[Federal Register Volume 71, Number 227 (Monday, November 27, 2006)]
[Proposed Rules]
[Pages 68519-68524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19960]
[[Page 68519]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 401
[CMS-6032-P]
RIN 0938-AO27
Medicare Program; Use of Repayment Plans
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would modify Medicare regulations to
implement a provision of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 pertaining to the use of repayment plans
(also known as extended repayment schedules or ``ERS''). Under this
provision, we propose to grant a provider or a supplier an extended
repayment schedule under certain terms and conditions as defined in the
statute. The proposed rule would establish criteria and procedures to
apply this requirement and to define the concepts of ``hardship'' and
``extreme hardship.''
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on January 26, 2007.
ADDRESSES: In commenting, please refer to file code CMS-6032-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-6032-P, P.O. Box 8020, Baltimore, MD 21244-8032.
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-6032-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) 786-7195 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: Tom Noplock, (410) 786-3378.
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-6032-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
[If you choose to comment on issues in this section, please include the
caption ``BACKGROUND'' at the beginning of your comments.]
A. Medicare Overpayment
Medicare overpayments are Medicare funds an individual, provider,
or supplier has received that exceed amounts due and payable under the
Medicare statute and regulations (plus any applicable interest and
penalties assessed on the overpayment). We note that Medicare
regulations at 42 CFR 400.202 define a ``supplier'' as ``a physician or
other practitioner, or an entity other than a provider, that furnishes
health care services under Medicare.''
Generally, overpayments result when payment is made by Medicare for
noncovered items or services that exceeds the amount allowed by
Medicare for an item or service, or when payment is made for items or
services that should have been paid by another insurer (Medicare
secondary payer obligations). Once a determination and any necessary
adjustments in the amount of the overpayment have been made, the
remaining amount is a debt owed to the United States Government.
Section 1870 of the Social Security Act (the Act) provides a
framework within which liability for such Medicare overpayments is
determined and recoupment of overpayments is pursued. This framework
prescribes a decision making process that the agency follows when
pursuing the recoupment of Medicare overpayments.
The regulation governing the liability for Medicare overpayments is
located at 42 CFR part 401 (subpart F).
B. Statutory Authority
The Federal Claims Collection Act (FCCA) of 1966, Public Law 89-
508, 80 Stat. 308 (1966) (amended by the Debt Collection Improvement
Act of 1966, Pub. L. 104-134 (1996) (codified at 31 U.S.C. 3711) is the
Federal government's basic statutory authority for debt management
practices. The Congress intended the FCCA to reduce the amount of
litigation previously required to collect claims and to reduce the
volume of private relief legislation in
[[Page 68520]]
the Congress. The FCCA is independent of the other authorities we use
to collect debt and was intended by the Congress to add to, rather than
to supplant, other authorities, including common law authority.
The FCCA authorizes the head of an agency to collect claims in any
amount. This statute also provides that the head of an agency may,
under certain conditions, compromise a claim, or suspend or terminate
collection action on a claim. Uncollectible claims in excess of
$100,000, exclusive of interest, must be referred to the Department of
Justice for compromise.
On November 2, 1977, the Secretary of the Department of Health and
Human Services published a rule in the Federal Register (42 FR 57351)
to delegate authority to the Department Claims Officer generally, and
the Administrator of the Centers for Medicare & Medicaid Services
(formerly Health Care Financing Administration (HCFA)) for necessary
claims collection actions under our programs. The authority delegated
to the Administrator covers all of our activities in the Medicare
program (title XVIII) and pertains to claims up to $20,000. (This
amount has been increased to $100,000; see 31 U.S.C. 3711.)
On August 29, 1983, we published a final rule with comment period
titled ``Federal Claims Collection Act; Claims Collection and
Compromise'' in the Federal Register (48 FR 39060) in accordance with
the FCCA. In this final rule, the agency adopted the applicable debt
collection tools made available to it under the FCCA including the
ability to collect or compromise claims, or suspend or terminate
collection action, as appropriate. The final rule also set forth the
requirements we would use to evaluate debtors' requests for extended
repayment agreements specified in Sec. 401.607.
