[Federal Register Volume 72, Number 139 (Friday, July 20, 2007)]
[Proposed Rules]
[Pages 39776-39779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14115]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 455
[CMS-2264-P]
RIN 0938-AO88
Medicaid Integrity Program; Limitation on Contractor Liability
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: Section 6034 of the Deficit Reduction Act of 2005 established
the Medicaid Integrity Program to promote the integrity of the Medicaid
program by authorizing the Centers for Medicare and Medicaid Services
(CMS) to enter into contracts with contractors that will review the
actions of individuals or entities furnishing items or services
(whether fee-for-service, risk, or other basis) for which payment may
be made under an approved State plan and/or any waiver of the plan
approved under section 1115 of the Social Security Act; audit claims
for payment of items or services furnished, or administrative services
furnished, under a State plan; identify overpayments of individuals or
entities receiving Federal funds; and educate providers of services,
managed care entities, beneficiaries, and other individuals with
respect to payment integrity and quality of care. This proposed rule
would set forth limitations on a contractor's liability while
performing these services under the Medicaid Integrity Program.
This proposed rule would provide for limitation of a contractor's
liability for actions taken to carry out a contract under the Medicaid
Integrity Program. The proposed rule would, to the extent possible,
employ the same or comparable standards and other substantive and
procedural provisions as are contained in section 1157 (Limitation on
Liability) of the Social Security Act.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 20, 2007.
[[Page 39777]]
ADDRESSES: In commenting, please refer to file code CMS-2264-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (Fax) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By regular mail. You may mail written comments (one original and
two copies) to the following address Only: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-2264-P, P.O. Box 8014, Baltimore, MD 21244-8014.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address Only: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-2264-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-8148 in advance to schedule your arrival
with one of our staff members. Room 445-G, Hubert H. Humphrey Building,
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security
Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Barbara Rufo, 410-786-5589 or Crystal
High, 410-786-8366.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-2064-P and the specific ``issue identifier'' that precedes the
section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Current Law
States and the Federal Government share in the responsibility for
safeguarding Medicaid program integrity. States must comply with
Federal requirements designed to ensure that Medicaid funds are
properly spent (or recovered, when necessary). The Centers for Medicare
and Medicaid Services (CMS) is the primary Federal agency responsible
for providing oversight of States' activities and facilitating their
program integrity efforts.
B. Medicaid Integrity Program
Section 6034 of the Deficit Reduction Act (DRA) of 2005 (Pub. L.
109-171, enacted on February 8, 2006) established the Medicaid
Integrity Program (the Program), within CMS to combat Medicaid fraud
and abuse. For the first time, the Program authorizes the Federal
government to directly identify, recover, and prevent inappropriate
Medicaid payments. It would also support the efforts of the State
Medicaid agencies through a combination of oversight and technical
assistance.
Although individual States work to ensure the integrity of their
respective Medicaid programs, the Program represents our first
comprehensive national strategy to detect and prevent Medicaid fraud
and abuse. The Program would provide CMS with the ability to more
directly ensure the accuracy of Medicaid payments and to deter those
who would exploit the program.
Section 6034 of the DRA amended title XIX of the Social Security
Act (the Act), (42 U.S.C. 1396 et seq.) by redesignating the old
section 1936 as section 1937; and inserting the new section 1936
``Medicaid Integrity Program.''
The new section 1936 of the Act states that the Secretary promote
the integrity of the Medicaid program by entering into contracts with
eligible entities to carry out the following activities:
1. Review of the actions of individuals or entities furnishing
items or services (whether on a fee-for-service, risk or other basis)
for which payment may be made under a State plan approved under title
XIX (or under any waiver of this plan approved under section 1115 of
the Act) to determine whether fraud, waste, and/or abuse has occurred,
or is likely to occur, or whether these actions have any potential for
resulting in an expenditure of funds under title XIX in a manner that
is not intended under the provisions of title XIX.
2. Audit of claims for payment for items or services furnished, or
administrative services rendered, under a State plan under title XIX,
including cost reports, consulting contracts; and risk contracts under
section 1903(m) of title XIX.
3. Identification of overpayments to individuals or entities
receiving Federal funds under title XIX.
4. Education of providers of services, managed care entities,
beneficiaries, and other individuals with respect to payment integrity
and quality of care.
Section 6034 of the DRA also mandated that the Secretary will by
regulation provide for the limitation of a contractor's liability for
actions taken to carry out a contract under the Medicaid Integrity
Program.
II. Provisions of the Proposed Rule
[If you wish to comment on issues in this section, please include
the caption ``Provisions of the Proposed Rule'' at the beginning of
your comments.]
[[Page 39778]]
Limitations on Contractor Liability
Contractors that perform activities under the Medicaid Integrity
Program (the Program), would be reviewing activities of providers and
others seeking Medicaid payment for providing services to Medicaid
beneficiaries. In an effort to reduce or eliminate the Program
contractor's exposure to possible legal action from entities it
reviews, section 6034 of the DRA requires that we, by regulation, limit
the Program contractor's liability for actions taken in carrying out
its contract. We must establish, to the extent we find appropriate,
standards and other substantive and procedural provisions that are the
same as, or comparable to, those contained in section 1157 of the Act.
Section 1157 of the Act states that any organization having a
contract with the Secretary, its employees, fiduciaries, and anyone who
furnishes professional services to these organizations are protected
from civil and criminal liability in performing their duties under the
Act or their contract, provided these duties are performed with due
care.
