year for any extensions beyond the initial term of the APD based on the criteria outlined in the proposed regulation. The BLM declines to provide for a further extension of an APD under either (b)(1) or (b)(2). In both of these scenarios, a well has already been drilled to the approximate total measured depth as authorized by the APD. Instead, the BLM will administer the wells as shut-in or temporarily abandoned if the well is not yet producing at the expiration of the APD. This allows the BLM to track and manage these wells under 43 CFR 3162.3-4. Therefore, there is no need to set a limit of one-year for paragraphs (b)(1) and (b)(2) in this section.
The BLM received multiple comments on paragraph (b)(3). Some commenters considered the requirement for the plan to be vague and that the regulatory language leaves the authorized officer with no guidance for approving such a plan. A separate comment recommended that the BLM accept reasonable plans to complete drilling any well to total depth if the operator has set surface casing prior to the APD expiring. The BLM reviewed the many comments on the plan required by this section and recognized that more information on the plan should be added to the regulations. Based on these comments, the BLM has revised paragraph (b)(3) to specify that the “plan must include the timeframe for continuously drilling and completing the well and any extenuating circumstances that may delay the continuous drilling and completion of the well.”
In addition, multiple commenters encouraged the BLM to delete paragraph (b)(3). They asserted that paragraph (b)(3) would allow APD extensions based only on submission of a drilling plan to the BLM, with no requirement that on-the-ground activity have taken place, undermining the goal of diligent development. They further contended it may risk further waste of public lands and resources. The BLM concurs that the operator should be pursing diligent development with a showing of on-the-ground activity. The BLM modified paragraph (b)(3) to require that on-the-ground activity has taken place to ensure the operator has started development under the APD. For the final rule, the BLM updated paragraph (b)(3) to require the operator to have set the surface casing for the well and to have submitted a plan. This will ensure the operator is working towards developing its lease with a real effort to begin development. In addition, as noted above, one comment recommended the BLM accept reasonable plans to complete drilling any well to total depth if the operator has set surface casing prior to the APD expiring. Therefore, the BLM considered requiring surface casing for the BLM to consider a plan as a reasonable approach for paragraph (b)(3).
For paragraph (c), a commenter expressed concern that an operator may not be able to submit an APD to finish drilling the well during the time allowed under the proposed regulations, and the regulations would then require the operator to immediately comply with all applicable plugging, abandonment, and reclamation requirements. This was not the intent in the proposed rule; therefore, the BLM updated the final rule to provide two options for an expired APD. The “operator or lessee must either comply with all applicable plugging, abandonment, and reclamation requirements or submit a new APD covering the existing disturbance.”
The BLM received a comment on paragraph (d) suggesting that the BLM should specify the timeframe by which reclamation must start once an APD expires. The BLM's existing regulations require earthwork for reclamation to begin within 6-months of well completion or well plugging under 43 CFR 3171.25(b)(2). To be consistent with 43 CFR 3171.25(b)(2), the final rule updates paragraph (d) to state, “Earthwork for reclamation must be completed within 6 months of APD expiration (weather permitting).”
Multiple commenters expressed concern that the BLM proposes to no longer grant extensions to an APD's term. Some commenters expressed a concern that the lack of an APD extension would disadvantage project proponents in situations where drilling was delayed for a variety of on-the-ground reasons and there is not a way to seek an APD extension. Another commenter mentioned the need for extensions when there is litigation challenging the NEPA compliance for the lease or APD because the BLM cannot take any action on an APD when there is ongoing litigation. Upon review of the comments, the BLM recognizes that there is a valid concern related to litigation challenging the issuance of leases; therefore, the BLM added paragraph (e), which will allow the BLM to adjust an APD's term when the lease is suspended. The new paragraph (e) states, “The valid period for an approved APD on a lease suspended under subpart 3103 will be adjusted to account for the suspension. Beginning on the date the suspension is lifted, the valid period of the approved APD will be extended by the time that was remaining on the term of the approved APD on the effective date of the suspension.” This addition will allow the BLM to extend the term of an approved APD based upon an oil and gas lease suspension of operations and/or production. The BLM will not grant general extensions as the 3-year APD term will provide sufficient time for the Federal operator to drill a well under an approved APD.
The BLM identified that 43 CFR 3181.5 should be updated to recognize the changes to royalty made by the IRA. The BLM has revised the existing § 3181.5 in the final rule to reflect the increased royalty rate.
Finally, the rule will not make any revisions to the section designations or their headings in the existing 43 CFR subpart 3181 regulations.
During the public comment period, the BLM discovered that § 3181.5 of the current regulations still references a royalty rate of 12.5 percent. As discussed earlier, in the IRA, Congress changed the royalty rate for onshore Federal oil and gas leases to 16.67 percent, a rate that will last until August 2032, at which time, the royalty rate becomes not less than 16.67 percent and subject to further increases. Therefore, the BLM is replacing the 12.5 percent royalty in § 3181.5 with the language “the current royalty percentage for leases offered on onshore oil and gas lease sales.” This will allow BLM offices to enter the appropriate royalty rate based upon the latest onshore oil and gas lease sales for the area.
During the comment period, BLM employees identified that a section in the model onshore unit agreement for unproven areas should be updated to recognize the changes Congress made to royalty rates in the IRA.
Section 17(b) of the model onshore unit agreement for unproven areas still references the old royalty rate of 12.5 percent. Because Congress changed the royalty rate in the IRA for onshore Federal oil and gas leases to 16.67 percent, the BLM is replacing the 12.5 percent royalty in Section 17(b) of the model onshore unit agreement for unproven areas with the language “(current royalty for leases offered on onshore oil and gas lease sales).” This will allow BLM offices to enter the appropriate royalty rate based upon the latest onshore oil and gas leases.
The BLM is republishing the revised model onshore unit agreement for unproven areas in the final rule in its entirety because the OFR is unable to make a piecemeal edit to the document. The document is not regulatory and, in conformance with current OFR Document Drafting Handbook requirements, cannot be given section numbers. Instead, the model onshore unit agreement for unproven areas must be redesignated in the final rule as Appendix A to Part 3180. The BLM uses this model form to identify where new unit agreements do not match the model form and ensures any differences from the model form are in the public interest.
Likewise, at the direction of the OFR, the BLM is redesignating four other models and exhibits that comprise the remainder of existing subpart 3186. These items will appear in the final rule as follows: (1) § 3186.1-1 Model “Exhibit A” will appear as Appendix B to Part 3180; (2) § 3186.1-2 Model “Exhibit B” will appear as Appendix C to Part 3180; (3) § 3186.3 Model for designation of successor unit operator by working interest owners will appear as Appendix D to Part 3180; and (4) § 3186.4 Model for change in unit operator by assignment will appear as Appendix E to Part 3180. The final rule does not revise the contents of Appendices B through E.
Cross refences in §§ 3107.10(a), 3181.1 and 3183.4(a) are revised in the final rule to reflect the redesignated appendices.
E.O. 12866, as amended by E.O. 14094, provides that the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB) will review all significant rules. OIRA has determined that this final rule constitutes a “significant regulatory action” within the scope of section 3(f)(1) of E.O. 12866, as amended by E.O. 14094.
During the comment period for the proposed rule, some commenters suggested that the proposed rule would cause adverse effects on the economy, the energy sector of the economy, and all communities that rely on fluid mineral development as their major economic driver. Commenters pointed to the language in the preference criteria for leasing under § 3120.42, asserting it could severely restrict the amount of oil and gas leasing on Federal lands. The BLM disagrees. Codifying the preference criteria will ensure that oil and gas leasing on public lands focuses development where there is the most potential for recovery and allows the agency to manage public lands for other uses. The BLM completed an RIA and determined that the net costs to the economy range from a cost of $8.0 million to a cost of $13.2 million, depending on the cost of bonds (1 percent or 2 percent) and the number of wells the BLM reclaims (15 wells or 24 wells). As discussed in the RIA, the BLM expects that the expedited timing for reclamation of orphaned wells from increased bonding could provide benefits related to wildlife, vegetation, soil erosion, climate change (reduced greenhouse gas emissions from unplugged orphaned wells), visual and aesthetic resources, ground water, and allowing the surface land to be utilized for other uses sooner (for example, for grazing purposes). The BLM cannot currently quantify these benefits using the information available to the BLM.
Other benefits of the final rule include ensuring that costs reside with oil and gas lessees, operating rights owners, and operators, and not the American public. This includes adjusting the BLM's cost recovery mechanisms so that project applicants provide a more equitable share of the BLM's up-front costs for processing these applications. Finally, the BLM implements several changes to provide a transparent leasing process that focuses leasing on areas with a greater likelihood of being developed with fewer resource conflicts and ensuring transparency in these processes. Overall, shifting the financial responsibility for leasing to industries and ensuring transparency in the decision-making process will result in a more effective, fair, and accountable regulatory framework that benefits both businesses and society as a whole.
E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The E.O. directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas.
This final rule replaces the BLM's current rules governing oil and gas leasing, which are contained in 43 CFR 3100 through 3140, and revises some regulations governing oil and gas operations, which are contained in 43 CFR 3150 through 3171.
For any regulatory action that OIRA determines is a significant regulatory action under section 3(f)(1) of E.O. 12866, section 6(a)(3)(C) of E.O. 12866 requires Federal agencies to provide an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable non-regulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives. 58 FR 51735, 51741. The BLM developed this final rule in a manner consistent with the requirements in E.O. 12866 and E.O. 13563.
For more detailed information on the BLM's analysis, as required by the referenced Executive Orders, see the RIA prepared for this final rule. The RIA has been posted in the docket for the final rule on the Federal eRulemaking Portal:
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601
The BLM reviewed the Small Business Administration's (SBA) size standards for small businesses and the number of entities fitting those size standards as reported by the U.S. Census Bureau in the Economic Census. The number of small businesses in States where there are existing Federal oil and gas leases is estimated to be 20,975 for the Crude Petroleum Extraction and Natural Gas Extraction industries (North American Industry Classification System (NAICS) codes 211120 and 21130, respectively). The BLM concludes that the vast majority of entities operating in the relevant sectors are small businesses as defined by the SBA. As such, the final rule will likely affect a substantial number of small entities.
In addition, the rule will have a distributional and positive impact on the Direct Property and Casualty Insurance Carriers Industry (NAICS 524126). Additional premiums will be paid by lessees in the oil and natural gas extraction industries to surety companies who will be providing the coverage to meet the proposed bonding requirements. The number of small businesses in the oil and gas industry in States where there are existing Federal oil and gas leases is estimated to be 476,687. This is because the SBA defines a small business for purposes of the Crude Petroleum Extraction and Natural Gas Extraction industries (NAICS codes 211120 and 21130, respectively) as one which has 1,250 or fewer employees.
Finally, the BLM received multiple comments expressing concerns related to impacts that the proposed rule would have on small entities. Specifically, the comments stated that: (1) the BLM should have included the changes from the IRA in its analysis for the Regulatory Flexibility Act (RFA); (2) the BLM should have mailed notification of the proposed rule to the affected small businesses under the RFA; (3) the BLM should have considered alternatives as required by the RFA; and (4) this rule requires the preparation of an initial and final Regulatory Flexibility Analysis. The BLM reviewed the final rule and has determined that, although the final rule will likely affect a substantial number of small entities, that effect will not be significant. The basis for this determination is explained in more detail in the RIA.
Because the increased royalty amounts, bonus bids, and rentals, and the EOI fee, are non-discretionary, the BLM is not required to include these increases in its evaluation of the impacts on small businesses. Congress passed the RFA “to establish as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” Public Law 96-354, section 2(b), 94 Stat. 1164 (1980). The RFA requires agencies to analyze alternatives to their rules with an eye towards minimizing significant impacts on small entities. 5 U.S.C. 603(c), 604(a)(6). In this case, the BLM cannot consider alternatives to mandatory instructions in the IRA. The nondiscretionary changes include the increased minimum bonus bid, rental, and royalty rate, and the new EOI fee. The only discretionary cost increases at issue in this final rule are the increased bonding amounts and filing fees, which are fully analyzed. Aside from assessing alternatives to the statutorily mandated provisions of this rule, however, the BLM has provided the analysis the RFA requires.
Based on the BLM's review of the costs associated with the increased bonding, the BLM has determined that the incremental costs that a company must pay to meet the increased bonding amounts are unlikely to deter a company from obtaining a lease and developing it. As discussed in the RIA, sureties offer both new and existing operators the ability to cover the increased bond amount at an estimated cost of only 1 to 2 percent per year of the additional bond amount.
While there were multiple comments stating that small operators will be forced to shut in wells, will be at higher risk of going bankrupt, or will go bankrupt due to the increased costs, the comments did not provide the well- or lease-level financial information needed to support these claims. The BLM reviewed available data and reported statistics on the sensitivity of low-producing wells to changes in wellhead prices and concluded that, given the range of recent and expected oil prices, even low-producing wells generate sufficient revenue to fund the increased level of bonding. The economic data provided from the public comment period did not provide the necessary detail to support a more detailed analysis. For example, one commenter provided a report on the economic benefits of oil and gas leasing. This report supported our baseline in the RIA; however, it did not change the BLM's estimates of the impacts from this rule.
Notably, the BLM has only limited access to financial data of the small businesses themselves, since most of those small businesses are privately held and are not required to report their financial information to the BLM or any other public forum. Even if a company is public, those covered under the NAICS codes for Crude Petroleum and Natural Gas Extraction are often partnerships or limited liability companies, which frequently merge and split, making it difficult to determine if a firm composed of partners and subsidiaries are sufficiently affiliated to be considered small businesses or if they are functionally a subsidiary of a larger firm. Even when financial statements are available for review, those statements are designed to standardize overall reporting of an entity's finances and do not specify income and expenditures associated with production from Federal wells. Nor is it possible to obtain the requisite information on both Federal production volume and the production costs of this Federal production from any Federal database. For example, ONRR reports production volumes but not production costs. Constructing the needed data on Federal production and financial costs requires cross-referencing several data sources that are not readily available.
Therefore, based on the BLM's review, the BLM lacks the data to determine whether the rule will impact small businesses in the manner the commenters assert. Nor is such information reasonably available to the BLM such that it could undertake such analysis. The BLM has, nevertheless, reaffirmed its finding that the rule will not have a significant impact on a substantial number of small entities for the reasons described above in this section.
In summary, the per-entity, annualized compliance costs associated with this final rule are estimated to represent only a small fraction of the annual net incomes of the companies likely to be impacted. Because the final rule will not have a “significant economic impact on a substantial number of small entities,” neither an initial nor a final regulatory flexibility analysis is required.
The Secretary of the Interior certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
The Congressional Review Act (5 U.S.C. 804(2)) requires certain procedures for “any rule that the Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget finds has resulted in or is likely to result in—
a. an annual effect on the economy of $100 million or more;
b. a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions;
c. significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.
DOI will report to Congress on the promulgation of this rule prior to its effective date. The report will state that the Office of Information and Regulatory Affairs has determined that this rule meets the criteria set forth in 5 U.S.C. 804(2).
The final rule will not have a significant or unique effect on State, local, or Tribal governments or the private sector. The rule contains no requirements that apply to State, local, or Tribal governments. The rule revises requirements that otherwise apply to the private sector participation in a voluntary Federal program. The compliance costs associated with the rule are below the monetary threshold established at 2 U.S.C. 1532(a). The rule updates the BLM's existing regulations to reflect the IRA's changes to lease terms. Those provisions (which became effective with the enactment of the IRA and which the BLM has no discretion to modify) will result in additional transfer payments made from the private sector to the U.S. Treasury, which then distributes portions to State governments and various funds, such as the Land and Water Conservation Fund. The BLM estimates the transfer payments will total $210 million per year, but these payments are not a result of action taken by the BLM and are instead Congressionally mandated. Since the discretionary provisions of the rule impose compliance costs that are below the $100,000,000 threshold established at 2 U.S.C. 1532(a), a statement containing the information required by the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531
This final rule will not effect a taking of private property or otherwise have taking implications under E.O. 12630; therefore, a takings implication assessment is not required. The final rule replaces the BLM's current rules governing oil and gas leasing, which are contained in 43 CFR 3100 through 3140, and some governing oil and gas operations, which are contained in 43 CFR 3160 and 3171. Therefore, the rule will impact future leases on Federal land; however, it will not impact current leases. All other terms in the regulations are not considered a taking of private property as such operations are subject to the existing lease terms which expressly require that subsequent lease activities be conducted in compliance with subsequently adopted Federal laws and regulations.
This final rule conforms to the terms of the existing leases and applicable statutes and, as such, the rule is not a government action capable of interfering with constitutionally protected property rights. Therefore, the BLM has determined that the rule will not cause a taking of private property or require further discussion of takings implications under E.O. 12630.
Under the criteria in section 1 of E.O. 13132, this final rule does not have any federalism implications to warrant the preparation of a federalism summary impact statement.
The final rule will not have a substantial direct effect on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the levels of government. It does not apply to States or local governments or State or local governmental entities. The rule will affect the relationship between operators, lessees, and the BLM, but it does not directly impact the States. Therefore, in accordance with E.O. 13132, the BLM has determined that this final rule does not have sufficient federalism implications to warrant preparation of a Federalism Assessment.
Several commenters suggested that the BLM should make substantial changes to the rule to allow for better cooperation with States and local governments when their jurisdictions overlap. For example, one comment stated that the BLM must respect local governments' regulatory authority over State, private, and trust mineral and water resources within each State. Another comment stated that the proposed rule would have significant direct impacts on the States and local communities, and that, if the BLM does not offer Federal lands for lease, that omission will prevent State and private lessees from developing their leases due to the mixed ownership for horizontal wells. Some comments stated the rule is inconsistent with State laws that expedite the processing, granting, and streamlining of mineral and energy leases and permits.
The BLM developed this rule based on its statutory authority to offer federally owned lands and minerals for oil and gas leasing and development. The BLM has evaluated the federalism implications of this rule as required by E.O. 13132. Although the final rule will affect the relationship between operators, lessees, and the BLM, it will not directly impact the States' leasing ability. Local governments and the public may submit information to the BLM on how the development of nominated lands may affect the development of adjacent non-Federal lands when the BLM is considering lands for leasing. This could occur either when the EOI is submitted or during the scoping and public comment periods for the lease sales.
This final rule complies with the requirements of E.O. 12988. More specifically, this final rule meets the criteria of section 3(a), which requires agencies to review all regulations to eliminate errors and ambiguity and to write all regulations to minimize litigation. This final rule also meets the criteria of section 3(b)(2), which requires agencies to write all regulations in clear language with clear legal standards.
The Department strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their
The BLM evaluated this final rule under the Department's consultation policy and under the criteria in E.O. 13175 to identify possible effects of the rule on federally recognized Indian Tribes. Since the changes to leasing only apply to Federal lands, the final rule will not impact the leasing of Indian minerals. The final rule could impact Tribal minerals as the BLM will require operators on both Federal and Tribal minerals to comply with the requirements within Parts 3160 and 3170, including the changes for shut-in and temporarily abandoned wells and approved APDs.
In August of 2021, the BLM sent a letter to each registered Tribe informing them of certain rulemaking efforts, including the development of this final rule. The letter offered Tribes the opportunity for individual government-to-government consultation regarding the rulemaking.
In June 2023, the BLM sent another letter to each registered Tribe informing them of the proposed rule. During the comment period for the proposed rule, a commenter, who is not from a Tribe, stated that the BLM should fulfill its Federal trust obligation to Tribes to protect their interest and further the government-to-government relationships with Tribes. The BLM concurs and worked to inform the Tribes of the changes proposed in this rulemaking. The BLM did receive comments from a Tribe as previously discussed in Section III.B.4. and III.B.8. of this preamble.
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) generally provides that an agency may not conduct or sponsor, and not withstanding any other provision of law, a person is not required to respond to a collection of information, unless it displays a currently valid OMB control number. Collections of information include any request or requirement that persons obtain, maintain, retain, or report information to an agency, or disclose information to a third party or to the public (44 U.S.C. 3502(3) and 5 CFR 1320.3(c)).
This final rule contains information-collection requirements that are subject to review by OMB under the PRA. OMB has generally approved the existing information collection requirements contained in the regulations that will be affected by this final rule under the following OMB Control Numbers:
• 43 CFR 3100, 3120, and subpart 3162—OMB Control Number 1004-0185;
• 43 CFR 3106—OMB Control Number 1004-0034;
• 43 CFR part 3130—OMB Control Number 1004-0196;
• 43 CFR 3150—OMB Control Number 1004-0162; and
• 43 CFR 3160—OMB Control Number 1004-0137.
The BLM plans to transfer the information collection requirements contained in 43 CFR 3106 from OMB control number 1004-0034 to OMB Control Number 1004-0185 in order to keep similar information collections requirements together under the same OMB Control Number. Additionally, the BLM plans to transfer information collection requirements contained in 43 CFR 3160 from OMB Control Number 1004-0137 to a new OMB Control Number. Once approved by OMB, the new OMB Control Number will be 1004-0220. The new and revised information collection requirements are discussed as follows, along with the resulting changes in public burdens.
The final rule will result in new information collection requirements that will require OMB approval under a new OMB control number (previously, 1004-0137). This final rule is estimated to result in 33,621 annual responses, 260,928 annual burden hours, $35,400,000 non-hour cost burdens under this new OMB Control Number.
The new information collection requirements are described as follows.
• Justification for Temporary Well Abandonment—43 CFR 3162.3-4(d);
• Reporting Shut-in Status—43 CFR 3162.3-4(e);
• Verification of Mechanical Integrity—43 CFR 3162.3-4(e)(2) and 3162.3-4(f); and
• Plan and Timeline for Future Beneficial Use—43 CFR 3162.3-4(e)(3)(iii).
The BLM believes these new requirements with yearly interval checks will help operators stay on top of shut-in wells, thus preventing them from becoming orphaned in the future. The addition of these information collection requirements will result in an addition of 5,500 annual responses, 52,000 annual burden hours.
Currently, there are 301,663 annual responses, 1,835,888 annual burden hours, and $31,080,000 annual non-hour cost burdens inventoried under the OMB Control Number 1004-0137. This final rule will create a new OMB Control Number and moves 28,121 annual responses, 208,298 annual burden hours, and $31,080,000 annual non-hour cost burdens inventoried under OMB Control Number 1004-0137 into this OMB Control Number.
In addition, there is an adjustment of $4.3 million in annual non-hour cost burdens (from $31 million to 35.4 million). This adjustment results from the annual inflation adjustment of filing fees and do not result from the final rule. The resulting new estimated total burdens for this new OMB Control Number are provided as follows.
Currently, there are 68 annual responses, 26 annual burden hours, and $25 annual non-hour cost burdens inventoried under OMB Control Number 1004-0162. It is not anticipated that the final rule will change the results to the annual responses, annual burden hours, or non-hour cost burdens under this OMB Control Number. The revised information collection requirement is described as follows.
Currently, there are 9,132 annual responses, 37,695 annual burden hours, and $751,415 annual non-hour cost burdens inventoried under OMB Control Number 1004-0185. This final rule is estimated to result in 16,340 annual responses, 29,410 annual burden hours, $3,766,184, non-hour cost burdens under this OMB Control Number. The final rule will result in new, revised, and removed information collection requirements. Additionally, as discussed earlier, the BLM will also be transferring certain information collection requirements, along with the associated burdens from OMB Control Number 1004-0034 to OMB Control Number 1004-0185. These changes are discussed blow.
The following two information collections will be moved into OMB Control Number 1004-0185 to keep information collection requirements in subpart 3106 under the same OMB Control Number:
1.
2.
The resulting new estimated total burdens for OMB Control Number 1004-0185 are provided as follows.
Currently, there are there are 21 annual responses and 220 annual burden hours associated with this OMB control number. There are also no non-hours cost burden currently associated with this OMB control number. The final rule is not projected to result in any new annual responses. The additional requirements in 43 CFR 3170.80(b) include description of the anticipated PA(s) size and define the proposed PAs in the unit designation agreements required by 43 CFR 3137.21, and 3137.23 is not projected to result in additional burden for that information collection.
43 CFR 3000.120 introduces new filing fees for the following information collections, resulting in a new total estimated annual non-hour burden cost of $1,320;
• $120 for Statement of change of unit operator (43 CFR 3137.61); and
• $1,200 for Application for storage agreement (43 CFR 3138.11);
Additionally, the existing 43 CFR 3137.86, New information demonstrating that the participating area should be larger or smaller than previously determined, contains the following three information collection requirements for which the burden has not been previously captured in this OMB control number:
• Information demonstrating that a participating area should be larger than previously determined (43 CFR 3137.86(a)(1));
• Application to enlarge participating area outside of existing boundaries (43 CFR 3137.86(a)(2)); and
• Statement for additional committed tract or tracts are added to the unit under paragraph (a)(2) (43 CFR 3137.86(a)(3)).
The resulting new estimated total burdens for OMB Control Number 1004-0196 are provided as follows.
If you want to comment on the information-collection requirements in this rule, please send your comments and suggestions on this information-collection request within 30 days of publication of this final rule in the
The BLM received comments on this section. One commenter stated the BLM properly issues the rule pursuant to a categorical exclusion. Other comments recommended that the BLM use an environmental assessment for the rule. Commenters stated the rule affects decisions in RMPs, because the preference criteria would guide the BLM's decision making and direct oil and gas leasing to appropriate locations. Another commenter stated that the economic burden that the proposed rule would cause for oil and gas operators and State economies would require the BLM to perform a NEPA analysis on the portions of the proposed rule that are beyond the scope of changes required by Congress in the IRA. As previously stated, this rule does not close additional lands for oil and gas leasing and the MLA has vested the Secretary with broad discretion to decide, up until the time of lease issuance, whether particular parcels of Federal land “may be leased” for oil and gas development, see 30 U.S.C. 226(a). The BLM completed an RIA and an extraordinary circumstances review and determined that the BLM can issue this rule under the applicable Departmental categorical exclusion.
A detailed environmental analysis under NEPA is not required, because the final rule is covered by a categorical exclusion (see 43 CFR 46.205). This final rule meets the criteria set forth at 43 CFR 46.210(i) for a Departmental categorical exclusion in that this final rule is “of an administrative, financial, legal, technical, or procedural nature.” The BLM also has determined that the final rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.
Under E.O. 13211, agencies are required to prepare and submit to OMB a Statement of Energy Effects for significant energy actions. This statement is to include a detailed statement of “any adverse effects on energy supply, distribution, or use (including a shortfall in supply, price increases, and increase use of foreign supplies)” for the action and reasonable alternatives and their effects.
Section 4(b) of E.O. 13211 defines a “significant energy action” as “any action by an agency (normally published in the
The BLM believes that the final rule may affect the locations that operators choose for future oil or gas development but will have little impact on an entity's decision to invest in energy development, the size of that development, or the production from that development. As a result of this rule, an entity holding existing nonproducing leases may choose to shift more future development to those existing leases or to develop non-Federal acreage instead of securing new Federal leases, and some entities may be relatively less likely to choose a new Federal lease to a comparable non-Federal lease. Also, any incremental changes in oil or gas production estimated to result from the rule's enactment would constitute a small fraction of total U.S. gas production, and any potential and temporary deferred production of oil would likewise constitute a small fraction of total U.S. oil production. Some commenters disagreed and pointed to the preference criteria as increasing the risk for litigation, which could shift development off Federal land and increase the cost to produce gas or oil. The BLM disagrees. The preference criteria under § 3120.32 support the BLM's existing policy and direction to make a public interest determination, which has existed at least since 1988.
The principal authors of this final rule include: Peter Cowan, Senior Mineral Leasing Specialist in BLM Headquarters; Jennifer Spencer, Mineral Leasing Specialist in BLM Headquarters; William Lambert, Petroleum Engineer in BLM Headquarters; Natalie Eades, Attorney Advisor in DOI Office of the Solicitor. Technical support provided by: Scott Rickard, Economist in BLM Headquarters; Travis Kern, Program Analyst in BLM Headquarters; and Erik Vernon, Air Resources Program Lead in BLM Utah State Office. Assisted by: Duane Spencer, Deputy State Director of Minerals and Land in BLM Wyoming State Office; JulieAnn Serrano, Supervisory Land Law Examiner in BLM New Mexico State Office; and Darrin King, Senior Regulatory Analyst in BLM Headquarters.
Public lands-mineral resources, Reporting and recordkeeping requirements.
Government contracts, Mineral royalties, Oil and gas reserves, Public lands-mineral resources, Reporting and recordkeeping requirements, Surety bonds.
Government contracts, Oil and gas exploration, Public lands-mineral resources, Reporting and recordkeeping requirements.
Government contracts, Oil and gas exploration, Public lands-mineral resources, Reporting and recordkeeping requirements.
Alaska, Government contracts, Mineral royalties, Oil and gas exploration, Oil and gas reserves, Public lands-mineral resources, Reporting and recordkeeping requirements, Surety bonds.
Government contracts, Hydrocarbons, Mineral royalties, Oil and gas exploration, Public lands-mineral resources, Reporting and recordkeeping requirements.
Administrative practice and procedure, Alaska, Oil and gas exploration, Public lands-mineral resources, Reporting and recordkeeping requirements, Surety bonds.
Administrative practice and procedure, Government contracts, Indians-lands, Mineral royalties, Oil and gas exploration, Penalties, Public lands-mineral resources, Reporting and recordkeeping requirements.
Administrative practice and procedure, Flaring, Immediate assessments, Indians-lands, Mineral royalties, Oil and gas exploration, Oil and gas measurement, Public lands-mineral resources, Reporting and record keeping requirements, Royalty-free use, Venting.
Government contracts, Mineral royalties, Oil and gas exploration, Public lands-mineral resources, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, the Bureau of Land Management amends 43 CFR parts 3000, 3100, 3110, 3120, 3130, 3140, 3150, 3160, 3170, and 3180 as follows:
16 U.S.C. 3101
As used in 43 CFR parts 3000 and 3100, the term:
(See 43 CFR 1821.10 for office location and area of jurisdiction of Bureau of Land Management offices.)
Any person acquiring a lease under this chapter must comply fully with the equal opportunity provisions of Executive Order 11246 dated September 24, 1965, as amended, and the rules, regulations and relevant orders of the Secretary of Labor (41 CFR part 60 and 43 CFR part 17).
As provided in 18 U.S.C. 1001, it is a crime punishable by imprisonment or a fine, or both, for any person knowingly and willfully to submit or cause to be submitted to any agency of the United States any false or fraudulent statement(s) as to any matter within the agency's jurisdiction.
No member of, or delegate to, Congress, or Resident Commissioner, and no employee of the Department of the Interior, except as provided in 43 CFR part 20, is allowed or entitled to acquire or hold any Federal lease, or interest therein. (Officer, agent or employee of the Department—see 43 CFR part 20; Member of Congress—see R.S. 3741; 41 U.S.C. 22; 18 U.S.C. 431-433.)
Except as provided in 43 CFR 3000.120, 3101.53(b), 3103.1, 3165.4, and 3427.2, any party adversely affected by a decision of the authorized officer made pursuant to the provisions of 43 CFR parts 3000 or 3100 has a right of appeal pursuant to 43 CFR part 4.
If a court holds any section or its paragraphs of the regulations in parts 3000 through 3180 or their applicability to any person or circumstance invalid, the remainder of these rules and their applicability to other persons or circumstances will not be affected.
No action challenging a decision of the Secretary involving any oil or gas lease (including decisions on offers or applications to lease) can be maintained unless such action is commenced or taken within 90 days after the final decision of the Secretary relating to such matter.
All necessary documents must be filed in the proper BLM office. Documents may be submitted to the BLM using hard-copy delivery services, in-person delivery, or by electronic filing. When using hard-copy delivery services or in-person delivery, the document will be considered filed only when received during regular business hours in the proper BLM office. See 43 CFR part 1820, subpart 1822.
The granting of a permit or lease for the prospecting, development or production of deposits of any one mineral does not preclude the issuance of other permits or leases for the same lands for deposits of other minerals with suitable stipulations for simultaneous operation, nor the allowance of applicable entries, locations or selections of leased lands with a reservation of the mineral deposits to the United States.
Where nonmineral public land disposal statutes provide that in conveyances of title all or certain minerals are reserved to the United States together with the right to prospect for, mine and remove the minerals under applicable law and regulations as the Secretary may prescribe, the lease or sale, and administration and management of the use of such minerals will be accomplished under the regulations of 43 CFR parts 3000 and 3100. Such mineral estates include, but are not limited to, those that have been or will be reserved under the authorities of the Small Tract Act of June 1, 1938, as amended (43 U.S.C. 682(b)) and the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701
The United States Department of Justice is the agency responsible for the enforcement actions described in 30 U.S.C. 195, which makes it unlawful for any person to organize or participate in any scheme, arrangement, plan, or agreement to circumvent or defeat the provisions of the MLA or its implementing regulations; or to seek to obtain or to obtain any money or property by means of false statements of material facts or by failing to state materials facts concerning the:
(a) Value of any lease or portion thereof issued or to be issued under the MLA;
(b) Availability of any land for leasing under the MLA;
(c) Ability of any person to obtain leases under the MLA; or
(d) Provisions of the MLA and its implementing regulations.
(a)
(b)
(c)
(d)
(2) For a document that the BLM receives on or after June 22, 2024, the applicant must include the required fixed fees with the documents filed, as provided in § 3000.120(a) of this chapter, and the applicant is subject to case-by-case processing fees as provided in § 3000.110 and under other provisions of this chapter.
(a) Fees in this subchapter are designated either as case-by-case fees or as fixed fees. The fixed fees are established in this subchapter for specified types of documents. However, if the BLM decides at any time that a particular document designated for a fixed fee will have a unique processing cost, such as the preparation of an Environmental Impact Statement, the BLM may set the fee under the case-by-case procedures in this section.
(b) For case-by-case fees, the BLM measures the ongoing processing cost for each individual document and considers the factors in section 304(b) of FLPMA on a case-by-case basis according to the following procedures:
(1) The applicant may request the BLM's approval to do all or part of any study or other activity according to standards the BLM specifies, thereby reducing the BLM's costs for processing the document, in accordance with all other applicable laws and regulations.
(2) Before performing any case processing, the BLM will give the applicant a written estimate of the proposed fee for reasonable processing costs after the BLM considers the FLPMA section 304(b) factors.
(3) The applicant may comment on the proposed fee.
(4) The BLM will then give the applicant the final estimate of the processing fee amount after considering the applicant's comments and any BLM-approved work that the applicant will do.
(i) If the BLM encounters higher or lower processing costs than anticipated, the BLM will re-estimate the reasonable processing costs following the procedure in
(ii) If the fee the applicant would pay under this
(iii) Once processing is complete, the BLM will refund to the applicant any money that the BLM did not spend on processing costs.
(5)(i) The BLM will periodically estimate what its reasonable processing costs will be for a specific period and will bill the applicant for that period. Payment is due to the BLM 30 days after the applicant receives its bill. The BLM will stop processing the document if the applicant does not pay the bill by the date payment is due.
(ii) If a periodic payment turns out to be more or less than the BLM's reasonable processing costs for the period, the BLM will adjust the next billing accordingly or make a refund. Do not deduct any amount from a payment without the BLM's prior written approval.
(6) The applicant must pay the entire fee before the BLM will issue the final document.
(7) The applicant may appeal the BLM's estimated processing costs in accordance with the regulations in 43 CFR part 4, subpart E. The applicant may also appeal any determination the BLM makes under
(a) The table in this section lists the services that require payment of fixed fees to the BLM. The fixed fee amounts are posted on the BLM website (
(b) The amount of a fixed fee is not subject to appeal to the Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E.
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; 43 U.S.C. 1701
(a)(1)
(2)
(i) Units of the National Park System, including lands withdrawn by section 206 of the Alaska National Interest Lands Conservation Act, except as provided in paragraph (g)(4) of this section;
(ii) Indian reservations;
(iii) Incorporated cities, towns and villages;
(iv) Naval petroleum and oil shale reserves;
(v) Lands north of 68 degrees north latitude and east of the western boundary of the National Petroleum Reserve—Alaska;
(vi) Lands recommended for wilderness allocation by the surface managing agency;
(vii) Lands within the BLM's wilderness study areas;
(viii) Lands designated by Congress as wilderness study areas, except where oil and gas leasing is specifically allowed to continue by the statute designating the study area;
(ix) Lands within areas allocated for wilderness or further planning in Executive Communication 1504, Ninety-Sixth Congress (House Document numbered 96-119), unless such lands are allocated to uses other than wilderness by a land and resource management plan or have been released to uses other than wilderness by an Act of Congress;
(x) Lands within the National Wilderness Preservation System, subject to valid existing rights under section 4(d)(3) of the Wilderness Act (16 U.S.C. 1133) established before midnight, December 31, 1983, unless otherwise provided by law;
(xi) Subject to valid existing rights, lands within the National Wild and Scenic Rivers System and that constitute the bed or bank or are situated within one-quarter mile of the bank of any river designated as a wild river under the Wild and Scenic Rivers Act (16 U.S.C. 1280), lands within the National Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-quarter mile of the bank of certain rivers designated as scenic or recreational, and in some cases, designating legislation may apply a different boundary extent. Lands within the National Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-half mile of the bank of any river designated a wild river by the Alaska National Interest Lands Conservation Act (16 U.S.C. 3148); and
(xii) Wildlife refuge lands, which are those lands embraced in a withdrawal of lands of the United States for the protection of all species of wildlife within a particular area. Sole and complete jurisdiction over such lands for wildlife conservation purposes is vested in the Fish and Wildlife Service even though such lands may be subject to prior rights for other public purposes or, by the terms of the withdrawal order, may be subject to mineral leasing. No expressions of interest covering wildlife refuge lands will be considered for oil and gas leasing, except as provided by applicable law.
(b)(1)
(2)
(i) Units of the National Park System, except as provided in paragraph (g)(4) of this section;
(ii) Incorporated cities, towns and villages;
(iii) Naval petroleum and oil shale reserves;
(iv) Tidelands or submerged coastal lands within the continental shelf adjacent or littoral to lands within the jurisdiction of the United States;
(v) Lands acquired by the United States for development of helium, fissionable material deposits or other minerals essential to the defense of the country, except oil, gas and other minerals subject to leasing under the Act;
(vi) Lands reported as excess under the Federal Property and Administrative Services Act of 1949;
(vii) Lands acquired by the United States by foreclosure or otherwise for resale;
(viii) Lands recommended for wilderness allocation by the surface managing agency;
(ix) Lands within the BLM's wilderness study areas;
(x) Lands designated by Congress as wilderness study areas, except where oil and gas leasing is specifically allowed to continue by the statute designating the study area;
(xi) Lands within areas allocated for wilderness or further planning in Executive Communication 1504, Ninety-Sixth Congress (House Document numbered 96-119), unless such lands are allocated to uses other than wilderness by a land and resource management plan or have been released to uses other than wilderness by an Act of Congress;
(xii) Lands within the National Wilderness Preservation System, subject to valid existing rights under section 4(d)(3) of the Wilderness Act (16 U.S.C. 1133) established before midnight, December 31, 1983, unless otherwise provided by law;
(xiii) Subject to valid existing rights, lands within the National Wild and Scenic Rivers System and that constitute the bed or bank or are situated within one-quarter mile of the bank of any river designated as a wild river under the Wild and Scenic Rivers Act (16 U.S.C. 1280), lands within the National Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-quarter mile of the bank of certain rivers designated as scenic or recreational, and in some cases, designating legislation may apply a different boundary extent. Lands within the National Wild and Scenic Rivers System that constitute the bed or bank or are situated within one-half mile of the bank of any river designated a wild river by the Alaska National Interest Lands Conservation Act (16 U.S.C. 3148); and
(xiv) Wildlife refuge lands, which are those lands embraced in a withdrawal of lands of the United States for the protection of all species of wildlife within a particular area. Sole and complete jurisdiction over such lands for wildlife conservation purposes is vested in the Fish and Wildlife Service even though such lands may be subject to prior rights for other public purposes or, by the terms of the withdrawal order, may be subject to mineral leasing. No expressions of interest for wildlife refuge lands will be considered except as provided in applicable law.
(c) National Petroleum Reserve—Alaska is subject to lease under the Department of the Interior Appropriations Act, Fiscal Year 1981 (42 U.S.C. 6508).