As part of the Health Insurance Portability and Accountability Act
of 1996, the Congress added section 1893 to the Act establishing the
Medicare integrity program (MIP) to carry out Medicare program
integrity activities that are funded from the Medicare Trust Fund.
Section 1893 of the Act expands our contracting authority to allow us
to contract with ``eligible entities'' to perform Medicare program
integrity activities. These activities include review of provider and
supplier activities, including medical, fraud, and utilization review;
cost report audits; Medicare secondary payer determinations; education
of providers, suppliers, beneficiaries, and other persons regarding
payment integrity and benefit quality assurance issues; and developing
and updating a list of durable medical equipment items that are subject
to prior authorization (42 U.S.C. 1395ddd). These MIP contractors
assist us in the identification and collection of provider and supplier
Medicare overpayments.
Overview of Current Policy
The current policy CMS and its contractors use for the evaluation
of extended repayment schedules (ERSs) is based on the existing
regulations at Sec. 401.607(c)(2) [which we are proposing to
redesignate as Sec. 401.607(c)(3)] and guidance in the Medicare
Financial Management Manual, Pub. 100-6 (Chapter 4, Section 50). Under
our current policy, we determine the frequency and amount of the
installment payments based on the factors set forth at Sec.
401.607(c)(2) which include: (i) The amount of the claim; (ii) the
debtor's ability to pay; and (iii) the cost to CMS of administering an
installment agreement.
Under the current ERS review process, we primarily focus on the
second factor, the debtor's ability to repay the overpayment, by
conducting a review of the debtor's financial status, similar to how
banks assess applicants for a loan. In almost all cases, we try to work
with the provider or supplier to recover the overpayment. In general,
it has been our experience that it is in both CMS and the debtor's best
interests to work out a reasonable repayment schedule to recoup an
overpayment rather than demand immediate collection of the debt, which
could place a provider or supplier at financial risk or force the
provider or supplier into bankruptcy.
Under our existing procedures we review financial documentation
submitted by the provider or supplier to assess the provider's or
supplier's ability to repay the Medicare overpayment. This
documentation must include, at a minimum, a statement of financial
position (for example, balance sheet), a statement of financial
performance (for example, income statement), and a statement of future
viability (for example, projected statement of cash flow). In addition,
the provider must include a letter from a financial institution proving
that it cannot obtain financing from an alternative source.
C. Medicare Prescription Drug, Improvement, and Modernization Act of
2003
1. Hardship Provision
[If you choose to comment on issues in this section, please include the
caption ``HARDSHIP PROVISION'' at the beginning of your comments.]
On December 8, 2003, the Congress enacted the Medicare Prescription
Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-
173). This new legislation contained provisions affecting the recovery
of provider and supplier overpayments under the Medicare program.
Section 935(a) of the MMA amended title XVIII of the Act by adding a
new section 1893(f)(1) to the Act to require us to use certain
statutory criteria in evaluating whether a provider or supplier should
be granted a repayment schedule of at least 6 months and up to 5 years.
Under section 1893(f)(1) of the Act, we may grant a provider or a
supplier upon request, a repayment schedule of at least 6 months, if
repaying an overpayment within 30 days would constitute a ``hardship''
on the provider or supplier, provided that certain criteria are met.
The new statute at section 1893(f)(1)(B)(i) of the Act defines
``hardship'' based on the relationship between the amount of the
overpayment(s) not covered under an existing ERS owed by a provider or
supplier and the total amount of Medicare payments made to that
provider or supplier over the most recently submitted cost report or
for the previous calendar year.
Under section 1893(f)(1)(B) of the Act, a provider or supplier is
deemed to be in ``hardship'' when the total amount of all outstanding
overpayments not included in an approved, existing repayment schedule,
is 10 percent or greater than the total Medicare payments made for the
cost reporting period covered by the most recently submitted cost
report (for a provider filing a cost report), or the previous calendar
year (for a supplier or non cost-report provider). We propose to
interpret ``outstanding overpayments'' to include both principal and
accrued interest. We read the newly added section 1893(f)(1)(B)(iii) of
the Act to exclude overpayments already being repaid under an approved
ERS.