Following the mandate of section 6034 of the DRA, this proposed
rule, in Sec. 455.1, Basis and scope, would add a new paragraph (c)
stating that subpart C implements section 1936 of the Act. Section 1936
of the Act establishes the Medicaid Integrity Program under which the
Secretary will promote the integrity of the program by entering into
contracts with eligible entities to carry out the activities under
subpart C. In addition, new subpart C, Sec. 455.200(a), would specify
the statutory basis of proposed new subpart C, which would implement
section 1936 of the Act, which states that the Secretary will promote
the integrity of the Medicaid program by entering into contracts with
eligible entities to carry out the activities under subpart C. Section
455.200(b) would provide the scope for the limitation on a contractor's
liability to carry out a contract under the Medicaid Integrity Program
as proposed under new Sec. 455.202. Section 455.202(a) would protect
Program contractors from liability in the performance of their
contracts provided they carry out their contractual duties with due
care.
In accordance with section 6034 of the DRA, we propose to employ
the same standards for payment of legal expenses as are contained in
section 1157(d) of the Act. Therefore, Sec. 455.202(b) would provide
that we would make payment to Program contractors, their members,
employees, and anyone who provides legal counsel or services to them,
for expenses incurred in the defense of any legal action related to the
performance of the Program contract. We also propose that any and all
payment(s) and the amount of each payment(s) if any, would be
determined exclusively by us, and conditioned upon (1) the
reasonableness of the expense(s); (2) the amount of government funds
available for payment(s); and (3) whether the payment(s) is (are)
allowable under the terms of the contract.
In drafting Sec. 455.202, we considered employing a standard for
the limitation of liability other than the due care standard. We
considered whether it would be appropriate to provide that a contractor
would not be civilly liable by reason of the performance of any duty,
function, or activity under its contract provided the contractor was
not grossly negligent in that performance. However, section 6034 of the
DRA requires that we employ the same or comparable standards and
provisions as are contained in section 1157 of the Act. This approach
is consistent with a similar approach taken in the Medicare Integrity
Program (see 70 FR 35204), which has virtually identical statutory
limitations on contractor liability language. Therefore, we do not
believe that it would be appropriate to expand the scope of immunity to
a standard of gross negligence, as it would not be a comparable
standard to that set forth in section 1157(b) of the Act.
III. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995.
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Regulatory Impact Statement
[If you wish to comment on issues in this section, please include
the caption ``Regulatory Impact Statement'' at the beginning of your
comments.]
We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This rule
would not reach the economic threshold and thus is not considered a
major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6 million to $29 million in any 1 year. Individuals and States are not
included in the definition of a small entity. We are not preparing an
analysis for the RFA because we have determined that this rule would
not have a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Core-Based
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined that
this rule would not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $120 million. This rule would have no
consequential effect on State, local, or tribal governments or on the
private sector.
[[Page 39779]]
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation would not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects 42 CFR in Part 455
Fraud, Grant programs--health, Health facilities, Health
professions, Investigations, Medicaid, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services would amend 42 CFR chapter IV as set forth below:
PART 455--PROGRAM INTEGRITY; MEDICAID
1. The authority citation for part 455 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. In Sec. 455.1, add new paragraph (c) to read as follows:
Sec. 455.1 Basis and scope.
* * * * *
(c) Subpart C implements section 1936 of the Act. It establishes
the Medicaid Integrity Program under which the Secretary will promote
the integrity of the program by entering into contracts with eligible
entities to carry out the activities of subpart C.
3. New subpart C, consisting of Sec. 455.200 and Sec. 455.202, is
added to part 455 to read as follows:
Subpart C--Medicaid Integrity Program
Sec.
455.200 Basis and scope.
455.202 Limitation on contractor liability.
Subpart C--Medicaid Integrity Program
Sec. 455.200 Basis and scope.
(a) Statutory basis. This subpart implements section 1936 of the
Act that establishes the Medicaid Integrity Program under which the
Secretary will promote the integrity of the program by entering into
contracts with eligible entities to carry out the activities under this
subpart C.
(b) Scope. This subpart provides for the limitation on a
contractor's liability to carry out a contract under the Medicaid
Integrity Program.
Sec. 455.202 Limitation on contractor liability.
(a) A program contractor, a person, or an entity employed by, or
having a fiduciary relationship with, or who furnishes professional
services to a program contractor will not be held to have violated any
criminal law and will not be held liable in any civil action, under any
law of the United States or of any State (or political subdivision
thereof), by reason of the performance of any duty, function, or
activity required or authorized under this subpart or under a valid
contract entered into under this subpart, provided due care was
exercised in that performance and the contractor has a contract with
CMS under this subpart.
(b) CMS pays a contractor, a person, or an entity described in
paragraph (a) of this section, or anyone who furnishes legal counsel or
services to a contractor or person, a sum equal to the reasonable
amount of the expenses, as determined by CMS, incurred in connection
with the defense of a suit, action, or proceeding, if the following
conditions are met:
(1) The suit, action, or proceeding was brought against the
contractor, person or entity by a third party and relates to the
contractor's, person's or entity's performance of any duty, function,
or activity under a contract entered into with CMS under this subpart.
(2) The funds are available.
(3) The expenses are otherwise allowable under the terms of the
contract.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: March 15, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: April 20, 2007.
Michael O. Leavitt,
Secretary.
[FR Doc. E7-14115 Filed 7-19-07; 8:45 am]
BILLING CODE 4120-01-P