(d) Where oil or gas is being drained from lands otherwise unavailable for leasing, there is implied authority in the agency having jurisdiction of those lands to grant authority to the BLM to lease such lands (see
(e) Where lands previously withdrawn or reserved from the public domain are no longer needed by the agency for which the lands were withdrawn or reserved and such lands are retained by the General Services Administration, or where acquired lands are declared as excess to or surplus by the General Services Administration, authority to lease such lands may be transferred to the Department in accordance with the Federal Property and Administrative Services Act of 1949 and the Mineral Leasing Act for Acquired Lands, as amended.
(f) The Act of May 21, 1930 (
(g)(1)
(2)
(3)
(4)
(i)
(ii)
(iii)
(iv)
(5)
(h) Under the Recreation and Public Purposes Act, as amended (43 U.S.C. 869
(i)(1) Coordination lands are those lands withdrawn or acquired by the United States and made available to the States by cooperative agreements entered into between the Fish and Wildlife Service and the game commissions of the various States, in accordance with the Fish and Wildlife Coordination Act (16 U.S.C. 661), or by long-term leases or agreements between the Department of Agriculture and the game commissions of the various States pursuant to the Bankhead-Jones Farm Tenant Act (50 Stat. 525), as amended, where such lands were subsequently transferred to the Department of the Interior, with the Fish and Wildlife Service as the custodial agency of the United States.
(2) Representatives of the BLM and the Fish and Wildlife Service will, in cooperation with the authorized members of the various State game commissions, confer for the purpose of determining by agreement those coordination lands which will not be subject to oil and gas leasing. Coordination lands not closed to oil and gas leasing may be subject to leasing on the imposition of such stipulations as are agreed upon by the State Game Commission, the Fish and Wildlife Service and the BLM.
(j) No lands within a refuge in Alaska open to leasing will be available until the Fish and Wildlife Service has first completed compatibility determinations.
As used in this part, the term:
(a)
(b)(1)
(2)
The ownership of and the right to extract helium from all gas produced from lands leased or otherwise disposed of under the Act have been reserved to the United States.
Upon a determination by the authorized officer that lands owned by the United States are being drained of oil or gas by wells drilled on adjacent lands, the authorized officer may execute agreements with the owners of adjacent lands whereby the United States and its lessees will be compensated for such drainage. Such agreements must be made with the consent of any lessee affected by an agreement. Such lands may also be offered for lease in accordance with 43 CFR part 3120.
Where lands in any leases are being drained of their oil or gas content by wells either on a Federal lease issued at a lower rate of royalty or on non-Federal lands, the lessee must both drill and produce all wells necessary to protect the leased lands from drainage. In lieu of drilling necessary wells, the lessee may, with the consent of the authorized officer, pay compensatory royalty in accordance with 43 CFR 3162.2-4.
(a) No option to acquire any interest in a lease is enforceable if entered into for a period of more than 3 years (including any renewal period that may be provided for in the option).
(b) No option or renewal thereof is enforceable until a signed copy or notice of the option has been filed in the proper BLM office. Each such signed copy or notice must include:
(1) The names and addresses of the parties thereto;
(2) The serial number of the lease to which the option is applicable;
(3) A statement of the number of acres and the type and percentage of interests to be conveyed and retained by the parties to the option, including the date and expiration date of the option.
(c) The signatures of all parties to the option or their duly authorized agents. The signed copy or notice of the option required by this paragraph must contain or be accompanied by a signed statement by the holder of the option that entity is the sole party in interest in the option; if not, the entity must set forth the names and provide a description of the interest therein of the other interested parties, and provide a description of the agreement between them, if oral, and a copy of such agreement, if written.
The acreage to which the option is applicable will be charged both to the grantor of the option and the option holder. The acreage covered by an unexercised option remains charged during its term until notice of its relinquishment or surrender has been filed in the proper BLM office.
Each option holder must file in the proper BLM office within 90 days after June 30 and December 31 of each year a statement showing:
(a) Any changes to the statements submitted under § 3100.31(b); and
(b) The number of acres covered by each option and the total acreage of all options held in each State.
(a) All data and information concerning Federal and Indian minerals submitted under this part 3100 and parts 3120 through 3190 of this chapter are subject to 43 CFR part 2, except as provided in paragraph (c) of this section. 43 CFR part 2 includes the regulations of the Department of the Interior covering the public disclosure of data and information contained in Department of the Interior records. Certain mineral information not protected from public disclosure under 43 CFR part 2 may be made available for inspection without a Freedom of Information Act (FOIA) (5 U.S.C. 552) request.
(b) When you submit data and information under this part 3100 and parts 3120 through 3190 of this chapter that you believe to be exempt from disclosure to the public, you must clearly mark each page that you believe includes confidential information. The BLM will keep all such data and information confidential to the extent allowed by 43 CFR 2.26.
(c) Under the Indian Mineral Development Act of 1982 (IMDA) (25 U.S.C. 2101
(1) All findings forming the basis of the Secretary's intent to approve or disapprove any Minerals Agreement under IMDA; and
(2) All projections, studies, data, or other information concerning a Minerals Agreement under IMDA, regardless of the date received, related to:
(i) The terms, conditions, or financial return to the Indian parties;
(ii) The extent, nature, value, or disposition of the Indian mineral resources; or
(iii) The production, products, or proceeds thereof.
(d) For information concerning Indian minerals not covered by paragraph (c) of this section:
(1) The BLM will withhold such records as may be withheld under an exemption to FOIA when it receives a request for information related to tribal or Indian minerals held in trust or subject to restrictions on alienation;
(2) The BLM will notify the Indian mineral owner(s) identified in the records of the Bureau of Indian Affairs (BIA) and give them a reasonable period of time to state objections to disclosure, using the standards and procedures of 43 CFR 2.28, before making a decision about the applicability of FOIA exemption 4 to:
(i) Information obtained from a person outside the United States Government; when
(ii) Following consultation with a submitter under 43 CFR 2.28, the BLM determines that the submitter does not have an interest in withholding the records that can be protected under FOIA; but
(iii) The BLM has reason to believe that disclosure of the information may result in commercial or financial injury to the Indian mineral owner(s) but is uncertain that such is the case.
A lease will be issued only on the standard form approved by the Director.
A lessee will have the right to use only so much of the leased lands as is necessary to explore for, drill for, mine, extract, remove and dispose of all the leased resource in a leasehold subject to applicable requirements, including stipulations attached to the lease, restrictions deriving from nondiscretionary statutes, and such reasonable measures as may be required and detailed by the authorized officer to mitigate adverse impacts to other resource values, land uses or users, federally recognized Tribes, and underserved communities. Such reasonable measures may include, but are not limited to, relocation or modification to siting or design of facilities, timing of operations, specification of interim and final reclamation measures, and specification of rates of development and production in the public interest. At a minimum, modifications that are consistent with lease rights include, but are not limited to, requiring relocation of proposed operations by up to 800 meters and prohibiting new surface disturbing operations for a period of up to 90 days in any lease year.
(a) The BLM may consider the sensitivity and importance of potentially affected resources and any uncertainty concerning the present or future condition of those resources and will assess whether a resource is adequately protected by stipulation while considering the restrictiveness of the stipulation on operations.
(b) The authorized officer may require stipulations as conditions of lease issuance. Stipulations will become part of the lease and will supersede inconsistent provisions of the standard lease form. Any party submitting a bid under part 3120 will be deemed to have agreed to stipulations applicable to the specific parcel as indicated in the Notice of Competitive Lease Sale available from the proper BLM office.
(c) The BLM may attach an information notice to the lease. An information notice has no legal consequences, except to give notice of existing requirements, and may be attached to a lease by the authorized officer at the time of lease issuance to convey certain operational, procedural or administrative requirements relative to lease management within the terms and conditions of the standard lease form. Information notices may not be a basis for denial of lease operations.
(d) Where the surface managing agency is the Fish and Wildlife Service, leases will be issued subject to stipulations prescribed by the Fish and Wildlife Service as to the time, place, nature and condition of such operations in order to minimize impacts to fish and wildlife populations and habitat and other refuge resources on the areas leased. The specific conduct of lease activities on any refuge lands will be subject to site-specific stipulations prescribed by the Fish and Wildlife Service.
(a) If the authorized officer determines that a change to a lease term or stipulation is substantial or a stipulation involves an issue of major concern to the public, except for changes to stipulations governing time of year restrictions (such as those related to protected species) supported by data showing that the restrictions are unnecessary, the changes will be subject to public review for at least 30 calendar days.
(b) Prior to lease issuance, if the BLM determines that an additional stipulation will be added to the lease or a modification to an existing stipulation is required, the potential lessee must be given an opportunity to accept the additional or modified stipulation. If the potential lessee does not accept the additional or modified stipulation, the BLM may reject the bid, and may include the lands in the next Notice of Competitive Lease Sale. If the change in stipulation(s) increases the value of the parcel, the BLM will reject the bid, and will include the lands in the next Notice of Competitive Lease Sale.
(c) After lease issuance, if a lessee does not accept an additional or modified stipulation, that additional or modified stipulation is not binding on the lessee and is without effect. When a stipulation is required by the relevant Resource Management Plan, or surface management agency land management plan, and was inadvertently omitted, a lessee's failure to sign and accept changes in the stipulations when requested by the authorized officer may subject the lease to cancellation.
(d) A stipulation included in an oil and gas lease will be subject to modification, waiver, or exception if the authorized officer determines, in conjunction with the applicable surface management agency, that the factors leading to its inclusion in the lease have changed sufficiently to make the specific protections provided by the stipulation no longer justified.
(a) No person may take, hold, own or control more than 246,080 acres of Federal oil and gas leases on public domain lands in any one State at any one time. No more than 200,000 acres of such acres may be held under option.
(b) In Alaska, the acreage that can be taken, held, owned or controlled is limited to 300,000 acres in the northern leasing district and 300,000 acres in the southern leasing district, of which no more than 200,000 acres may be held under option in each of the two leasing districts. The boundary between the two leasing districts in Alaska begins at the northeast corner of the Tetlin National Wildlife Refuge as established by section 302(8) of the Alaska National Interest Lands Conservation Act, at a point on the boundary between the United States and Canada, then northwesterly along the northern boundary of the refuge to the left limit of the Tanana River (63°9′38″ north latitude, 142°20′52″ west longitude), then westerly along the left limit to the confluence of the Tanana and Yukon Rivers, and then along the left limit of
Separate from, and in addition to, the limitation for public domain lands, no person may take, hold, own or control more than 246,080 acres of Federal oil and gas leases on acquired lands in any one State at any one time. No more than 200,000 acres of such acres may be held under option. Where the United States owns only a fractional interest in the mineral resources of the lands involved in a lease, only that part owned by the United States will be charged as acreage holdings. The acreage embraced in a future interest lease will not be charged as acreage holdings until the lease for the future interest becomes effective.
(a) The following acreage will not be included in computing acreage limitations:
(1) Acreage under any lease any portion of which is committed to any federally approved oil and gas agreement;
(2) Acreage under any lease for which royalty (including compensatory royalty or royalty in-kind) was paid in the preceding calendar year; and
(3) Acreage under leases subject to an operating, drilling or development contract approved by the Secretary, as provided in 43 CFR 3105.30.
(b) Acreage subject to offers to lease, overriding royalties and payments out of production will not be included in computing acreage limitations.
(a) Where, as the result of the termination or contraction of an oil and gas agreement or the elimination of a lease from an operating, drilling, or development contract, a party holds or controls excess accountable acreage, that party will have 90 calendar days from the date of termination, contraction or elimination, to reduce the holdings to the prescribed limitation and to file proof of the reduction in the proper BLM office. Where, as a result of a merger or the purchase of the controlling interest in a corporation, a party acquired acreage in excess of the amount permitted, the party holding the excess acreage will have 180 calendar days from the date of the merger or purchase to divest the excess acreage. If additional time is required to complete the divestiture of the excess acreage, a petition requesting additional time, along with a full justification for the additional time, may be filed with the authorized officer prior to the termination of the 180 days provided herein.
(b) If any person is found to hold accountable acreage in violation of the provisions of these regulations, lease(s) or interests therein will be subject to cancellation or forfeiture in their entirety, until sufficient acreage has been eliminated to comply with the acreage limitation. Excess acreage or interest will be cancelled in the inverse order of acquisition.
The accountable acreage of a party owning an undivided interest in a lease will be the party's proportionate part of the total lease acreage.
Before issuance of a lease for lands within an approved unit, the lease offeror must file evidence with the proper BLM office that it has joined in the unit agreement and unit operating agreement or a statement giving satisfactory reasons for its failure to enter into such agreement. If such statement is satisfactory to the authorized officer, the lessee may be permitted to operate independently but will be required to conform to the terms and provisions of the unit agreement with respect to such operations.
(a) The authorized officer will not issue a lease for lands which have been covered by a lease which terminated automatically until 90 calendar days after the date of termination.
(b) The authorized officer will not, after the receipt of a petition for reinstatement, issue a new lease affecting any of the lands covered by the terminated lease until all action on the petition is final.
Public domain and acquired lands will be leased only after seeking concurrence from the surface managing agency, which, upon receipt of a description of the lands from the authorized officer, may report to the authorized officer that it consents to leasing with stipulations, if any, or withholds consent or objects to leasing.
(a) Where the surface managing agency has consented to leasing with required stipulations, and the Secretary decides to issue a lease, the authorized officer will incorporate the stipulations into any lease which it may issue. The authorized officer may add other appropriate stipulations.
(b) The authorized officer will not issue a lease on lands to which the surface managing agency objects or withholds consent and for which consent or concurrence is required by law.
(c) The authorized officer will review all recommendations of the surface managing agency and will accept all reasonable recommendations.
(d) Where the surface managing agency is the Fish and Wildlife Service, there will be no drilling or prospecting under any lease heretofore or hereafter issued on lands within a wildlife refuge, except with the consent and approval of the Secretary with the concurrence of the Fish and Wildlife Service as to the time, place and nature of such operations in order to give complete protection to wildlife populations and wildlife habitat on the areas leased, and all such operations must be conducted in accordance with BLM stipulations.
(a) The decision of the authorized officer to reject an offer to lease or to issue a lease with stipulations recommended by the surface managing agency may be appealed to the Interior Board of Land Appeals under 43 CFR part 4.
(b) Where, as provided by statute, the surface managing agency has required that certain stipulations be included in a lease or has consented, or objected or refused to consent to leasing, any appeal by an affected lease offeror will be subject to the administrative remedies if provided for by the particular surface managing agency.
Where the United States has conveyed title to, or otherwise transferred the control of the surface of lands to any State or political subdivision, agency, or instrumentality thereof, or a college or any other educational corporation or association, or a charitable or religious corporation or association, with reservation of the oil and gas rights to the United States, such party will be given an opportunity to suggest any lease stipulations deemed necessary for the protection of existing surface improvements or uses, to set forth the facts supporting the necessity of the stipulations and also to file any objections it may have to the issuance of a lease. Where a party controlling the surface opposes the issuance of a lease
Leases or interests therein may be acquired and held only by citizens of the United States; associations (including partnerships and trusts) of such citizens; corporations organized under the laws of the United States or of any State or Territory thereof; and municipalities.
(a) Leases or interests therein may be acquired and held by non-U.S. Citizens only through stock ownership, holding or control in a present or potential lessee that is incorporated under the laws of the United States or of any State or territory thereof, and only if the laws, customs or regulations of their country do not deny similar or like privileges to citizens or corporations of the United States. If it is determined that a country has denied similar or like privileges to citizens or corporations of the United States, it would be placed on a list available from any BLM State office.
(b) The Committee on Foreign Investment in the United States is authorized to review covered real estate transactions and to mitigate any risk to the national security of the United States that arises as a result of such transactions. Covered real estate transactions may include certain transactions involving the Federal mineral estate (see 31 CFR part 802).
Leases must not be acquired or held by someone considered to be a minor under the laws of the State in which the lands are located, but leases may be acquired and held by legal guardians or trustees of minors on their behalf. Such legal guardians or trustees must be citizens of the United States or otherwise meet the provisions of 43 CFR 3102.10.
Signatures on all applications and BLM forms certify acceptance of lease terms and stipulations, as well as compliance with the regulations under 43 CFR part 3100. Refer to § 3102.50 for certification of compliance and evidence. The BLM also accepts electronic signatures and submissions.
(a) A bid to lease must be made on a current form approved by the Director. Copies must be exact reproductions of the official approved form, without additions, omissions, or other changes. When the bid is filed in person at the proper BLM office, the bid must be typed or printed plainly, signed, and dated by the offeror or an authorized agent on behalf of the present or potential lessee. Bids may be made to the BLM by other arrangements, such as electronically signed and filed, when specifically authorized by the BLM.
(b) Documents signed by any party other than the present or potential lessee must be rendered in a manner to reveal the name of the present or potential lessee, the name of the signatory and their relationship. A signatory who is a member of the organization that constitutes the present or potential lessee (
Only responsible and qualified bidders and lessees may own, hold, or control an interest in a lease or prospective lease. Responsible and qualified bidders and lessees, including corporations, and all members of associations, including partnerships of all types, will, without exception, be qualified and in compliance with the Act. Compliance means that the persons are:
(a) Citizens of the United States (see § 3102.10) or non-U.S. citizens who own stock in a corporation organized under State or Federal law (see § 3102.20);
(b) In compliance with the Federal acreage limitations (see § 3101.20);
(c) Not minors (see § 3102.30);
(d) Except for an assignment or transfer under 43 CFR subpart 3106, in compliance with section 2(a)(2)(A) of the Act (30 U.S.C. 201(2)(A)), in which case the signature on a bid or lease constitutes evidence of compliance. A lease issued to any person in violation of this paragraph (d) will be subject to the cancellation provisions of 43 CFR 3108.30.
(e) Not in violation of the provisions of section 41 of the Act (30 U.S.C. 195); and
(f) In compliance with section 17(g) of the Act (30 U.S.C. 226(g)), in which case the signature on an offer, lease, assignment, or transfer constitutes evidence of compliance that the signatory and any subsidiary, affiliate, or person, association, or corporation controlled by or under common control with the signatory, as defined in 43 CFR 3400.0-5(rr), has not failed or refused to comply with reclamation requirements with respect to all leases and operations thereon in which such person has an interest. A person is noncompliant with section 17(g) of the Act when they fail to comply with their reclamation obligations or other standards established under 30 U.S.C. 226 in the time specified in a notice from the BLM. A lease issued, or an assignment or transfer approved, to any such person in violation of this paragraph (f) may be subject to the cancellation provisions of 43 CFR 3108.30, notwithstanding any administrative or judicial appeals that may be pending with respect to violations or penalties assessed for failure to comply with the prescribed reclamation standards on any lease holdings. Noncompliance will end upon a determination by the authorized officer that all required reclamation has been completed and that the United States has been fully reimbursed for any costs incurred due to the required reclamation.
(g) In compliance with 43 CFR 3106.10(d) and section 30A of the Act (30 U.S.C. 187(a)). The authorized officer may accept the signature on a request for approval of an assignment of less than 640 acres outside of Alaska (2,560 acres within Alaska) as acceptable certification that the assignment would further the development of oil and gas, or the authorized officer may apply the provisions of 43 CFR 3102.53.
(h) Not excluded or disqualified from participating in a transaction covered by Federal non-procurement debarment and suspension (2 CFR parts 180 and 1400), unless the Department explicitly approves an exception for a transaction pursuant to the regulations in those parts.
Any party(s) seeking to obtain an interest in a lease must certify that it is
The authorized officer may request at any time further evidence of compliance and qualification from any party holding or seeking to hold an interest in a lease. Failure to comply with the request of the authorized officer will result in adjudication of the action based on the incomplete submission.
(a) The table in this section shows the fiscal terms, that the BLM will adjust every 4 years by a final rule. The BLM will adjust the amounts according to the change in the Implicit Price Deflator for Gross Domestic Product since the previous adjustment. The fiscal terms displayed below are effective on June 22, 2024. Per the Inflation Reduction Act, the BLM will not adjust the rental nor the minimum bonus bids until after August 16, 2032.
(b) The amounts in the fiscal terms table are not subject to appeal to the Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E.
All remittances must be by personal check, cashier's check, certified check, or money order, and must be made payable to the Department of the Interior—Bureau of Land Management or the Department of the Interior—Office of Natural Resources Revenue, as appropriate. Payments made to the BLM may be made by other arrangements such as by electronic funds transfer or credit card when specifically authorized by the BLM. In the case of payments made to the ONRR, such payments may also be made by electronic funds transfer.
(a)(1) All processing fees for the respective lease applications, nominations, or requests for approval of a transfer found in the fee schedule in § 3000.120 of this chapter and all first-year rentals and bonuses for leases issued under 43 CFR part 3100 must be paid to the proper BLM office.
(2) All second year and subsequent rentals, except for leases specified in paragraph (b) of this section, must be paid to the ONRR, refer to 30 CFR 1218.51.
(b) All rentals and royalties on producing leases, communitized leases in producing spacing units, unitized leases in producing unit areas, leases on which compensatory royalty is payable and all payments under subsurface storage agreements must be paid to the ONRR.
(a) Each competitive bid submitted in response to a Notice of Competitive Lease Sale must be accompanied by full payment of the first year's rental based on the total acreage for that lease in the Notice of Competitive Lease Sale.
(b) If the acreage is incorrectly indicated in a Notice of Competitive Lease Sale, payment of the rental based on the error is curable within 15 calendar days of receipt of notice from the authorized officer of the error.
(c) Rental will not be prorated for any lands in which the United States owns an undivided fractional interest and must be paid for the full acreage in such lands.
Rentals must be paid on or before the lease anniversary date. A full year's rental must be submitted even when less than a full year remains in the lease term, except as provided in 43 CFR 3103.42(d). Failure to make the required payment on or before the lease anniversary date will cause a lease to terminate automatically by operation of law. If the designated ONRR office is not open on the anniversary date, payment received on the next day the designated ONRR office is open to the public will be deemed to be timely made. Payments made to an improper BLM or ONRR office will be returned and will not be forwarded to the designated ONRR office. Rental must be paid at the following rates:
(a) The annual rental for all leases is as stated in the lease, and the annual rental for all new leases will be as specified in 43 CFR 3103.1;
(b) Rental will not be due on acreage for which royalty or minimum royalty is being paid, except on nonproducing leases when compensatory royalty has been assessed in which case annual rental as established in the lease will be due in addition to compensatory royalty;
(c) For leases that are reinstated under § 3108.23, the annual rental will be as specified in 43 CFR 3103.1 beginning with the termination date upon the filing of a petition to reinstate a lease; and
(d) Each succeeding time a specific lease is reinstated under § 3108.23, the annual rental on that lease will increase by an additional $10 per acre or fraction thereof.
(a) Royalty on production will be payable only on the mineral interest owned by the United States. Royalty must be paid in the amount or value of the production removed or sold as follows:
(1) For leases issued before August 16, 2022, the rate prescribed in the lease or in applicable regulations at the time of lease issuance;
(2) For leases issued between August 16, 2022, and August 16, 2032, the royalty rate will be 16.67 percent;
(3) For leases issued on or after August 16, 2032, a rate of not less than 16.67 percent on all leases issued under the Act;
(4) A minimum of 16.67 percent on all leases issued under 43 CFR subpart 3109;
(5) For reinstated leases, the rate used for royalty determination that applies to new leases at the time of the reinstatement plus 4 percentage points, plus an additional 2 percentage points for each succeeding reinstatement. In no case will royalties on the reinstated lease be less than 20 percent.
(b) Leases that qualify under specific provisions of the Act of August 8, 1946 (30 U.S.C. 226c) may apply for a limitation of a 12
(c) The average production per well per day for oil and gas will be determined pursuant to 43 CFR 3162.7-4.
(d) Payment of a royalty on the helium component of gas will not convey the right to extract the helium from the gas stream. Applications for the right to extract helium from the gas stream will be made under 43 CFR part 16.
(a) A minimum royalty must be paid at the expiration of each lease year beginning on or after a discovery of oil or gas in paying quantities on the lands leased, except on unitized leases that lack production, the minimum royalty must be paid only on the participating acreage, at the following rates:
(1) On leases issued on or after August 8, 1946, and on those issued prior thereto if the lessee files an election under section 15 of the Act of August 8, 1946, a minimum royalty of $1 per acre or fraction thereof in lieu of rental, except as provided in paragraph (a)(2) of this section; and
(2) On leases issued from offers filed after December 22, 1987, and on competitive leases issued after December 22, 1987, a minimum royalty in lieu of rental of not less than the amount of rental which otherwise would be required for that lease year.
(b) Minimum royalties will not be prorated for any lands in which the United States owns a fractional interest and must be paid on the full acreage of the lease.
(c) Minimum royalties and rentals on non-participating acreage must be paid to the ONRR.
(d) The minimum royalty provisions of this section are applicable to leases reinstated under 43 CFR 3108.23.
(e) If the royalty paid during any year aggregates to less than the minimum royalty, then the lessee must pay the difference at the end of the lease year.
(a) In order to encourage the greatest ultimate recovery of oil or gas and in the interest of conservation, the Secretary, upon a determination that it is necessary to promote development or that the leases cannot be produced in paying quantities under the terms provided therein, may waive, suspend or reduce the rental or minimum royalty or reduce the royalty on an entire leasehold, or any portion thereof.
(b)(1) An application for the benefits under paragraph (a) of this section must be filed by the operator/payor in the proper BLM office. The application must contain the serial number of the leases, the names of the record title holders, operating rights owners (sublessees), and operators for each lease, the description of lands by legal subdivision and a description of the relief requested.
(2) Each application must show the number, location and status of each well drilled, a tabulated statement for each month covering a period of not less than 6 months prior to the date of filing the application of the aggregate amount of oil or gas subject to royalty, the number of wells counted as producing each month and the average production per well per day.
(3) Every application must contain a detailed statement of expenses and costs of operating the entire lease, the income from the sale of any production and all facts tending to show whether the wells can be produced in paying quantities upon the fixed royalty or rental. Where the application is for a reduction in royalty, complete information must be furnished as to whether overriding royalties, payments out of production, or similar interests are paid to others than the United States, the amounts so paid and efforts made to reduce them. The applicant must also file agreements of the holders to a reduction of all other royalties or similar payments from the leasehold to an aggregate not in excess of one-half the royalties due the United States.
(c) Petition may be made for a reduction of royalty for leases reinstated under 43 CFR 3108.23. Petitions to waive, suspend or reduce rental or minimum royalty for leases reinstated under 43 CFR 3108.23 may be made under this section.
(a) A suspension of all operations and production may be directed or consented to by the authorized officer only in the interest of conservation of natural resources. A suspension of operations only or a suspension of production only may be directed or consented to by the authorized officer in cases where the lessee is prevented from operating on the lease or producing from the lease, despite the exercise of due care and diligence, by reason of
(b) The term of any lease will be adjusted to account for the suspension. Beginning on the date the suspension is lifted, the term will be extended by the time that was remaining on the term of the lease on the effective date of the suspension. No lease will expire during any suspension.
(c) A suspension will take effect as of the time specified in the direction or assent of the authorized officer, in accordance with the provisions of 43 CFR 3165.1.
(d) Rental and minimum royalty payments will be suspended during any period of suspension of all operations and production directed or assented to by the authorized officer beginning with the first day of the lease month in which the suspension of all operations and production becomes effective, or if the suspension of all operations and production becomes effective on any date other than the first day of a lease month, beginning with the first day of
(e) Rental and minimum royalty payments will resume on the first day of the lease month in which the suspension of all operations and production is lifted. Where rentals are creditable against royalties and have been paid in advance, proper credit may be allowed on the next rental or royalty due under the terms of the lease.
(f) Rental and minimum royalty payments will not be suspended during any period of suspension of operations only or suspension of production only.
(g) Where all operations and production are suspended on a lease on which there is a well capable of producing in paying quantities and the authorized officer approves resumption of operations and production, such resumption will be regarded as lifting the suspension, including the suspension of rental and minimum royalty payments, as provided in paragraph (e) of this section.
(h) The relief authorized under this section also may be obtained for any Federal lease included within an approved oil and gas agreement. Oil and gas agreement obligations will not be suspended by relief obtained under this section but will be suspended only in accordance with the terms and conditions of the specific agreement.
(a) The table in this section shows the minimum bond amounts, that the BLM will adjust every 10 years by a final rule. The BLM will adjust the amounts according to the change in the Implicit Price Deflator for Gross Domestic Product since the previous adjustment. The minimum bond amounts displayed below are effective on June 22, 2024.
(b) The Minimum Bond Amount are not subject to appeal to the Interior Board of Land Appeals pursuant to 43 CFR part 4, subpart E.
(c) Principals must increase or replace all bonds not meeting the appropriate minimum bond amount in paragraph (a) by:
(1) June 22, 2026, for statewide; and
(2) June 22, 2027, for lease bonds.
(d) Failure to increase or replace an existing bond that does not meet the minimum bond amount may:
(1) Subject all wells covered by the bond(s) to shut down under the provisions of 43 CFR 3163.1(a)(3);
(2) Subject all leases covered by the bond(s) to cancellation under the provisions of 43 CFR 3108.30; and
(3) Result in the BLM referring the bond obligor or principal to the Department's Suspension and Debarment Program under 2 CFR part 1400 to determine if the person will be suspended or debarred from doing business with the Federal Government.
(a) Prior to the commencement of surface disturbing activities related to drilling operations, the lessee, operating rights owner (sublessee), or operator must submit a surety or a personal bond, conditioned upon compliance with all of the terms and conditions of the entire leasehold(s) covered by the bond, as described in this subpart. The bond amounts must be not less than the minimum amounts described in this subpart in order to ensure compliance with the Act, including complete and timely plugging of the well(s), reclamation of the lease area(s), and the restoration of any lands or surface waters adversely affected by lease operations after the abandonment or cessation of oil and gas operations on the lease(s) in accordance with, but not limited to, the standards and requirements set forth in 43 CFR 3162.3 and 3162.5 and orders issued by the authorized officer.
(b) Surety bonds must be issued by qualified surety companies approved by the Department of the Treasury (see Department of the Treasury Circular No. 570).
(c) Personal bonds must be accompanied by a:
(1) Certificate of deposit issued by a financial institution, the deposits of which are federally insured, explicitly granting the Secretary full authority to demand immediate payment in case of default in the performance of the terms and conditions of the lease. The certificate will explicitly indicate on its face, or through assignment, that Secretarial approval is required prior to redemption of the certificate of deposit by any party;
(2) Cashier's check;
(3) Certified check; or
(4) Negotiable Treasury securities of the United States of a value equal to the amount specified in the bond. Negotiable Treasury securities must be accompanied by a proper conveyance to the Secretary of full authority to sell such securities in case of default in the performance of the terms and conditions of a lease.
(5) Irrevocable letter of credit issued by a financial institution, for a specific term, identifying the secretary as sole payee with full authority to demand immediate payment in the case of default in the performance of the terms and conditions of a lease. Letters of credit must be subject to the following conditions:
(i) The letter of credit must be issued only by a financial institution organized or authorized to do business in the United States;
(ii) The letter of credit must be irrevocable during its term. A letter of credit used as security for any lease upon which drilling has taken place and final approval of all abandonment has not been given, or as security for an individual lease or statewide bond, will be forfeited and will be collected by the authorized officer if not replaced by other suitable bond or letter of credit at least 30 days before its expiration date;
(iii) The letter of credit must be payable to the Bureau of Land Management upon demand, in part or in full, upon receipt from the authorized officer of a notice of collection stating the basis therefore,
(iv) The initial expiration date of the letter of credit must be at least 1 year following the date it is filed in the proper BLM office; and
(v) The letter of credit must contain a provision for automatic renewal for periods of not less than 1 year in the absence of notice to the proper BLM office at least 90 days prior to the
The operator, a lessee, or an owner of operating rights (sublessee) must be covered by a bond in its own name as principal or obligor in an amount of not less than the amount specified in 43 CFR 3104.1 for each lease conditioned upon compliance with all of the terms of the lease. Where two or more lease interest holders have interests in different formations or portions of the lease, separate bonds may be posted. The operator shall be covered by a bond in his/her own name as principal, or a bond in the name of the lessee or sublessee, provided that a consent of the surety, or the obligor in the case of a personal bond, to include the operator under the coverage of the bond is furnished to the BLM office maintaining the bond.
In lieu of lease bonds, lessees, owners of operating rights (sublessees), or operators may furnish a bond in an amount of not less than the amount specified in 43 CFR 3104.1 covering all leases and operations in any one State.
(a) If a good-faith effort by the Federal lessee, its operator, or representatives has not resulted in an agreement with the surface owner under 43 CFR 3171.19, the authorized officer will require an adequate surface owner protection bond in an amount sufficient to indemnify the surface owner against the reasonable and foreseeable damages to crops and tangible improvements from the proposed operations that would not otherwise be covered by a bond held by the BLM. This surface owner protection bond is not part of the bond obligations under lease or statewide bonds.
(b) The surface owner protection bond must be provided on a BLM-approved form.
(c) The surface owner protection bond may be a personal or surety bond and must be not less than $1,000.
(d) The BLM will notify the surface owner of the proposed surface owner protection bond amount.
(e) If the surface owner objects to the sufficiency of the surface owner protection bond, the BLM authorized officer will determine the sufficiency of the bond necessary to indemnify the surface owner for the reasonable and foreseeable damages to crops and tangible improvements.
(a) When an operator desiring approval of an APD has caused the BLM, or a surface management agency, to make a demand for payment under a bond or other financial guarantee within the 5-year period prior to submission of the APD, due to failure to plug a well or reclaim lands completely in a timely manner, the authorized officer will require, prior to approval of the APD, a bond in an amount equal to the costs, when higher than the minimum bond amounts, as estimated by the authorized officer of plugging the well and reclaiming the disturbed area involved in the proposed operation, or in the minimum amount as prescribed in this subpart, whichever is greater.
(b) The authorized officer may require an increase in the amount of any bond whenever it is determined that the operator poses a risk due to factors, including, but not limited to, a history of previous violations, a notice from the ONRR that there are uncollected royalties due, or the total cost of plugging existing wells and reclaiming lands exceeds the present bond amount based on the estimates determined by the authorized officer. The increase in bond amount may be to any level specified by the authorized officer, but in no circumstances will it exceed the total of the estimated costs of plugging and reclamation, the amount of uncollected royalties due to the ONRR, plus the amount of money owed to the lessor due to previous violations remaining outstanding.
All bonds must be filed in the proper BLM office on a current form approved by the Director. A single copy executed by the principal or, in the case of surety bonds, by both the principal and an acceptable surety is sufficient. A bond filed on a form not currently in use will be acceptable, unless such form has been declared obsolete by the Director prior to the filing of such bond. For purposes of 43 CFR 3104.20 and 3104.30, bonds or bond riders must be filed in the BLM State office having jurisdiction over the lease or operations covered by the bond or rider.
(a) Where, upon a default, the surety makes a payment to the United States of an obligation incurred under a lease, the face amount of the surety bond or personal bonds and the surety's liability thereunder will be reduced by the amount of such payment.
(b) After default, where the obligation in default equals or is less than the face amount of the bond(s), the principal must either post a new bond or restore the existing bond(s) to the amount previously held or a larger amount as determined by the authorized officer. In lieu thereof, the principal may file separate bonds for each lease covered by the deficient bond(s). Where the obligation incurred exceeds the face amount of the bond(s), the principal must make full payment to the United States for all obligations incurred that are in excess of the face amount of the bond(s) and must post a new bond in the amount previously held or such larger amount as determined by the authorized officer. The restoration of a bond or posting of a new bond must be made within 6 months or less after receipt of notice from the authorized officer. Failure to comply with these requirements may:
(1) Subject all leases covered by such bond(s) to cancellation under the provisions of 43 CFR 3108.30; and
(2) Result in the bond obligor or principal being referred to the Department's Suspension and Debarment Program under 2 CFR part 1400 to determine if the person will be suspended or debarred from doing business with the Federal Government.
The authorized officer will not give consent to termination of the period of liability of any bond unless an acceptable replacement bond has been filed or until all the terms and conditions of the lease have been met.
Unit operator and nationwide bonds accepted by the BLM prior to June 22, 2024, must be replaced with individual lease or statewide bonds by June 22, 2025. The BLM will not accept any new unit operator or nationwide bonds.
(a) The suggested contents of such an agreement and the procedures for
(b) An application to form a unit agreement, a unit expansion, or a designation of a successor operator must include the processing fee found in the fee schedule in § 3000.120 of this chapter.
(a) An application to form a communitization agreement or modify an existing agreement must be filed with the proper BLM office for final approval.
(b) An application for a communitization agreement must include:
(1) A statement as to whether the proposed communitization agreement deviates from the BLM's current model communitization agreement form, and a certification that the applicant received the required signatures;
(2) An Exhibit A displaying a map of the area covered by the proposed agreement and the separate agreement tracts; and
(3) An Exhibit B displaying the separate tracts and ownership;
(c) To ensure accurate reporting to ONRR, an application for a communitization agreement should be submitted at least 90 calendar days prior to first production.
(d) An application for designations of successor operator for a communitization agreement must include the processing fee found in the fee schedule in § 3000.120 of this chapter.
When a lease or a portion thereof cannot be independently developed and operated in conformity with an established well-spacing or well-development program, the authorized officer may approve a communitization agreement for such lands with other lands, whether or not owned by the United States, upon a determination that it is in the public interest. Operations or production under such an agreement will be deemed to be operations or production as to each lease committed thereto.
(a) The communitization agreement must describe the separate tracts comprising the drilling or spacing unit, must show the apportionment of the production or royalties to the several parties, the name of the operator, and contain adequate provisions for the protection of the interests of the United States. The agreement must be signed by or on behalf of all necessary parties and must be filed prior to the expiration of the Federal lease(s) involved in order to confer the benefits of the agreement upon such lease(s).
(b) The agreement will be effective as to the Federal lease(s) involved only if approved by the authorized officer. Approved communitization agreement are considered effective from the date of the agreement or from the date of the onset of production from the communitized formation, whichever is earlier, except when the spacing unit is subject to a State pooling order after the date of first sale, then the effective date of the agreement will be the effective date of the order.
(c) The public interest requirement for an approved communitization agreement will be satisfied only if the well dedicated thereto has been completed for production in the communitized formation at the time the agreement is approved or, if not, that the operator thereafter commences and/or diligently continues drilling operations to a depth sufficient to test the communitized formation or establishes to the satisfaction of the authorized officer that further drilling of the well would be unwarranted or impracticable. If an application is received for voluntary termination of a communitization agreement during its fixed term or such an agreement automatically expires at the end of its fixed term without the public interest requirement having been satisfied, the approval of that agreement by the authorized officer will be invalid and no Federal lease included in the communitization agreement will be eligible for an extension under 43 CFR 3107.40.
The communitization agreement will remain in effect for a period of 2 years from the effective date or approval date, whichever is later, and so long thereafter as communitized substances may be produced in paying quantities, or as otherwise specified in the agreement.
A contract submitted for approval under this section must be filed with the proper BLM office.
Approval of operating, drilling or development contracts will be granted only to permit operators or pipeline companies to enter into contracts with a number of lessees sufficient to justify operations on a scale large enough to justify the discovery, development, production or transportation of oil or gas and to finance the same.
The contract must be accompanied by a statement showing all the interests held by the contractor in the area or field and the proposed or agreed plan for development and operation of the field. All the contracts held by the same contractor in the area or field must be submitted for approval at the same time and full disclosure of the projects made.
(a) Applications for subsurface storage or designations of successor operator must be filed in the proper BLM office.
(b) The final gas storage agreement signed by all the parties in interest must be submitted to the BLM.
(c) Applications for subsurface storage agreements or designations of successor operator must include the processing fee found in the fee schedule in § 3000.120 of this chapter.
To avoid waste and to promote conservation of natural resources, the Secretary, upon application by the interested parties, may authorize the subsurface storage of oil and gas, whether or not produced from lands owned by the United States. Such authorization will provide for the payment of such storage fee or rental on the stored oil or gas as may be determined adequate in each case, or, in lieu thereof, for a royalty other than that prescribed in the lease when such stored oil or gas is produced in conjunction with oil or gas not previously produced. The BLM will require a bond as provided under § 3104 for operations conducted in a subsurface storage agreement.
The agreement must disclose the ownership of the lands involved, the parties in interest, the storage fee, rental or royalty offered to be paid for such storage and all information demonstrating such storage would avoid waste and promote the conservation of natural resources.