We propose to interpret the new ``hardship'' test under section
935(a) of the MMA as not to supersede our extended repayment schedule
regulations currently at Sec. 401.607(c)(2), (which we are proposing
to redesignate as Sec. 401.607(c)(3) in this proposed rule). Since our
existing regulations governing ERSs are promulgated under the FCCA, we
do not plan to eliminate the criteria and procedures currently used to
grant providers and suppliers ERSs. Instead, we propose adding an
initial ``hardship'' test to existing regulations and
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procedures for determining a debtor's ERS.
We are proposing that all requests for an ERS first be evaluated
under the new ``hardship'' test. Under this MMA provision, if
``hardship'' is determined and no statutory exception applies under
Sec. 401.607(c)(2)(iv), then the statute requires that the Secretary
grant a provider or supplier a repayment period of at least 6 months
but not longer than 3 years.
Section 935(a) of the MMA requires that the Secretary establish
rules for cases when a provider or a supplier was not paid during the
previous year or paid for only a portion of that year. For these cases,
we propose using the last 12 months of Medicare payments made to the
provider or supplier. In cases where there is less than a 12-month
payment history, we propose that the number of months available be
annualized to equal an approximate yearly Medicare payment level for
the provider or supplier.
Using the new ``hardship'' test provided in section 1893(f)(1) of
the Act, the contractor would calculate ``hardship'' as described in
the following examples:
If the debt is from a provider that files cost reports, then the
contractor will--
Step 1: Determine cost reporting year covered by most recently
filed cost report;
Step 2: Determine total amount of Medicare dollars paid to provider
for that cost report year;
Step 3: Determine amount of all outstanding overpayments (principal
and accrued interest) not under an existing ERS; and
Step 4: Divide result in Step 3 by result in Step 2.
If result in Step 4 is .10 or greater, then the provider meets the
``hardship'' test.
We note that Medicare dollars paid for providers that file cost
reports include all interim payments including tentative settlement
amounts.
Example: The provider submits cost report on 05/31/2004 for the
cost report year from 01/01/2003 through 12/31/2003. For the cost
report year ending 12/31/2003, the provider was paid a total of
$1,000,000. On 8/31/2004, a notice of program reimbursement is
issued as a result of the final settlement for the cost report year
ending 12/31/2002 showing an overpayment of $105,000. Therefore, the
provider meets the ``hardship'' test: $105,000 divided by $1,000,000
= .105. (Calculations should be carried out to three decimal
points.)
If the debt is from a provider or supplier that does not file cost
reports, then the contractor will--
Divide amount of all outstanding overpayments (principal and
accrued interest) not under an existing ERS by the Medicare dollars
paid by the contractor to the provider or supplier for the previous
calendar year. If result is .10 or greater, the provider or supplier
meets the ``hardship'' test.
Example: On 09/01/2004, the provider or supplier is issued a
demand letter for overpayments resulting from Medical Review of Part
A Claims that total $110,000. For calendar year 2003, the provider
or supplier was paid $1,000,000 by Medicare. $110,000 divided by
$1,000,000 = 11. Based on this calculation, the provider or supplier
meets the ``hardship'' test.
If the provider or supplier does not qualify under the ``hardship''
test, we would then analyze the ERS request under the existing ERS
procedures, found at newly redesignated Sec. 401.607(c)(3).
2. Exceptions Under the ``Hardship'' Provision in Section 935(a) of the
MMA
As stated above, section 935(a) of the MMA sets out exceptions to
granting a provider or supplier an extended repayment schedule even if
the provider or supplier meets the ``hardship'' test. These exceptions
are when there is reason to suspect the provider or supplier may file
for bankruptcy, cease to do business, discontinue participation in the
program, or when there is an indication of fraud or abuse committed
against the program. We propose that contractors continue to use
existing procedures and definitions applicable to bankruptcy and fraud
or abuse.