Any lease used for the storage of oil or gas will be extended for the period of storage under an approved agreement. The obligation to pay annual lease rent continues during the extended period.
(a) Leases may be consolidated upon written request of the lessee filed with the proper BLM office. The request must identify each lease involved by serial number and justify the consolidation. Each request for a consolidation of leases must include the processing fee found in the fee schedule in § 3000.120 of this chapter.
(b) All parties holding any undivided interest in any lease involved in the consolidation must agree to enter into the same lease consolidation.
(c) Leases containing different types of lands (public domain lands vs. acquired lands), mixed fractional mineral interest, or provisions required by law that cannot be reconciled, will not be consolidated.
(d) Consolidation of leases will not exceed acreage limits of 2,560 acres for competitive leases and 10,240 acres for noncompetitive leases.
(e) The effective date, the anniversary date, and the primary term of the consolidated lease will be those of the oldest original lease included in the consolidation. The term of a consolidated lease may be extended beyond the primary lease term under subpart 3107.
(f) The highest royalty and rental rates of the each of the leases to be consolidated will apply to the consolidated lease.
(g) Lease stipulations and other terms and conditions of each original lease, except as noted in paragraphs (e) and (f) of this section, will continue to apply to that lease or any portion thereof regardless of the lease becoming a part of a consolidated lease.
(a) Leases may be transferred by assignment or sublease as to all or part of the acreage in the lease or as to either a divided or undivided interest therein.
(b) An assignment of the record title conveys both record title and operating rights, unless operating rights have been severed from the record title through an approved transfer of operating rights. Thereafter, the operating rights and record title may each be subject to further transfers.
(c) An assignment of a separate zone, deposit, depth, formation, specific well, or of part of a legal subdivision, will be denied.
(d) Within the boundaries of a Federal lease, operating rights may only be divided with respect to legal subdivisions, depth ranges, and formations.
(e) An assignment of less than 640 acres outside Alaska or of less than 2,560 acres within Alaska will be denied unless the assignment constitutes the entire lease or is demonstrated to further the development of oil and gas to the satisfaction of the authorized officer. Reference 43 CFR 3102.51(g) for certification of compliance.
(f) The rights of the transferee to a lease or an interest therein will not be recognized by the Department until the transfer has been approved by the authorized officer.
(g) A transfer may be withdrawn in writing, signed by the transferor and the transferee, if the transfer has not been approved by the authorized officer.
(h) A request for approval of a transfer of a lease or interest in a lease must be filed within 90 days from the date of its execution. The 90-day filing period will begin on the date the transferor signs and dates the transfer. If the transfer is filed after the 90th day, the authorized officer may require verification that the transfer is still in force and effect.
(i) A transfer of production payments or overriding royalty or other similar payments, arrangements, or interests must be filed in the proper BLM office but will not require approval.
(j) No transfer of an offer to lease or interest in a lease will be approved prior to the issuance of the lease.
Assignees and transferees must comply with the provisions of 43 CFR subpart 3102 and post any bond that may be required. Only responsible and qualified lessees may own, hold, or control an interest in a lease.
(a) Each transfer of record title or of operating rights (sublease) for each lease must include payment of the processing fee for assignments and transfers found in the fee schedule in § 3000.120 of this chapter.
(b) Each transfer of overriding royalty or payment out of production must include payment of the processing fee for overriding royalty transfers or payments out of productions found in the fee schedule in § 3000.120 of this chapter for each lease to which it applies.
Each transfer of record title or of an operating right (sublease) must be filed with the proper BLM office on a current form approved by the Director. A separate form for each transfer, in triplicate, must be filed for each lease out of which a transfer is made. The BLM does not require triplicate copies of the assignment or transfer when it is electronically submitted. Copies of documents other than the current form approved by the Director must not be submitted. However, reference(s) to other documents containing information affecting the terms of the transfer may be made on the submitted form.
(a) Each transfer of overriding royalty interest, payment out of production or similar interests created or reserved must be described for each lease on the current assignment or transfer form when filed.
(b) A single executed copy of each such transfer of other interests for each lease must be filed with the proper BLM office.
(a) A mass transfer may be utilized in lieu of the provisions of 43 CFR 3106.41 and 3106.42 when an assignor or transferor transfers interests of any type in more than one Federal lease to the same assignee or transferee.
(b) The mass transfer must be filed with each proper BLM office administering any lease affected by the mass transfer. The transfer must be on a current form approved by the Director with an exhibit attached to each copy listing the following for each lease:
(1) The serial number;
(2) The type and percent of interest being conveyed; and
(3) A description of the lands affected by the transfer in accordance with 43 CFR 3106.50.
(c)(1) One duplicate copy of the form must be filed with the proper BLM office for each lease involved in the mass transfer. A copy of the exhibit for each lease may be limited to line items pertaining to individual leases as long as that line item includes the information required by paragraph (b) of this section. The BLM does not require a duplicate copy of the assignment or transfer when it is electronically submitted.
(2) When the BLM does not receive the requisite number of copies, the applicant must reimburse the BLM for the full costs incurred to make the required number of copies. The BLM will waive fees under one dollar.
(d) A mass transfer must include the processing fee for assignments and transfers found in the fee schedule in § 3000.120 of this chapter for each such interest transferred for each lease.
Each assignment of record title must describe the lands involved in the same manner as the lands are described in the lease, except no land description is required when 100 percent of the entire area encompassed within a lease is conveyed.
Where the lessee or operating rights owner (sublessee) maintains a bond covering the lease, the assignee of record title interest or transferee of operating rights in such lease must furnish, if bond coverage continues to be required, a proper bond that will cover any obligations arising under the lease to the same extent as the assignor's or transferor's bond.
The BLM will not approve any assignment of record title or transfer of operating rights (sublease) if any party in interest is not a qualified lessee, or if the bond is insufficient. The BLM approves assignments and transfers for administrative purposes only. Approval does not warrant or certify that either party to a transfer holds legal or equitable title to a lease.
(a) The lessee or sublessee remains responsible for performing all obligations under the lease until the date the BLM approves an assignment of record title interest or transfer of operating rights.
(b) After the BLM approves the assignment or transfer, the assignor or transferor will continue to be responsible for lease obligations that accrued before the approval date, whether or not such obligations were identified at the time of the assignment or transfer. This includes paying compensatory royalties for drainage. It also includes responsibility for plugging wells drilled and removing facilities installed or used before the effective date of the assignment or transfer.
The BLM will not approve a transfer if the lease account is delinquent with respect to: royalty payments; lease obligations, such as, but not limited to, rent and minimum royalty; or production reporting to ONRR for a lease in non-terminable status.
The signature of the authorized officer on the official form will constitute approval of the assignment of record title or transfer of operating rights (sublease) which will take effect as of the first day of the lease month following the date of filing in the proper BLM office of all documents and statements required by this subpart and an appropriate bond, if one is required.
An assignment of record title to 100 percent of a portion of the lease segregates the transferred portion and the retained portion into separate leases. Each resulting lease retains the anniversary date and the terms and conditions of the original lease. An assignment of record title to less than 100 percent of a portion of the lease or a transfer of operating rights (sublease) will not segregate the transferred and retained portions into separate leases.
(a) The assignee of record title agrees to comply with the terms of the original lease during the lease tenure. The assignee assumes the responsibility to plug and abandon all wells which are no longer capable of producing, reclaim the lease site, and remedy all environmental problems in existence and that a purchaser exercising reasonable diligence should have known existed at the time of the transfer. When required, the record title holder must also maintain an adequate bond to ensure performance of these responsibilities.
(b) The transferee of operating rights agrees to comply with the terms of the original lease as it applies to the area or horizons for the interest acquired. The transferee assumes the responsibility to plug and abandon all wells that are no longer capable of producing, reclaim the lease site, and remedy all environmental problems in existence and that a purchaser exercising reasonable diligence should have known existed at the time of the transfer. When required, the operating rights holder must also maintain an adequate bond to ensure performance of these responsibilities.
(a) If an offeror, applicant, lessee or transferee dies, their rights would be assigned or transferred to the heirs, devisees, executor or administrator of the estate, as appropriate, upon the filing of legal documents demonstrating that the assignee or transferee is recognized as the successor of the deceased.
(b) The filing must include the processing fee for the transfer to an heir/devisee found in the fee schedule in § 3000.120 of this chapter with the request to assign lease rights.
(c) The filing must include a qualification statement demonstrating qualification to hold an interest in a lease in accordance with 43 CFR subpart 3102. Any ownership or interest otherwise forbidden by the regulations in this part which may be acquired by descent, will, judgment or decree may be held for a period not to exceed 2 years after its acquisition. Any such forbidden ownership or interest held for a period of more than 2 years after acquisition may be subject to cancellation.
(d) A bond rider or replacement bond may be required for any bond(s) previously furnished by the decedent.
(a) A legally recognized change of name of a lessee or sublessee must be reported to the proper BLM office. The notice of name change must be submitted in writing with adequate information concerning the name change. For a corporate name change, the request must include the Secretary of State's Certificate of Name Change, along with the Articles of Incorporation, or Amendment, if available.
(b) An entity must include with the notice of name change the required processing fee listed in the fee schedule in § 3000.120 of this chapter.
(c) If a bond(s) has been furnished, a change of name on the bond may be made by surety consent or a rider to the original bond or by a replacement bond.
(a) In the event a corporate merger affects leases where property of the dissolving corporation to the surviving corporation is accomplished by operation of law, an assignment of any affected lease interest is not required. An entity must notify the BLM of the merger and provide copies of the Secretary of State's Certificate of Merger, along with the Articles of Incorporation, or Amendment, if available, to the BLM.
(b) The BLM will not recognize any transfers provided by the Articles of Dissolution unless an entity has filed with the BLM a Certificate of Dissolution of an incorporated entity, certified as accepted by the State where the entity was incorporated.
(c) An entity must file with the BLM a dissolution of a partnership or trust through an order or decree that authorizes settlement, discharge, and distribution of the lease holdings and/or interests for official recognition of the assignment of lease interests.
(d) An entity must include the processing fee for corporate merger or dissolution of corporation, partnership, or trust found in the fee schedule in § 3000.120 of this chapter.
(e) The authorized officer may require a bond rider or replacement bond for all affected corporations, partnerships or trusts.
(a) Where a notice of sale of the leasehold interest is published pursuant to State law applicable to the execution of sales of real property, the purchaser must submit a copy of the Sheriff's Certificate of Sale to the proper BLM office after any redemption period has passed.
(b) When submitting the certificate described in paragraph (a), an entity must include the processing fee for sheriff's deed found in the fee schedule in § 3000.120 of this chapter.
(c) The purchaser(s) must file a qualification statement to hold an interest in a lease in accordance with 43 CFR subpart 3102. Failure to provide a qualification statement after 2 years will result in the BLM cancelling the lease or interest.
(d) If a bond has been furnished by the previous interest holder, the authorized officer may require a new bond.
(a) Any lease on which actual drilling operations were commenced prior to the end of its primary term and are being diligently prosecuted at the end of the primary term or any lease which is part of an approved oil and gas agreement upon which such drilling takes place, will be extended for 2 years subject to the rental being timely paid as required by 43 CFR 3103.20, and subject to the provisions of 43 CFR 3105.23 and appendix A to part 3180, if applicable. The BLM will not grant a drilling extension for a lease in its extended term.
(b) Actual drilling operations must be conducted in a manner that a reasonable person seriously looking for oil or gas could be expected to make in that particular area, given the existing knowledge of geologic and other pertinent facts. In drilling a new well on a lease or for the benefit of a lease under the terms of an approved agreement, it must be taken to a depth sufficient to penetrate at least one formation recognized in the area as potentially productive of oil or gas, or where an existing well is reentered, it must be taken to a depth sufficient to penetrate at least one new and deeper formation recognized in the area as potentially productive of oil or gas. The authorized officer may determine that further drilling is unwarranted or impracticable.
(c) When a BLM-approved directional or horizontal well is drilled within the leased area from an off-lease location with the intent to produce from the leased area, the BLM will consider drilling to have commenced on the leased area when drilling is commenced at the off-lease location.
A lease will be extended so long as oil or gas is being produced in paying quantities.
A lease in its extended term because of production (and lacking a well capable of production in paying quantities) will not expire upon cessation of production, if, within 60 calendar days of cessation of production, reworking or drilling operations on the leasehold are commenced and are thereafter conducted with reasonable diligence during the period of nonproduction. If these reworking or drilling operations fail to result in production in paying quantities, the lease will expire by operation of law, effective as of the date paying production ceased.
No lease for lands on which there is a well capable of producing oil or gas in paying quantities will expire because the lessee fails to produce the same, unless the lessee fails to place the lease in production within a period of not less than 60 calendar days as specified by the authorized officer after receipt of notice by certified mail from the authorized officer to do so. Such production must be continued unless and until suspension of production is granted by the authorized officer.
(a) Any lease or portion of a lease committed to an oil and gas agreement that contains a general provision for allocation of oil or gas will continue in effect so long as the lease or portion thereof remains subject to the agreement;
(b) A well that is drilled and completed on a lease committed to a unit agreement, and that is capable of production in paying quantities on a lease basis, will extend the term of all expiring Federal leases committed to the unit agreement for the term of the unit agreement and so long as the well is capable of production in paying quantities.
(a) Any lease committed after July 29, 1954, to any unit agreement, which covers lands within and lands outside the area covered by the agreement, will be segregated, as of the effective date of commitment to the unit, into separate leases; one covering the lands committed to the agreement, the other lands not committed to the agreement. For unproven areas, such segregation will occur only when the public interest requirement is satisfied pursuant to 43 CFR 3183.4(b). Upon satisfaction of the public interest requirement, the BLM will deem the segregation to have been effective as of the date of commitment of the lands to the unit.
(b)(1) The segregated lease covering the non-unitized portion of the lands will continue in force and effect for the term of the lease or for 2 years from the date of segregation, whichever is longer.
(2) If a partially committed lease is in an extended term because of production, the segregated, non-producing lease will continue in effect so long as the producing lease exists and rentals are paid, and so long thereafter as oil or gas is produced from the committed lease.
Any lease eliminated from any approved or prescribed oil and gas agreement authorized by the Act and any lease in effect at the termination of such agreement, unless relinquished, will continue in effect for the original term of the lease or for 2 years after its elimination from the agreement or after the termination of the plan or agreement, whichever is longer, and for so long thereafter as oil or gas is produced in paying quantities. No lease will be extended if the public interest requirement for an approved oil and gas agreement has not been satisfied, as determined by the authorized officer.
Any lease segregated by assignment, including the retained portion, will continue in effect for the primary term
Undeveloped parts of leases retained or assigned out of leases which are in their extended term will continue in effect for 2 years after the effective date of assignment, provided the parent lease was issued prior to September 2, 1960.
Undeveloped parts of leases retained or assigned out of leases which are extended by production, actual or suspended, or the payment of compensatory royalty will continue in effect for 2 years after the effective date of assignment and for so long thereafter as oil or gas is produced in paying quantities.
Where a reinstatement of a terminated lease is granted under 43 CFR 3108.20 and the authorized officer finds that the reinstatement will not afford the lessee a reasonable opportunity to continue operations under the lease, the authorized officer may extend the term of such lease for a period sufficient to give the lessee such an opportunity. Any extension will be subject to the following conditions:
(a) No extension will exceed a period equal to the unexpired portion of the lease or any extension thereof remaining at the date of termination.
(b) When the reinstatement occurs after the expiration of the term or extension thereof, the lease may be extended from the date the authorized officer grants the petition, but in no event for more than 2 years from the date the reinstatement is authorized and so long thereafter as oil or gas is produced in paying quantities.
The payment of a compensatory royalty will extend the term of any lease for the period during which such compensatory royalty is paid and for a period of 1 year from the discontinuance of such payments.
Any lease used for the storage of oil or gas will be extended for the period of storage under an approved agreement.
The lessee(s) may relinquish the lease or any legal subdivision of the lease at any time. The lessee(s) must file a written relinquishment with the BLM State Office with jurisdiction over the lease. All lessees holding record title interests in the lease must sign the relinquishment. A relinquishment takes effect on the date the lessee filed it with the BLM. However, the lessee(s) and the party that issued the bond will continue to be obligated to:
(a) Make payments of all accrued rentals and royalties, including payments of compensatory royalty due for all drainage that occurred before the relinquishment;
(b) Place all wells to be relinquished in condition for suspension or abandonment as the BLM requires; and
(c) Complete reclamation of the leased sites after stopping or abandoning oil and gas operations on the lease, under a plan approved by the BLM or the appropriate surface management agency.
(a) Except as provided in paragraph (b) of this section, any lease on which there is no well capable of producing oil or gas in paying quantities will automatically terminate by operation of law (30 U.S.C. 188) if the lessee fails to pay the rental at the designated ONRR office on or before the lease anniversary date. However, if the designated ONRR office is closed on the anniversary date, a rental payment received on the next business day the ONRR office is open to the public will be considered timely made.
(b) If the rental payment due under a lease is paid on or before its anniversary date but the amount of the payment is deficient and the deficiency is nominal as defined in this section, or the amount of payment made was determined in accordance with the rental or acreage figure stated in a decision rendered by the authorized officer, and such figure is found to be in error resulting in a deficiency, such lease will not have automatically terminated unless the lessee fails to pay the deficiency within the period prescribed in the Notice of Deficiency provided for in this section. A deficiency will be considered nominal if it is not more than $100 or more than 5 percent of the total payment due, whichever is less. The designated ONRR office will send a Notice of Deficiency to the lessee. The Notice will allow the lessee 15 days from the date of receipt or until the due date, whichever is later, to submit the full balance due to the designated ONRR office. If the payment required by the Notice is not paid within the time allowed, the lease will have terminated by operation of law as of its anniversary date.
(c) The automatic termination provision does not apply where, due to other contingencies, additional rental is due on a date other than the lease anniversary date and where the lessee did not receive notice that the obligation had accrued, unless the lessee fails to pay the rental within the period prescribed in the BLM Notice.
(a) Except as hereinafter provided, the authorized officer may reinstate a lease which has terminated for failure to pay on or before the anniversary date the full amount of rental due, provided that:
(1) Such rental was paid or tendered within 20 days after the anniversary date; and
(2) It is shown to the satisfaction of the authorized officer that the failure to timely submit the full amount of the rental due was either justified or not due to a lack of reasonable diligence on the part of the lessee (reasonable diligence includes a rental payment that is paid to the ONRR on or before the lease anniversary date. If the designated ONRR office or payment system is not operational on the anniversary date, payment received on the next business day in which the designated ONRR office or payment system is operational to the public will be deemed timely); and
(3) A petition for reinstatement and the processing fee for lease reinstatement, Class I, found in the fee schedule in § 3000.120 of this chapter, are filed with the proper BLM office within 60 days after receipt of Notice of Termination of Lease due to late payment of rental. If a terminated lease becomes productive prior to the time the lease is reinstated, all required royalty that has accrued must be paid to the ONRR.
(b) The burden of showing that the failure to pay on or before the anniversary date was justified or not due to lack of reasonable diligence is on the lessee.
(c) Under no circumstances will a terminated lease be reinstated if:
(1) A valid oil and gas lease has been issued prior to the filing of a petition for reinstatement affecting any of the lands covered by that terminated lease; or
(2) The oil and gas interests of the United States in the lands have been disposed of or otherwise have become unavailable for leasing.
(a) The authorized officer may, if the requirements of this section are met, reinstate a competitive oil and gas lease which was terminated by operation of law for failure to pay rental timely when the rental was not paid or tendered within 20 calendar days of the termination date, and it is shown to the satisfaction of the authorized officer that such failure was justified or not due to a lack of reasonable diligence, or no matter when the rental was paid, it is shown to the satisfaction of the authorized officer that such failure was inadvertent.
(b)(1) Such leases may be reinstated if the required back rental and royalty at the increased rates accruing from the date of termination, together with a petition for reinstatement, are filed on or before the earlier of:
(i) Sixty calendar days after the last date that any lessee of record received Notice of Termination by certified mail; or
(ii) Twenty-four months after termination of the lease.
(2) After determining that the requirements for filing of the petition for reinstatement have been timely met, the authorized officer may reinstate the lease if:
(i) No valid lease has been issued prior to the filing of the petition for reinstatement affecting any of the lands covered by the terminated lease, whether such lease is still in effect or not;
(ii) The oil and gas interests of the United States in the lands have not been disposed of or have not otherwise become unavailable for leasing;
(iii) Payment of all back rentals and royalties at the rates established for the reinstated lease has been made;
(iv) An agreement has been signed by the lessee and attached to and made a part of the lease specifying future rentals at the applicable rates specified for reinstated leases in 43 CFR 3103.22 and future royalties at the rates set in 43 CFR 3103.31 for all production removed or sold from such lease or shared by such lease from production allocated to the lease by virtue of its participation in an oil and gas agreement;
(v) A notice of the proposed reinstatement of the terminated lease and the terms and conditions of reinstatement has been published in the
(vi) The lessee has paid the BLM a nonrefundable administrative fee of $500.
(c) The authorized officer will furnish to the Chairpersons of the Committee on Natural Resources of the House of Representatives and of the Committee on Energy and Natural Resources of the Senate, at least 30 days prior to the date of reinstatement, a copy of the notice, together with information concerning rental, royalty, volume of production, if any, and any other matter which the authorized officer considers significant in making the determination to reinstate.
(d) If the authorized officer reinstates the lease, the reinstatement will be effective as of the date of termination, for the unexpired portion of the original lease or any extension thereof remaining on the date of termination, and so long thereafter as oil or gas is produced in paying quantities. Where a lease is reinstated under this section and the authorized officer finds that the reinstatement of such lease either:
(1) Occurs after the expiration of the primary term or any extension thereof; or
(2) Will not afford the lessee a reasonable opportunity to continue operations under the lease, the authorized officer may extend the term of the reinstated lease for such period as determined reasonable, but in no event for more than 2 years from the date of the reinstatement and so long thereafter as oil or gas is produced in paying quantities.
(a) Whenever the lessee fails to comply with any of the provisions of the law, the regulations issued thereunder, or the lease, the lease may be canceled by the Secretary, if the leasehold does not contain a well capable of production of oil or gas in paying quantities, or if the lease is not committed to an approved oil and gas agreement that contains a well capable of production of unitized substances in paying quantities. The lease may be canceled only if the default continues for 30 calendar days after a notice of default has been delivered in accordance with 43 CFR 1810.2.
(b) Whenever the lessee fails to comply with any of the provisions of the law, the regulations issued thereunder, or the lease, and if the leasehold contains a well capable of production of oil or gas in paying quantities, or if the lease is committed to an approved oil and gas agreement that contains a well capable of production of unitized substances in paying quantities, the lease may be canceled only by court order in the manner provided by section 31(a) of the Act (30 U.S.C. 188).
(c) If any interest in any lease is owned or controlled, directly or indirectly, by means of stock or otherwise, in violation of any of the provisions of the Act, the lease may be canceled, or the interest so owned may be forfeited, or the person so owning or controlling the interest may be compelled to dispose of the interest, only by court order in the manner provided by section 27(h)(1) of the Act (30 U.S.C. 184).
(d) Leases will be subject to cancellation if improperly issued.
A lease or interest therein may not be cancelled to the extent that such action adversely affects the title or interest of a
If, during any proceeding with respect to a violation of any provision of the regulations in 43 CFR parts 3000 and 3100 or the Act, a party thereto files a waiver of his/her rights under the lease to drill or to assign his/her lease interests, or if such rights are suspended by order of the Secretary pending a decision, payments of rentals and the running of time against the term of the lease involved will be suspended as of the first day of the month following the filing of the waiver or the Secretary's suspension until the first day of the month following the final decision in the proceeding or the revocation of the waiver or suspension.
The Act of May 21, 1930 (30 U.S.C. 301-306), authorizes either the leasing of oil and gas deposits under railroad and other rights-of-way to the owner of the right-of-way or the entering of a compensatory royalty agreement with adjoining landowners. This authority will be exercised only with respect to railroad rights-of-way and easements issued pursuant either to the Act of March 3, 1875 (43 U.S.C.934
(a) No approved form is required for an application to lease oil and gas deposits underlying a right-of-way.
(b) The right-of-way owner or his/her transferee must file the application in the proper BLM office.
(c) Include the processing fee for leasing under right-of-way found in the fee schedule in § 3000.120 of this chapter.
(d) An application must include:
(1) Facts as to the ownership of the right-of-way, and of the transfer if the application is filed by a transferee;
(2) An executed transfer of the right to obtain a lease, if necessary;
(3) A description of the development of oil or gas in adjacent or nearby lands, the location and depth of the wells, the production and the probability of drainage of the deposits in the right-of-way;
(4) A description of each legal subdivision through which a portion of the right-of-way desired to be leased traverses; however, a description by metes and bounds of the right-of-way is not required; and
(5) A map of the applicable lands.
After the BLM has determined that a lease of a right-of-way or any portion thereof is consistent with the public interest, either upon consideration of an application for lease or on its own motion, the authorized officer will serve notice on the owner or lessee of the oil and gas rights of the adjoining lands. The adjoining landowner or lessee will be allowed a reasonable time, as provided in the notice, within which to submit a bid for the percent of compensatory royalty, the owner or lessee must pay for the extraction of the oil and gas underlying the right-of-way through wells on such adjoining lands. The owner of the right-of-way will be given the same time period to submit a bid for the lease.
Award of lease to the owner of the right-of-way, or a contract for the payment of compensatory royalty by the owner or lessee of the adjoining lands will be made to the bidder whose offer is determined by the authorized officer to be to the best advantage of the United States, considering the amount of royalty to be received and the better development under the respective means of production and operation.
(a) The lease or compensatory royalty agreement will be on a form approved by the Director.
(b) The primary term of the lease will be for a period of 10 years.
(c) The following provisions of 43 CFR part 3100 apply to the issuance and administration of leases for oil and gas deposits underlying a right-of-way issued under this part:
(1) All of subpart 3101, except §§ 3101.21, 3101.22, 3101.23, 3101.24, and 3101.25; and
(2) All of subparts 3102 through 3108;
(a) Oil and gas leasing in units of the National Park System will be governed by 43 CFR part 3100 and all operations conducted on a lease or permit in such units will be governed by 43 CFR parts 3160 and 3180.
(b) Any lease or permit respecting minerals in units of the National Park System may be issued or renewed only with the consent of the Regional Director, National Park Service. Such consent will only be granted upon a determination by the Regional Director that the activity permitted under the lease or permit will not have significant adverse effect upon the resources or administration of the unit pursuant to the authorizing legislation of the unit. Any lease or permit issued will be subject to such conditions as may be prescribed by the Regional Director to protect the surface and significant resources of the unit, to preserve their use for public recreation, and to the condition that site specific approval of any activity on the lease will only be given upon concurrence by the Regional Director. All lease applications received for reclamation withdrawn lands will also be submitted to the Bureau of Reclamation for review.
(c) The units subject to the regulations in this part are those units of land and water which are shown on the following maps on file and available for public inspection in the office of the Director of the National Park Service and in the Superintendent's Office of each unit. The boundaries of these units may be revised by the Secretary as authorized in the Acts.
(1) Lake Mead National Recreation Area—The map identified as “boundary map, 8360-80013B, revised February 1986.
(2) Whiskeytown Unit of the Whiskeytown-Shasta-Trinity National Recreation Area—The map identified as “Proposed Whiskeytown-Shasta-Trinity National Recreation Area,” numbered BOR-WST 1004, dated July 1963.
(3) Ross Lake and Lake Chelan National Recreation Areas—The map identified as “Proposed Management Units, North Cascades, Washington,” numbered NP-CAS-7002, dated October 1967.
(4) Glen Canyon National Recreation Area—the map identified as “boundary map, Glen Canyon National Recreation Area,” numbered GLC-91,006, dated August 1972.
(d) The following excepted units will not be open to mineral leasing:
(1)
(ii) All lands within the unit of supervision of the Bureau of Reclamation around Hoover and Davis Dams and all lands outside of resource utilization zones as designated by the Superintendent on the map (602-2291B, dated October 1987) of Lake Mead National Recreation Area which is available for inspection in the Office of the Superintendent.
(2)
(ii) All lands classified as high-density recreation, general outdoor recreation, outstanding natural and historic, as shown on the map numbered 611-20,004B, dated April
(iii) All lands within section 34 of Township 33 north, Range 7 west, Mt. Diablo Meridian.
(3)
(ii) All lands within
(iii) All lands proposed for or designated as wilderness;
(iv) All lands within
(v) Pyramid Lake Research Natural Area and all lands within
(4)
Section 6 of the Act of November 8, 1965 (Pub. L. 89-336), authorizes the Secretary to permit the removal of oil and gas from lands within the Shasta and Trinity Units of the Whiskeytown-Shasta-Trinity National Recreation Area in accordance with the Act or the Mineral Leasing Act for Acquired Lands. Subject to the determination by the Secretary of Agriculture that removal will not have significant adverse effects on the purposes of the Central Valley project or the administration of the recreation area.
16 U.S.C. 3101
All lands eligible and available for leasing may be offered for competitive auction under this subpart, including but not limited to:
(a) Lands that were covered by previously issued oil and gas leases that have terminated, expired, been cancelled or relinquished;
(b) Lands for which authority to lease has been delegated from the General Services Administration;
(c) If, in proceeding to cancel a lease, interest in a lease, option to acquire a lease or an interest therein, acquired in violation of any of the provisions of the Act, an underlying lease, interest or option in the lease is cancelled or forfeited through a bankruptcy or otherwise to the United States and there are valid interests therein that are not subject to cancellation, forfeiture, or compulsory disposition, such underlying lease, interest, or option may be sold to the highest responsible and qualified bidder by competitive bidding under this subpart, subject to all outstanding valid interests therein and valid options pertaining thereto. If less than the whole interest in the lease, interest, or option is cancelled or forfeited, such partial interest may likewise be sold by competitive bidding. If no satisfactory bid is obtained as a result of the competitive offering of such whole or partial interests, such interests may be sold in accordance with 30 U.S.C. 184(h)(2) by such other methods as the authorized officer deems appropriate, but on terms no less favorable to the United States than those of the best competitive bid received. Interest in outstanding leases(s) so sold will be subject to the terms and conditions of the existing lease(s);
(d) Lands which are otherwise unavailable for leasing but which are subject to drainage (protective leasing);
(e) Lands included in any expression of interest submitted to the authorized officer;
(f) Lands selected by the authorized officer; and
(g) Lands that were offered on a previous sale for which no bid was accepted or received.
(a) Each BLM state office will hold sales at least quarterly if eligible lands are available for competitive leasing.
(b) Lease sales will be conducted by a competitive auction process.
(c) The BLM may issue a lease only to the highest responsible and qualified bidder. If a person does not pay the minimum monies owed the day of the sale, the BLM may refer that person to the Department of the Interior's Office of the Inspector General, Administrative Remedies Division, for appropriate action, including potential suspension and debarment.
(d) The national minimum acceptable bid will be as specified in § 3103.1 of this chapter and payable on the gross acreage and will not be prorated for any lands in which the United States owns a fractional interest.
(a) No action pursuant to the regulations in this subpart will be suspended under 43 CFR 4.21(a) due to a protest from a notice by the authorized officer to hold a lease sale.
(b) Notwithstanding paragraph (a) of this section, the authorized officer may suspend the offering of a specific parcel while considering a protest against its inclusion in a Notice of Competitive Lease Sale.
(c) Only the Assistant Secretary for Land and Minerals Management may suspend a lease sale for good cause after reviewing the reason(s) for a protest.
Competitive leases will be issued for a primary term of 10 years.
All competitive leases will be considered issued when signed by the authorized officer. Competitive leases, except future interest leases issued under § 3120.80, will be effective as of the first day of the month following the date the leases are signed on behalf of the United States. A lease may be made effective on the first day of the month within which it is issued if a written request is made prior to the date of signature of the authorized officer. Leases for future interest will be effective as of the date the mineral interests vest in the United States.
Lands may be offered in leasing units of not more than 2,560 acres outside Alaska, or 5,760 acres within Alaska, which may be as nearly compact in form as possible.
(a) A party submitting an expression of interest in leasing land available for disposition under section 17 of the Mineral Leasing Act must include the submitter's name and address and must submit the expression of interest through the BLM's online leasing system.
(b) The expression must provide a description of the lands identified by legal land description, as follows:
(1) For lands surveyed under the public land survey system, describe the lands to the nearest aliquot part within the legal subdivision, section, township, range, and meridian;
(2) For unsurveyed lands, describe the lands by metes and bounds, giving courses and distances, and tie this information to an official corner of the public land surveys, or to a prominent topographic feature;
(3) For approved protracted surveys, include an entire section, township, range, and meridian. Do not divide protracted sections into aliquot parts;
(4) For lands that have water boundaries, describe the lands based on the initial survey or deed acquiring ownership;
(5) For fractional interest lands, identify the United States mineral ownership by percentage;
(6) For split estate lands, where the surface rights are in private ownership and the rights to develop the oil and gas are managed by the Federal Government, submit the private surface owner's name and address.
(7) For lands where the acquiring agency has assigned an acquisition or tract number covering the lands applied, submit the number in addition to any description otherwise required by this section. If the authorized officer determines that the acquisition or tract number, together with identification of the State and county, constitutes an adequate description, the authorized officer may allow the description in this manner in lieu of other descriptions required by this section.
(c) A submitter may submit more than one expression of interest, so long as each expression separately satisfies the requirements of paragraph (b) of this section.
(d) Each expression of interest must include a filing fee, as found in the fee schedule in § 3103.1 of this chapter.
(e) The BLM may offer for sale all or some of the lands specified in an expression of interest and may offer those lands as part of a parcel that includes lands not specified in the expression of interest.
When determining whether the BLM should offer lands specified in an expression of interest at lease sales, the BLM will evaluate the Secretary's obligations to manage public lands for multiple use and sustained yield and to take any action required to prevent unnecessary or undue degradation of the lands and their resources, along with other applicable legal requirements. In evaluating the lands to be offered, as part of the scoping process, the BLM will consider, at minimum:
(a) Proximity to oil and gas development existing at the time of the BLM's evaluation, giving preference to lands upon which a prudent operator would seek to expand existing operations;
(b) The presence of important fish and wildlife habitats or connectivity areas, giving preference to lands that would not impair the proper functioning of such habitats or corridors;
(c) The presence of historic properties, sacred sites, and other high value cultural resources, giving preference to lands that would not impair the cultural significance of such resources;
(d) The presence of recreation and other important uses or resources, giving preference to lands that would not impair the value of such uses or resources; and
(e) The potential for oil and gas development, giving preference to lands with high potential for development.
Until August 16, 2032, the BLM will from time to time calculate, for the preceding 1-year period before it issues a wind or solar energy right-of-way, the acreage for which expressions of interest have been submitted to the BLM and the sum total of acres offered for lease.
(a) The lands available for competitive lease sale under this subpart will be described in a Notice of Competitive Lease Sale.
(b) The time, date, and place of the competitive lease sale will be stated in the notice.
(c) The notice will include an identification of, and a copy of, stipulations applicable to each parcel.
(a) After identifying a preliminary list of lands for a lease sale, the BLM will provide a scoping period, of not less than 30 calendar days, for public comment on the preliminary parcel list for the upcoming lease sale. The preliminary parcel list is not subject to protests or appeals.
(b) After drafting a National Environmental Policy Act document for a lease sale, the BLM will provide a comment period, of not less than 30 calendar days, for public comment on the National Environmental Policy Act document for the upcoming lease sale. The draft National Environmental Policy Act document is not subject to protests or appeals.
(c) At least 60 calendar days prior to conducting a competitive auction, the BLM will make available to the public a list of lands to be offered for competitive lease sale in a Notice of Competitive Lease Sale.
(d) After posting the Notice of Competitive Lease Sale notice, the BLM will provide a protest period, of not less than 30 calendar days, for public input on the upcoming lease sale.
(e) The BLM will make available the final National Environmental Policy Act compliance documents prior to issuing a lease from the lease sale.
(a) Parcels will be offered by competitive auction.
(b) A winning bid will be the highest bid by a responsible and qualified bidder, equal to or exceeding the national minimum acceptable bid. The decision of the auctioneer will be final.
(a) Payments must be made in accordance with 43 CFR 3103.11.
(b) Each winning bidder must submit, by the close of official business hours on
(1) The minimum bonus bid as specified in § 3103.1 of this chapter;
(2) The total amount of the first year's rental; and
(3) The processing fee for competitive lease applications found in the fee schedule in § 3000.120 of this chapter for each parcel.
(c) The winning bidder must submit the balance of the bonus bid to the proper BLM office within 10 business days after the last day of the competitive auction.
(a) A bid will not be withdrawn and will constitute a legally binding commitment to execute the lease bid form and accept a lease, including the obligation to pay the bonus bid, first year's rental, and processing fee. Execution by the high bidder of a competitive lease bid form approved by the Director constitutes certification of compliance with 43 CFR subpart 3102, will constitute a binding lease offer, including all terms and conditions applicable thereto, and must be submitted when payment is made in accordance with § 3120.62(b). Failure to comply with § 3120.62(c) will result in rejection of the bid and forfeiture of the monies submitted under § 3120.62(b).
(b) A lease will be awarded to the highest responsible and qualified bidder. A copy of the lease will be provided to the lessee after signature by the authorized officer.
(c) If a bid is rejected, the land may be reoffered competitively under this subpart.
(d) The BLM will not issue a lease until it resolves all protests covering the lands to be leased.
(e) Leases will be issued within 60 calendar days, following payment by the successful bidder of the remainder of the bonus bid, if any, and the annual rental for the first lease year. If the BLM cannot issue the lease within 60 days, the BLM, with the consent of the bidder, may reject the offer.
Lands offered at the competitive auction that received no bids may be offered in a future competitive auction.
An expression of interest for a future interest lease must be filed in accordance with this subpart.
(a) No rental or royalty will be due to the United States prior to the vesting of the oil and gas rights in the United States. However, the future interest lessee must agree that if, he/she is or becomes the holder of any present interest operating rights in the lands:
(1) The future interest lessee transfers all or a part of the lessee's present oil and gas interests, such lessee must file in the proper BLM office an assignment or transfer, in accordance with 43 CFR subpart 3106, of the future interest lease of the same type and proportion as the transfer of the present interest; and
(2) The future interest lessee's present lease interests are relinquished, cancelled, terminated, or expired, the future interest lease rights with the United States also will cease and terminate to the same extent.
(b) Upon vesting of the oil and gas rights in the United States, the future interest lease rental and royalty will be as for any competitive lease issued under this subpart, as provided in 43 CFR subpart 3103, and the acreage will be chargeable in accordance with 43 CFR 3101.20.
The terms and conditions of compensatory royalty agreements involving acquired lands in which the United States owns a future or fractional interest will be established on an individual case basis. Such agreements may be required when leasing is not possible in situations where the interest of the United States in the oil and gas deposit includes both a present and a future fractional interest in the same tract containing a producing well.
42 U.S.C. 6508, 43 U.S.C. 1733 and 1740.
The unitization application must include:
(a) The proposed unit agreement;
(b) A map showing the proposed unit area;
(c) A list of committed tracts including, for each tract, the:
(1) Legal land description and acreage;
(2) Names of persons holding record title interest;
(3) Names of persons owning operating rights; and
(4) Name of the unit operator.
(d) A statement certifying:
(1) The operator invited all owners of oil and gas rights (leased or unleased) and lease interests (record title and operating rights) within the external boundary of the unit area described in the application to join the unit;
(2) That there are sufficient tracts committed to the unit agreement to reasonably operate and develop the unit area;
(3) The commitment status of all tracts within the area proposed for unitization; and
(4) The operator accepts unit obligations under § 3137.60 of this subpart.
(e) Evidence of acceptable bonding;
(f) A discussion of reasonably foreseeable and significantly adverse effects on the surface resources of the NPR-A and how unit operations may reduce impacts compared to individual lease operations;
(g) A discussion of the proposed methodology for allocating production among the committed tracts. If the unit includes non-Federal oil and gas mineral estate, you must explain how the methodology takes into account reservoir heterogeneity and area variation in reservoir producibility; and
(h) Other documentation that the BLM may request. The BLM may require additional copies of maps, plats, and other similar exhibits.
(i) The processing fee found in the fee schedule in § 3000.120 of this chapter.
(a) To change unit operators, the new unit operator must submit to the BLM:
(1) Statements that:
(i) The new operator accepts unit obligations; and
(ii) The percentage of required interest owners consented to a change of unit operator;
(2) Evidence of acceptable bonding (
(3) The processing fee found in the fee schedule in § 3000.120 of this chapter.
(b) The effective date of the change in unit operator is the date the BLM approves the new unit operator.
(a) An application for a subsurface storage agreement must include:
(1) The reason for forming a subsurface storage agreement;
(2) A description of the area to be included in the subsurface storage agreement;
(3) A description of the formation to be used for storage;
(4) The proposed storage fees or rentals. The fees or rentals must be based on the value of the subsurface storage, injection, and withdrawal volumes, and rental income or other income generated by the operator for letting or subletting the storage facilities;
(5) The payment of royalty for native oil or gas (oil or gas that exists in the formation before injection and that is produced when the stored oil or gas is withdrawn);
(6) A description of how often and under what circumstances the operator and the BLM intend to renegotiate fees and payments;
(7) The proposed effective date and term of the subsurface storage agreement;
(8) Certification that all owners of mineral rights (leased or unleased) and lease interests have consented to the gas storage agreement in writing;
(9) An ownership schedule showing lease or land status;
(10) A schedule showing the participation factor for all parties to the subsurface storage agreement;
(11) Supporting data (geologic maps showing the storage formation, reservoir data, etc.) demonstrating the capability of the reservoir for storage; and
(12) The processing fee found in the fee schedule in § 3000.120 of this chapter.
(b) The BLM will negotiate the terms of a subsurface storage agreement with the operator, including bonding, and reservoir management.
(c) The BLM may request documentation in addition to that which the operator provides under paragraph (a) of this section.
30 U.S.C. 181
The purpose of this subpart is to provide for the conversion of existing oil and gas leases and valid claims based on mineral locations within Special Tar Sand Areas to combined hydrocarbon leases.
These regulations are issued under the authority of the Mineral Lands Leasing Act of February 25, 1920 (30 U.S.C. 181
As used in this subpart, the term:
(a) The owner of an oil and gas lease issued prior to November 16, 1981, or the owner of a valid claim based on a mineral location situated within a Special Tar Sand Area may convert that portion of the lease or claim so situated to a combined hydrocarbon lease, provided that such conversion is consistent with the provisions of this subpart. The application time period ended on November 15, 1983.
(b) Owners of oil and gas leases in Special Tar Sand Areas who elect not to convert their leases to a combined hydrocarbon lease do not acquire the rights to any hydrocarbon resource except oil and gas as those terms were defined prior to the enactment of the Combined Hydrocarbon Leasing Act of 1981. The failure to file an application to convert a valid claim based on a mineral location within the time herein provided will have no effect on the validity of the mining claim nor the right to maintain that claim.
(a) Owners of oil and gas leases in Special Tar Sand Areas which were scheduled to expire prior to November 15, 1983, could have preserved the right to convert their leases to combined hydrocarbon leases by filing a Notice of Intent to Convert with the BLM Utah State Office.
(b) A letter, submitted by the lessee, notifying the BLM of the lessee's intention to submit a plan of operations constituted a notice of intent to convert a lease. The Notice of Intent must have contained the lease number.
(c) The Notice of Intent must have been filed prior to the expiration date of the lease. The notice would have preserved the lessee's conversion rights only until November 15, 1983.
(a) The authorized officer may grant permission to holders of existing oil and gas leases to gather information to develop, perfect, complete or amend a plan of operations required for conversion upon the approval of the authorized officer of an exploration plan developed in accordance with 43 CFR 3592.1.
(b) The approval of an exploration plan in units of the National Park System requires the consent of the Regional Director of the National Park Service in accordance with § 3140.70.
(c) The filing of an exploration plan alone will be insufficient to meet the requirements of a complete plan of operations as set forth in § 3140.23.
(a) A combined hydrocarbon lease will be for no more than 5,760 acres. Acreage held under a combined hydrocarbon lease in a Special Tar Sand Area is not chargeable to State oil and gas limitations allowable in 43 CFR 3101.21 or 3101.22.
(b) The annual rental rate for all combined hydrocarbon leases will be as stated in the lease, and the annual rental for all new leases will be as specified in 43 CFR 3103.1. The rental rate for a combined hydrocarbon lease will be payable upon conversion and annually, in advance, thereafter.
(c)(1) The royalty rate for a combined hydrocarbon lease converted from an oil and gas lease will be that provided for in the original oil and gas lease.
(2) The royalty rate for a combined hydrocarbon lease converted from a valid claim based on a mineral location will be 16.67 percent.
(3) A reduction of royalties may be granted either as provided in § 3103.40 or, at the request of the lessee and upon a review of information provided by the lessee, prior to commencement of commercial operations if the purpose of the request is to promote development and the maximum production of tar sand. A reduction of royalties for the tar sand will not apply to the oil and gas resource. A reduction of royalties for the oil and gas will not apply to the tar sand resource.
(d)(1) Existing oil and gas leases and valid claims based on mineral locations may be unitized prior to or after the lease or claim has been converted to a combined hydrocarbon lease. The requirements of 43 CFR part 3180 will provide the procedures and general guidelines for unitization of combined hydrocarbon leases. For leases within units of the National Park System, unitization requires the consent of the Regional Director of the National Park Service in accordance with § 3140.41(b).
(2) If the plan of operations submitted for conversion is designed to cover a unit, a fully executed unit agreement will be approved before the plan of operations applicable to the unit may be approved under § 3140.20. The proposed plan of operations and the proposed unit agreement may be reviewed concurrently. The approved unit agreement will be effective after the leases or claims subject to it are converted to combined hydrocarbon leases. The plan of operations will explain how and when each lease included in the unit operation will be developed.
(e) Except as provided for in this subpart, the regulations set out in 43 CFR part 3100 are applicable, as appropriate, to all combined hydrocarbon leases issued under this subpart.
No special form is required for a conversion application.
Only owners of oil and gas leases issued within Special Tar Sands Areas, on or before November 16, 1981, and owners of valid claims based on mineral locations within Special Tar Sands Areas, are eligible to convert leases or claims to combined hydrocarbon leases in Special Tar Sands Areas.
(a) The BLM stopped accepting conversion applications on November 15, 1983. The applicant must have submitted to the BLM Utah State Office, a written request for a combined hydrocarbon lease signed by the owner of the lease or valid claim which must be accompanied by three copies of a plan of operations which must meet the requirements of 43 CFR 3592.1 and which must have provided for reasonable protection of the environment and diligent development of the resources requiring enhanced recovery methods of development or mining.
(b) A plan of operations may be modified or amended before or after conversion of a lease or valid claim to reflect changes in technology, slippages in schedule beyond the control of the lessee, new information about the resource or the economic or environmental aspects of its development, changes to or initiation of applicable unit agreements or for other purposes. To obtain approval of a modification or amended plan, the applicant must submit a written statement of the proposed changes or supplements and the justification for the changes proposed. Any modifications will be in accordance with 43 CFR 3592.1(c). The approval of the modification or amendment is the responsibility of the authorized officer. Changes or modification to the plan of operations will have no effect on the primary term of the lease. The authorized officer will, prior to approving any amendment or modification, review the modification or amendment with the appropriate surface management agency. For leases within units of the National Park System, no amendment or modification will be approved without the consent of the Regional Director of the National Park Service in accordance with § 3140.70.
(c) The plan of operations may be for a single existing oil and gas lease or valid claim or for an area of proposed unit operation.
(d) The plan of operations must identify by lease number all Federal oil and gas leases proposed for conversion and identify valid claims proposed for conversion by the recordation number of the mining claim.
(e) The plan of operations must include any proposed designation of
(f) The plan of operations may include an exploration phase, if necessary, but it must include a development phase. Such a plan can be approved even though it may indicate work under the exploration phase is necessary to perfect the proposed plan for the development phase as long as the overall plan demonstrates reasonable protection of the environment and diligent development of the resources requiring enhanced recovery methods of mining.
(g)(1) Upon determination that the plan of operations is complete, the authorized officer will suspend the term of the Federal oil and gas lease(s) as of the date that the complete plan was filed until the plan is finally approved or rejected. Only the term of the oil and gas lease will be suspended, not any operation and production requirements thereunder.
(2) If the authorized officer determines that the plan of operations is not complete, the applicant will be notified that the plan is subject to rejection if not completed within the period specified in the notice.
(3) The authorized officer may request additional data after the plan of operations has been determined to be complete. This request for additional information will have no effect on the suspension of the running of the oil and gas lease.
A plan of operations to convert an existing oil and gas lease or valid claim based on a mineral location to a combined hydrocarbon lease must have been filed on or before November 15, 1983, or prior to the expiration of the oil and gas lease, whichever was earlier, except as provided in § 3140.12.
The authorized officer will take action on an application for conversion within 15 months of receipt of a proposed plan of operations.
(a) The owner of an oil and gas lease, or the owner of a valid claim based on a mineral location will have such lease or claim converted to a combined hydrocarbon lease when the plan of operations, filed under § 3140.23, is deemed acceptable and is approved by the authorized officer.
(b) The conversion of a lease within a unit of the National Park System will be approved only with the consent of the Regional Director of the National Park Service in accordance with § 3140.70.
(c) A plan of operations may not be approved in part but may be approved where it contains an appropriately staged plan of exploration and development operations.
(a) After a plan of operations is found acceptable, and is approved, the authorized officer will prepare and submit to the owner, for execution, a combined hydrocarbon lease containing all appropriate terms and conditions, including any necessary stipulations that were part of the oil and gas lease being converted, as well as any additional stipulations, such as those required to ensure compliance with the plan of operations.
(b) The authorized officer will not sign the combined hydrocarbon lease until it has been executed by the conversion applicant and the lease or claim to be converted has been formally relinquished to the United States.
(c) The effective date of the combined hydrocarbon lease will be the first day of the month following the date that the authorized officer signs the lease.
(d) The authorized officer will issue one combined hydrocarbon lease to cover the existing contiguous oil and gas leases or valid claims based on mineral locations which have been approved for conversion within the special tar sand area.
A combined hydrocarbon lease will be for a primary term of 10 years and for so long thereafter as oil or gas is produced in paying quantities. If the applicant withdraws the combined hydrocarbon lease application or the BLM denies the conversion application, the suspension on the oil and gas lease will be lifted and the term will be extended by the time remaining on the term of the lease.
(a) The authorized officer may noncompetitively lease additional lands for ancillary facilities in a Special Tar Sand Area that are needed to support any operations necessary for the recovery of tar sand. Such uses include, but are not limited to, mill site or waste disposal. Application for a lease or permit to use additional lands must be filed under the provisions of 43 CFR part 2920 with the proper BLM office having jurisdiction of the lands. The application for additional lands may be filed at the time a plan of operations is filed.
(b) A lease for the use of additional lands will not be issued when the use can be authorized under 43 CFR parts 2800 and 2880. Such uses include, but are not limited to, reservoirs, pipelines, electrical generation systems, transmission lines, roads, and railroads.
(c) Within units of the National Park System, permits or leases for additional lands will only be issued by the National Park Service. Applications for such permits or leases must be filed with the Regional Director of the National Park Service.
The BLM stopped accepting conversion applications on November 15, 1983. Conversions of existing oil and gas leases and valid claims based on mineral locations to combined hydrocarbon leases within units of the National Park System will be allowed only where mineral leasing is permitted by law and where the lands covered by the lease or claim proposed for conversion are open to mineral resource disposition in accordance with any applicable minerals management plan. (See 43 CFR 3100.3(h)(4)). In order to consent to any conversion or any subsequent development under a combined hydrocarbon lease requiring further approval, the Regional Director of the National Park Service must find that there will be no resulting significant adverse impacts on the resources and administration of such areas or on other contiguous units of the National Park System in accordance with 43 CFR 3109.20(b).
The purpose of this subpart is to provide for the competitive leasing of lands and issuance of combined hydrocarbon leases, oil and gas leases, or tar sand leases within special tar sand areas.
The regulations in this subpart are issued under the authority of the Mineral Leasing Act of February 25, 1920 (30 U.S.C. 181
As used in this subpart, the term:
(1) Contains a hydrocarbonaceous material with a gas-free viscosity, at original reservoir temperature greater than 10,000 centipoise, or
(2) contains a hydrocarbonaceous material and is produced by mining or quarrying.
(a)
(i) All of 43 CFR subpart 3100;
(ii) All of 43 CFR subpart 3101, with the exception of §§ 3101.21, 3101.22, 3101.23, 3101.24, and 3101.25;
(iii) All of 43 CFR subpart 3102;
(iv) All of 43 CFR subpart 3103, with the exception of §§ 3103.21, and 3103.31(a), (b), and (c);
(v) All of 43 CFR subpart 3104;
(vi) All of 43 CFR subpart 3105;
(vii) All of 43 CFR subpart 3106, with the exception of § 3106.10(j);
(viii) All of 43 CFR subpart 3107;
(ix) All of 43 CFR subpart 3108; and
(x) All of 43 CFR subpart 3109, with special emphasis on § 3109.20(b).
(2) Prior to commencement of operations, the lessee must develop either a plan of operations as described in 43 CFR 3592.1 which ensures reasonable protection of the environment or file an application for a permit to drill as described in 43 CFR part 3160, whichever is appropriate.
(3) The provisions of 43 CFR part 3180 will serve as general guidance to the administration of combined hydrocarbon leases issued under this part to the extent they may be included in unit or cooperative agreements.
(b)
(2) All of the provisions of 43 CFR parts 3160 and 3170 apply to operations on an oil and gas lease issued under this part.
(3) The provisions of 43 CFR part 3180 apply to the administration of oil and gas leases issued under this part.
(c)
(i) All of 43 CFR subpart 3102;
(ii) All of 43 CFR subpart 3103 with the exception of §§ 3103.21, 3103.22(d), 3103.31, and 3103.32;
(iii) All of 43 CFR 3120.50; and
(iv) All of 43 CFR 3120.60.
(2) Prior to commencement of operations, the lessee must develop a plan of operations as described in 43 CFR 3592.1 which ensures reasonable protection of the environment.
(a) Combined hydrocarbons or tar sands within a Special Tar Sand Area will be leased only by competitive bonus bidding.
(b) Oil and gas within a Special Tar Sand Area will be leased by competitive bonus bidding as described in 43 CFR part 3120.
(c) The authorized officer may issue either combined hydrocarbon leases, or oil and gas leases for oil and gas within such areas.
(d) The rights to explore for or develop tar sand deposits in a Special Tar Sand Area may be acquired through either a combined hydrocarbon lease or a tar sand lease.
(e) An oil and gas lease in a Special Tar Sand Area does not include the rights to explore for or develop tar sand.
(f) A tar sand lease in a Special Tar Sand Area does not include the rights to explore for or develop oil and gas.
(g) The minimum acceptable bid for a lease issued for tar sand will be as specified in § 3103.1 of this chapter.
(h) The acreage of combined hydrocarbon leases or tar sand leases held within a Special Tar Sand Area will not be charged against acreage limitations for the holding of oil and gas leases as provided in 43 CFR 3101.21.
(i)(1) The authorized officer may noncompetitively lease additional lands for ancillary facilities in a Special Tar Sand Area that are shown by an applicant to be needed to support any operations necessary for the recovery of tar sand. Such uses include, but are not limited to, mill siting or waste disposal. An application for a lease or permit to use additional lands must be filed under the provisions of 43 CFR part 2920 with the proper BLM office having jurisdiction of the lands. The application for additional lands may be filed at the time a plan of operations is filed.
(2) A lease for the use of additional lands will not be issued under this part when the use can be authorized under 43 CFR part 2800. Such uses include, but are not limited to, reservoirs, pipelines, electrical generation systems, transmission lines, roads and railroads.
(3) Within units of the National Park System, permits or leases for additional lands for any purpose will be issued only by the National Park Service. Applications for such permits or leases must be filed with the Regional Director of the National Park Service.
Geophysical exploration in Special Tar Sand Areas will be governed by 43 CFR part 3150. Information obtained under a permit must be made available to the BLM upon request.
(a) Any person(s) responsible and qualified to hold a lease under the provisions of 43 CFR subpart 3102 and this subpart may obtain an exploration license to conduct core drilling and other exploration activities to collect geologic, environmental and other data concerning tar sand resources only on lands, the surface of which are under the jurisdiction of the BLM, within or adjacent to a Special Tar Sand Area. The application for such a license must be submitted to the proper BLM office having jurisdiction over the lands. No drilling for oil or gas will be allowed under an exploration license issued under this subpart. No specific form is required for an application for an exploration license.
(b) The application for an exploration license will be subject to the following requirements:
(1) Each application must contain the name and address of the applicant(s);
(2) Each application must be accompanied by a nonrefundable filing fee based on the coal exploration license application fee found in the fee schedule in § 3000.120 of this chapter;
(3) Each application must contain a description of the lands covered by the application according to section,
(4) Each application must include an exploration plan which complies with the requirements of 43 CFR 4392.1(a); and
(5) An application must cover no more than 5,760 acres, which will be as compact as possible. The authorized officer may grant an exploration license covering more than 5,760 acres only if the application contains a justification for an exception to the normal limitation.
(c) The authorized officer may, if the authorized officer determines it necessary to avoid impacts resulting from duplication of exploration activities, require applicants for exploration licenses to provide an opportunity for other parties to participate in exploration under the license on a pro rata cost sharing basis. If joint participation is determined necessary, it will be conducted according to the following:
(1) Immediately upon the notification of a determination that parties will be given an opportunity to participate in the exploration license, the applicant must publish a “Notice of Invitation,” approved by the authorized officer, once every week for 2 consecutive weeks in at least one newspaper of general circulation in the area where the lands covered by the exploration license are situated. This notice must contain an invitation to the public to participate in the exploration license on a pro rata cost sharing basis. Copies of the “Notice of Invitation” must be filed with the authorized officer at the time of publication by the applicant for posting in the proper BLM office having jurisdiction over the lands covered by the application for at least 30 days prior to the issuance of the exploration license.
(2) Any person seeking to participate in the exploration program described in the Notice of Invitation must notify the authorized officer and the applicant in writing of such intention within 30 days after posting in the proper BLM office having jurisdiction over the lands covered by the Notice of Invitation. The authorized officer may require modification of the original exploration plan to accommodate the legitimate exploration needs of the person(s) seeking to participate and to avoid the duplication of exploration activities in the same area, or that the person(s) should file a separate application for an exploration license.
(3) An application to conduct exploration which could have been conducted under an existing or recent exploration license issued under this paragraph may be rejected.
(d) The authorized officer may accept or reject an exploration license application. An exploration license will become effective on the date specified by the authorized officer as the date when exploration activities may begin. The exploration plan approved by the BLM will be attached and made a part of each exploration license.
(e) An exploration license will be subject to these terms and conditions:
(1) The license will be for a term of not more than 2 years;
(2) The annual rental rate for an exploration license will be as stated in the license;
(3) The licensee must provide a bond in an amount determined by the authorized officer, but not less than $5,000. The authorized officer may accept bonds furnished under 43 CFR subpart 3104, if adequate. The period of liability under the bond will be terminated only after the authorized officer determines that the terms and conditions of the license, the exploration plan and the regulations have been met;
(4) The licensee must provide to the BLM, upon request, all required information obtained under the license. Any information provided will be treated as confidential and proprietary, if appropriate, at the request of the licensee, and will not be made public until the areas involved have been leased or if the BLM determines that public access to the data will not damage the competitive position of the licensee.
(5) Operations conducted under a license will not unreasonably interfere with or endanger any other lawful activity on the same lands, must not damage any improvements on the lands, and will not result in any substantial disturbance to the surface of the lands and their resources;
(6) The authorized officer will include in each license requirements and stipulations to protect the environment and associated natural resources, and to ensure reclamation of the land disturbed by exploration operations;
(7) When unforeseen conditions are encountered that could result in an action prohibited by paragraph (e)(5) of this section, or when warranted by geologic or other physical conditions, the authorized officer may adjust the terms and conditions of the exploration license and may direct adjustment in the exploration plan;
(8) The licensee may submit a request for modification of the exploration plan to the authorized officer. Any modification will be subject to the regulations in this section and the terms and conditions of the license. The authorized officer may approve the modification after any necessary adjustments to the terms and conditions of the license that are accepted in writing by the licensee; and
(9) The license will be subject to termination or suspension as provided in 43 CFR 2920.9-3.
No lease will be issued under this subpart unless the lands have been included in a land use plan which meets the requirements under 43 CFR part 1600 or an approved Minerals Management Plan of the National Park Service. The decision to hold a lease sale and issue leases will be in conformance with the appropriate plan.
The Secretary will consult with the Governor of the State in which any tract proposed for sale is located. The Secretary will give the Governor 30 days to comment before determining whether to conduct a lease sale. The Secretary will seek the recommendations of the Governor of the State in which the lands proposed for lease are located as to whether or not to lease such lands and what alternative actions are available and what special conditions could be added to the proposed lease(s) to mitigate impacts. The Secretary will accept the recommendations of the Governor if the Secretary determines that they provide for a reasonable balance between the national interest and the State's interest. The Secretary will communicate to the Governor in writing and publish in the
(a) Where the surface is administered by an agency other than the BLM, including lands patented or leased under the provisions of the Recreation and Public Purposes Act, as amended (43 U.S.C. 869
(b) The issuance of combined hydrocarbon leases, oil and gas leases, and tar sand leases within special tar sand areas in units of the National Park System will be allowed only where mineral leasing is permitted by law and where the lands are open to mineral resource disposition in accordance with any applicable Minerals Management Plan. In order to consent to any issuance
Prior to any lease sale for a combined hydrocarbon lease, the authorized officer will request an economic evaluation of the total hydrocarbon resource on each proposed lease tract exclusive of coal, oil shale, or gilsonite.
(a) Oil and gas leases in special tar sand areas will have a primary term of 10 years and will remain in effect so long thereafter as oil or gas is produced in paying quantities.
(b) Tar Sand leases will have a primary term of 10 years and will remain in effect so long thereafter as tar sand is produced in paying quantities.
(a) The royalty rate on all combined hydrocarbon leases or tar sand leases is 16.67 percent of the value of production removed or sold from a lease. The ONRR will be responsible for collecting and administering royalties.
(b) The lessee may request the Secretary to reduce the royalty rate applicable to a tar sand lease prior to commencement of commercial operations in order to promote development and maximum production of the tar sand resource in accordance with procedures established by the BLM for oil shale leases and may request a reduction in the royalty after commencement of commercial operations in accordance with 43 CFR 3103.41.
(c) The annual rental rate for a combined hydrocarbon lease will be as stated in the lease.
(d) The annual rental rate for a tar sand lease will be as stated in the lease.
(e) Except as explained in paragraphs (a) through (c) of this section, all other provisions of 43 CFR 3103.20 and 3103.30 apply to combined hydrocarbon leasing.
Combined hydrocarbon leases or tar sand leases in Special Tar Sand Areas will not exceed 5,760 acres.
A combined hydrocarbon lease will be effective as of the first day of the month following the date the lease is signed on behalf of the United States, except where a prior written request is made, a lease may be made effective on the first of the month in which the lease is signed.
The BLM may, on its own motion, offer lands through competitive bidding. A request or expression(s) of interest in tract(s) for competitive lease offerings must be submitted in writing to the proper BLM office.
(a)
(b)
(2) The winning bid will be the highest bid by a responsible and qualified bidder, equal to the minimum bonus bid amount as specified in § 3103.1 of this chapter or for hydrocarbon leases, the minimum bonus bid amount determined under § 3141.51, whichever is larger.
(3) Payments must be made as provided in 43 CFR 3120.62.
Each bidder must submit with the bid a statement over the bidder's signature with respect to compliance with 43 CFR subpart 3102.
If the high bid is rejected for failure by the successful bidder to execute the lease forms and pay the balance of the bonus bid, or otherwise to comply with the regulations of this subpart, the minimum bonus payment accompanying the bid will be forfeited.
The Department reserves the right to accept the next highest bid if the highest bid is rejected. In no event will an offer be made to the next highest bidder if the difference between that bid and the bid of the rejected successful bidder is greater than the minimum bonus payment forfeited by the rejected successful bidder.
After determining the highest responsible and qualified bidder, the authorized officer will send the lease on a form approved by the Director, and any necessary stipulations, to the successful bidder. The successful bidder must, not later than the 30th calendar day after receipt of the lease, execute the lease, pay the balance of the bid and the first year's rental, and file a bond as required in 43 CFR subpart 3104. Failure to comply with this section will result in rejection of the lease.
This subpart provides definitions and procedures for meeting the production in paying quantities and the diligent development requirements for tar sand in all combined hydrocarbon leases and tar sand leases.
These regulations are issued under the authority of the Mineral Leasing Act of 1920, as amended and supplemented (30 U.S.C. 181
As used in this subpart, the term:
(1) Production, in compliance with an approved plan of operations and by nonconventional methods, of oil and gas which can be marketed; or
(2) Production of oil or gas by conventional methods as the term is currently used in 43 CFR part 3160.
A lessee will have met its diligent development obligation if:
(a) The lessee is conducting activity on the lease in accordance with an approved plan of operations; and
(b) The lessee files with the authorized officer, not later than the end of the eighth lease year, a supplement to the approved plan of operations which must include the estimated recoverable tar sand reserves and a detailed development plan for the next stage of operations;
(c) The lessee has achieved production in paying quantities, as that term is defined in § 3142.5(a), by the end of the primary term; and
(d) The lessee annually produces the minimum amount of tar sand established by the authorized officer under the lease in the minimum production schedule which will be made part of the plan of operations or pays annually advance royalty in lieu of this minimum production.
(a) Upon receipt of the supplement to the plan of operations described in § 3142.10(b), the authorized officer will examine the information furnished by the lessee and determine if the estimate of the recoverable tar sand reserves is adequate and reasonable. In making this determination, the authorized officer may request, and the lessee must furnish, any information that is the basis of the lessee's estimate of the recoverable tar sand reserves. As part of the authorized officer's determination that the estimate of the recoverable tar sand reserves is adequate and reasonable, the authorized officer may consider, but is not limited to, the following: ore grade, strip ratio, vertical and horizontal continuity, extract process recoverability, and proven or unproven status of extraction technology, terrain, environmental mitigation factors, marketability of products and capital operations costs. The authorized officer will then establish as soon as possible, but prior to the beginning of the eleventh year, based upon the estimate of the recoverable tar sand reserves, a minimum annual tar sand production schedule for the lease or unit operations which will start in the eleventh year of the lease. This minimum production level will escalate in equal annual increments to a maximum of 1 percent of the estimated recoverable tar sand reserves in the twentieth year of the lease and remain at 1 percent each year thereafter.
(b) The minimum annual tar sand production schedule for the lease or unit operations will be set at a level for paying quantities. If the operator or lessee cannot establish production in paying quantities, the lease will terminate at the end of the lease's primary term.
(a) Failure to meet the minimum annual tar sand production schedule level in any year will result in the assessment of an advance royalty in lieu of production which will be credited to future production royalty assessments applicable to the lease or unit.
(b) If there is no production during the lease year, and the lessee has reason to believe that there will be no production during the remainder of the lease year, the lessee must submit to the authorized officer a request for suspension of production at least 90 days prior to the end of that lease year and a payment sufficient to cover any advance royalty due and owing as a result of the failure to produce. Upon receipt of the request for suspension of production and the accompanying payment, the authorized officer may approve a suspension of production for that lease year and the lease will not expire during that year for lack of production.
(c) If there is production on the lease or unit during the lease year, but such production fails to meet the minimum production schedule required by the plan of operations for that lease or unit, the lessee must pay an advance royalty within 60 days of the end of the lease year in an amount sufficient to cover the difference between such actual production and the production schedule required by the plan of operations for that lease or unit and the authorized officer may direct a suspension of production for those periods during which no production occurred.
Failure of the lessee to pay advance royalty within the time prescribed by the authorized officer, or failure of the lessee to comply with any other provisions of this subpart following the end of the primary term of the lease, will result in the automatic expiration of the lease as of the first of the month following notice to the lessee of its failure to comply. The lessee will remain subject to the requirement of applicable laws, regulations and lease terms which have not been met at the expiration of the lease.
16 U.S.C. 3150(b) and 668dd; 30 U.S.C. 189 and 359; 42 U.S.C. 6508; 43 U.S.C. 1201, 1732(b), 1733, 1734, 1740.
Parties wishing to conduct oil and gas geophysical exploration outside of the State of Alaska must file a Notice of Intent to Conduct Oil and Gas Exploration Operations, referred to herein as a notice of intent. The notice of intent must include the filing fee required by 43 CFR 3000.120 and must be filed with the authorized officer of the proper BLM office on the form approved by the Director. Within 5 business days of the filing date, the authorized officer will process the notice of intent and notify the operator of practices and procedures to be followed. If the notice of intent cannot be processed within 5 business days of the filing date, the authorized officer will promptly notify the operator as to when processing will be completed, giving the reason for the delay. The operator must, within 5 business days of the filing date, or such other time as may be convenient for the operator, participate in a field inspection if requested by the authorized officer. Signing of the notice of intent by the operator will signify agreement to comply with the terms and conditions contained therein and in this part, and with all practices and procedures specified at any time by the authorized officer.
Upon completion of exploration, the permittee must file with the District
(a) The permittee must submit to the authorized officer all data and information obtained in carrying out the exploration plan.
(b) All information submitted under this section is presumptively confidential business information and is subject to 43 CFR part 2, which sets forth the rules of the Department of the Interior relating to public availability of information contained in Departmental records, as provided at § 3100.40 of this chapter.
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; 43 U.S.C. 1732(b), 1733, 1740; and Sec. 107, Pub. L. 114-74, 129 Stat. 599, unless otherwise noted.
As used in this part, the term:
(1) For an oil well, the date on which liquid hydrocarbons are first sold or shipped from a temporary storage facility, such as a test tank, or the date on which liquid hydrocarbons are first produced into a permanent storage facility, whichever first occurs; and
(2) For a gas well, the date on which gas is first measured through sales metering facilities or the date on which associated liquid hydrocarbons are first sold or shipped from a temporary storage facility, whichever first occurs.
(1) A reduction in the quantity or quality of oil and gas ultimately producible from a reservoir under prudent and proper operations; or
(2) Avoidable surface loss of oil or gas.
(a) The operator must promptly plug and abandon, in accordance with a plan first approved in writing or prescribed by the authorized officer, each newly completed or recompleted well in which oil or gas is not encountered in paying quantities or which, after being completed as a producing well, is demonstrated to the satisfaction of the authorized officer to be no longer capable of producing oil or gas in paying quantities, unless the authorized officer approves the use of the well as a service well for injection to recover additional oil or gas or for subsurface disposal of produced water. In the case of a newly drilled or recompleted well, the approval to abandon may be written or oral with written confirmation.
(b) Completion of a well as plugged and abandoned may also include conditioning the well as a water supply source for lease operations or for use by the surface owner or appropriate Government Agency, when authorized by the authorized officer. All costs over and above the normal plugging and abandonment expense will be paid by the party accepting the water well.
(c) Upon the removal of drilling or production equipment from the well site which is to be permanently abandoned, the surface of the lands disturbed in connection with the conduct of operations must be reclaimed in accordance with a plan first approved or prescribed by the authorized officer.
(d) Operators of temporarily abandoned wells must:
(1) Receive prior approval from the authorized officer for any well temporarily abandoned for more than 30 days. The authorized officer may authorize a delay in the permanent abandonment of a well for a period of up to 1 year. The operator must provide:
(i) Adequate and detailed justification for the temporary abandonment;
(ii) Verification of the mechanical integrity of the well; and
(iii) Isolate the completed interval(s) prior to temporary abandonment.
(2) Receive prior approval from the authorized officer for any additional delays to permanently abandon a well beyond 1 year. The authorized officer may authorize additional delays, none of which may exceed an additional 1-year period. Each request for additional delay must provide adequate and detailed justification for continued temporary abandonment.
(3) Within 4 years of temporary abandonment of a well, complete one of the following actions:
(i) Permanently abandon the well;
(ii) Resume production in paying quantities or commence using the well for injection or disposal;
(iii) Provide the authorized officer with a detailed plan and timeline for future beneficial use of the well. If the authorized officer determines that there is a legitimate future beneficial use for the well, the officer may allow the operator to delay permanent abandonment by 1 additional year. The authorized officer may grant additional delays in 1-year increments, provided that the operator confirms the future beneficial use of the well and is making verifiable progress on returning the well to a beneficial use.
(e) Operators of shut-in wells must:
(1) Notify the authorized officer of the well's shut-in status, if the well will be shut-in for 90 or more consecutive days, and provide the date the well was shut-in within 90 days of well shut-in;
(2) Within 3 years of well shut-in, provide the authorized officer with verification of the mechanical integrity of the well and confirmation that the well remains capable of producing in paying quantities; and
(3) Within 4 years of well shut-in, complete one of the following actions:
(i) Permanently abandon the well;
(ii) Resume production in paying quantities; or
(iii) Provide the authorized officer with a detailed plan and timeline for future beneficial use of the well. If the authorized officer determines that there is a legitimate future beneficial use for the well, the officer may allow the operator to delay permanent abandonment by 1 year. The authorized officer may grant additional delays in 1-year increments, provided that the operator confirms the future beneficial use of the well and is making verifiable progress on returning the well to a beneficial use.
(f) All wells that are temporarily abandoned or shut-in must have mechanical integrity verified as required in paragraphs (d)(1) and (e)(2) of this section and must ensure that mechanical integrity is verified every 3 years thereafter. The operator must submit the results of each verification of mechanical integrity to the authorized officer within 30 days of the mechanical integrity test.
(a) The Director is authorized to issue Onshore Oil and Gas Orders when necessary to implement and supplement the regulations in the part. All orders will be published in final form in the
(b) These Orders are binding on operating rights owners and operators, as appropriate, of Federal and restricted Indian oil and gas leases which have been, or may hereafter be, issued. There are no current Onshore Oil and Gas Orders currently in effect.
Note: Numbers to be assigned sequentially by the Washington Office as proposed Orders are prepared for publication.
(a) Applications for relief from either the operating or the producing requirements of a lease, or both, must be filed with the authorized officer, and must include a full statement of the circumstances that render such relief necessary.
(b) The authorized officer will act on applications submitted for a suspension of operations or production, or both, filed pursuant to 43 CFR 3103.42. The application for suspension must be filed with the authorized officer prior to the expiration date of the lease; must be executed by all operating rights owners or by the operator on behalf of the operating rights owners; and must include a full statement of the circumstances that makes such relief necessary.
(c) The authorized officer will not approve an application for a suspension of a lease where the applicant only cites, as the basis for the suspension, a pending application for permit to drill filed less than 90 calendar days prior to the expiration date of the lease.
(d) If approved, a suspension of operations and production will be effective on the first of the month in which the completed application was
(e) BLM-directed suspensions may exceed 1 year.
(f) Suspensions will lift when the basis provided for the suspension no longer exists, when lifting the suspension is in the public interest, or as otherwise stated by the authorized officer in the approval letter.
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.
Operators are encouraged to consider and incorporate Best Management Practices into their APDs because Best Management Practices can result in reduced processing times and reduced number of Conditions of Approval. An APD package must include the following information that will be reviewed by technical specialists of the appropriate agencies to determine the technical adequacy of the package:
(a) A completed Form 3160-3; and
(b) A well plat. Operators must include in the APD package a well plat and geospatial database prepared by a registered surveyor depicting the proposed location of the well and identifying the points of control and datum used to establish the section lines or metes and bounds. The purpose of this plat is to ensure that operations are within the boundaries of the lease or agreement and that the depiction of these operations is accurately recorded both as to location (latitude and longitude) and in relation to the surrounding lease or agreement boundaries (public land survey corner and boundary ties). The registered surveyor should coordinate with the cadastral survey division of the appropriate BLM state office, particularly where the lands have not been surveyed under the Public Land Survey System.
(1) The plat and geospatial database must describe the location of operations in:
(i) Geographical coordinates generated by an electronic navigation system, and document the datum referenced to generate these coordinates; and
(ii) In feet and direction from the nearest two adjacent section lines, or, if not within the Rectangular Survey System, the nearest two adjacent property lines, generated from the BLM's current Geographic Coordinate Data Base.
(2) The surveyor who prepared the plat must sign it, certifying that the location has been staked on the ground as shown on the plat.
(3) Surveying and staking are necessary casual uses, typically involving negligible surface disturbance. The operator is responsible for making access arrangements with the appropriate Surface Managing Agency (other than the BLM and the FS) or private surface owner. On tribal or allotted lands, the operator must contact the appropriate office of the BIA to make access arrangements with the Indian surface owners. In the event that not all of the Indian owners consent or may be located, but a majority of those who can be located consent, or the owners of interests are so numerous that it would be impracticable to obtain their consent and the BIA finds that the issuance of the APD will cause no substantive injury to the land or any owner thereof, the BIA may approve access. Typical off-road vehicular use, when conducted in conjunction with these activities, is a necessary action for obtaining a permit and may be done without advance approval from the Surface Managing Agency, except for:
(i) Lands administered by the Department of Defense;
(ii) Other lands used for military purposes;
(iii) Indian lands; or
(iv) Where more than negligible surface disturbance is likely to occur or is otherwise prohibited.
(4) No entry on split estate lands for surveying and staking should occur without the operator first making a good faith effort to notify the surface owner. Also, operators are encouraged to notify the BLM or the FS, as appropriate, before entering private lands to stake for Federal mineral estate locations.
(a) For APDs approved after June 22, 2024, an APD approval is valid for 3 years from the date that it is approved, or until lease expiration, whichever occurs first.
(b) Notwithstanding paragraph (a) of this section, if an APD approval expires by reason other than lease expiration, the APD approval shall remain valid if the operator or lessee:
(1) Has drilled the well to the approximate total measured depth in the approved APD, including wells drilled to the approximate total measured depth and not yet completed;
(2) Is drilling the well with a rig capable of drilling the well to the proposed total measured depth in the approved APD; or
(3) Has set the surface casing for the well and has submitted a plan, approved by the BLM prior to expiration of the APD approval, for continuously drilling the well to reach the proposed total measured depth in the approved APD. The plan must include the timeframe for continuously drilling and completing the well and any extenuating circumstances that may delay the continuous drilling and completion of the well.
(c) If, upon expiration of the approved APD, the operator created surface disturbance or began drilling the well under the approved APD, the operator or lessee must either comply with all applicable plugging, abandonment, and reclamation requirements or submit a new APD covering the existing disturbance.
(d) The operator is responsible for reclaiming any surface disturbance that resulted from its actions, even if a well was not drilled. Earthwork for reclamation must be completed within 6 months of APD expiration (weather permitting).
(e) The valid period for an approved APD on a lease suspended under subpart 3103 will be adjusted to account for the suspension. Beginning on the date the suspension is lifted, the valid period of the approved APD will be extended by the time that was remaining on the term of the approved APD on the effective date of the suspension.
30 U.S.C. 189.
The unit agreement submitted by the unit proponent for approval by the authorized officer will provide for payment to the Federal Government of the current royalty percentage for leases offered on onshore oil and gas lease sales on production that would be attributable to unleased Federal lands in a PA of the unit if said lands were leased and committed to the unit agreement. The value of production subject to compensatory royalty payment will be determined pursuant to 30 CFR part 206, provided that no additional royalty will be due on any production subject to compensatory royalty under this provision.
This agreement, entered into as of the __ day of ____ , 19__ by and between the parties subscribing, ratifying, or consenting hereto, and herein referred to as the “parties hereto,”
1. ENABLING ACT AND REGULATIONS. The Mineral Leasing Act of February 25, 1920, as amended, supra, and all valid pertinent regulations including operating and unit plan regulations, heretofore issued thereunder or valid, pertinent, and reasonable regulations hereafter issued thereunder are accepted and made a part of this agreement as to Federal lands, provided such regulations are not inconsistent with the terms of this agreement; and as to non-Federal lands, the oil and gas operating regulations in effect as of the effective date hereof governing drilling and producing operations, not inconsistent with the terms hereof or the laws of the State in which the non-Federal land is located, are hereby accepted and made a part of this agreement.
2. UNIT AREA. The area specified on the map attached hereto marked Exhibit A is hereby designated and recognized as constituting the unit area, containing __ acres, more or less.