3. Extreme Hardship Provision
[If you choose to comment on issues in this section, please include the
caption ``EXTREME HARDSHIP PROVISION'' at the beginning of your
comments.]
Under section 935(a) of the MMA, the Secretary may grant a provider
or a supplier a repayment schedule of 36 months and up to 60 months if
repaying an overpayment would constitute an ``extreme hardship'' unless
a statutory exception applies under Sec. 401.607(c)(2)(iv). Since the
Congress left the definition of ``extreme hardship'' to our discretion,
we are considering different approaches for defining ``extreme
hardship'' and seek public comment on this section.
We considered proposing a new financial threshold to determine if a
provider or supplier was in extreme financial hardship, such as using a
15 percent threshold. We rejected this approach because it could result
in discriminating against providers and suppliers who may be similarly
financially situated but may attribute more of their total revenue to
Medicare income. This could occur for example with a home health agency
(HHA) which may attribute 100 percent of its revenue to Medicare
business and a skilled nursing facility (SNF) which may only attribute
20 percent of its business to Medicare. The following example may help
illustrate the inequitable results that may occur. If a HHA reporting
$1 million in total revenue (100 percent of which was attributed to
Medicare income), was subject to a 15 percent extreme hardship test,
the HHA would need to owe an overpayment of 15 percent of $1 million,
or at least $150,000, to qualify as being in extreme hardship. However,
if a SNF reporting $1 million in total revenue had only 20 percent of
its income attributed to Medicare ($200,000), this SNF would need to
owe an overpayment of 15 percent of $200,000, or at least $30,000, in
order to qualify as being in extreme hardship. This example illustrates
the problems inherent with using a set threshold in defining ``extreme
hardship'' for purposes of evaluating a provider's or supplier's
ability to make payment on a Medicare debt. In fact, we believe that
using any fixed financial variables in this type of evaluation poses
limitations on CMS's ability to maintain the regulatory flexibility
needed to properly evaluate a Medicare provider or supplier's request
for an ERS. Using one fixed set of financial variables to determine the
length of an ERS would be problematic and inefficient since the ERS
evaluation is a multi-variable analysis. We need to review several
variables contained in financial documents that include statements of a
provider or supplier's financial position, financial performance, and
future viability in order to properly assess a provider or debtor's
ability to pay. Moreover, it is difficult for CMS to predict which
financial variables will be the most useful in its analysis for each
provider or supplier since this may vary on a case-by-case basis.
We propose to define ``extreme hardship'' when a provider or
supplier qualifies under the ``hardship'' provision defined above and
the provider's or supplier's request for an ERS is approved under newly
redesignated Sec. 401.607(c)(3). If we determine the request meets the
criteria in newly redesignated Sec. 401.607(c)(3) and meets the CMS
manual guidance set forth in the Medicare Financial Management Manual,
Pub. 100-6, Chapter 4, Section 50, the provider or supplier may be
granted an ERS between 36 and 60 months. We are also proposing that
contractors apply the
[[Page 68522]]
statutory exceptions to ``extreme hardship'' cases in a similar manner
as they do to ``hardship'' cases. We solicit comments on other
alternative approaches to define ``extreme hardship'' that could
distinguish between the most extreme cases requiring ERSs between 36
and 60 months.
4. Extended Repayment Schedules
[If you choose to comment on issues in this section, please include the
caption ``EXTENDED REPAYMENT SCHEDULES'' at the beginning of your
comments.]
We propose to initially handle ERS requests differently than we
have under our current regulations. The proposed rule would allow
providers or suppliers that meet the ``hardship'' test and request only
a 6-month ERS period, the opportunity to pay back the Medicare debt in
6 months without having to submit financial documentation to the
contractor in accordance with the existing instructions given in the
Medicare Financial Management Manual, CMS, Pub. 100-6, Chapter 4,
Section 50. Not requiring financial documentation, such as financial
statements, a bank denial letter, etc., may provide a provider or
supplier time to generate or secure the necessary capital to liquidate
the debt without having to file extensive documentation in order to
secure a repayment schedule.