Exhibit A shows, in addition to the boundary of the unit area, the boundaries and identity of tracts and leases in said area to the extent known to the Unit Operator. Exhibit B attached hereto is a schedule showing to the extent known to the Unit Operator, the acreage, percentage, and kind of ownership of oil and gas interests in all lands in the unit area. However, nothing herein or in Exhibits A or B shall be construed as a representation by any party hereto as to the ownership of any interest other than such interest or interests as are shown in the Exhibits as owned by such party. Exhibits A and B shall be revised by the Unit Operator whenever changes in the unit area or in the ownership interests in the individual tracts render such revision necessary, or when requested by the Authorized Officer, hereinafter referred to as AO and not less than four copies of the revised Exhibits shall be filed with the proper BLM office.
The above-described unit area shall when practicable be expanded to include therein any additional lands or shall be contracted to exclude lands whenever such expansion or contraction is deemed to be necessary or advisable to conform with the purposes of this agreement. Such expansion or contraction shall be effected in the following manner:
(a) Unit Operator, on its own motion (after preliminary concurrence by the AO), or on demand of the AO, shall prepare a notice of proposed expansion or contraction describing the contemplated changes in the boundaries of the unit area, the reasons therefor, any plans for additional drilling, and the proposed effective date of the expansion or contraction, preferably the first day of a month subsequent to the date of notice.
(b) Said notice shall be delivered to the proper BLM office, and copies thereof mailed to the last known address of each working interest owner, lessee and lessor whose interests are affected, advising that 30 days will be allowed for submission to the Unit Operator of any objections.
(c) Upon expiration of the 30-day period provided in the preceding item (b) hereof, Unit Operator shall file with the AO evidence of mailing of the notice of expansion or contraction and a copy of any objections thereto which have been filed with Unit Operator, together with an application in triplicate, for approval of such expansion or contraction and with appropriate joinders.
(d) After due consideration of all pertinent information, the expansion or contraction shall, upon approval by the AO, become effective as of the date prescribed in the notice thereof or such other appropriate date.
(e) All legal subdivisions of lands (
Any expansion of the unit area pursuant to this section which embraces lands theretofore eliminated pursuant to this subsection 2(e) shall not be considered automatic commitment or recommitment of such lands. If conditions warrant extension of the 10-year period specified in this subsection, a single extension of not to exceed 2 years may be accomplished by consent of the owners of 90 percent of the working interest in the current nonparticipating unitized lands and the owners of 60 percent of the basic royalty interests (exclusive of the basic royalty interests of the United States) in nonparticipating unitized lands with approval of the AO, provided such extension application is submitted not later than 60 days prior to the expiration of said 10-year period.
3. UNITIZED LAND AND UNITIZED SUBSTANCES. All land now or hereafter committed to this agreement shall constitute land referred to herein as “unitized land” or “land subject to this agreement.” All oil and gas in any and all formations of the unitized land are unitized under the terms of this agreement and herein are called “unitized substances.”
4. UNIT OPERATOR. ____ is hereby designated as Unit Operator and by signature hereto as Unit Operator agrees and consents to accept the duties and obligations of Unit Operator for the discovery, development, and production of unitized substances as herein provided. Whenever reference is made herein to the Unit Operator, such reference means the Unit Operator acting in that capacity and not as an owner of interest in unitized substances, and the term “working interest owner” when used herein shall include or refer to Unit Operator as the owner of a working interest only when such an interest is owned by it.
5. RESIGNATION OR REMOVAL OF UNIT OPERATOR. Unit Operator shall have the right to resign at any time prior to the establishment of a participating area or areas hereunder, but such resignation shall not become effective so as to release Unit Operator from the duties and obligations of Unit Operator and terminate Unit Operator's rights as such for a period of 6 months after notice of intention to resign has been served by Unit Operator on all working interest owners and the AO and until all wells then drilled hereunder are placed in a satisfactory condition for suspension or abandonment, whichever is required by the AO, unless a new Unit Operator shall have been selected and approved and shall have taken over and assumed the duties and obligations of Unit Operator prior to the expiration of said period.
Unit Operator shall have the right to resign in like manner and subject to like limitations as above provided at any time after a participating area established hereunder is in existence, but in all instances of resignation or removal, until a successor Unit Operator is selected and approved as hereinafter provided, the working interest owners shall be jointly responsible for performance of the duties of Unit Operator, and shall not later than 30 days before such resignation or removal becomes effective appoint a common agent to represent them in any action to be taken hereunder.
The resignation of Unit Operator shall not release Unit Operator from any liability for any default by it hereunder occurring prior to the effective date of its resignation.
The Unit Operator may, upon default or failure in the performance of its duties or obligations hereunder, be subject to removal by the same percentage vote of the owners of working interests as herein provided for the selection of a new Unit Operator. Such removal shall be effective upon notice thereof to the AO.
The resignation or removal of Unit Operator under this agreement shall not terminate its right, title, or interest as the owner of working interest or other interest in unitized substances, but upon the resignation or removal of Unit Operator becoming effective, such Unit Operator shall deliver possession of all wells, equipment, materials, and appurtenances used in conducting the unit operations to the new duly qualified successor Unit Operator or to the common agent, if no such new Unit Operator is selected to be used for the purpose of conducting unit operations hereunder. Nothing herein shall be construed as authorizing removal of any material, equipment, or appurtenances needed for the preservation of any wells.
6. SUCCESSOR UNIT OPERATOR. Whenever the Unit Operator shall tender his or its resignation as Unit Operator or shall be removed as hereinabove provided, or a change of Unit Operator is negotiated by the working interest owners, the owners of the working interests according to their respective acreage interests in all unitized land shall, pursuant to the Approval of the Parties requirements of the unit operating agreement, select a successor Unit Operator. Such selection shall not become effective until:
(a) a Unit Operator so selected shall accept in writing the duties and responsibilities of Unit Operator, and
(b) the selection shall have been approved by the AO.
If no successor Unit Operator is selected and qualified as herein provided, the AO at his election may declare this unit agreement terminated.
7. ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT. If the Unit Operator is not the sole owner of working interests, costs and expenses incurred by Unit Operator in conducting unit operations hereunder shall be paid and apportioned among and borne by the owners of working interests, all in accordance with the agreement or agreements entered into by and between the Unit Operator and the owners of working interests, whether one or more, separately or collectively. Any agreement or agreements entered into between the working interest owners and the Unit Operator as provided in this section, whether one or more, are herein referred to as the “unit operating agreement.” Such unit operating agreement shall also provide the manner in which the working interest owners shall be entitled to receive their respective proportionate and allocated share of the benefits accruing hereto in conformity with their underlying operating agreements, leases, or other independent contracts, and such other rights and obligations as between Unit Operator and the working interest owners as may be agreed upon by Unit Operator and the working interest owners; however, no such unit operating agreement shall be deemed either to modify any of the terms and conditions of this unit agreement or to relieve the Unit Operator of any right or obligation established under this unit agreement, and in case of any inconsistency or conflict between this agreement and the unit operating agreement, this agreement shall govern. Two copies of any unit operating agreement executed pursuant to this section shall be filed in the proper BLM office prior to approval of this unit agreement.
8. RIGHTS AND OBLIGATIONS OF UNIT OPERATOR. Except as otherwise specifically provided herein, the exclusive right, privilege, and duty of exercising any and all rights of the parties hereto which are necessary or convenient for prospecting for, producing, storing, allocating, and distributing the unitized substances are hereby delegated to and shall be exercised by the Unit Operator as herein provided. Acceptable evidence of title to said rights shall be deposited with Unit Operator and, together with this agreement, shall constitute and define the rights, privileges, and obligations of Unit Operator. Nothing herein, however, shall be construed to transfer title to any land or to any lease or operating agreement, it being understood that under this agreement the Unit Operator, in its capacity as Unit Operator, shall exercise the rights of possession and use vested in the parties hereto only for the purposes herein specified.
9. DRILLING TO DISCOVERY. Within 6 months after the effective date hereof, the Unit Operator shall commence to drill an
The AO may modify any of the drilling requirements of this section by granting reasonable extensions of time when, in his opinion, such action is warranted.
Until the establishment of a participating area, the failure to commence a well subsequent to the drilling of the initial obligation well, or in the case of multiple well requirements, if specified, subsequent to the drilling of those multiple wells, as provided for in this (these) section(s), within the time allowed including any extension of time granted by the AO, shall cause this agreement to terminate automatically. Upon failure to continue drilling diligently any well other than the obligation well(s) commenced hereunder, the AO may, after 15-days' notice to the Unit Operator, declare this unit agreement terminated. Failure to commence drilling the initial obligation well, or the first of multiple obligation wells, on time and to drill it diligently shall result in the unit agreement approval being declared invalid
10. PLAN OF FURTHER DEVELOPMENT AND OPERATION. Within 6 months after completion of a well capable of producing unitized substances in paying quantities, the Unit Operator shall submit for the approval of the AO an acceptable plan of development and operation for the unitized land which, when approved by the authorized officer, shall constitute the further drilling and development obligations of the Unit Operator under this agreement for the period specified therein. Thereafter, from time to time before the expiration of any existing plan, the Unit Operator shall submit for the approval of the AO a plan for an additional specified period for the development and operation of the unitized land. Subsequent plans should normally be filed on a calendar year basis not later than March 1 each year. Any proposed modification or addition to the existing plan should be filed as a supplement to the plan.
Any plan submitted pursuant to this section shall provide for the timely exploration of the unitized area, and for the diligent drilling necessary for determination of the area or areas capable of producing unitized substances in paying quantities in each and every productive formation. This plan shall be as complete and adequate as the AO may determine to be necessary for timely development and proper conservation of the oil and gas resources in the unitized area and shall:
(a) Specify the number and locations of any wells to be drilled and the proposed order and time for such drilling; and
(b) Provide a summary of operations and production for the previous year.
Plans shall be modified or supplemented when necessary to meet changed conditions or to protect the interests of all parties to this agreement. Reasonable diligence shall be exercised in complying with the obligations of the approved plan of development and operation. The AO is authorized to grant a reasonable extension of the 6-month period herein prescribed for submission of an initial plan of development and operation where such action is justified because of unusual conditions or circumstances.
After completion of a well capable of producing unitized substances in paying quantities, no further wells, except such as may be necessary to afford protection against operations not under this agreement and such as may be specifically approved by the AO, shall be drilled except in accordance with an approved plan of development and operation.
11. PARTICIPATION AFTER DISCOVERY. Upon completion of a well capable of producing unitized substances in paying quantities, or as soon thereafter as required by the AO, the Unit Operator shall submit for approval by the AO, a schedule, based on subdivisions of the public-land survey or aliquot parts thereof, of all land then regarded as reasonably proved to be productive of unitized substances in paying quantities. These lands shall constitute a participating area on approval of the AO, effective as of the date of completion of such well or the effective date of this unit agreement, whichever is later. The acreages of both Federal and non-Federal lands shall be based upon appropriate computations from the courses and distances shown on the last approved public-land survey as of the effective date of each initial participating area. The schedule shall also set forth the percentage of unitized substances to be allocated, as provided in Section 12, to each committed tract in the participating area so established, and shall govern the allocation of production commencing with the effective date of the participating area. A different participating area shall be established for each separate pool or deposit of unitized substances or for any group thereof which is produced as a single pool or zone, and any two or more participating areas so established may be combined into one, on approval of the AO. When production from two or more participating areas is subsequently found to be from a common pool or deposit, the participating areas shall be combined into one, effective as of such appropriate date as may be approved or prescribed by the AO. The participating area or areas so established shall be revised from time to time, subject to the approval of the AO, to include additional lands then regarded as reasonably proved to be productive of unitized substances in paying quantities or which are necessary for unit operations, or to exclude lands then regarded as reasonably proved not to be productive of unitized substances in paying quantities, and the schedule of allocation percentages shall be revised accordingly. The effective date of any revision shall be the first of the month in which the knowledge or information is obtained on which such revision is predicated; provided, however, that a more appropriate effective date may be used if justified by Unit Operator and approved by the AO. No land shall be excluded from a participating area on account of depletion of its unitized substances, except that any participating area established under the provisions of this unit agreement shall terminate automatically whenever all
It is the intent of this section that a participating area shall represent the area known or reasonably proved to be productive of unitized substances in paying quantities or which are necessary for unit operations; but, regardless of any revision of the participating area, nothing herein contained shall be construed as requiring any retroactive adjustment for production obtained prior to the effective date of the revision of the participating area.
In the absence of agreement at any time between the Unit Operator and the AO as to the proper definition or redefinition of a participating area, or until a participating area has, or areas have, been established, the portion of all payments affected thereby shall, except royalty due the United States, be impounded in a manner mutually acceptable to the owners of committed working interests. Royalties due the United States shall be determined by the AO and the amount thereof shall be deposited, as directed by the AO, until a participating area is finally approved and then adjusted in accordance with a determination of the sum due as Federal royalty on the basis of such approved participating area.
Whenever it is determined, subject to the approval of the AO, that a well drilled under this agreement is not capable of production of unitized substances in paying quantities and inclusion in a participating area of the land on which it is situated is unwarranted, production from such well shall, for the purposes of settlement among all parties other than working interest owners, be allocated to the land on which the well is located, unless such land is already within the participating area established for the pool or deposit from which such production is obtained. Settlement for working interest benefits from such a nonpaying unit well shall be made as provided in the unit operating agreement.
12. ALLOCATION OF PRODUCTION. All unitized substances produced from a participating area established under this agreement, except any part thereof used in conformity with good operating practices within the unitized area for drilling, operating, and other production or development purposes, or for repressuring or recycling in accordance with a plan of development and operations that has been approved by the AO, or unavoidably lost, shall be deemed to be produced equally on an acreage basis from the several tracts of unitized land and unleased Federal land, if any, included in the participating area established for such production. Each such tract shall have allocated to it such percentage of said production as the number of acres of such tract included in said participating area bears to the total acres of unitized land and unleased Federal land, if any, included in said participating area. There shall be allocated to the working interest owner(s) of each tract of unitized land in said participating area, in addition, such percentage of the production attributable to the unleased Federal land within the participating area as the number of acres of such unitized tract included in said participating area bears to the total acres of unitized land in said participating area, for the payment of the compensatory royalty specified in section 17 of this agreement. Allocation of production hereunder for purposes other than for settlement of the royalty, overriding royalty, or payment out of production obligations of the respective working interest owners, including compensatory royalty obligations under section 17, shall be prescribed as set forth in the unit operating agreement or as otherwise mutually agreed by the affected parties. It is hereby agreed that production of unitized substances from a participating area shall be allocated as provided herein, regardless of whether any wells are drilled on any particular part or tract of the participating area. If any gas produced from one participating area is used for repressuring or recycling purposes in another participating area, the first gas withdrawn from the latter participating area for sale during the life of this agreement shall be considered to be the gas so transferred, until an amount equal to that transferred shall be so produced for sale and such gas shall be allocated to the participating area from which initially produced as such area was defined at the time that such transferred gas was finally produced and sold.
13. DEVELOPMENT OR OPERATION OF NONPARTICIPATING LAND OR FORMATIONS. Any operator may with the approval of the AO, at such party's sole risk, costs, and expense, drill a well on the unitized land to test any formation provided the well is outside any participating area established for that formation, unless within 90 days of receipt of notice from said party of his intention to drill the well, the Unit Operator elects and commences to drill the well in a like manner as other wells are drilled by the Unit Operator under this agreement.
If any well drilled under this section by a non-unit operator results in production of unitized substances in paying quantities such that the land upon which it is situated may properly be included in a participating area, such participating area shall be established or enlarged as provided in this agreement and the well shall thereafter be operated by the Unit Operator in accordance with the terms of this agreement and the unit operating agreement.
If any well drilled under this section by a non-unit operator that obtains production in quantities insufficient to justify the inclusion of the land upon which such well is situated in a participating area, such well may be operated and produced by the party drilling the same, subject to the conservation requirements of this agreement. The royalties in amount or value of production from any such well shall be paid as specified in the underlying lease and agreements affected.
14. ROYALTY SETTLEMENT. The United States and any State and any royalty owner who is entitled to take in kind a share of the substances now unitized hereunder shall be hereafter be entitled to the right to take in kind its share of the unitized substances, and Unit Operator, or the non-unit operator in the case of the operation of a well by a non-unit operator as herein provided for in special cases, shall make deliveries of such royalty share taken in kind in conformity with the applicable contracts, laws, and regulations. Settlement for royalty interest not taken in kind shall be made by an operator responsible therefor under existing contracts, laws and regulations, or by the Unit Operator on or before the last day of each month for unitized substances produced during the preceding calendar month; provided, however, that nothing in this section shall operate to relieve the responsible parties of any land from their respective lease obligations for the payment of any royalties due under their leases.
If gas obtained from lands not subject to this agreement is introduced into any participating area hereunder, for use in repressuring, stimulation of production, or increasing ultimate recovery, in conformity with a plan of development and operation approved by the AO, a like amount of gas, after settlement as herein provided for any gas transferred from any other participating area and with appropriate deduction for loss from any cause, may be withdrawn from the formation into which the gas is introduced, royalty free as to dry gas, but not as to any products which may be extracted therefrom; provided that such withdrawal shall be at such time as may be provided in the approved plan of development and operation or as may otherwise be consented to by the AO as conforming to good petroleum engineering practice; and provided further, that such right of withdrawal shall terminate on the termination of this unit agreement.
Royalty due the United States shall be computed as provided in 30 CFR Group 200 and paid in value or delivered in kind as to all unitized substances on the basis of the amounts thereof allocated to unitized Federal land as provided in Section 12 at the rates specified in the respective Federal leases, or at such other rate or rates as may be authorized by law or regulation and approved by the AO; provided, that for leases on which the royalty rate depends on the daily average production per well, said average production shall be determined in accordance with the operating regulations as though each participating area were a single consolidated lease.
15. RENTAL SETTLEMENT. Rental or minimum royalties due on leases committed hereto shall be paid by the appropriate parties under existing contracts, laws, and regulations, provided that nothing herein contained shall operate to relieve the responsible parties of the land from their respective obligations for the payment of any rental or minimum royalty due under their leases. Rental or minimum royalty for lands of the United States subject to this agreement shall be paid at the rate specified in the respective leases from the United States unless such rental or minimum royalty is waived, suspended, or reduced by law or by approval of the Secretary or his duly authorized representative.
With respect to any lease on non-Federal land containing provisions which would terminate such lease unless drilling operations are commenced upon the land covered thereby within the time therein specified or rentals are paid for the privilege
16. CONSERVATION. Operations hereunder and production of unitized substances shall be conducted to provide for the most economical and efficient recovery of said substances without waste, as defined by or pursuant to State or Federal law or regulation.
17. DRAINAGE. (a) The Unit Operator shall take such measures as the AO deems appropriate and adequate to prevent drainage of unitized substances from unitized land by wells on land not subject to this agreement, which shall include the drilling of protective wells and which may include the payment of a fair and reasonable compensatory royalty, as determined by the AO.
(b) Whenever a participating area approved under section 11 of this agreement contains unleased Federal lands, the value of __
18. LEASES AND CONTRACTS CONFORMED AND EXTENDED. The terms, conditions, and provisions of all leases, subleases, and other contracts relating to exploration, drilling, development or operation for oil or gas on lands committed to this agreement are hereby expressly modified and amended to the extent necessary to make the same conform to the provisions hereof, but otherwise to remain in full force and effect; and the parties hereto hereby consent that the Secretary shall and by his approval hereof, or by the approval hereof by his duly authorized representative, does hereby establish, alter, change, or revoke the drilling, producing, rental, minimum royalty, and royalty requirements of Federal leases committed hereto and the regulations in respect thereto to conform said requirements to the provisions of this agreement, and, without limiting the generality of the foregoing, all leases, subleases, and contracts are particularly modified in accordance with the following:
(a) The development and operation of lands subject to this agreement under the terms hereof shall be deemed full performance of all obligations for development and operation with respect to each and every separately owned tract subject to this agreement, regardless of whether there is any development of any particular tract of this unit area.
(b) Drilling and producing operations performed hereunder upon any tract of unitized lands will be accepted and deemed to be performed upon and for the benefit of each and every tract of unitized land, and no lease shall be deemed to expire by reason of failure to drill or produce wells situated on the land therein embraced.
(c) Suspension of drilling or producing operations on all unitized lands pursuant to direction or consent of the AO shall be deemed to constitute such suspension pursuant to such direction or consent as to each and every tract of unitized land. A suspension of drilling or producing operations limited to specified lands shall be applicable only to such lands.
(d) Each lease, sublease, or contract relating to the exploration, drilling, development, or operation for oil or gas of lands other than those of the United States committed to this agreement which, by its terms might expire prior to the termination of this agreement, is hereby extended beyond any such term so provided therein so that it shall be continued in full force and effect for and during the term of this agreement.
(e) Any Federal lease committed hereto shall continue in force beyond the term so provided therein or by law as to the land committed so long as such lease remains subject hereto, provided that production of unitized substances in paying quantities is established under this unit agreement prior to the expiration date of the term of such lease, or in the event actual drilling operations are commenced on unitized land, in accordance with provisions of this agreement, prior to the end of the primary term of such lease and are being diligently prosecuted at that time, such lease shall be extended for 2 years, and so long thereafter as oil or gas is produced in paying quantities in accordance with the provisions of the Mineral Leasing Act, as amended.
(f) Each sublease or contract relating to the operation and development of unitized substances from lands of the United States committed to this agreement, which by its terms would expire prior to the time at which the underlying lease, as extended by the immediately preceding paragraph, will expire is hereby extended beyond any such term so provided therein so that it shall be continued in full force and effect for and during the term of the underlying lease as such term is herein extended.
(g) The segregation of any Federal lease committed to this agreement is governed by the following provision in the fourth paragraph of sec. 17(m) of the Mineral Leasing Act, as amended by the Act of September 2, 1960 (74 Stat. 781-784) (30 U.S.C. 226(m)):
“Any [Federal] lease heretofore or hereafter committed to any such [unit] plan embracing lands that are in part within and in part outside of the area covered by any such plan shall be segregated into separate leases as to the lands committed and the lands not committed as of the effective date of unitization:
If the public interest requirement is not satisfied, the segregation of a lease and/or extension of a lease pursuant to 43 CFR 3107.32 and 43 CFR 3107.40, respectively, shall not be effective.
19. COVENANTS RUN WITH LAND. The covenants herein shall be construed to be covenants running with the land with respect to the interests of the parties hereto and their successors in interest until this agreement terminates, and any grant, transfer or conveyance of interest in land or leases subject hereto shall be and hereby is conditioned upon the assumption of all privileges and obligations hereunder by the grantee, transferee, or other successor in interest. No assignment or transfer of any working interest, royalty, or other interest subject hereto shall be binding upon Unit Operator until the first day of the calendar month after Unit Operator is furnished with the original, photostatic, or certified copy of the instrument of transfer.
20. EFFECTIVE DATE AND TERM. This agreement shall become effective upon approval by the AO and shall automatically terminate 5 years from said effective date unless:
(a) Upon application by the Unit Operator such date of expiration is extended by the AO, or
(b) It is reasonably determined prior to the expiration of the fixed term or any extension
(c) A valuable discovery of unitized substances in paying quantities has been made or accepted on unitized land during said initial term or any extension thereof, in which event this agreement shall remain in effect for such term and so long thereafter as unitized substances can be produced in quantities sufficient to pay for the cost of producing same from wells on unitized land within any participating area established hereunder. Should production cease and diligent drilling or reworking operations to restore production or new production are not in progress within 60 days and production is not restored or should new production not be obtained in paying quantities on committed lands within this unit area, this agreement will automatically terminate effective the last day of the month in which the last unitized production occurred, or
(d) It is voluntarily terminated as provided in this agreement. Except as noted herein, this agreement may be terminated at any time prior to the discovery of unitized substances which can be produced in paying quantities by not less than 75 per centum, on an acreage basis, of the working interest owners signatory hereto, with the approval of the AO. The Unit Operator shall give notice of any such approval to all parties hereto. If the public interest requirement is not satisfied, the approval of this unit by the AO shall be invalid.
21. RATE OF PROSPECTING, DEVELOPMENT, AND PRODUCTION. The AO is hereby vested with authority to alter or modify from time to time, in his discretion, the quantity and rate of production under this agreement when such quantity and rate are not fixed pursuant to Federal or State law, or do not conform to any Statewide voluntary conservation or allocation program which is established, recognized, and generally adhered to by the majority of operators in such State. The above authority is hereby limited to alteration or modifications which are in the public interest. The public interest to be served and the purpose thereof, must be stated in the order of alteration or modification. Without regard to the foregoing, the AO is also hereby vested with authority to alter or modify from time to time, in his discretion, the rate of prospecting and development and the quantity and rate of production under this agreement when such alteration or modification is in the interest of attaining the conservation objectives stated in this agreement and is not in violation of any applicable Federal or State law.
Powers is the section vested in the AO shall only be exercised after notice to Unit Operator and opportunity for hearing to be held not less than 15 days from notice.
22. APPEARANCES. The Unit Operator shall, after notice to other parties affected, have the right to appear for and on behalf of any and all interests affected hereby before the Department of the Interior and to appeal from orders issued under the regulations of said Department, or to apply for relief from any of said regulations, or in any proceedings relative to operations before the Department, or any other legally constituted authority; provided, however, that any other interested party shall also have the right at its own expense to be heard in any such proceeding.
23. NOTICES. All notices, demands, or statements required hereunder to be given or rendered to the parties hereto shall be in writing and shall be personally delivered to the party or parties, or sent by postpaid registered or certified mail, to the last-known address of the party or parties.
24. NO WAIVER OF CERTAIN RIGHTS. Nothing contained in this agreement shall be construed as a waiver by any party hereto of the right to assert any legal or constitutional right or defense as to the validity or invalidity of any law of the State where the unitized lands are located, or of the United States, or regulations issued thereunder in any way affecting such party, or as a waiver by any such party of any right beyond his or its authority to waive.
25. UNAVOIDABLE DELAY. All obligations under this agreement requiring the Unit Operator to commence or continue drilling, or to operate on, or produce unitized substances from any of the lands covered by this agreement, shall be suspended while the Unit Operator, despite the exercise of due care and diligence, is prevented from complying with such obligations, in whole or in part, by strikes, acts of God, Federal, State, or municipal law or agencies, unavoidable accidents, uncontrollable delays in transportation, inability to obtain necessary materials or equipment in the open market, or other matters beyond the reasonable control of the Unit Operator, whether similar to matters herein enumerated or not.
26. NONDISCRIMINATION. In connection with the performance of work under this agreement, the Unit Operator agrees to comply with all the provisions of section 202 (1) to (7) inclusive, of E.O. 11246 (30 FR 12319), as amended, which are hereby incorporated by reference in this agreement.
27. LOSS OF TITLE. In the event title to any tract of unitized land shall fail and the true owner cannot be induced to join in this unit agreement, such tract shall be automatically regarded as not committed hereto, and there shall be such readjustment of future costs and benefits as may be required on account of the loss of such title. In the event of a dispute as to title to any royalty, working interest, or other interests subject thereto, payment or delivery on account thereof may be withheld without liability for interest until the dispute is finally settled; provided, that, as to Federal lands or leases, no payments of funds due the United States shall be withheld, but such funds shall be deposited as directed by the AO, to be held as unearned money pending final settlement of the title dispute, and then applied as earned or returned in accordance with such final settlement.
Unit Operator as such is relieved from any responsibility for any defect or failure of any title hereunder.
28. NONJOINDER AND SUBSEQUENT JOINDER. If the owner of any substantial interest in a tract within the unit area fails or refuses to subscribe or consent to this agreement, the owner of the working interest in that tract may withdraw the tract from this agreement by written notice delivered to the proper BLM office and the Unit Operator prior to the approval of this agreement by the AO. Any oil or gas interests in lands within the unit area not committed hereto prior to final approval may thereafter be committed hereto by the owner or owners thereof subscribing or consenting to this agreement, and, if the interest is a working interest, by the owner of such interest also subscribing to the unit operating agreement. After operations are commenced hereunder, the right of subsequent joinder, as provided in this section, by a working interest owner is subject to such requirements or approval(s), if any, pertaining to such joinder, as may be provided for in the unit operating agreement. After final approval hereof, joinder by a nonworking interest owner must be consented to in writing by the working interest owner committed hereto and responsible for the payment of any benefits that may accrue hereunder in behalf of such nonworking interest. A nonworking interest may not be committed to this unit agreement unless the corresponding working interest is committed hereto. Joinder to the unit agreement by a working interest owner, at any time, must be accompanied by appropriate joinder to the unit operating agreement, in order for the interest to be regarded as committed to this agreement. Except as may otherwise herein be provided, subsequent joinders to this agreement shall be effective as of the date of the filing with the AO of duly executed counterparts of all or any papers necessary to establish effective commitment of any interest and/or tract to this agreement.
29. COUNTERPARTS. This agreement may be executed in any number of counterparts, no one of which needs to be executed by all parties, or may be ratified or consented to by separate instrument in writing specifically referring hereto and shall be binding upon all those parties who have executed such a counterpart, ratification, or consent hereto with the same force and effect as if all such parties had signed the same document, and regardless of whether or not it is executed by all other parties owning or claiming an interest in the lands within the above-described unit area.
If as a result of any such surrender, the working interest rights as to such lands become vested in any party other than the fee owner of the unitized substances, said party may forfeit such rights and further benefits from operations hereunder as to said land to
If as the result of any such surrender or forfeiture working interest rights become vested in the fee owner of the unitized substances, such owner may:
(a) Accept those working interest rights subject to this agreement and the unit operating agreement; or
(b) Lease the portion of such land as is included in a participating area established hereunder subject to this agreement and the unit operating agreement; or
(c) Provide for the independent operation of any part of such land that is not then included within a participating area established hereunder.
If the fee owner of the unitized substances does not accept the working interest rights subject to this agreement and the unit operating agreement or lease such lands as above provided within 6 months after the surrendered or forfeited, working interest rights become vested in the fee owner; the benefits and obligations of operations accruing to such lands under this agreement and the unit operating agreement shall be shared by the remaining owners of unitized working interests in accordance with their respective working interest ownerships, and such owners of working interests shall compensate the fee owner of unitized substances in such lands by paying sums equal to the rentals, minimum royalties, and royalties applicable to such lands under the lease in effect when the lands were unitized.
An appropriate accounting and settlement shall be made for all benefits accruing to or payments and expenditures made or incurred on behalf of such surrendered or forfeited working interests subsequent to the date of surrender or forfeiture, and payment of any moneys found to be owing by such an accounting shall be made as between the parties within 30 days.
The exercise of any right vested in a working interest owner to reassign such working interest to the party from whom obtained shall be subject to the same conditions as set forth in this section in regard to the exercise of a right to surrender.
1. Executed agreement to be legally complete.
2. Agreement submitted for approval must contain Exhibit A and B in accordance with models shown in Appendix B to part 3180 and Appendix C to part 3180.
3. Consents should be identified (in pencil) by tract numbers as listed in Exhibit B and assembled in that order as far as practical. Unit agreements submitted for approval shall include a list of the overriding royalty interest owners who have executed ratifications of the unit agreement. Subsequent joinders by overriding royalty interest owners shall be submitted in the same manner, except each must include or be accompanied by a statement that the corresponding working interest owner has consented in writing to such joinder. Original ratifications of overriding royalty owners will be kept on file by the Unit Operator or his designated agent.
4. All leases held by option should be noted on Exhibit B with an explanation as to the type of option,
5. All owners of oil and gas interests must be invited to join the unit agreement, and statement to that effect must accompany executed agreement, together with summary of results of such invitations. A written reason for all interest owners who have not joined shall be furnished by the unit operator.
6. In the event fish and wildlife lands are included, add the following as a separate section:
“Wildlife Stipulation. Nothing in this unit agreement shall modify the special Federal lease stipulations applicable to lands under the jurisdiction of the United States Fish and Wildlife Service.”
7. In the event National Forest System lands are included within the unit area, add the following as a separate section:
“Forest Land Stipulation. Notwithstanding any other terms and conditions contained in this agreement, all of the stipulations and conditions of the individual leases between the United States and its lessees or their successors or assigns embracing lands within the unit area included for the protection of lands or functions under the jurisdiction of the Secretary of Agriculture shall remain in full force and effect the same as though this agreement had not been entered into, and no modification thereof is authorized except with the prior consent in writing of the Regional Forester, United States Forest Service, __, ____.”
8. In the event National Forest System lands within the Jackson Hole Area of Wyoming are included within the unit area, additional “special” stipulations may be required to be included in the unit agreement by the U.S. Forest Service, including the Jackson Hole Special Stipulation.
9. In the event reclamation lands are included, add the following as a new separate section:
“Reclamation Lands. Nothing in this agreement shall modify the special, Federal lease stipulations applicable to lands under the jurisdiction of the Bureau of Reclamation.”
10. In the event a powersite is embraced in the proposed unit area, the following section should be added:
“Powersite. Nothing in this agreement shall modify the special, Federal lease stipulations applicable to lands under the jurisdiction of the Federal Energy Regulatory Commission.”
11. In the event special surface stipulations have been attached to any of the Federal oil and gas leases to be included, add the following as a separate section:
“Special surface stipulations. Nothing in this agreement shall modify the special Federal lease stipulations attached to the individual Federal oil leases.”
12. In the event State lands are included in the proposed unit area, add the appropriate State Lands Section as separate section. (See § 3181.4(a)).
13. In the event restricted Indian lands are involved, consult the AO regarding appropriate requirements under § 3181.4(b).
Pursuant to the authority vested in the Secretary of the Interior, under the Act approved February 25, 1920, 41 Stat. 437, as amended, 30 U.S.C. 181,
A. Approve the attached agreement for the development and operation of the __, Unit Area, State of ____. This approval shall be invalid
B. Certify and determine that the unit plan of development and operation contemplated in the attached agreement is necessary and advisable in the public interest for the purpose of more properly conserving the natural resources.
C. Certify and determine that the drilling, producing, rental, minimum royalty, and royalty requirements of all Federal leases committed to said agreement are hereby established altered, changed, or revoked to conform with the terms and conditions of this agreement.
This action by the Principal Deputy Assistant Secretary is taken pursuant to an existing delegation of authority.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments on proposed authorization.
NMFS has received a request from Vineyard Wind LLC (Vineyard Wind) for authorization to take marine mammals incidental to the completion of the construction of a commercial wind energy project offshore Massachusetts in the northern portion of Lease Area OCS-A 0501. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to incidentally take marine mammals during the specified activities; which consists of a subset of activities for which take was authorized previously, but which Vineyard Wind did not complete within the effective dates of the previous IHA. NMFS will consider public comments prior to making any final decision on the issuance of the requested MMPA authorization and agency responses will be summarized in the final notice of our decision. The IHA would be valid for 1 year from date of issuance.
Comments and information must be received no later than May 23, 2024.
Comments should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources (OPR), NMFS and should be submitted via email to
Jessica Taylor, OPR, NMFS, (301) 427-8401.
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the mitigation, monitoring and reporting of the takings are set forth. The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
NMFS' proposal to issue Vineyard Wind the requested IHA constitutes a federal action subject to NEPA (42 U.S.C. 4321
On December 15, 2023, NMFS received a request from Vineyard Wind for an IHA to take marine mammals incidental to Phase 2 construction of the Vineyard Wind Offshore Wind Project off Massachusetts, specifically wind turbine generator (WTG) monopile foundation installation, in the northern portion of Lease Area OCS-A 0501. Vineyard Wind completed installation of 47 WTG monopiles and 1 electrical service platform (ESP) jacket foundation in 2023 under an IHA issued by NMFS on June 25, 2021 (86 FR 33810) with effective dates from May 1, 2023, through April 30, 2024. Due to unexpected delays, Vineyard Wind was not able to complete pile driving activities before the expiration date of the current IHA (April 30, 2024); thus, Vineyard Wind is requesting take of marine mammals incidental to installing the remaining 15 monopiles to complete foundation installation for the Project. In total, the Project will consist of 62 WTG monopiles and 1 offshore substation.
Following NMFS' review of the December 2023 application, Vineyard Wind submitted multiple revised versions of the application, and it was deemed adequate and complete on March 13, 2024. Vineyard Wind's request is for take of 14 species of marine mammals, by Level B harassment and, for 6 of these species, Level A harassment. Neither Vineyard
Vineyard Wind previously conducted high resolution geophysical (HRG) site characterization surveys within the Lease Area and associated export cable corridor in 2016, 2018-2021, and June-December 2023 (ESS Group
Vineyard Wind proposes to construct and operate an 800-megawatt (MW) wind energy facility, the Project, in the Atlantic Ocean in Lease area OCS-A 0501, offshore of Massachusetts. The project would consist of up to 62 offshore wind turbine generators (WTGs), 1 electrical service platform (ESP), an onshore substation, offshore and onshore cabling, and onshore operations and maintenance facilities. The onshore substation and ESP are now complete. Installation of 47 monopile foundations was completed under a current IHA (86 FR 33810, June 25, 2021), effective from May 1, 2023, through April 30, 2024. However, due to unexpected, Vineyard Wind will not be able to complete pile driving activities before the expiration date of the current IHA (April 30, 2024). Take of marine mammals, in the form of behavioral harassment and limited instances of auditory injury, may occur incidental to the installation of the remaining 15 WTG monopile foundations due to in-water noise exposure resulting from impact pile driving. The remaining 15 monopile foundations would occur within a Limited Installation Area (LIA) (64.3 square kilometers (km
The proposed pile driving activities are planned to occur in 2024 after the IHA is issued and, while not planned, may occur in June or July in 2025. Pile driving activities are estimated to require approximately 15 nonconsecutive days (30 nonconsecutive hours of pile driving). Given vessel availability, weather delay, and logistical constraints, these 15 days for installation of the remaining monopile foundations could occur close in time or spread out over months.
Although installation of a single monopile may last for several hours, active pile driving for installation of a single monopile is expected to last for a maximum of 2 hours. Up to 1 monopile may be installed per day, based upon the average pile driving time (up to 2 hours) for the installation of the currently installed 47 monopiles. Monopile foundations would be installed in batches of three to six monopiles at a time as this represents the maximum batch size that the installation vessel can carry to the LIA. After installation of a batch of three to six monopiles, there would be a 4 to 7 day pause in monopile installation to allow time for the installation vessel to return with a new batch of monopiles. No concurrent monopile installation is proposed. Vineyard Wind has proposed, and NMFS would require, that pile driving activities be prohibited from January 1 through May 31 due to the increased presence of North Atlantic right whales (NARWs) in the LIA and the timing of the project (
Vineyard Wind's would construct the Project in within Federal waters off Massachusetts, in the northern portion of the Vineyard Wind Lease Area OCS-A 0501 (figure 1). This area is also referred to as the Wind Development Area (WDA). The 15 remaining monopiles would be installed in a LIA within a portion of the southwest corner of the WDA. The LIA is approximately 70.5 km
Vineyard Wind's specified activities would occur in the Northeast U.S. Continental Shelf Large Marine Ecosystem (NES LME), an area of approximately 260,000 km
Vineyard Wind proposes to install 15 monopile WTG foundations in the LIA (figure 1) to complete the Vineyard Wind Offshore Wind Project (84 FR 18346, April 30, 2019; 86 FR 33810, June 25, 2021). Vineyard Wind assumes all monopile foundations would be installed using an impact hammer. Individual monopile installation would be sequenced according to the numbers in the cross-hatched area in figure 1.
A WTG monopile foundation typically consists of a coated single steel tubular section, with several sections of rolled steel plate welded together. Each 13-MW monopile would have a maximum diameter of 9.6 m (31.5 ft). WTGs would be arranged in a grid-like pattern within the LIA with spacing of
Monopile foundations would be installed by a heavy lift vessel. The installation vessel would upend the monopile with a crane and place it in a gripper frame before lowering the monopile foundation to the seabed (see figure 4 in IHA application). Vineyard Wind would use a Monopile Installation Tool (MPIT) to seat the monopile foundation and protect against pile gripper damage as well as risks to human safety associated with pile run. The MPIT creates buoyancy within the monopile foundation using air pressure to control lowering the monopile through the pile run risk zone (Vineyard Wind, 2023). As the monopile foundation is lowered, air is released from the top of the foundation above the water surface until the pile is stabilized within the seabed. Once the monopile is lowered to the seabed, the crane hook would be released. A hydraulic impact hammer would be placed on top of the monopile and used to drive the monopile into the seabed to the target penetration depth (28-35 m). Monopile foundations would be installed using a maximum hammer energy of 4,000 kilojoules (kJ) (table 1). Pile driving would begin with a 20-minute soft-start at reduced hammer energy (see Proposed Mitigation). The hammer energy would gradually be increased based upon resistance experienced from sediments. Prior to pile driving, the MPIT process may last from 6 to 15 hours and is dependent upon local soil conditions at each monopile foundation (Vineyard Wind, 2023). Vineyard Wind anticipates that one monopile would be installed per day at a rate of approximately 2 hours of active pile driving time per monopile (table 1). Rock scour protection would be applied after foundation installation. The scour protection would be 1-2 m high (3-6 ft), with stone or rock sizes of approximately 10-30 centimeters (4-12 inches).
While post-piling activities could be ongoing at one foundation position as pile driving is occurring at another position, no concurrent/simultaneous pile driving of foundations would occur (see
After monopile installation, transition pieces, containing work platforms and other ancillary structures, and WTGs, consisting of a tower and the energy-generating components of the turbine, would be installed. Transition pieces and WTGs would be installed on top of monopile foundations using jack-up vessels. However, installation of transition pieces and WTGS on monopile foundations is not expected to result in take of marine mammals and, therefore, are not discussed further.
Vineyard Wind has developed a sequencing plan for installation of monopiles throughout the LIA, as shown in figure 1. The sequencing plan will allow for several of the monopiles located in the northeast corner of the LIA and highest density area of NARWs, to be installed first.
Vineyard Wind anticipates that it is possible for the 15 WTGs to become operational within the effective period of the IHA. Nine of the 47 WTGs previously installed in 2023 are currently operational.
Vineyard Wind would use various types of vessels over the course of the 1-year proposed IHA for foundation installation and transporting monopile batches between ports and the LIA (table 2). Construction-related vessel activity is anticipated to include approximately 20 vessels operating throughout the specified geographic area on any given work day. Many of these vessels would remain in the LIA for days or weeks at a time, making infrequent trips to port for bunkering and provisioning, as needed. Table 2 shows the type and number of vessels Vineyard Wind would use for various construction activities as well as the associated ports. Vineyard Wind would utilize ports in New London, Connecticut and New Bedford, Massachusetts (table 2) to support offshore construction, crew transfer and logistics, and other operational activities. In addition, monopile foundations would come from a Canadian port in Halifax. Monopile foundations would be transported on an installation vessel to the LIA from Canada, and would be installed in batches of three to six monopiles at a time. Upon completion of installation of a batch of monopiles, the installation vessel would return to Canada to load an additional batch of monopiles (Vineyard Wind, 2023). For the proposed activities, it is expected that the installation vessel would need to make a maximum of three trips between Canada and the LIA.
As part of vessel-based construction activities, dynamic positioning thrusters would be utilized to hold vessels in position or move slowly during monopile installation. Sound produced through use of dynamic positioning thrusters is similar to that produced by transiting vessels, and dynamic positioning thrusters are typically operated either in a similarly predictable manner or used for short durations around stationary activities. Construction-related vessel activity, including the use of dynamic positioning thrusters, is not expected to result in take of marine mammals. While a vessel strike could cause injury or mortality of a marine mammal, Vineyard Wind proposed and NMFS is proposing to require, extensive vessel strike avoidance measures that would avoid vessel strikes from occurring (see Proposed Mitigation and Proposed Monitoring and Reporting). Vineyard Wind did not request, and NMFS
Inter-array cables would be installed to connect WTGs to the ESP. In 2023, Vineyard Wind completed approximately 40 percent of the installation of inter-array cables in the Lease Area. Vineyard Wind anticipates approximately 50 percent of the inter-array cable laying to take place during the effective period of the IHA. Vineyard Wind would perform a pre-lay grapnel run to remove any obstructions, such as fishing gear, from the seafloor. The cable would be laid on the seafloor and buried using a jet trencher with scour added for cable protection near the transition pieces and ESPs. The sounds associated with cable laying are consistent with those of routine vessel operations and not expected to result in take of marine mammals. Inter-array cable laying activities are, therefore, not discussed further.
Vineyard Wind would not conduct high-resolution geophysical (HRG) surveys, UXO/MEC detonation, or fishery research surveys under this IHA.
Thirty-eight marine mammal species, comprising 39 stocks, under NMFS' jurisdiction have geographic ranges within the western North Atlantic OCS (Hayes
Table 3 lists all species or stocks for which take is expected and proposed to be authorized for this activity and summarizes information related to the population or stock, including regulatory status under the MMPA and Endangered Species Act (ESA) and potential biological removal (PBR), where known. PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS' SARs; 16 U.S.C. 1362(20)). While no serious injury or mortality is anticipated or proposed to be authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of the status of the species or stocks and other threats. Four of the marine mammal species for which take is requested are listed as endangered under the ESA, including the NARW, fin whale, sei whale, and sperm whale.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS' stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprise that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS' U.S. 2023 draft SARs and NMFS' U.S. 2022 SARs. For the majority of species potentially present in the specific geographic region, NMFS has designated only a single generic stock (
As indicated above, all 14 species (with 14 managed stocks) in table 3 temporally and spatially co-occur with the activity to the degree that take is expected to occur. The following species are not expected to occur in the LIA due to their known distributions, preferred habitats, and/or known temporal and spatial occurrences: the blue whale (
In addition to what is included in sections 3 and 4 of Vineyard Wind's ITA application (Vineyard Wind, 2023), the SARs (
Under the MMPA, a UME is defined as “a stranding that is unexpected; involves a significant die-off of any marine mammal population; and demands immediate response” (16 U.S.C. 1421h(6)). As of January 2024, three UMEs are occurring along the U.S. Atlantic coast for NARWs, humpback whales, and minke whales. Of these, the most relevant to the LIA are the NARW and humpback whale UMEs given the prevalence of these species in Southern New England (SNE). Below, we include information for a subset of the species that presently have an active or recently closed UME occurring along the Atlantic coast or for which there is information available related to areas of biological significance. More information on UMEs, including all active, closed, or pending, can be found on NMFS' website at
The NARW has been listed as Endangered since the ESA's enactment in 1973. The species was recently uplisted from Endangered to Critically Endangered on the International Union for Conservation of Nature Red List of Threatened Species (Cooke, 2020). The uplisting was due to a decrease in population size (Pace
The NARW population had only a 2.8-percent recovery rate between 1990 and 2011 and an overall abundance decline of 23.5 percent from 2011 to 2019 (Hayes
NMFS' regulations at 50 CFR 224.105 designated Seasonal Management Areas (SMAs) for NARWs in 2008 (73 FR 60173, October 10, 2008). SMAs were developed to reduce the threat of collisions between vessels and NARWs. A portion of the Block Island SMA, which occurs off Block Island, Rhode Island, is near the LIA (approximately 4.3 km (2.7 mi) southwest of the OCS-A 0501 Lease Area at the closest point), but does not overlap spatially with the Lease Area or LIA. This SMA is active from November 1 through April 30 of each year, and may be used by NARWs for migrating and/or feeding. As noted below, NMFS is proposing changes to the NARW speed rule (87 FR 46921, August 1, 2022). NMFS has designated critical habitat for NARWs (81 FR 4838, January 27, 2016), along the U.S. southeast coast for calving as well as in the northeast, just east of the LIA. The LIA both spatially and temporally overlaps a portion of a migratory corridor BIA (LaBrecque
NARWs range from calving grounds in the southeastern United States to feeding grounds in New England waters and into Canadian waters (Hayes
NARWs may occur year-round in SNE, near Martha's Vineyard and Nantucket Shoals as well as throughout the Massachusetts and Rhode Island/Massachusetts Wind Energy Areas (MA and RI/MA WEAs) (Quintan-Rizzo
An 8-year analysis of NARW sightings within SNE showed that the NARW distribution has been shifting (Quintana-Rizzo
While Nantucket Shoals is not designated as critical NARW habitat, its importance as a foraging habitat is well established (Leiter
Observations of NARW transitions in habitat use, variability in seasonal presence in identified core habitats, and utilization of habitat outside of previously focused survey effort prompted the formation of a NMFS' Expert Working Group, which identified current data collection efforts, data gaps, and provided recommendations for future survey and research efforts (Oleson
Since 2017, 125 dead, seriously injured, or sublethally injured or ill NARWs along the United States and Canadian coasts have been documented, necessitating a UME declaration in 2017 and subsequent investigation. The leading category for the cause of death for this ongoing UME is “human interaction,” specifically from entanglements or vessel strikes. As of April 9, 2024, there have been 39 confirmed mortalities, 1 pending mortality (dead, stranded, or floaters), and 34 seriously injured free-swimming whales for a total of 73 whales. Beginning on October 14, 2022, the UME also considers animals with sublethal injury or illness bringing the total number of whales in the UME to 125. Approximately 42 percent of the population is known to be in reduced health (Hamilton
On August 1, 2022, NMFS announced proposed changes to the existing NARW vessel speed regulations to further reduce the likelihood of mortalities and serious injuries to endangered right whales from vessel collisions, which are a leading cause of the species' decline and a primary factor in the ongoing Unusual Mortality Event (87 FR 46921, August 1, 2022). Should a final vessel speed rule be issued and become effective during the effective period of this IHA (or any other MMPA incidental take authorization), the authorization holder would be required to comply with any and all applicable requirements contained within the final rule. Specifically, where measures in any final vessel speed rule are more protective or restrictive than those in this or any other MMPA authorization, authorization holders would be required to comply with the requirements of the rule. Alternatively, where measures in this or any other MMPA authorization are more restrictive or protective than those in any final vessel speed rule, the measures in the MMPA authorization would remain in place. These changes would become effective immediately upon the effective date of any final vessel speed rule and would not require any further action on NMFS's part.
Humpback whales were listed as endangered under the Endangered Species Conservation Act (ESCA) in June 1970. In 1973, the ESA replaced the ESCA, and humpbacks continued to
In New England waters, feeding is the principal activity of humpback whales, and their distribution in this region has been largely correlated to abundance of prey species, although behavior and bathymetry are factors influencing foraging strategy (Payne
Kraus
The LIA does not overlap with any BIAs or other important areas for the humpback whales. A humpback whale feeding BIA extends throughout the Gulf of Maine, Stellwagen Bank, and Great South Channel from May through December, annually (LaBrecque
Since January 2016, elevated humpback whale mortalities along the Atlantic coast from Maine to Florida led to the declaration of a UME in April 2017. As of April 9, 2024, 218 humpback whales have stranded as part of this UME. Partial or full necropsy examinations have been conducted on approximately 90 of the known cases. Of the whales examined, about 40 percent had evidence of human interaction, either ship strike or entanglement. While a portion of the whales have shown evidence of pre-mortem vessel strike, this finding is not consistent across all whales examined and more research is needed. Since January 1, 2023, 43 humpbacks have stranded along the east coast of the United States (7 of these whales have stranded off Massachusetts). These whales may have been following their prey (small fish) which were reportedly close to shore this past winter. These prey also attract fish that are targeted by recreational and commercial fishermen, which increases the number of boats in these areas. More information is available at
Fin whales frequently occur in the waters of the U.S. Atlantic Exclusive Economic Zone (EEZ), principally from Cape Hatteras, North Carolina northward and are distributed in both continental shelf and deep-water habitats (Hayes
New England waters represent a major feeding ground for fin whales, and fin whale feeding BIAs occur offshore of Montauk Point, New York, from March to October (2,933 km
Minke whales are common and widely distributed throughout the U.S. Atlantic EEZ (Cetacean and Turtle Assessment Program (CETAP), 1982; Hayes
There are two minke whale feeding BIAs identified in the southern and southwestern section of the Gulf of Maine, including Georges Bank, the Great South Channel, Cape Cod Bay and Massachusetts Bay, Stellwagen Bank, Cape Anne, and Jeffreys Ledge from March through November, annually (LaBrecque
Although minke whales are sighted in every season in SNE (O'Brien
From 2017 through 2024, elevated minke whale mortalities detected along the Atlantic coast from Maine through South Carolina resulted in the declaration of a UME in 2018. As of April 9, 2024, a total of 166 minke whale mortalities have occurred during this UME. Full or partial necropsy examinations were conducted on more than 60 percent of the whales. Preliminary findings in several of the whales have shown evidence of human interactions or infectious disease, but these findings are not consistent across all of the minke whales examined, so more research is needed. More information is available at
The Nova Scotia stock of sei whales can be found in deeper waters of the continental shelf edge of the eastern United States and northeastward to south of Newfoundland (Mitchell, 1975; Hain
Aerial surveys conducted from 2011-2015 in SNE observed sei whales between March and June, with the greatest number of sightings occurring in May (
Harbor and gray seals have experienced multiple UMEs since 2018. From June through July 2022, elevated numbers of harbor seal and gray seal mortalities occurred across the southern and central coast of Maine. This event was declared a UME. During the event, 181 seals stranded. Based upon necropsy, histopathology, and diagnostic findings, this UME was attributed to spillover events of the highly pathogenic avian influenza from infected birds to harbor and gray seals. While the UME did not occur in the LIA, the populations that were affected by the UME are the same as those potentially affected by the project. This UME has recently been closed. Information on this UME is available online at
The above event was preceded by a different UME, occurring from 2018 to 2020 (closure of the 2018-2020 UME is pending). Beginning in July 2018, elevated numbers of harbor seal and gray seal mortalities occurred across Maine, New Hampshire, and Massachusetts. Additionally, stranded seals have shown clinical signs as far south as Virginia, although not in elevated numbers, therefore the UME investigation encompassed all seal strandings from Maine to Virginia. A total of 3,152 reported strandings (of all species) occurred from July 1, 2018, through March 13, 2020. Full or partial necropsy examinations have been conducted on some of the seals and samples have been collected for testing. Based on tests conducted thus far, the main pathogen found in the seals is phocine distemper virus. NMFS is performing additional testing to identify any other factors that may be involved
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Not all marine mammal species have equal hearing capabilities (
The pinniped functional hearing group was modified from Southall
For more detail concerning these groups and associated frequency ranges, please see NMFS (2018) for a review of available information.
This section provides a discussion of the ways in which components of the specified activity may impact marine mammals and their habitat. The Estimated Take of Marine Mammals section later in this document includes a quantitative analysis of the number of individuals that are expected to be taken by this activity. The Negligible Impact Analysis and Determination section considers the content of this section, the Estimated Take of Marine Mammals section, and the Proposed Mitigation section, to draw conclusions regarding the likely impacts of these activities on the reproductive success or survivorship of individuals and whether those impacts are reasonably expected to, or reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.
Vineyard Wind has requested, and NMFS proposes to authorize, the take of marine mammals incidental to the construction activities associated with the LIA. In their application, Vineyard Wind presented their analyses of potential impacts to marine mammals from the acoustic sources. NMFS carefully reviewed the information provided by Vineyard Wind, as well as independently reviewed applicable scientific research and literature and other information to evaluate the potential effects of the Project's activities on marine mammals.
The proposed activities would result in the construction and placement of 15 permanent foundations to support WTGs. There are a variety of types and degrees of effects to marine mammals, prey species, and habitat that could occur as a result of the Project. Below we provide a brief description of the types of sound sources that would be generated by the project, the general impacts from these types of activities, and an analysis of the anticipated impacts on marine mammals from the project, with consideration of the proposed mitigation measures.
This section contains a brief technical background on sound, on the characteristics of certain sound types, and on metrics used in this proposal inasmuch as the information is relevant to the specified activity and to a discussion of the potential effects of the specified activity on marine mammals found later in this document. For general information on sound and its interaction with the marine environment, please see: Au and Hastings, 2008; Richardson
Sound travels in water more efficiently than almost any other form of energy, making the use of acoustics ideal for the aquatic environment and its inhabitants. In seawater, sound
The basic components of a sound wave are frequency, wavelength, velocity, and amplitude. Frequency is the number of pressure waves that pass by a reference point per unit of time and is measured in hertz (Hz) or cycles per second. Wavelength is the distance between two peaks or corresponding points of a sound wave (length of one cycle). Higher frequency sounds have shorter wavelengths than lower frequency sounds, and typically attenuate (decrease) more rapidly, except in certain cases in shallower water.
The intensity (or amplitude) of sounds is measured in dB, which is a relative unit of measurement that is used to express the ratio of one value of a power or field to another. Decibels are measured on a logarithmic scale, so a small change in dB corresponds to large changes in sound pressure. For example, a 10-dB increase is a ten-fold increase in acoustic power. A 20-dB increase is then a hundred-fold increase in power and a 30-dB increase is a thousand-fold increase in power. However, a ten-fold increase in acoustic power does not mean that the sound is perceived as being 10 times louder. Decibels are a relative unit comparing two pressures; therefore, a reference pressure must always be indicated. For underwater sound, this is 1 microPascal (μPa). For in-air sound, the reference pressure is 20 microPascal (μPa). The amplitude of a sound can be presented in various ways; however, NMFS typically considers three metrics. In this proposed IHA, all decibel levels are referenced to (re) 1μPa.
Sound exposure level (SEL) represents the total energy in a stated frequency band over a stated time interval or event and considers both amplitude and duration of exposure (represented as dB re 1 μPa
Root mean square (rms) is the quadratic mean sound pressure over the duration of an impulse. Root mean square is calculated by squaring all of the sound amplitudes, averaging the squares, and then taking the square root of the average (Urick, 1983). Root mean square accounts for both positive and negative values; squaring the pressures makes all values positive so that they may be accounted for in the summation of pressure levels (Hastings and Popper, 2005). This measurement is often used in the context of discussing behavioral effects, in part because behavioral effects, which often result from auditory cues, may be better expressed through averaged units than by peak pressures.
Peak sound pressure (also referred to as zero-to-peak sound pressure or 0-pk) is the maximum instantaneous sound pressure measurable in the water at a specified distance from the source and is represented in the same units as the rms sound pressure. Along with SEL, this metric is used in evaluating the potential for permanent threshold shift (PTS) and temporary threshold shift (TTS).
Sounds can be either impulsive or non-impulsive. The distinction between these two sound types is important because they have differing potential to cause physical effects, particularly with regard to hearing (
Non-impulsive sounds can be tonal, narrowband, or broadband, brief, or prolonged, and may be either continuous or intermittent (ANSI, 1995; NIOSH, 1998). Some of these non-impulsive sounds can be transient signals of short duration but without the essential properties of pulses (
Even in the absence of sound from the specified activity, the underwater environment is typically loud due to ambient sound, which is defined as environmental background sound levels lacking a single source or point (Richardson
The sum of the various natural and anthropogenic sound sources that comprise ambient sound at any given location and time depends not only on the source levels (as determined by current weather conditions and levels of biological and human activity) but also on the ability of sound to propagate through the environment. In turn, sound propagation is dependent on the spatially and temporally varying properties of the water column and sea floor and is frequency-dependent. As a result of the dependence on a large number of varying factors, ambient sound levels can be expected to vary widely over both coarse and fine spatial and temporal scales. Sound levels at a given frequency and location can vary by 10-20 dB from day to day (Richardson
Anthropogenic sounds cover a broad range of frequencies and sound levels and can have a range of highly variable impacts on marine life from none or minor to potentially severe responses depending on received levels, duration of exposure, behavioral context, and various other factors. Broadly, underwater sound from active acoustic sources, such as those in the Project, can potentially result in one or more of the following: temporary or permanent hearing impairment, non-auditory physical or physiological effects, behavioral disturbance, stress, and masking (Richardson
In general, the degree of effect of an acoustic exposure is intrinsically related to the signal characteristics, received level, distance from the source, and duration of the sound exposure, in addition to the contextual factors of the receiver (
Below, we provide additional detail regarding potential impacts on marine mammals and their habitat from noise in general, starting with hearing impairment, as well as from the specific activities Vineyard Wind plans to conduct, to the degree it is available (noting that there is limited information regarding the impacts of offshore wind construction on marine mammals).
Marine mammals exposed to high-intensity sound or to lower-intensity sound for prolonged periods can experience hearing threshold shift (TS), which NMFS defines as a change, usually an increase, in the threshold of audibility at a specified frequency or portion of an individual's hearing range above a previously established reference level expressed in decibels (NMFS, 2018). Threshold shifts can be permanent, in which case there is an irreversible increase in the threshold of audibility at a specified frequency or portion of an individual's hearing range or temporary, in which there is reversible increase in the threshold of audibility at a specified frequency or portion of an individual's hearing range and the animal's hearing threshold would fully recover over time (Southall
When PTS occurs, there can be physical damage to the sound receptors in the ear (
Relationships between TTS and PTS thresholds have not been studied in marine mammals, and there is no PTS data for cetaceans. However, such relationships are assumed to be similar to those in humans and other terrestrial mammals. Noise exposure can result in either a permanent shift in hearing thresholds from baseline (a 40-dB threshold shift approximates a PTS onset;
TTS is the mildest form of hearing impairment that can occur during
Marine mammal hearing plays a critical role in communication with conspecifics, and interpretation of environmental cues for purposes such as predator avoidance and prey capture. Depending on the degree (elevation of threshold in dB), duration (
Currently, TTS data only exist for four species of cetaceans (bottlenose dolphin, beluga whale (
Recent studies with captive odontocete species (bottlenose dolphin, harbor porpoise, beluga, and false killer whale) have observed increases in hearing threshold levels when individuals received a warning sound prior to exposure to a relatively loud sound (Nachtigall and Supin, 2013, 2015; Nachtigall
Exposure of marine mammals to sound sources can result in, but is not limited to, no response or any of the following observable responses: increased alertness; orientation or attraction to a sound source; vocal modifications; cessation of feeding; cessation of social interaction; alteration of movement or diving behavior; habitat abandonment (temporary or permanent); and in severe cases, panic, flight, stampede, or stranding, potentially resulting in death (Southall
Behavioral responses to sound are highly variable and context-specific. Many different variables can influence an animal's perception of and response to (nature and magnitude) an acoustic event. An animal's prior experience with a sound or sound source affects whether it is less likely (habituation) or more likely (sensitization) to respond to certain sounds in the future (animals can also be innately predisposed to respond to certain sounds in certain ways) (Southall
Overall, the variability of responses to acoustic stimuli depends on the species receiving the sound, the sound source, and the social, behavioral, or environmental contexts of exposure (
With respect to distance influencing disturbance, DeRuiter
Ellison
Behavioral change, such as disturbance manifesting in lost foraging time, in response to anthropogenic activities is often assumed to indicate a biologically significant effect on a population of concern. However, individuals may be able to compensate for some types and degrees of shifts in behavior, preserving their health and thus their vital rates and population dynamics. For example, New
The following subsections provide examples of behavioral responses that give an idea of the variability in behavioral responses that would be expected given the differential sensitivities of marine mammal species to sound, contextual factors, and the wide range of potential acoustic sources to which a marine mammal may be exposed. Behavioral responses that could occur for a given sound exposure should be determined from the literature that is available for each species, or extrapolated from closely related species when no information exists, along with contextual factors.
Avoidance is the displacement of an individual from an area or migration path as a result of the presence of a sound or other stressors and is one of the most obvious manifestations of disturbance in marine mammals (Richardson
Available information on impacts to marine mammals from pile driving associated with offshore wind is limited to information on harbor porpoises and seals, as the vast majority of this research has occurred at European offshore wind projects where large whales and other odontocete species are uncommon. Harbor porpoises and harbor seals are considered to be
Brandt
While harbor porpoises and seals tend to move several kilometers away from wind farm construction activities, the duration of displacement has been documented to be relatively temporary. In two studies at Horns Rev II using impact pile driving, harbor porpoise returned within 1 to 2 days following cessation of pile driving (Tougaard
NMFS notes that the aforementioned European studies involved installing much smaller monopiles than Vineyard Wind proposes to install (Brandt
Some avoidance behavior of other marine mammal species has been documented to be dependent on distance from the source. As described above, DeRuiter
The signal context of the noise exposure has been shown to play an important role in avoidance responses. In a 2007-2008 Bahamas study, playback sounds of a potential predator—a killer whale—resulted in a similar but more pronounced reaction in beaked whales (an acoustically sensitive species), which included longer inter-dive intervals and a sustained straight-line departure of more than 20 km (12.4 mi) from the area (Boyd
One potential consequence of behavioral avoidance is the altered energetic expenditure of marine mammals because energy is required to move and avoid surface vessels or the sound field associated with active sonar (Frid and Dill, 2002). Most animals can avoid that energetic cost by swimming away at slow speeds or speeds that
Forney
A flight response is a dramatic change in normal movement to a directed and rapid movement away from the perceived location of a sound source. The flight response differs from other avoidance responses in the intensity of the response (
Changes in dive behavior in response to noise exposure can vary widely. They may consist of increased or decreased dive times and surface intervals as well as changes in the rates of ascent and descent during a dive (
Nowacek
Disruption of feeding behavior can be difficult to correlate with anthropogenic sound exposure, so it is usually inferred by observed displacement from known foraging areas, the cessation of secondary indicators of foraging (
Impacts on marine mammal foraging rates from noise exposure have been documented, though there is little data regarding the impacts of offshore turbine construction specifically. Several broader examples follow, and it is reasonable to expect that exposure to noise produced during the year that the proposed IHA would be effective could have similar impacts. Visual tracking, passive acoustic monitoring, and movement recording tags were used to
Information on or estimates of the energetic requirements of the individuals and the relationship between prey availability, foraging effort and success, and the life history stage of the animal will help better inform a determination of whether foraging disruptions incur fitness consequences. Foraging strategies may impact foraging efficiency, such as by reducing foraging effort and increasing success in prey detection and capture, in turn promoting fitness and allowing individuals to better compensate for foraging disruptions. Surface feeding blue whales did not show a change in behavior in response to mid-frequency simulated and real sonar sources with received levels between 90 and 179 dB re 1 µPa, but deep feeding and non-feeding whales showed temporary reactions including cessation of feeding, reduced initiation of deep foraging dives, generalized avoidance responses, and changes to dive behavior (DeRuiter
Similarly, while the rates of foraging lunges decrease in humpback whales due to sonar exposure, there was variability in the response across individuals, with one animal ceasing to forage completely and another animal starting to forage during the exposure (Sivle
Marine mammals vocalize for different purposes and across multiple modes, such as whistling, production of echolocation clicks, calling, and singing. Changes in vocalization behavior in response to anthropogenic noise can occur for any of these modes and may result directly from increased vigilance or a startle response, or from a need to compete with an increase in background noise (see Erbe
For example, in the presence of potentially masking signals, humpback whales and killer whales have been observed to increase the length of their songs (Miller
Sound can disrupt behavior through masking, or interfering with, an animal's ability to detect, recognize, or discriminate between acoustic signals of interest (
Masking these acoustic signals can disturb the behavior of individual animals, groups of animals, or entire populations. Masking can lead to behavioral changes including vocal changes (
Therefore, when the coincident (masking) sound is man-made, it may be considered harassment when disrupting behavioral patterns. It is important to distinguish TTS and PTS, which persist after the sound exposure, from masking, which only occurs during the sound exposure. Because masking (without resulting in threshold shift) is not associated with abnormal physiological function, it is not considered a physiological effect, but rather a potential behavioral effect.
The frequency range of the potentially masking sound is important in determining any potential behavioral impacts. For example, low-frequency signals may have less effect on high-frequency echolocation sounds produced by odontocetes but are more likely to affect detection of mysticete communication calls and other potentially important natural sounds such as those produced by surf and some prey species. The masking of communication signals by anthropogenic noise may be considered as a reduction in the communication space of animals (
The echolocation calls of toothed whales are subject to masking by high-frequency sound. Human data indicate low-frequency sound can mask high-frequency sounds (
Impacts on signal detection, measured by masked detection thresholds, are not the only important factors to address when considering the potential effects of masking. As marine mammals use sound to recognize conspecifics, prey, predators, or other biologically significant sources (Branstetter
As marine mammals use sound to recognize predators (Allen
Redundancy and context can also facilitate detection of weak signals. These phenomena may help marine mammals detect weak sounds in the presence of natural or manmade noise. Most masking studies in marine mammals present the test signal and the masking noise from the same direction. The dominant background noise may be highly directional if it comes from a particular anthropogenic source such as a ship or industrial site. Directional hearing may significantly reduce the masking effects of these sounds by improving the effective signal-to-noise ratio.
Masking affects both senders and receivers of acoustic signals and, at higher levels and longer duration, can potentially have long-term chronic effects on marine mammals at the population level as well as at the individual level. Low-frequency ambient sound levels have increased by as much as 20 dB (more than three times
In addition to making it more difficult for animals to perceive and recognize acoustic cues in their environment, anthropogenic sound presents separate challenges for animals that are vocalizing. When they vocalize, animals are aware of environmental conditions that affect the “active space” (or communication space) of their vocalizations, which is the maximum area within which their vocalizations can be detected before it drops to the level of ambient noise (Brenowitz, 2004; Brumm
Many animals will combine several of these strategies to compensate for high levels of background noise. Anthropogenic sounds that reduce the signal-to-noise ratio of animal vocalizations; increase the masked auditory thresholds of animals listening for such vocalizations; or reduce the active space of an animal's vocalizations impair communication between animals. Most animals that vocalize have evolved strategies to compensate for the effects of short-term or temporary increases in background or ambient noise on their songs or calls. Although the fitness consequences of these vocal adjustments are not directly known in all instances, like most other trade-offs animals must make, some of these strategies likely come at a cost (Patricelli and Blickley, 2006; Noren
Marine mammals are also known to make vocal changes in response to anthropogenic noise. In cetaceans, vocalization changes have been reported from exposure to anthropogenic noise sources such as sonar, vessel noise, and seismic surveying (
In some cases, these vocal changes may have fitness consequences, such as an increase in metabolic rates and oxygen consumption, as observed in bottlenose dolphins when increasing their call amplitude (Holt
While these changes all represent possible tactics by the sound-producing animal to reduce the impact of masking, the receiving animal can also reduce masking by using active listening strategies such as orienting to the sound source, moving to a quieter location, or reducing self-noise from hydrodynamic flow by remaining still. The temporal structure of noise (
Masking is more likely to occur in the presence of broadband, relatively continuous noise sources, such as vessels. Several studies have shown decreases in marine mammal communication space and changes in behavior as a result of the presence of vessel noise. For example, right whales were observed to shift the frequency content of their calls upward while reducing the rate of calling in areas of increased anthropogenic noise (Parks
Habituation can occur when an animal's response to a stimulus wanes with repeated exposure, usually in the absence of unpleasant associated events (Wartzok
Both habituation and sensitization require an ongoing learning process. As noted, behavioral state may affect the type of response. For example, animals that are resting may show greater behavioral change in response to disturbing sound levels than animals that are highly motivated to remain in an area for feeding (Richardson
Stone (2015) reported data from at-sea observations during 1,196 airgun surveys from 1994 to 2010. When large arrays of airguns (considered to be 500 cubic inches (in
An animal's perception of a threat may be sufficient to trigger stress responses consisting of some combination of behavioral responses, autonomic nervous system responses, neuroendocrine responses, or immune responses (
Neuroendocrine stress responses often involve the hypothalamus-pituitary-adrenal system. Virtually all neuroendocrine functions that are affected by stress—including immune competence, reproduction, metabolism, and behavior—are regulated by pituitary hormones. Stress-induced changes in the secretion of pituitary hormones have been implicated in failed reproduction, altered metabolism, reduced immune competence, and behavioral disturbance (
The primary distinction between stress (which is adaptive and does not normally place an animal at risk) and “distress” is the cost of the response. During a stress response, an animal uses glycogen stores that can be quickly replenished once the stress is alleviated. In such circumstances, the cost of the stress response would not pose serious fitness consequences. However, when an animal does not have sufficient energy reserves to satisfy the energetic costs of a stress response, energy resources must be diverted from other functions. This state of distress will last until the animal replenishes its energetic reserves sufficiently to restore normal function.
Relationships between these physiological mechanisms, animal behavior, and the costs of stress responses are well studied through controlled experiments and for both laboratory and free-ranging animals (
These and other studies lead to a reasonable expectation that some marine mammals will experience physiological stress responses upon exposure to acoustic stressors and that it is possible that some of these would be classified as “distress.” In addition, any animal experiencing TTS would likely also experience stress responses (NRC, 2003, 2017). Respiration naturally varies with different behaviors, and variations in respiration rate as a function of acoustic exposure can be expected to co-occur with other behavioral reactions, such as a flight response or an alteration in diving. However, respiration rates in and of themselves may be representative of annoyance or an acute stress response. Mean exhalation rates of gray whales at rest and while diving were found to be unaffected by seismic surveys conducted adjacent to the whale feeding grounds (Gailey
The definition for a stranding under the MMPA is that: (A) a marine mammal is dead and is (i) on a beach or shore
Marine mammal strandings have been linked to a variety of causes, such as illness from exposure to infectious agents, biotoxins, or parasites; starvation; unusual oceanographic or weather events; or anthropogenic causes including fishery interaction, ship strike, entrainment, entrapment, sound exposure, or combinations of these stressors sustained concurrently or in series. There have been multiple events worldwide in which marine mammals (primarily beaked whales, or other deep divers) have stranded coincident with relatively nearby activities utilizing loud sound sources (primarily military training events), and five in which mid-frequency active sonar has been more definitively determined to have been a contributing factor.
There are multiple theories regarding the specific mechanisms responsible for marine mammal strandings caused by exposure to loud sounds. One primary theme is the behaviorally mediated responses of deep-diving species (odontocetes), in which their startled response to an acoustic disturbance: (1) affects ascent or descent rates, the time they stay at depth or the surface, or other regular dive patterns that are used to physiologically manage gas formation and absorption within their bodies, such that the formation or growth of gas bubbles damages tissues or causes other injury; or (2) results in their flight to shallow areas, enclosed bays, or other areas considered “out of habitat,” in which they become disoriented and physiologically compromised. For more information on marine mammal stranding events and potential causes, please see the Stranding and Mortality discussion in NMFS' proposed rule for the Navy's Training and Testing Activities in the Hawaii-Southern California Training and Testing Study Area (83 FR 29872, 29928; June 26, 2018).
The construction activities proposed by Vineyard Wind (
The different ways that marine mammals respond to sound are sometimes indicators of the ultimate effect that exposure to a given stimulus will have on the well-being (survival, reproduction,
Attention is the cognitive process of selectively concentrating on one aspect of an animal's environment while ignoring other things (Posner, 1994). Because animals (including humans) have limited cognitive resources, there is a limit to how much sensory information they can process at any time. The phenomenon called “attentional capture” occurs when a stimulus (usually a stimulus that an animal is not concentrating on or attending to) “captures” an animal's attention. This shift in attention can occur consciously or subconsciously (for example, when an animal hears sounds that it associates with the approach of a predator) and the shift in attention can be sudden (Dukas, 2002; van Rij, 2007). Once a stimulus has captured an animal's attention, the animal can respond by ignoring the stimulus, assuming a “watch and wait” posture, or treat the stimulus as a disturbance and respond accordingly, which includes scanning for the source of the stimulus or “vigilance” (Cowlishaw
Vigilance is an adaptive behavior that helps animals determine the presence or absence of predators, assess their distance from conspecifics, or to attend cues from prey (Bednekoff and Lima, 1998; Treves, 2000). Despite those benefits, however, vigilance has a cost of time; when animals focus their attention on specific environmental cues, they are not attending to other activities such as foraging or resting. These effects have generally not been demonstrated for marine mammals, but studies involving fish and terrestrial animals have shown that increased vigilance may substantially reduce feeding rates (Saino, 1994; Beauchamp and Livoreil, 1997; Fritz
The primary mechanism by which increased vigilance and disturbance appear to affect the fitness of individual animals is by disrupting an animal's time budget and, as a result, reducing the time they might spend foraging and resting (which increases an animal's activity rate and energy demand while decreasing their caloric intake/energy). In a study of northern resident killer whales off Vancouver Island, exposure to boat traffic was shown to reduce foraging opportunities and increase traveling time (Holt
On a related note, many animals perform vital functions, such as feeding, resting, traveling, and socializing, on a diel cycle (24-hour cycle). Behavioral reactions to noise exposure (such as disruption of critical life functions, displacement, or avoidance of important habitat) are more likely to be significant for fitness if they last more than one diel cycle or recur on subsequent days (Southall
There are few studies that directly illustrate the impacts of disturbance on marine mammal populations. Lusseau and Bejder (2007) present data from three long-term studies illustrating the connections between disturbance from whale-watching boats and population-level effects in cetaceans. In Shark Bay, Australia, the abundance of bottlenose dolphins was compared within adjacent control and tourism sites over three consecutive 4.5-year periods of increasing tourism levels. Between the second and third time periods, in which tourism doubled, dolphin abundance decreased by 15 percent in the tourism area and did not change significantly in the control area. In Fiordland, New Zealand, two populations (Milford and Doubtful Sounds) of bottlenose dolphins with tourism levels that differed by a factor of seven were observed and significant increases in traveling time and decreases in resting time were documented for both. Consistent short-term avoidance strategies were observed in response to tour boats until a threshold of disturbance was reached (average of 68 minutes between interactions), after which the response switched to a longer-term habitat displacement strategy. For one population, tourism only occurred in a part of the home range. However, tourism occurred throughout the home range of the Doubtful Sound population and once boat traffic increased beyond the 68-minute threshold (resulting in abandonment of their home range/preferred habitat), reproductive success drastically decreased (increased stillbirths) and abundance decreased significantly (from 67 to 56 individuals in a short period).
In order to understand how the effects of activities may or may not impact species and stocks of marine mammals, it is necessary to understand not only what the likely disturbances are going to be but how those disturbances may affect the reproductive success and survivorship of individuals, and then how those impacts to individuals translate to population-level effects. Following on the earlier work of a committee of the U.S. NRC (NRC, 2005), New
Since the PCoD general framework was outlined and the relevant supporting literature compiled, multiple studies developing state-space energetic models for species with extensive long-term monitoring (
Despite its simplicity, there are few complete PCoD models available for any marine mammal species due to a lack of data available to parameterize many of the steps. To date, no PCoD model has been fully parameterized with empirical data (Pirotta
PCoD models may also be approached in different manners. Dunlop
Behavioral change, such as disturbance manifesting in lost foraging time, in response to anthropogenic activities is often assumed to indicate a biologically significant effect on a population of concern. However, as described above, individuals may be able to compensate for some types and degrees of shifts in behavior, preserving their health and thus their vital rates and population dynamics. For example,
By integrating different sources of data (
In their table 1, Keen
Nearly all PCoD studies and experts agree that infrequent exposures of a single day or less are unlikely to impact individual fitness, let alone lead to population level effects (Booth
Vessel collisions with marine mammals, also referred to as vessel strikes or ship strikes, can result in death or serious injury of the animal. Wounds resulting from ship strike may include massive trauma, hemorrhaging, broken bones, or propeller lacerations (Knowlton and Kraus, 2001). An animal at the surface could be struck directly by a vessel, a surfacing animal could hit the bottom of a vessel, or an animal just below the surface could be cut by a vessel's propeller. Superficial strikes may not kill or result in the death of the animal. Lethal interactions are typically associated with large whales, which are occasionally found draped across the bulbous bow of large commercial ships upon arrival in port. Although smaller cetaceans are more maneuverable in relation to large vessels than are large whales, they may also be susceptible to strike. The severity of injuries typically depends on the size and speed of the vessel (Knowlton and Kraus, 2001; Laist
The most vulnerable marine mammals are those that spend extended periods of time at the surface in order to restore oxygen levels within their tissues after deep dives (
An examination of all known ship strikes from all shipping sources (civilian and military) indicates vessel speed is a principal factor in whether a vessel strike occurs and, if so, whether it results in injury, serious injury, or mortality (Knowlton and Kraus, 2001; Laist
Jensen and Silber (2003) detailed 292 records of known or probable ship strikes of all large whale species from 1975 to 2002. Of these, vessel speed at the time of collision was reported for 58 cases. Of these 58 cases, 39 (or 67 percent) resulted in serious injury or death (19 of those resulted in serious injury as determined by blood in the water, propeller gashes or severed tailstock, and fractured skull, jaw, vertebrae, hemorrhaging, massive bruising, or other injuries noted during necropsy and 20 resulted in death). Operating speeds of vessels that struck various species of large whales ranged from 2 to 51 kn. The majority (79 percent) of these strikes occurred at speeds of 13 kn or greater. The average speed that resulted in serious injury or death was 18.6 kn. Pace and Silber (2005) found that the probability of death or serious injury increased rapidly with increasing vessel speed.
In a separate study, Vanderlaan and Taggart (2007) analyzed the probability of lethal mortality of large whales at a given speed, showing that the greatest rate of change in the probability of a lethal injury to a large whale as a function of vessel speed occurs between 8.6 and 15 kn. The chances of a lethal injury decline from approximately 80 percent at 15 kn to approximately 20 percent at 8.6 kn. At speeds below 11.8 kn, the chances of lethal injury drop below 50 percent, while the probability asymptotically increases toward 100 percent above 15 kn.
The Jensen and Silber (2003) report notes that the Large Whale Ship Strike Database represents a minimum number of collisions, because the vast majority probably goes undetected or unreported. In contrast, the Project's personnel are likely to detect any strike that does occur because of the required personnel training and lookouts, along with the inclusion of PSOs (as described in the Proposed Mitigation section), and they are required to report all ship strikes involving marine mammals.
There are no known vessel strikes of marine mammals by any offshore wind energy vessel in the United States. Given the extensive mitigation and monitoring measures (see the Proposed Mitigation and Proposed Monitoring and Reporting section) that would be required of Vineyard Wind, NMFS believes that a vessel strike is not likely to occur.
Vineyard Wind's proposed activities could potentially affect marine mammal habitat through impacts on the prey species of marine mammals (through noise, oceanographic processes, or reef effects), acoustic habitat (sound in the water column), water quality, and biologically important habitat for marine mammals.
Sound may affect marine mammals through impacts on the abundance, behavior, or distribution of prey species (
Fish utilize the soundscape and components of sound in their environment to perform important functions such as foraging, predator avoidance, mating, and spawning (
Fishes, like other vertebrates, have a variety of different sensory systems to glean information from ocean around them (Astrup and Mohl, 1993; Astrup, 1999; Braun and Grande, 2008; Carroll
Hearing capabilities vary considerably between different fish species with data only available for just over 100 species out of the 34,000 marine and freshwater fish species (Eschmeyer and Fong, 2016). In order to better understand acoustic impacts on fishes, fish hearing groups are defined by species that possess a similar continuum of anatomical features, which result in varying degrees of hearing sensitivity (Popper and Hastings, 2003). There are four hearing groups defined for all fish species (modified from Popper
In terms of physiology, multiple scientific studies have documented a lack of mortality or physiological effects to fish from exposure to low- and mid-frequency sonar and other sounds (Halvorsen
In terms of behavioral responses, Juanes
Pile driving noise during construction is of particular concern as the very high sound pressure levels could potentially prevent fish from reaching breeding or spawning sites, finding food, and acoustically locating mates. A playback study in west Scotland revealed that there was a significant movement response to the pile driving stimulus in both species at relatively low received sound pressure levels (sole: 144-156 dB re 1μPa Peak; cod: 140-161 dB re 1 μPa Peak, particle motion between 6.51 × 10
Occasional behavioral reactions to activities that produce underwater noise sources are unlikely to cause long-term consequences for individual fish or populations. The most likely impact to fish from impact and vibratory pile driving activities at the LIAs would be temporary behavioral avoidance of the area. Any behavioral avoidance by fish of the disturbed area would still leave significantly large areas of fish and marine mammal foraging habitat in the nearby vicinity. The duration of fish avoidance of an area after pile driving stops is unknown, but a rapid return to normal recruitment, distribution and behavior is anticipated. In general, impacts to marine mammal prey species are expected to be minor and temporary due to the expected short daily duration of individual pile driving events and the relatively small areas being affected.
Occasional behavioral reactions to activities that produce underwater noise sources are unlikely to cause long-term consequences for individual fish or populations. The most likely impact to fish from impact pile driving activities at the LIA would be temporary behavioral avoidance of the area. Any behavioral avoidance by fish of the disturbed area would still leave significantly large areas of fish and marine mammal foraging habitat in the nearby vicinity. The duration of fish avoidance of an area after pile driving stops is unknown, but a rapid return to normal recruitment, distribution and behavior is anticipated. In general, impacts to marine mammal prey species are expected to be minor and temporary due to the expected short daily duration of individual pile driving events and the relatively small areas being affected.
As described in the Proposed Mitigation section below, Vineyard Wind would utilize a sound attenuation device which would reduce potential for injury to marine mammal prey. Other fish that experience hearing loss as a result of exposure to impulsive sound sources may have a reduced ability to detect relevant sounds such as predators, prey, or social vocalizations. However, PTS has not been known to occur in fishes and any hearing loss in fish may be as temporary as the timeframe required to repair or replace the sensory cells that were damaged or destroyed (Popper
Required soft-starts would allow prey and marine mammals to move away from the source prior to any noise levels that may physically injure prey and the use of the noise attenuation devices would reduce noise levels to the degree any mortality or injury of prey is also minimized. Use of bubble curtains, in addition to reducing impacts to marine mammals, for example, is a key mitigation measure in reducing injury and mortality of ESA-listed salmon on the U.S. west coast. However, we recognize some mortality, physical injury and hearing impairment in marine mammal prey may occur, but we anticipate the amount of prey impacted in this manner is minimal compared to overall availability. Any behavioral responses to pile driving by marine mammal prey are expected to be brief. We expect that other impacts, such as stress or masking, would occur in fish that serve as marine mammals prey (Popper
In addition to fish, prey sources such as marine invertebrates could potentially be impacted by noise stressors as a result of the proposed activities. However, most marine invertebrates' ability to sense sounds is limited. Invertebrates appear to be able to detect sounds (Pumphrey, 1950; Frings and Frings, 1967) and are most sensitive to low-frequency sounds (Packard
Cephalopods have a specialized sensory organ inside the head called a statocyst that may help an animal determine its position in space (orientation) and maintain balance (Budelmann, 1992). Packard
With regard to potential impacts on zooplankton, McCauley
A modeling exercise was conducted as a follow-up to the McCauley
Notably, a recently described study produced results inconsistent with those of McCauley
Airguns and impact pile driving are similar in that they both produce impulsive and intermittent noise and typically have higher source levels than other sources (
The presence of large numbers of turbines has been shown to impact meso- and sub-meso-scale water column circulation, which can affect the density, distribution, and energy content of zooplankton and thereby, their availability as marine mammal prey. Topside, atmospheric wakes result in wind speed reductions influencing upwelling and downwelling in the ocean while underwater structures such as WTG and ESP foundations may cause turbulent current wakes, which impact circulation, stratification, mixing, and sediment resuspension (Daewel
Turbine operations for the previously installed 47 WTG monopile foundations commenced in 2023. Vineyard Wind intends to install 15 WTG monopile foundations, and it is possible that turbines would become operational by the end of the IHA effective period. As described below (see
The presence of monopile foundations and scour protection will result in a conversion of the existing sandy bottom habitat to a hard bottom habitat with areas of vertical structural relief. This could potentially alter the existing habitat by creating an “artificial reef effect” that results in colonization by assemblages of both sessile and mobile animals within the new hard-bottom habitat (Wilhelmsson
Artificial structures can create increased habitat heterogeneity important for species diversity and density (Langhamer, 2012). The monopile WTG foundations will extend through the water column, which may serve to increase settlement of meroplankton or planktonic larvae on the structures in both the pelagic and benthic zones (Boehlert and Gill, 2010). Fish and invertebrate species are also likely to aggregate around the foundations and scour protection which could provide increased prey availability and structural habitat (Boehlert and Gill, 2010; Bonar
Numerous studies have documented significantly higher fish concentrations including species like cod and pouting (
Temporary and localized reduction in water quality will occur as a result of pile driving activities. These activities will disturb bottom sediments and may cause a temporary increase in suspended sediment in the LIA. Currents should quickly dissipate any raised total suspended sediment (TSS) levels, and levels should return to background levels once the project activities in that area cease. No direct impacts on marine mammals are anticipated due to increased TSS and turbidity; however, turbidity within the water column has the potential to reduce the level of oxygen in the water and irritate the gills of prey fish species in the LIA. However, turbidity plumes associated with the project would be temporary and localized, and fish in the LIA would be able to move away from and avoid the areas where plumes may occur. Therefore, it is expected that the impacts on prey fish species from turbidity, and therefore on marine mammals, would be minimal and temporary.
Equipment used by Vineyard Wind within the LIA, including ships and other marine vessels, potentially aircrafts, and other equipment, are also potential sources of by-products (
Acoustic habitat is the soundscape, which encompasses all of the sound present in a particular location and time, as a whole when considered from the perspective of the animals experiencing it. Animals produce sound for, or listen for sounds produced by, conspecifics (communication during feeding, mating, and other social activities), other animals (finding prey or avoiding predators), and the physical environment (finding suitable habitats, navigating). Together, sounds made by animals and the geophysical environment (
Soundscapes are defined and influenced by the total contribution of anthropogenic sound. This may include incidental emissions from sources such as vessel traffic or may be intentionally introduced to the marine environment for data acquisition purposes (as in the use of airgun arrays) or for Navy training and testing purposes (as in the use of sonar and explosives and other acoustic sources). Anthropogenic noise varies widely in its frequency, content, duration, and loudness. These characteristics greatly influence the potential habitat-mediated effects to marine mammals (please also see the previous discussion on Masking), which may range from local effects for brief periods of time to chronic effects over large areas and for long durations. Depending on the extent of effects to habitat, animals may alter their communications signals (thereby potentially expending additional energy) or miss acoustic cues (either conspecific or adventitious). Problems arising from a failure to detect cues are more likely to occur when noise stimuli are chronic and overlap with biologically relevant cues used for communication, orientation, and predator/prey detection (Francis and Barber, 2013). For more detail on these concepts, see: Barber
The term “listening area” refers to the region of ocean over which sources of sound can be detected by an animal at the center of the space. Loss of communication space concerns the area over which a specific animal signal, used to communicate with conspecifics in biologically important contexts (
Although this proposed IHA primarily covers the noise produced from construction activities relevant to the Vineyard Wind Offshore Wind Project offshore wind facility, operational noise was a consideration in NMFS' analysis of the project, as turbines may become operational within the effective dates of the IHA (if issued).
In both newer, quieter, direct-drive systems and older generation, geared turbine designs, recent scientific studies indicate that operational noise from turbines is on the order of 110 to 125 dB re 1 μPa root-mean-square sound pressure level (SPL
Tougaard
More recently, Stöber and Thomsen (2021) used monitoring data and modeling to estimate noise generated by more recently developed, larger (10-MW) direct-drive WTGs. Their findings, similar to Tougaard
Recently, Holme
Finally, operational turbine measurements are available from the Coastal Virginia Offshore Wind (CVOW)
Overall, noise from operating turbines would raise ambient noise levels in the immediate vicinity of the turbines; however, the spatial extent of increased noise levels would be limited. Vineyard Wind did not request, and NMFS is not proposing to authorize, take incidental to operational noise from WTGs. Therefore, the topic is not discussed or analyzed further herein. However, NMFS proposes to require Vineyard Wind to measure operational noise levels.
This section provides an estimate of the number of incidental takes proposed for authorization through the IHA, which will inform NMFS' consideration of “small numbers,” the negligible impact determinations, and impacts on subsistence uses.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which: (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Proposed takes would primarily be by Level B harassment, as noise from pile driving has the potential to result in disruption of marine mammal behavioral patterns. Impacts such as masking and TTS can contribute to the disruption of behavioral patterns and are accounted for within those takes proposed for authorization. There is also some potential for high frequency species (harbor porpoise) and phocids (harbor seal and gray seal) to experience a limited amount of auditory injury (PTS; Level A harassment) primarily because predicted auditory injury zones are large enough and these species are cryptic enough that the potential for PTS cannot be fully discounted. For mysticetes, the Level A harassment ER95
As described previously, no serious injury or mortality is anticipated or proposed to be authorized incidental to the specified activity. Even without mitigation, pile driving activities are unlikely to directly cause marine mammal mortality or serious injury. There is no documented case wherein pile driving resulted in marine mammal mortality or stranding and the scientific literature demonstrates that the most likely behavioral response to pile driving (or similar stimulus source) is avoidance and temporary cessation of behaviors such as foraging or socialization (see
For acoustic impacts, we estimate take by considering: (1) acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and, (4) the number of days of activities. We note that while these factors can contribute to a basic calculation to provide an initial prediction of potential takes, additional information that can qualitatively inform take estimates is also sometimes available (
As described below, there are multiple methods available to estimate the density or number of a given species in the area appropriate to inform the take estimate. For each species and activity, the largest value resulting from the three take estimation methods described below (
Below, we describe NMFS' acoustic thresholds, acoustic and exposure modeling methodologies, marine mammal density calculation methodology, occurrence information, and the modeling and methodologies applied to estimate take for the Project's proposed construction activities. NMFS considered all information and analysis presented by Vineyard Wind, as well as all other applicable information and, based on the best available science, concurs that the estimates of the types and amounts of take for each species and stock are reasonable, and is proposing to authorize the amount requested. NMFS notes the take estimates described herein for foundation installation can be considered conservative because the estimates do not reflect the implementation of clearance and shutdown zones for any marine mammal species or stock.
NMFS recommends the use of acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals are likely to be behaviorally harassed (Level B harassment) or to incur PTS of some degree (Level A harassment). A summary of all NMFS' thresholds can be found at
Though significantly driven by received level, the onset of behavioral disturbance from anthropogenic noise exposure is also informed to varying degrees by other factors related to the source or exposure context (
NMFS generally predicts that marine mammals are likely to be taken in a manner considered to be Level B harassment when exposed to underwater anthropogenic noise above root-mean-squared pressure received levels (RMS SPL) of 120 dB (referenced to 1 micropascal (re 1 μPa)) for continuous (
The proposed Project's construction activities include the use of impulsive sources (
NMFS' Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing (Version 2.0, Technical Guidance; NMFS, 2018) identifies dual criteria to assess auditory injury (Level A harassment) to five different marine mammal groups (based on hearing sensitivity) as a result of exposure to noise from two different types of sources (impulsive or non-impulsive). As dual metrics, NMFS considers onset of PTS (Level A harassment) to have occurred when either one of the two metrics is exceeded (
Below, we describe the assumptions and methodologies used to estimate take, in consideration of acoustic thresholds and appropriate marine mammals density and occurrence information, for WTG monopile installation. Resulting distances to thresholds, densities and occurrence (
During the 2023 Vineyard Wind pile installation activities, Vineyard Wind conducted a sound field verification (SFV) study to compare with model results of the 2018 modeling (Küsel
In addition to the 15 piles being installed under the same noise attenuation scenario as the 5 aforementioned representative piles, they are also anticipated to be installed under similar pile driving specifications and in a similar acoustic environment. Table 6 describes the key piling assumptions and proposed impact pile driving schedule for 2024. These assumptions and schedule are based upon the 2023 piling and hammer energy schedule for installing monopiles. Vineyard Wind expects installation of the 15 remaining piles will necessitate similar operations. Further, as described in detail in section 6.1 of Vineyard Wind's application, the water depth and bottom type are similar throughout the Lease Area and therefore sound propagation in the LIA is not expected to differ from where the SFV data were collected in 2023.
Vineyard Wind compared the acoustic ranges to the Level A harassment and Level B harassment thresholds derived from the 2018 acoustic modeling (Pyć
The maximum range with absorption to the Level B harassment threshold for acoustically monitored piles was 5.72 km (3.6 mi) (pile 13, AU-38; Küsel
In 2018, Vineyard Wind conducted animat modeling to estimate take, by Level A harassment (PTS), incidental to the project. In order to best evaluate the SEL
Since the time that the JASMINE animal movement modeling was conducted for the 2023 IHA (86 FR 33810, June 25, 2021), no new behavior data is available that would have changed how animats move in time and space in that model and, therefore, NMFS has determined that the JASMINE outputs from the 2018 modeling effort are reasonable for application here. However, the post processing calculations used more recent density data (table 8). The mean
To estimate the amount of take by Level B harassment incidental to installing the remaining 15 piles, Vineyard Wind applied a static method (
The ensonified area (102.7 km
In this section we provide information about marine mammal density, presence, and group dynamics that informed the take calculations for the proposed activities. Vineyard Wind applied the 2022 Duke University Marine Geospatial Ecology Laboratory Habitat-based Marine Mammal Density Models for the U.S. Atlantic (Duke Model-Roberts
The Duke habitat-based density models delineate species' density into 5 × 5 km (3.1 × 3.1 mi) grid cells. Vineyard Wind calculated mean monthly densities by using a 10-km buffered polygon around the remaining WTG foundations to be installed and overlaying this buffered polygon on the density maps. The 10-km buffer defines the area around the LIA used to calculate mean species density. Mean monthly density for each species was determined by calculating the unweighted mean of all 5 × 5 km grid cells (partially or fully) within the buffered polygon. The unweighted mean refers to using the entire 5 × 5 km (3.1 × 3.1 mi) grid cell for each cell used in the analysis, and was not weighted by the proportion of the cell overlapping with the density perimeter if the entire grid cell was not entirely within the buffer zone polygon. Vineyard Wind calculated densities for each month, except for species for which annual density data only was available (
The density models (Roberts
These calculations resulted in proportions of 0.895 for gray seals and 0.105 for harbor seals. The proportion for each species was then multiplied by the maximum monthly density for the seal guild (table 8) to determine the species-specific densities used in take calculations.
The density models (Roberts
For some species, PSO survey and construction data for SNE (ESS Group, 2016; Vineyard Wind, 2018, 2019, 2023a-f) and mean group size data compiled from the Atlantic Marine Assessment Program for Protected Species (AMAPPS) (Palka
In cases where the density-based Level B harassment exposure estimate for a species was less than the mean group size-based exposure estimate, the take request was increased to the mean group size (in some cases multiple groups were assumed) and rounded to the nearest integer (table 9). For all cetaceans, with the exception of NARWs, Vineyard Wind used the mean of the spring, summer, and fall AMAPPS group sizes for each species for the RI/MA WEA as shown in tables 2-2, 2-3, and 2-4 in Palka
For seals, mean group size data was also not available for the RI/MA WEA through AMAPPS (Palka
Additional detail regarding the density and occurrence as well as the assumptions and methodology used to estimate take is included below and in section 6.2 of the ITA application. Mean group sizes used in take estimates, where applicable, for all activities are provided in table 9.
Vineyard Wind also looked at PSO survey data (June through October 2023) in the LIA collected during Vineyard Wind I construction activities and calculated a daily sighting rate for species to compare with density-based take estimates and average group size estimates from AMAPPS (table 9). The number of animals of each species sighted from all survey vessels with active PSOs was divided by the sum of all PSO monitoring days (77 days) to calculate the mean number of animals of each species sighted (see table 11 in the ITA application). However, for each species, the PSO data-based exposure estimate was less than the density-based exposure estimate (see table 14 in the ITA application) and, therefore, density-based exposure estimates were not adjusted according to PSO data-based exposure estimates.
Here we present the amount of take requested by Vineyard Wind and proposed to be authorized. To estimate take, Vineyard Wind use the pile installation construction schedule
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity or other means of effecting the least practicable adverse impact upon the affected species or stocks, and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to effect the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, NMFS considers two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned); and
(2) The practicability of the measures for applicant implementation, which may consider such things as cost and impact on operations.
The mitigation strategies described below are consistent with those required and successfully implemented under previous incidental take authorizations issued in association with in-water construction activities (
Generally speaking, the mitigation measures considered and proposed to be required here fall into three categories: (1) temporal (seasonal and daily) work restrictions, (2) real-time measures (shutdown, clearance, and vessel strike avoidance), and (3) noise attenuation/reduction measures. Seasonal work restrictions are designed to avoid or minimize operations when marine mammals are concentrated or engaged in behaviors that make them more susceptible or make impacts more likely, in order to reduce both the number and severity of potential takes, and are effective in reducing both chronic (longer-term) and acute effects. Real-time measures, such as implementation of shutdown and clearance zones, as well as vessel strike avoidance measures, are intended to reduce the probability or severity of harassment by taking steps in real time once a higher-risk scenario is identified (
NMFS requires all Vineyard Wind's employees and contractors conducting activities on the water, including, but not limited to, all vessel captains and crew, to be trained in marine mammal detection and identification, communication protocols, and all required measures to minimize impacts on marine mammals and support Vineyard Wind's compliance with the IHA, if issued. Additionally, all relevant personnel and the marine mammal species monitoring team(s) are required to participate in joint, onboard briefings prior to the beginning of project activities. The briefing must be repeated whenever new relevant personnel (
Prior to the start of in-water construction activities, Vineyard Wind would conduct training for construction and vessel personnel and the marine mammal monitoring team (PSO and PAM operators) to explain responsibilities, communication procedures, marine mammal detection and identification, mitigation, monitoring, and reporting requirements, safety and operational procedures, and authorities of the marine mammal monitoring team(s). A description of the training program must be provided to NMFS at least 60 days prior to the initial training before in-water activities begin. Vineyard Wind would provide confirmation of all required training documented on a training course log sheet and reported to NMFS OPR prior to initiating project activities.
Vineyard Wind would be required to use available sources of information on NARW presence, including daily monitoring of the Right Whale Sightings Advisory System, U.S. Coast Guard very high-frequency (VHF) Channel 16, WhaleAlert, and the PAM system throughout each day to receive notifications of any Slow Zones (
This proposed IHA contains numerous vessel strike avoidance measures that reduce the risk that a vessel and marine mammal could collide. While the likelihood of a vessel strike is generally low, they are one of the most common ways that marine mammals are seriously injured or killed by human activities. Therefore, enhanced mitigation and monitoring measures are required to avoid vessel strikes, to the extent practicable. While many of these measures are proactive, intending to avoid the heavy use of vessels during times when marine mammals of particular concern may be in the area, several are reactive and occur when a project personnel sights a marine mammal. Vineyard Wind would be required to comply with these measures except under circumstances when doing so would create an imminent and serious threat to a person or vessel or to the extent that a vessel is unable to maneuver and, because of the inability to maneuver, the vessel cannot comply.
While underway, Vineyard Wind's personnel would be required to monitor for and maintain a minimum separation distance from marine mammals and operate vessels in a manner that reduces the potential for vessel strike. Regardless of the vessel's size or speed, all vessel operators, crews, and dedicated visual observers (
All of the project-related vessels would be required to comply with existing NMFS vessel speed restrictions for NARWs, and additional speed and approach restrictions measures within this IHA. All vessels must reduce speed to 10 kn or less when traveling in a DMA, Slow Zone or when a NARW is observed or acoustically detected. Reducing vessel speed is one of the most effective, feasible options available
When NMFS vessel speed restrictions are not in effect and a vessel is traveling at greater than 10 kn (18.5 km/hr), in addition to the required dedicated visual observer, Vineyard Wind would be required to monitor the crew transfer vessel transit corridor (the path crew transfer vessels take from port to any work area) in real-time with PAM prior to and during transits.
All project vessels, regardless of size, must maintain the following minimum separation zones: 500 m from NARWs; 100 m from sperm whales and non-NARW baleen whales; and 50 m from all delphinid cetaceans and pinnipeds (an exception is made for those species that approach the vessel such as bow-riding dolphins) (table 12). All reasonable steps must be taken to not violate minimum separation distances. If any of these species are sighted within their respective minimum separation zone, the underway vessel must turn away from the animal and shift its engine to neutral (if safe to do so) and the engines must not be engaged until the animal(s) have been observed to be outside of the vessel's path and beyond the respective minimum separation zone. If a NARW is observed at any distance by any project personnel or acoustically detected, project vessels must reduce speeds to 10 kn and turn away from the animal. Additionally, in the event that any project-related vessel, regardless of size, observes any large whale (other than a NARW) within 500 m of an underway vessel, the vessel is required to immediately reduce speeds to 10 kn or less and turn away from the animal.
Any marine mammal observed by project personnel must be immediately communicated to any on-duty PSOs, PAM operator(s), and all vessel captains. Any NARW or large whale observation or acoustic detection by PSOs or PAM operators must be conveyed to all vessel captains. All vessels would be equipped with an AIS and Vineyard Wind must report all Maritime Mobile Service Identity (MMSI) numbers to NMFS OPR prior to initiating in-water activities. Vineyard Wind has submitted an updated NMFS-approved NARW Vessel Strike Avoidance Plan, which NMFS is reviewing for alignment with the measures proposed herein.
Given the extensive vessel strike avoidance measures coupled with the limited amount of work associated with the project, NMFS has determined that Vineyard Wind's compliance with these proposed measures would reduce the likelihood of vessel strike to discountable levels.
Temporal restrictions in places where marine mammals are concentrated, engaged in biologically important behaviors, and/or present in sensitive life stages are effective measures for reducing the magnitude and severity of human impacts. The temporal restrictions proposed here are built around NARW protection. Based upon the best scientific information available (Roberts
NMFS is proposing to require seasonal work restrictions to minimize risk of noise exposure to the NARWs incidental to pile driving activities to the extent practicable. These seasonal work restrictions are expected to reduce the number of takes of NARWs and further reduce vessel strike risk. These seasonal restrictions also afford protection to other marine mammals that are known to use the LIA with greater frequency during winter months, including other baleen whales. As described previously, no impact pile driving activities may occur January 1 through May 31, and pile driving in December must be avoided to the maximum extent practicable and only if enhanced monitoring is undertaken and NMFS approves.
Vineyard Wind proposed to install no more than one pile per day and only initiate impact pile driving during daylight hours. Vineyard Wind would not be able to initiate pile driving later than 1.5 hours after civil sunset or continue pile driving after or 1 hour before civil sunrise. However, if Vineyard Wind determines that they must initiate pile driving after the aforementioned time frame, they must submit a sufficient nighttime pile driving plan for NMFS review and approval to do so. A sufficient nighttime pile driving plan would demonstrate that proposed detection systems would be capable of detecting marine mammals, particularly large whales, at distances necessary to ensure mitigation measures are effective.
Vineyard Wind would be required to employ noise abatement systems (NAS), also known as noise attenuation systems, during all foundation installation activities to reduce the sound pressure levels that are transmitted through the water in an effort to reduce acoustic ranges to the Level A harassment and Level B harassment acoustic thresholds and minimize, to the extent practicable, any acoustic impacts resulting from these activities. Vineyard Wind proposes and NMFS is proposing to require Vineyard Wind to use a double bubble curtain (DBBC) and Hydro Sound damper (HSD) in addition to an enhanced big bubble curtain (BBC) maintenance schedule. The refined NAS design (DBBC + HSD + enhanced bubble curtain (BC) maintenance schedule) used during the 2023 construction activities would be used on the 15 remaining piles to minimize noise levels. A single bubble curtain, alone or in combination with another NAS device, may not be used for pile driving as received SFV data reveals this approach is unlikely to attenuate sound sufficiently to be
Two categories of NAS exist: primary and secondary. A primary NAS would be used to reduce the level of noise produced by foundation installation activities at the source, typically through adjustments to the equipment (
Noise abatement systems, such as bubble curtains, are used to decrease the sound levels radiated from a source. Bubbles create a local impedance change that acts as a barrier to sound transmission. The size of the bubbles determines their effective frequency band, with larger bubbles needed for lower frequencies. There are a variety of bubble curtain systems, confined or unconfined bubbles, and some with encapsulated bubbles or panels. Attenuation levels also vary by type of system, frequency band, and location. Small bubble curtains have been measured to reduce sound levels, but effective attenuation is highly dependent on depth of water, current, and configuration and operation of the curtain (Austin
For example, Dähne
The HSD system Vineyard Wind proposes to use would be employed, in coordination with the DBBC, as a near-field attenuation device close to the monopiles (Küsel
Should SFV identify that distances to NMFS harassment isopleths are louder than expected, Vineyard Wind would be required to adjust the NAS, or conduct other measures to reduce noise levels, such that distances to thresholds are not exceeded.
NMFS is proposing to require the establishment of both clearance and shutdown zones during impact pile driving. The purpose of “clearance” of a particular zone is to minimize potential instances of auditory injury and more severe behavioral disturbances by delaying the commencement of an activity if marine mammals are near the activity. The purpose of a “shutdown” is to prevent a specific acute impact, such as auditory injury or severe behavioral disturbance of sensitive species, by halting the activity. Due to the increased density of NARWs during the months of November and December, more stringent clearance and shutdown mitigation measures are proposed for these months.
All relevant clearance and shutdown zones during project activities would be monitored by NMFS-approved PSOs and PAM operators. PAM would be conducted at least 24 hours in advance of any pile driving activities. At least one PAM operator would review data from at least 24 hours prior to foundation installation (to increase situational awareness) and actively monitor hydrophones for 60 minutes prior to commencement of these activities. Any sighting or acoustic detection of a NARW would trigger a delay to commencing pile driving and shutdown.
Prior to the start of pile driving activities, Vineyard Wind would be required to ensure designated areas (
From December 1 to 31, a vessel-based survey would be used to confirm the clearance zone (10 km PAM clearance zone (6.2 mi); table 13) is clear of NARWs prior to pile driving. The survey would be supported by a team of nine PSOs coordinating visual monitoring across two PSO support vessels and the pile driving platform. The two PSO support vessels, each with three active on-duty PSOs, would be positioned at the same distance on either side of the pile driving vessel. Each PSO support vessel would transit along a steady course along parallel track lines in opposite directions. Each transect line would be surveyed at a similar speed, not to exceed 10 kn, and would last for approximately 30 minutes to 1 hour. If a NARW is sighted at any distance during the vessel-based survey, pile driving would be delayed until the following day unless an additional vessel-based survey with additional transects are conducted to determine the clearance zone is clear of NARWs. Further details on PSO support vessel monitoring efforts are described in the Vineyard Wind application section 11, table 17.
Once pile driving activity begins, any marine mammal entering their respective shutdown zone would trigger the activity to cease. In the case of pile driving, the shutdown requirement may be waived if is not practicable due to imminent risk of injury or loss of life to an individual or risk of damage to a vessel that creates risk of injury or loss of life for individuals, or if the lead engineer determines there is pile refusal or pile instability.
In situations when shutdown is called for, but Vineyard Wind determines shutdown is not practicable due to aforementioned emergency reasons, reduced hammer energy must be implemented when the lead engineer determines it is practicable. Specifically, pile refusal or pile instability could result in the inability to shut down pile driving immediately. Pile refusal occurs when the pile driving sensors indicate the pile is approaching refusal, and a shut-down would lead to a stuck pile which then poses an imminent risk of injury or loss of life to an individual, or risk of damage to a vessel that creates risk for individuals. Pile instability occurs when the pile is unstable and unable to stay standing if the piling vessel were to “let go.” During these periods of instability, the lead engineer may determine a shut-down is not feasible because the shut-down combined with impending weather conditions may require the piling vessel to “let go” which then poses an imminent risk of injury or loss of life to an individual, or risk of damage to a vessel that creates risk for individuals. Vineyard Wind must document and report to NMFS all cases where the emergency exemption is taken.
After shutdown, impact pile driving may be reinitiated once all clearance zones are clear of marine mammals for the minimum species-specific periods, or, if required to maintain pile stability, impact pile driving may be reinitiated but must be used to maintain stability. From June 1 to October 31, if pile driving has been shut down due to the presence of a NARW, pile driving must not restart until the NARW has not been visually or acoustically detected for 30 minutes. Upon re-starting pile driving, soft-start protocols must be followed if pile driving has ceased for 30 minutes or longer. From November 1 to December 31, if pile driving has been shut down or delayed due to the presence of three or more NARWs, pile driving will be postponed until the next day. Shutdown zones vary by species and are shown in table 13 below.
For any other in-water construction heavy machinery activities (
The use of a soft-start procedure is believed to provide additional protection to marine mammals by warning them or providing them with a chance to leave the area prior to the
Soft start would be required at the beginning of each day's activity and at any time following a cessation of activity of 30 minutes or longer. Prior to soft-start, the operator must receive confirmation from the PSO that the clearance zone is clear of any marine mammals.
Based on our evaluation of the applicant's proposed measures, as well as other measures considered by NMFS, NMFS has preliminarily determined that the proposed mitigation measures provide the means of effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. NMFS' MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for authorization must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present while conducting the activities. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Separately, monitoring is also regularly used to support mitigation implementation, which is referred to as mitigation monitoring, and monitoring plans typically include measures that both support mitigation implementation and increase our understanding of the impacts of the activity on marine mammals.
PSOs are trained professionals who are tasked with visual monitoring for marine mammals during pile driving activities. The primary purpose of a PSO is to carry out the monitoring, collect data, and, when appropriate, call for the implementation of mitigation measures. Visual monitoring by NMFS-approved PSOs would be conducted at a minimum of 60 minutes before, during, and 30 minutes after all proposed impact pile driving activities. In addition to visual observations, NMFS would require Vineyard Wind to conduct PAM using NMFS-approved PAM operators during impact pile driving and vessel transit. PAM would also be conducted for 24 hours in advance and during impact pile driving activities. Visual observations and acoustic detections would be used to support the mitigation measures (
NMFS proposes to require PAM conducted by NMFS-approved PAM operators, following a standardized measurement, processing methods, reporting metrics, and metadata standards for offshore wind. PAM alongside visual data collection is valuable to provide the most accurate record of species presence as possible, and these two monitoring methods are well understood to provide best results when combined together (
The exact configuration and number of PAM systems depends on the size of the zone(s) being monitored, the amount of noise expected in the area, and the characteristics of the signals being monitored. More closely spaced hydrophones would allow for more directionality, and perhaps, range to the vocalizing marine mammals; although, this approach would add additional costs and greater levels of complexity to the project. Larger baleen cetacean species (
NMFS does not formally administer any PSO or PAM operator training program or endorse specific providers but would approve PSOs and PAM
For prospective PSOs and PAM operators not previously approved, or for PSOs and PAM operators whose approval is not current, NMFS must review and approve PSO and PAM operator qualifications. Vineyard Wind would be required to submit PSO and PAM operator resumes for approval at least 60 days prior to PSO and PAM operator use. Resumes must include information related to relevant education, experience, and training, including dates, duration, location, and description of prior PSO and/or PAM experience, and be accompanied by relevant documentation of successful completion of necessary training. Should Vineyard Wind require additional PSOs or PAM operators throughout the project, Vineyard Wind must submit a subsequent list of pre-approved PSOs and PAM operators to NMFS at least 15 days prior to planned use of that PSO or PAM operator. PSOs and PAM operators must have previous experience observing marine mammals and must have the ability to work with all required and relevant software and equipment.
PAM operators are responsible for obtaining NMFS approval. To be approved as a PAM operator, the person must meet the following qualifications: The PAM operator must demonstrate that they have prior experience with real-time acoustic detection systems and/or have completed specialized training for operating PAM systems and detecting and identifying Atlantic Ocean marine mammal sounds, in particular, NARW sounds, humpback whale sounds, and how to deconflict them from similar NARW sounds, and other co-occurring species' sounds in the area including sperm whales. The PAM operator must be able to distinguish between whether a marine mammal or other species sound is detected, possibly detected, or not detected, and similar terminology must be used across companies/projects. Where localization of sounds or deriving bearings and distance are possible, the PAM operators need to have demonstrated experience in using this technique. PAM operators must be independent observers (
NMFS may approve PSOs and PAM operators as conditional or unconditional. An unconditionally approved PSO or PAM operator is one who has completed training within the last 5 years and attained the necessary experience (
Conditionally approved PSOs and PAM operators would be paired with an unconditionally approved PSO (or PAM operator, as appropriate) to ensure that the quality of marine mammal observations and data recording is kept consistent. Additionally, impact pile driving activities would require PSOs and/or PAM operator monitoring to have a lead on duty. The visual PSO field team, in conjunction with the PAM team (
PSOs must have visual acuity in both eyes (with correction of vision being permissible) sufficient enough to discern moving targets on the water's surface with the ability to estimate the target size and distance (binocular use is allowable), ability to conduct field observations and collect data according to the assigned protocols, and the ability to communicate orally, by radio, or in-person, with project personnel to provide real-time information on marine mammals observed in the area. All PSOs must be trained in northwestern Atlantic Ocean marine mammal identification and behaviors and must be able to conduct field observations and collect data according to assigned protocols. Additionally, PSOs must have the ability to work with all required and relevant software and equipment necessary during observations.
Vineyard Wind must work with the selected third-party PSO and PAM operator provider to ensure PSOs and PAM operators have all equipment (including backup equipment) needed to adequately perform necessary tasks. For PSOs, this includes, but is not limited to, accurate determination of distance and bearing to observed marine mammals, and to ensure that PSOs are capable of calibrating equipment as necessary for accurate distance estimates and species identification. PSO equipment, at a minimum, shall include:
• At least one thermal (infrared) imaging device suited for the marine environment;
• Reticle binoculars (
• Global positioning units (GPS) (at least one plus backups);
• Digital cameras with a telephoto lens that is at least 300 mm or equivalent on a full-frame single lens reflex (SLR) (at least one plus backups).
• Equipment necessary for accurate measurement of distances to marine mammal;
• Compasses (at least one plus backups);
• Means of communication among vessel crew and PSOs; and,
• Any other tools deemed necessary to adequately and effectively perform PSO tasks.
At least two PSOs on the pile driving vessel must be equipped with functional Big Eye binoculars (
PSOs and PAM operators would not be permitted to exceed 4 consecutive watch hours on duty at any time, would have a 2-hour (minimum) break between watches, and would not exceed a combined watch schedule of more than 12 hours in a 24-hour period. If the schedule includes PSOs and PAM operators on-duty for 2-hour shifts, a minimum 1-hour break between watches would be allowed.
The PSOs would be responsible for monitoring the waters surrounding the pile driving site to the farthest extent permitted by sighting conditions, including pre-start clearance and shutdown zones, prior to, during, and following foundation installation activities. Monitoring must be done while free from distractions and in a consistent, systematic, and diligent manner. If PSOs cannot visually monitor the minimum visibility zone of 4 km (2.5 mi) prior to foundation pile driving at all times using the required equipment, pile driving operations must not commence or must shutdown if they are currently active. All PSOs must be located at the best vantage point(s) on any platform, as determined by the Lead PSO, in order to obtain 360-degree visual coverage of the entire clearance and shutdown zones, and as much of the Level B harassment zone as possible. PAM operators may be located on a vessel or remotely on-shore, and must assist PSOs in ensuring full coverage of the clearance and shutdown zones. The PAM operator must monitor to and past the clearance zones for large whales.
All on-duty PSOs must remain in real-time contact with the on-duty PAM operator(s). PAM operators must immediately communicate all acoustic detections of marine mammals to PSOs, including any determination regarding species identification, distance, and bearing (where relevant) relative to the pile being driven and the degree of confidence (
At least three PSOs (on the pile driving vessel) and one PAM operator would be on-duty and actively monitoring for marine mammals 60 minutes before, during, and 30 minutes after foundation installation in accordance with a NMFS-approved PAM Plan. PAM would also be conducted for at least 24 hours prior to foundation pile driving activities, and the PAM operator must review all detections from the previous 24-hour period prior to pile driving activities to increase situational awareness. Throughout the year (June through December), at least three PSOs would also be on-duty and actively monitoring from PSO support vessels. There would be at least two PSO support vessels with on-duty PSOs during any pile driving activities from June through December.
In addition to monitoring duties, PSOs and PAM operators are responsible for data collection. The data collected by PSO and PAM operators and subsequent analysis provide the necessary information to inform an estimate of the amount of take that occurred during the project, better understand the impacts of the project on marine mammals, address the effectiveness of monitoring and mitigation measures, and to adaptively manage activities and mitigation in the future. Data reported includes information on marine mammal sightings, activity occurring at time of sighting, monitoring conditions, and if mitigative actions were taken.
For all visual monitoring efforts and marine mammal sightings, NMFS proposes that the following information must be collected and reported to NMFS OPR: the date and time that monitored activity begins or ends, the construction activities occurring during each observation period, the watch status (
On May 19, 2023, Vineyard Wind submitted a Pile Driving Monitoring
Vineyard Wind would be required to conduct thorough SFV measurements during impact pile driving activity associated with the installation of, at minimum, the first monopile foundation and abbreviated SFV measurements during impact installation of the remaining monopiles to demonstrate noise levels are at or below those measured during the 2023 Vineyard Wind construction campaign (Küsel
For any pile driving activities, they would also be required to submit interim and final SFV data results to NMFS and make corrections to the noise attenuation systems in the case that any SFV measurements demonstrate noise levels are above those expected assuming 6 dB of attenuation. These frequent and immediate reports would allow NMFS to better understand the sound fields to which marine mammals are being exposed and require immediate corrective action should they be misaligned with anticipated noise levels within our analysis.
Prior to any construction activities occurring, Vineyard Wind would provide a report to NMFS OPR that demonstrates that all Vineyard Wind personnel, which includes the vessel crews, vessel captains, PSOs, and PAM operators have completed all required training. NMFS would require standardized and frequent reporting from Vineyard Wind during the active period of the IHA. All data collected relating to the Project would be recorded using industry-standard software (
Vineyard Wind must provide the initial results of the SFV measurements to NMFS OPR in an interim report after each foundation installation event as soon as they are available and prior to a subsequent foundation installation, but no later than 48 hours after each completed foundation installation event. The report must include, at minimum: hammer energies/schedule used during pile driving, including the total number of strikes and the maximum hammer energy, peak sound pressure level (SPL
Vineyard Wind must review abbreviated SFV results for each pile within 24 hours of completion of the foundation installation (inclusive of pile driving and any drilling), and, assuming measured levels at 750 m did not exceed the thresholds defined during thorough SFV, does not need to take any additional action. Results of abbreviated SFV must be submitted with the weekly pile driving report.
The final results of SFV measurements from each foundation installation must be submitted as soon as possible, but no later than 90 days following completion of each event's SFV measurements. The final reports must include all details prescribed above for the interim report as well as, at minimum, the following: the peak
If at any time during the project Vineyard Wind becomes aware of any issue(s) that may (to any reasonable subject-matter expert, including the persons performing the measurements and analysis) call into question the validity of any measured Level A harassment or Level B harassment isopleths to a significant degree, which were previously transmitted or communicated to NMFS OPR, Vineyard Wind must inform NMFS OPR within 1 business day of becoming aware of this issue or before the next pile is driven, whichever comes first.
In the event that personnel involved in the Project discover a stranded, entangled, injured, or dead marine mammal, Vineyard Wind must immediately report the observation to NMFS. If in the Greater Atlantic Region (Maine through Virginia), call the NMFS Greater Atlantic Stranding Hotline (866-755-6622), and if in the Southeast Region (North Carolina through Florida) call the NMFS Southeast Stranding Hotline (877-WHALE-HELP, 877-942-5343). Separately, Vineyard Wind must report the incident within 24 hours to NMFS OPR (
If the injury, entanglement, or death was caused by a project activity, Vineyard Wind would be required to immediately cease all activities until NMFS OPR is able to review the circumstances of the incident and determine what, if any, additional measures are appropriate to ensure compliance with the terms of the IHA. NMFS OPR may impose additional measures to minimize the likelihood of further prohibited take and ensure MMPA compliance consistent with the adaptive management provisions. Vineyard Wind could not resume their activities until notified by NMFS OPR.
In the event of a suspected or confirmed vessel strike of a marine mammal by any vessel associated with the Project or other means by which Project activities caused a non-auditory injury or death of a marine mammal, Vineyard Wind must immediately report the incident to NMFS. If in the Greater Atlantic Region (Maine through Virginia), call the NMFS Greater Atlantic Stranding Hotline (866-755-6622), and if in the Southeast Region (North Carolina through Florida) call the NMFS Southeast Stranding Hotline (877-WHALE-HELP, 877-942-5343). Separately, Vineyard Wind must immediately report the incident to NMFS OPR (
Vineyard Wind would be required to immediately cease activities until the NMFS OPR is able to review the circumstances of the incident and determine what, if any, additional measures are appropriate to ensure compliance with the terms of the IHA. NMFS OPR may impose additional measures to minimize the likelihood of further prohibited take and ensure MMPA compliance. Vineyard Wind may not resume their activities until notified by NMFS OPR.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
In the Estimated Take section, we estimated the maximum number of takes by Level A harassment and Level B harassment that could occur from Vineyard Wind's specified activities based on the methods described. The impact that any given take would have is dependent on many case-specific factors that need to be considered in the negligible impact analysis (
We base our analysis and preliminary negligible impact determination on the number of takes that are proposed to be authorized, and extensive qualitative consideration of other contextual factors that influence the degree of impact of the takes on the affected individuals and the number and context of the individuals affected.
To avoid repetition, we provide some general analysis in this Negligible Impact Analysis and Determination section that applies to all the species listed in table 3 given that some of the anticipated effects of Vineyard Wind's construction activities on marine mammals are expected to be relatively similar in nature. Where there are meaningful differences between species or stocks—as is the case of the NARW—they are included as separate subsections below.
Last, we provide a negligible impact determination for each species or stock, providing species or stock-specific information or analysis where appropriate, for example for NARWs given the population status. Organizing our analysis by grouping species or stocks that share common traits or that would respond similarly to effects of Vineyard Wind's activities, and then providing species- or stock-specific information allows us to avoid duplication while ensuring that we have analyzed the effects of the specified activities on each affected species or stock.
As described previously, no serious injury or mortality is anticipated or proposed to be authorized in this IHA. Any Level A harassment proposed to be authorized would be in the form of auditory injury (
In general, NMFS anticipates that impacts on an individual that has been harassed are likely to be more intense when exposed to higher received levels and for a longer duration (though this is in no way a strictly linear relationship for behavioral effects across species, individuals, or circumstances) and less severe impacts result when exposed to lower received levels and for a brief duration. However, there is also growing evidence of the importance of contextual factors such as distance from a source in predicting marine mammal behavioral response to sound—
In the range of behavioral effects that might be expected to be part of a response that qualifies as an instance of Level B harassment (which by nature of the way it is modeled/counted, occurs within 1 day), the less severe end might include exposure to comparatively lower levels of a sound, at a greater distance from the animal, for a few or several minutes. A less severe exposure of this nature could result in a behavioral response such as avoiding an area that an animal would otherwise have chosen to move through or feed in for some amount of time or breaking off one or a few feeding bouts. More severe effects could occur if an animal gets close enough to the source to receive a comparatively higher level, is exposed continuously to one source for a longer time or is exposed intermittently to different sources throughout a day. Such effects might result in an animal having a more severe flight response and leaving a larger area for a day or more or potentially losing feeding opportunities for a day. However, such severe behavioral effects are expected to occur infrequently.
Many species perform vital functions, such as feeding, resting, traveling, and socializing on a diel cycle (24-hour cycle). Behavioral reactions to noise exposure, when taking place in a biologically important context, such as disruption of critical life functions, displacement, or avoidance of important habitat, are more likely to be significant if they last more than 1 day or recur on subsequent days (Southall
It is also important to identify that the estimated number of takes does not necessarily equate to the number of individual animals Vineyard Wind expects to harass (which is lower), but rather to the instances of take (
Impact pile driving for foundation installation is anticipated to have the greatest impacts. For these reasons, impacts are proposed to be minimized through implementation of mitigation measures, including use of a sound attenuation system, soft-starts, the implementation of clearance zones that would facilitate a delay to pile driving commencement, and implementation of shutdown zones. All these measures are designed to avoid or minimize harassment. For example, given sufficient notice through the use of soft-start, marine mammals are expected to move away from a sound source that is disturbing prior to becoming exposed to very loud noise levels. The requirement to couple visual monitoring and PAM before and during all foundation installation will increase the overall capability to detect marine mammals compared to one method alone.
Occasional, milder behavioral reactions are unlikely to cause long-term consequences for individual animals or populations, and even if some smaller subset of the takes is in the form of a longer (several hours or a day) and more severe response, if they are not expected to be repeated over numerous or sequential days, impacts to individual fitness are not anticipated. Also, the effect of disturbance is strongly influenced by whether it overlaps with biologically important habitats when individuals are present—avoiding biologically important habitats will provide opportunities to compensate for reduced or lost foraging (Keen
TTS is one form of Level B harassment that marine mammals may incur through exposure to US Wind's activities and, as described earlier, the proposed takes by Level B harassment may represent takes in the form of direct behavioral disturbance, TTS, or both. As discussed in the Potential Effects of Specified Activities on Marine Mammals and their Habitat section, in general, TTS can last from a few minutes to days, be of varying degree, and occur across different frequency bandwidths, all of which determine the severity of the impacts on the affected individual, which can range from minor to more severe. Impact pile driving is a broadband noise sources but generates sounds in the lower frequency ranges (with most of the energy below 1-2 kHz, but with a small amount energy ranging up to 20 kHz); therefore, in general and all else being equal, we would anticipate the potential for TTS is higher in low-frequency cetaceans (
Generally, both the degree of TTS and the duration of TTS would be greater if the marine mammal is exposed to a higher level of energy (which would occur when the peak dB level is higher or the duration is longer). The threshold for the onset of TTS was discussed previously (see Estimated Take). An animal would have to approach closer to the source or remain in the vicinity of the sound source appreciably longer to increase the received SEL, which would be unlikely considering the proposed mitigation and the nominal speed of the receiving animal relative to the stationary sources such as impact pile driving. The recovery time of TTS is also of importance when considering the potential impacts from TTS. In TTS laboratory studies (as discussed in Potential Effects of Specified Activities on Marine Mammals and Their Habitat), some using exposures of almost an hour in duration or up to 217 SEL, almost all individuals recovered within 1 day (or less, often in minutes), and we note that while the pile driving activities last for hours a day, it is unlikely that most marine mammals would stay in the close vicinity of the source long enough to incur more severe TTS. Overall, given the few instances in which any individual might incur TTS, the low degree of TTS and the short anticipated duration, and the unlikely scenario that any TTS would overlap the entirety of an individual's critical hearing range, it is unlikely that TTS (of the nature expected to result from the project's activities) would result in behavioral changes or other impacts that would impact any individual's (of any hearing sensitivity) reproduction or survival.
NMFS proposes to authorize a very small amount of take by PTS to some marine mammal individuals. The numbers of proposed takes by Level A harassment are relatively low for all marine mammal stocks and species (table 11). We anticipate that PTS may occur from exposure to impact pile driving, which produces sounds that are both impulsive and primarily concentrated in the lower frequency ranges (below 1 kHz) (David, 2006; Krumpel
There are no PTS data on cetaceans and only one instance of PTS being induced in older harbor seals (Reichmuth
PTS would consist of minor degradation of hearing capabilities
The potential impacts of masking on an individual are similar to those discussed for TTS (
As our analysis has indicated, we expect that impact pile driving may occur for several, albeit intermittent, hours per day, for multiple days. Masking is fundamentally more of a concern at lower frequencies (which are pile driving dominant frequencies), because low-frequency signals propagate significantly further than higher frequencies and because they are more likely to overlap both the narrower low-frequency calls of mysticetes, as well as many non-communication cues related to fish and invertebrate prey, and geologic sounds that inform navigation. As mentioned above (see Description of Marine Mammals in the Area of Specified Activities), the LIA does not overlap critical habitat or BIAs for any species, and temporary avoidance of the pile driving area by marine mammals would likely displace animals to areas of sufficient habitat. In summary, the nature of Vineyard Wind's activities, paired with habitat use patterns by marine mammals, does not support the likelihood of take due to masking effects or that masking would have the potential to affect reproductive success or survival, and are we not proposing to authorize such take.
Construction activities may result in fish and invertebrate mortality or injury very close to the source, and Vineyard Wind's activities may cause some fish to leave the area of disturbance. It is anticipated that any mortality or injury would be limited to a very small subset of available prey and the implementation of mitigation measures such as the use of a noise attenuation system during impact pile driving would further limit the degree of impact. Behavioral changes in prey in response to construction activities could temporarily impact marine mammals' foraging opportunities in a limited portion of the foraging range but, because of the relatively small area of the habitat that may be affected at any given time (
Cable presence is not anticipated to impact marine mammal habitat, as these would be buried, and any electromagnetic fields emanating from the cables are not anticipated to result in consequences that would impact marine mammals' prey to the extent they would be unavailable for consumption. Although many species of marine mammal prey can detect electromagnetic fields, previous studies have shown little impacts on habitat use (Hutchinson
The presence of wind turbines within the Lease Area could have longer-term impacts on marine mammal habitat, as the project would result in the persistence of the structures within marine mammal habitat for more than 30 years. For piscivorous marine mammal species, the presence of structures could result in a beneficial reef effect which may lead to increases in the availability of prey. However, turbine presence and operation is, generally likely to result in certain oceanographic effects in the marine environment, and may adversely alter aggregations and distribution of marine mammal zooplankton prey through changing the strength of tidal currents and associated fronts, changes in stratification, primary production, the degree of mixing, and stratification in the water column (Chen
As discussed in the Description of the Specified Activity section, this IHA addresses the take incidental to the installation of 15 foundations, which will gradually become operational following construction completion. While there are likely to be oceanographic impacts from the presence of operating turbines, meaningful oceanographic impacts relative to stratification and mixing that would significantly affect marine
The proposed IHA includes a variety of mitigation measures designed to minimize impacts on all marine mammals, with a focus on NARWs (the latter is described in more detail below). For impact pile driving of foundation piles, 10 overarching mitigation measures are proposed, which are intended to reduce both the number and intensity of marine mammal takes: (1) seasonal/time of day work restrictions; (2) use of multiple PSOs to visually observe for marine mammals (with any detection within specifically designated zones triggering a delay or shutdown); (3) use of PAM to acoustically detect marine mammals, with a focus on detecting baleen whales (with any detection within designated zones triggering delay or shutdown); (4) implementation of clearance zones; (5) implementation of shutdown zones; (6) use of soft-start; (7) use of noise attenuation technology; (8) maintaining situational awareness of marine mammal presence through the requirement that any marine mammal sighting(s) by Vineyard Wind's personnel must be reported to PSOs; (9) sound field verification monitoring; and (10) Vessel Strike Avoidance measures to reduce the risk of a collision with a marine mammal and vessel.
The Proposed Mitigation section discusses the manner in which the required mitigation measures reduce the magnitude and/or severity of the take of marine mammals, including the following. For activities with large harassment isopleths, Vineyard Wind would be required to reduce the noise levels generated to the lowest levels practicable. Use of a soft-start during impact pile driving will allow animals to move away from (
Five mysticete species (comprising five stocks) of cetaceans (NARW, humpback whale, fin whale, sei whale, and minke whale) may be taken by harassment. These species, to varying extents, utilize the specific geographic region, including the LIA, for the purposes of migration, foraging, and socializing. Mysticetes are in the low-frequency hearing group.
Behavioral data on mysticete reactions to pile driving noise are scant. Kraus
Mysticetes encountered in the LIA are expected to be migrating through and/or engaged in foraging behavior. The extent to which an animal engages in these behaviors in the area is species-specific and varies seasonally. Many mysticetes are expected to predominantly be migrating through the LIA towards or from primary feeding habitats (
The potential for repeated exposures of individuals is dependent upon their residency time, with migratory animals unlikely to be exposed on repeated occasions and animals remaining in the area more likely to be exposed more than once. For mysticetes, where relatively low numbers of species-specific take by Level B harassment are predicted (compared to the abundance of each mysticete species or stock; see table 11) and movement patterns suggest that individuals would not necessarily linger in a particular area for multiple days, each predicted take likely represents an exposure of a different individual; with perhaps a subset of takes for a few species potentially representing a few repeated of a limited number of individuals across multiple days. In other words, the behavioral disturbance to any individual mysticete would, therefore, be expected to most likely occur within a single day, or potentially across a few days, and therefore would not be expected to impact the animal's fitness for reproduction or survival.
In general, the duration of exposures would not be continuous throughout any given day and pile driving would not occur on all consecutive days due to weather delays or any number of logistical constraints Vineyard Wind has identified. Species-specific analysis regarding potential for repeated exposures and impacts is provided below.
Humpback whales, minke whales, fin whales and sei whales are the mysticete species for which PTS is anticipated and proposed to be authorized. As described previously, PTS for mysticetes from some project activities may overlap frequencies used for communication, navigation, or detecting prey. However, given the nature and duration of the activity, the mitigation measures, and likely avoidance behavior, any PTS is expected to be of a small degree, would be limited to frequencies where pile driving noise is concentrated (
NARWs are listed as endangered under the ESA and as both depleted and strategic under the MMPA. As described in the Potential Effects to Marine Mammals and Their Habitat section, NARWs are threatened by a low population abundance, higher than
This proposed IHA would authorize seven takes of NARW by Level B harassment only, which equates to approximately 2.1 percent of the stock's abundance, if each take were considered to be of a different individual. No Level A harassment, serious injury, or mortality is anticipated or proposed to be authorized for this species.
As described in the Description of Marine Mammals in the Area of Specified Activities section, NARWs are presently experiencing an ongoing UME (beginning in June 2017). Preliminary findings support human interactions, specifically vessel strikes and entanglements, as the cause of death for the majority of NARWs. Given the current status of the NARW, the loss of even one individual could significantly impact the population. Level B harassment of NARWs resulting from the Project's activities is expected to primarily be in the form of temporary avoidance of the immediate area of construction. Required mitigation measures will ensure the least practicable adverse impact and the proposed number of takes of NARWs would not exacerbate or compound the effects of the ongoing UME.
In general, NARWs in the LIA are expected to be engaging in migratory, feeding, and/or social behavior. Migrating NARWs would typically be moving through the LIA, rather than lingering for extended periods of time (thereby limiting the potential for repeat exposures); however, foraging whales may remain in the LIA, with an average residence time of 13 days between December and May (Quintana-Rizzo
Foundation installation is of concern, given loud sound levels. However, as described above, foundation installation would only occur during times when, based on the best available scientific data, NARWs are less frequently encountered and less likely to be engaged in critical foraging behavior (although NMFS recognizes NARWs may forage year-round in SNE). The potential types, severity, and magnitude of impacts are also anticipated to mirror that described in the general
Overall, NMFS expects that any behavioral harassment of NARWs incidental to the specified activities would not result in changes to their migration patterns or foraging success, as only temporary avoidance of an area during construction is expected to occur. As described previously, NARWs migrate, forage, or socialize in the LIA but are not expected to remain in this habitat for extensive durations relative to core foraging habitats to the east, south of Nantucket and Martha's Vineyard, Cape Cod Bay, or the Great South Channel (Quintana-Rizzo
Although acoustic masking may occur in the vicinity of the foundation installation activities, based on the acoustic characteristics of noise associated with pile driving (
As described in the Potential Effects to Marine Mammals and Their Habitat section of this notice, the distance of the receiver from the source influences the severity of response, with greater distances typically eliciting less severe responses. NMFS recognizes NARWs migrating could be pregnant females (in the fall) and cows with older calves (in spring) and that these animals may slightly alter their migration course in response to any foundation pile driving; however, we anticipate that course diversion would be of small magnitude. Hence, while some avoidance of the pile-driving activities may occur, we anticipate any avoidance behavior of migratory NARWs would be similar to that of gray whales (Tyack
NARW presence in the LIA is year-round. However, abundance during summer months is lower compared to the winter months with spring and fall serving as “shoulder seasons” wherein abundance waxes (fall) or wanes (spring). Even in consideration of recent habitat use and distribution shifts, Vineyard Wind would still be installing monopile foundations when the presence of NARWs is expected to be lower.
Given this year-round habitat usage, in recognition that where and when whales may actually occur during project activities is unknown as it depends on the annual migratory behaviors, NMFS is requiring a suite of mitigation measures designed to reduce impacts to NARWs to the maximum extent practicable. These mitigation measures (
As described in the Description of Marine Mammals in the Area of Specified Activities section, the Vineyard Wind Offshore Wind Project is being constructed within the NARW migratory corridor BIA, which represents areas and months within which a substantial portion of a species or population is known to migrate. The area over which NARWs may be harassed is relatively small compared to the width of the migratory corridor. The width of the migratory corridor in this area is approximately 210.1 km (while the width of the Lease Area, at the longest point at which it crosses the BIA, is approximately 14.5 km). NARWs may be displaced from their normal path and preferred habitat in the immediate activity area (primarily from pile driving activities), however, we do not anticipate displacement to be of high magnitude (
The most significant measure to minimize impacts to individual NARWs is the seasonal moratorium on all foundation installation activities from January 1 through May 31 and the limitation on these activities in December (
Foundation installation may only begin in the absence of NARWs (based on visual and passive acoustic monitoring). Once foundation installation activities have commenced, NMFS anticipates NARWs would avoid the area, utilizing nearby waters to carry on pre-exposure behaviors. However, foundation installation activities must be shut down if a NARW is sighted at any distance or acoustically detected at any distance within the PAM monitoring zone, unless a shutdown is not feasible due to risk of injury or loss of life. Shutdown would be required anywhere if NARWs are detected within or beyond the Level B harassment zone, further minimizing the duration and intensity of exposure. These measures are designed to avoid PTS and also reduce the severity of Level B harassment, including the potential for TTS. While some TTS could occur, given the mitigation measures (
The clearance and shutdown measures are most effective when detection efficiency is maximized, as the measures are triggered by a sighting or acoustic detection. To maximize detection efficiency, NMFS would require the combination of PAM and visual observers. NMFS also would require communication protocols with other project vessels and other heightened awareness efforts (
As described above, no serious injury or mortality, or Level A harassment of NARWs is anticipated or proposed to be authorized. Extensive NARW-specific mitigation measures (beyond the robust suite required for all species) are expected to further minimize the amount and severity of Level B harassment.
Given the documented habitat use within the LIA, the seven instances of take by Level B harassment could include seven whales disturbed on one day each within the year, or it could represent a smaller number of whales impacted on 2 or 3 days, should NARWs briefly use the LIA as a “stopover” site and stay or swim in and out of the LIA for more than day. At any rate, any impacts to NARWs are expected to be in the form of lower level behavioral disturbance, given the extensive mitigation measures.
Given the magnitude and severity of the impacts discussed above, and in consideration of the required mitigation and other information presented, Vineyard Wind's activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take (by Level B harassment) anticipated and proposed to be authorized would have a negligible impact on the NARW.
The fin whale is listed as endangered under the ESA, and the western North Atlantic stock is considered both depleted and strategic under the MMPA. No UME has been designated for this species or stock. No serious injury or
This IHA would authorize up to seven takes, by harassment only, over the 1 year period. The maximum allowable take by Level A harassment and Level B harassment, is one and six, respectively (which equates to approximately 0.10 percent of the stock abundance, if each take were considered to be of a different individual). Given the close proximity of a fin whale feeding BIA (2,933 km
Level B harassment is expected to be in the form of behavioral disturbance, primarily avoidance of the LIA where foundation installation is occurring and some low-level TTS and masking that may limit the detection of acoustic cues for relatively brief periods of time. We anticipate any potential PTS would be minor (limited to a few dB), and any PTS or TTS would be concentrated at half or one octave above the frequency band of pile driving noise (most sound is below 2 kHz) which does not include the full predicted hearing range of fin whales. If TTS is incurred, hearing sensitivity would likely return to pre-exposure levels relatively shortly after exposure ends. Any masking or physiological responses would also be of low magnitude and severity for reasons described above.
Fin whales are present in the waters off of New England year-round and are one of the most frequently observed large whales and cetaceans in continental shelf waters, principally from Cape Hatteras, North Carolina in the Mid-Atlantic northward to Nova Scotia, Canada (Sergeant, 1977; Sutcliffe and Brodie, 1977; CETAP, 1982; Hain
As described previously, the LIA is in close proximity (approximately 8.0 km; 5.0 mi) to a small fin whale feeding BIA (2,933 km
Given the documented habitat use within the area, some of the individuals taken would likely be exposed on multiple days. However, low level impacts are generally expected from any fin whale exposure. Given the magnitude and severity of the impacts discussed above (including no more than seven takes over the course of the IHA, and a maximum allowable take by Level A harassment and Level B harassment of one and six, respectively) and in consideration of the required mitigation and other information presented, Vineyard Wind's activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by harassment anticipated and proposed to be authorized will have a negligible impact on the western North Atlantic stock of fin whales.
The West Indies DPS of humpback whales is not listed as threatened or endangered under the ESA but the Gulf of Maine stock, which includes individuals from the West Indies DPS, is considered strategic under the MMPA. However, as described in the Description of Marine Mammals in the Area of Specified Activities section, humpback whales along the Atlantic Coast have been experiencing an active UME as elevated humpback whale mortalities have occurred along the Atlantic coast from Maine through Florida since January 2016. Of the cases examined, approximately 40 percent had evidence of human interaction (vessel strike or entanglement). Despite the UME, the relevant population of humpback whales (the West Indies breeding population, or DPS of which the Gulf of Maine stock is a part) remains stable at approximately 12,000 individuals and takes of humpback whales proposed for authorization would not exacerbate or compound the effects of the ongoing UME.
This IHA would authorize up to six takes by harassment only, over the 1 year period. The maximum allowable take by Level A harassment and Level B harassment is two and four, respectively (this equates to approximately 0.43 percent of the stock abundance, if each take were considered to be of a different individual). Given that feeding is considered the principal activity of humpback whales in SNE waters, these takes could represent a few whales exposed two or three times during the year.
In the western North Atlantic, humpback whales feed during spring, summer, and fall over a geographic range encompassing the eastern coast of the U.S. Feeding is generally considered to be focused in areas north of the LIA, including in a feeding BIA in the Gulf of Maine/Stellwagen Bank/Great South Channel, but has been documented off the coast of SNE and as far south as Virginia (Swingle
Assuming humpback whales who are feeding in waters within or surrounding the LIA behave similarly, we expect that the predicted instances of disturbance could consist of some individuals that may be exposed on multiple days if they are utilizing the area as foraging habitat. As with other baleen whales, if migrating, such individuals would likely be exposed to noise levels from the project above the harassment thresholds only once during migration through the LIA.
For all the reasons described in the
Given the magnitude and severity of the impacts discussed above (including no more than six takes over the course of the 1-year IHA, and a maximum allowable take by Level A harassment and Level B harassment of two and four, respectively), and in consideration of
Minke whales are not listed under the ESA, and the Canadian East Coast stock is neither considered depleted nor strategic under the MMPA. There are no known areas of specific biological importance in or adjacent to the LIA. As described in the Description of Marine Mammals in the Area of Specified Activities section, a UME has been designated for this species but is pending closure. No serious injury or mortality is anticipated or proposed to be authorized for this species.
This IHA would authorize up to 1 take by Level A harassment and 28 takes by Level B harassment over the 1-year period (equating to approximately 0.13 percent of the stock abundance, if each take were considered to be of a different individual). As described in the Description of Marine Mammals in the Area of Specified Activities section, minke whales inhabit coastal waters during much of the year and are common offshore the U.S. eastern seaboard with a strong seasonal component in the continental shelf and in deeper, off-shelf waters (CETAP, 1982; Hayes
As previously detailed in the Description of Marine Mammals in the Area of Specified Activities section, there is a UME for minke whales along the Atlantic coast, from Maine through South Carolina, with the highest number of deaths in Massachusetts, Maine, and New York. Preliminary findings in several of the whales have shown evidence of human interactions or infectious diseases. However, we note that the population abundance is greater than 21,000, and the take by harassment proposed to be authorized through this action is not expected to exacerbate the UME.
We anticipate the impacts of this harassment to follow those described in the general
Given the magnitude and severity of the impacts discussed above (including no more than 29 takes of the course of the 1-year IHA, and a maximum allowable take by Level A harassment and Level B harassment of 1 and 28, respectively), and in consideration of the proposed mitigation and other information presented, Vineyard Wind's activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by harassment anticipated and proposed to be authorized will have a negligible impact on the Canadian Eastern Coastal stock of minke whales.
Sei whales are listed as endangered under the ESA, and the Nova Scotia stock is considered both depleted and strategic under the MMPA. There are no known areas of specific biological importance in or adjacent to the LIA, and no UME has been designated for this species or stock. No serious injury or mortality is anticipated or proposed to be authorized for this species.
The IHA would authorize up to three takes by harassment over the 1-year period. The maximum allowable take by Level A harassment and Level B harassment is one and two, respectively (combined, this annual take (
With respect to the severity of those individual takes by Level B harassment, we anticipate impacts to be limited to low-level, temporary behavioral responses with avoidance and potential masking impacts in the vicinity of the WTG installation to be the most likely type of response. Any potential PTS and TTS would likely be concentrated at half or one octave above the frequency band of pile driving noise (most sound is below 2 kHz), which does not include the full predicted hearing range of sei whales. Moreover, any TTS would be of a small degree. Any avoidance of the LIA due to the Project's activities would be expected to be temporary.
Given the magnitude and severity of the impacts discussed above (including no more than three takes of the course of the 1-year IHA, and a maximum allowable take by Level A harassment and Level B harassment, of one and two, respectively), and in consideration of the required mitigation and other information presented, Vineyard Wind's activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by harassment anticipated and proposed to be authorized will have a negligible impact on the Nova Scotia stock of sei whales.
In this section, we include information here that applies to all of the odontocete species and stocks addressed below. Odontocetes include dolphins, porpoises, and all other whales possessing teeth and we further divide them into the following subsections: sperm whales, dolphins and small whales, and harbor porpoises. These sub-sections include more specific information, as well as conclusions for each stock represented.
No serious injury or mortality is anticipated or proposed to be authorized. We anticipate that, given
As described earlier, Level B harassment may include direct disruptions in behavioral patterns (
Any masking or TTS effects are anticipated to be of low severity. First, while the frequency range of pile driving falls within a portion of the frequency range of most odontocete vocalizations, odontocete vocalizations span a much wider range than the low frequency construction activities planned for the project. Also, as described above, recent studies suggest odontocetes have a mechanism to self-mitigate the impacts of noise exposure (
The waters off the coast of Massachusetts are used by several odontocete species. However, none except the sperm whale are listed under the ESA and there are no known habitats of particular importance. In general, odontocete habitat ranges are far-reaching along the Atlantic coast of the U.S. and the waters off of New England, including the LIA, do not contain any particularly unique odontocete habitat features.
Sperm whales are listed as endangered under the ESA, and the North Atlantic stock is considered both depleted and strategic under the MMPA. The North Atlantic stock spans the east coast out into oceanic waters well beyond the U.S. EEZ. Although listed as endangered, the primary threat faced by the sperm whale across its range (
The IHA would authorize up to two takes by Level B harassment over the 1-year period, which equates to approximately 0.05 percent of the stock abundance. If sperm whales are present in the LIA during any Project activities, they will likely be only transient visitors, although foraging and social behavior may occur in the shallow waters off SNE (Westell
Given the magnitude and severity of the impacts discussed above (including no more than two takes by Level B harassment over the course of the 1-year IHA, and in consideration of the required mitigation and other information presented, Vineyard Wind's activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by Level B harassment anticipated and proposed to be authorized will have a negligible impact on the North Atlantic stock of sperm whales.
The five species and stocks included in this group (which are indicated in table 3 in the Delphinidae family) are not listed under the ESA, and nor are they listed as depleted or strategic under the MMPA. There are no known areas of specific biological importance in or around the LIA. As described above for any of these species and no UMEs have been designated for any of these species. No serious injury or mortality is anticipated or proposed to be authorized for these species.
The five delphinid species (constituting five stocks) with takes proposed to be authorized for the Project are Atlantic white-sided dolphin, bottlenose dolphin, long-finned pilot whale, Risso's dolphin, and common dolphin. The IHA would allow for the total authorization of 3 to 462 takes (depending on species) by Level B harassment, over the 1-year period. Overall, this annual take equates to approximately 0.01 (Risso's dolphin) to up to 0.27 (common dolphin) percent of the stock abundance (if each take were considered to be of a different individual, which is not likely the case), depending on the species.
The number of takes, likely movement patterns of the affected species, and the intensity of any Level B harassment, combined with the availability of alternate nearby foraging habitat suggests that the likely impacts would not impact the reproduction or survival of any individuals. While delphinids may be taken on several occasions, none of these species are known to have small home ranges within the LIA or known to be particularly sensitive to anthropogenic noise. Some TTS can occur, but it would be limited to the frequency ranges of the activity and any loss of hearing sensitivity is anticipated to return to pre-exposure conditions shortly after the animals move away from the source or the source ceases.
Across these species, the maximum number of incidental takes, by Level B harassment (no Level A harassment is anticipated or proposed to be authorized), proposed to be authorized ranges between 3 (Risso's dolphin) to 462 (common dolphin). Though the estimated numbers of take are comparatively higher than the numbers for mysticetes, we note that for all
As described above for odontocetes broadly, given the number of estimated takes for some species and the behavioral patterns of odontocetes, we anticipate that some of these instances of take in a day represent multiple exposures of a smaller number of individuals, meaning the actual number of individuals taken is lower. Although some amount of repeated exposure to some individuals across a few days within the year is likely, the intensity of any Level B harassment combined with the availability of alternate nearby foraging habitat suggests that the likely impacts would not impact the reproduction or survival of any individuals.
Overall, the populations of all delphinid and small whale species and stocks for which we proposed to authorize take are stable (no declining population trends). None of these stocks are experiencing existing UMEs. No mortality, serious injury, or Level A harassment is anticipated or proposed to be authorized for any of these species. Given the magnitude and severity of the impacts discussed above and in consideration of the required mitigation and other information presented, as well as the status of these stocks, the specified activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by harassment anticipated and proposed to be authorized will have a negligible impact on all of the following species and stocks: Atlantic white-sided dolphins, bottlenose dolphins, long-finned pilot whales, Risso's dolphins, and common dolphins.
Harbor porpoises are not listed as threatened or endangered under the ESA, and the Gulf of Maine/Bay of Fundy stock is neither considered depleted or strategic under the MMPA. The stock is found predominantly in northern United States coastal waters (less than 150 m depth) and up into Canada's Bay of Fundy (between New Brunswick and Nova Scotia). Although the population trend is not known, there are no UMEs or other factors that cause particular concern for this stock. No mortality or non-auditory injury are anticipated or proposed to be authorized for this stock.
The IHA would authorize up to 113 takes, by harassment only. The maximum allowable take by Level A harassment and Level B harassment would be 3 and 110, respectively (combined, this annual take (
Regarding the severity of takes by Level A harassment and Level B harassment, because harbor porpoises are particularly sensitive to noise, it is likely that a fair number of the responses could be of a moderate nature, particularly to foundation installation. In response to foundation installation, harbor porpoises are likely to avoid the area during construction, as previously demonstrated in Tougaard
With respect to PTS and TTS, the effects on an individual are likely relatively low, given the frequency bands of pile driving (most energy below 2 kHz) compared to harbor porpoise hearing (150 Hz to 160 kHz, peaking around 40 kHz). Specifically, TTS is unlikely to impact hearing ability in their more sensitive hearing ranges or the frequencies in which they communicate and echolocate. We expect any PTS that may occur to be within the very low end of their hearing range where harbor porpoises are not particularly sensitive and any PTS would be of small magnitude. As such, any PTS would not interfere with key foraging or reproductive strategies necessary for reproduction or survival.
As discussed in Hayes
Given the magnitude and severity of the impacts discussed above, and in consideration of the required mitigation and other information presented, the specified activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by harassment anticipated and proposed to be authorized will have a negligible impact on the Gulf of Maine/Bay of Fundy stock of harbor porpoises.
The harbor seal and gray seal are not listed under the ESA, and neither the western North Atlantic stock of gray seal nor the western North Atlantic stock of harbor seal are considered depleted or strategic under the MMPA. There are no known areas of specific biological importance in or around the LIA. As described in the Description of Marine Mammals in the Area of Specified Activities section, a UME has been designated for harbor seals and gray seals and is described further below. No serious injury or mortality is anticipated or proposed to be authorized for this species.
For the 2 seal species, the IHA would authorize up to between 30 (harbor seals) and 241 (gray seals) takes, by harassment only. The maximum allowable take for harbor seals by Level A harassment and Level B harassment would be 1 and 29, respectively (combined, this take (
Harbor and gray seals occur in SNE waters most often from December through April. Seals are more likely to be close to shore, such that exposure to foundation installation would be expected to be at low levels. Known haulouts for seals occur along the shores of Massachusetts.
As described in the Potential Effects to Marine Mammals and Their Habitat section, construction of wind farms in Europe resulted in pinnipeds temporarily avoiding construction areas but returning within short time frames after construction was complete (Carroll
As described above, noise from pile driving is mainly low frequency, and while any PTS and TTS that does occur would fall within the lower end of pinniped hearing ranges (50 Hz to 86 kHz), PTS and TTS would not occur at frequencies around 5 kHz where pinniped hearing is most susceptible to noise-induced hearing loss (Kastelein
Elevated numbers of harbor seal and gray seal mortalities were first observed in July 2018 and occurred across Maine, New Hampshire, and Massachusetts until 2020. Based on tests conducted so far, the main pathogen found in the seals belonging to that UME was phocine distemper virus, although additional testing to identify other factors that may be involved in this UME are underway. In 2022, a pinniped UME occurred in Maine with some harbor and gray seals testing positive for highly pathogenic avian influenza (HPAI) H5N1. Neither UME (alone or in combination) provides cause for concern regarding population-level impacts to any of these stocks. For harbor seals, the population abundance is over 61,000 and annual mortality/serious injury (M/SI) (
Given the magnitude and severity of the impacts of the Vineyard Wind Project discussed above, and in consideration of the required mitigation and other information presented, Vineyard Wind's activities are not expected to result in impacts on the reproduction or survival of any individuals, much less affect annual rates of recruitment or survival. For these reasons, we have determined that the take by harassment anticipated and proposed to be authorized will have a negligible impact on harbor and gray seals.
No mortality or serious injury is anticipated to occur or proposed to be authorized. As described in the analysis above, the impacts resulting from the project's activities cannot be reasonably expected to, and are not reasonably likely to, adversely affect any of the species or stocks through effects on annual rates of recruitment or survival. Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and, taking into consideration the implementation of the proposed mitigation and monitoring measures, NMFS preliminarily finds that the marine mammal take from the proposed activities would have a negligible impact on all affected marine mammal species or stocks.
As noted previously, only incidental take of small numbers of marine mammals may be authorized under sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. When the predicted number of individuals to be taken is fewer than one-third of the species or stock abundance, the take is considered to be of small numbers. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
NMFS is authorizing incidental take by Level A harassment and/or Level B harassment of 14 species of marine mammals (with 14 managed stocks). The estimated number of instances of takes by combined Level A harassment and Level B harassment relative to the best available population abundance is less than one-third for all affected species and stocks. For 13 stocks, 1 percent or less of the stock abundance is proposed for take by harassment. Specific to the NARW, the estimated amount of take, which is by Level B harassment only (no Level A harassment is anticipated or authorized), is seven, or 2.07 percent of the stock abundance, assuming that each instance of take represents a different individual. Please see table 3 for information relating to this small numbers analysis.
Based on the analysis contained herein of the proposed activity (including the proposed mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS preliminarily finds that small numbers of marine mammals would be taken relative to the population size of the affected species or stocks.
There are no relevant subsistence uses of the affected marine mammal stocks or species implicated by this action. Therefore, NMFS has determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
Section 7(a)(2) of the ESA of 1973 (16 U.S.C. 1531
There are four marine mammal species under NMFS jurisdiction that are listed as endangered or threatened under the ESA that may taken, by harassment, incidental to construction of the project: the North Atlantic right, sei, fin, and sperm whale. NMFS issued a Biological Opinion on September 11, 2020, concluding that the issuance of the 2023 Vineyard Wind IHA is not likely to jeopardize the continued existence of threatened and endangered species under NMFS' jurisdiction and is not likely to result in the destruction or adverse modification of designated or proposed critical habitat. The Biological Opinion is available at
The Permit and Conservation Division requested re-initiation of section 7 consultation with GARFO on the issuance of the Vineyard Wind proposed IHA for Phase 2 of the Vineyard Wind Offshore Wind Project. NMFS will conclude the ESA consultation prior to reaching a determination regarding the proposed issuance of the authorization.
As a result of these preliminary determinations, NMFS proposes to issue an IHA to Vineyard Wind for conducting impact pile driving of monopiles in the Vineyard Wind Offshore Wind Farm offshore of Massachusetts, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. A draft of the proposed IHA can be found at:
We request comment on our analyses, the proposed authorization, and any other aspect of this notice of proposed IHA for the proposed pile driving activities. Please include with your comments any supporting data or literature citations to help inform decisions on the request for this IHA.