Under the proposed regulation, a provider or supplier that requests
a 6-month repayment schedule, meets the ``hardship'' test, does not
fall within an exception, and elects not to submit financial
documentation would be approved for a 6-month repayment schedule. Any
provider or supplier qualifying for the 6-month ERS under the
``hardship'' provision has the choice to turn down the 6-month ERS and
either pay off the debt within 30 days of the date of determination or
request a longer than 6-month ERS. In addition, we would not prohibit
any provider or supplier under the 6-month ``hardship'' provision ERS
from applying for a longer ERS if it later desires to do so under Sec.
401.607(c)(3).
For all ERS requests, with the exception of those 6-month ERSs
granted without a submission of financial documentation, we propose to
rely on current regulations and procedures that require the provider or
supplier to submit financial documentation in accordance with the
Medicare Financial Management Manual, CMS Pub. 100-6, Chapter 4,
Section 50. A provider or supplier must continue to submit a written
request that refers to the specific overpayment for which an ERS is
being requested, the number of months requested, and include the first
payment with its request. The contractor would determine the duration
of the ERS based on its review of the provider or supplier's
documentation in accordance with CMS manual guidance.
While the statute permits us to immediately collect on an entire
overpayment, if a provider or supplier misses one installment payment
in any ERS granted under section 935(a) of the MMA, we are proposing to
impose this penalty only on the automatic 6-month repayment schedules.
With all other ERSs, we propose to continue to use the existing
procedures that define a default of an ERS as missing two consecutive
installment payments.
II. Provisions of the Proposed Regulations
[If you choose to comment on issues in this section, please include
the caption ``PROVISIONS OF THE PROPOSED REGULATIONS'' at the beginning
of your comments.]
We are proposing to revise paragraph (a) in Sec. 401.601, Basis
and scope, to read as follows: ``This subpart implements for CMS the
Federal Claims Collection Act (FCCA) of 1966 (amended 1996) (31 U.S.C.
3711), and conforms to the regulations (31 CFR parts 900-904) issued
jointly by the Department of the Treasury and the Department of Justice
that generally prescribe claims collection standards and procedures
under the FCCA for the Federal government. This subpart also implements
section 1893(f)(1) of the Act regarding the use of repayment plans.''
In addition, we are proposing in Sec. 401.603 to add a definition
for an ``Extended repayment schedule.''
We are proposing to redesignate Sec. 401.607(c)(2), ``CMS
decision,'' as Sec. 401.607(c)(3). In addition, we are proposing a new
Sec. 401.607(c)(2), ``Extended repayment schedule,'' in accordance
with 1893(f)(1) of the Act. The provisions of section 1893(f)(1) of the
Act, as amended by section 935(a) of the MMA, would be implemented by
new Sec. 401.607(c)(2), ``Extended repayment schedule.''
III. Collection of Information Requirements
This proposed rule does not impose any new information collection
or recordkeeping requirements. The burden associated with the
collection activities discussed in the preamble that pertain to the
extension of repayment schedules is currently approved under Office of
Management and Budget (OMB) control number 0938-0270, with an
expiration date of September 30, 2007.
However, in addition to the requirements discussed in this proposed
rule, we plan to submit a revised information collection request (ICR)
to OMB for approval. As discussed in Section I.C.4. of the preamble,
providers or suppliers that meet the ``hardship'' test and request only
a 6-month ERS period, will have the opportunity to pay back the
Medicare debt in 6 months without having to submit financial
documentation to the contractor. This new requirement reduces the
information collection burden placed on providers and suppliers. As
part of the OMB approval process for the revised ICR, the revisions to
0938-0270 will be announced in Federal Register notices and made
available to the public for comment.
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
A. Overall Impact
We have examined the impacts 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 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties) 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. There would be no additional costs or
documented savings resulting from the implementation of
[[Page 68523]]
this 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. For purposes of
the RFA, approximately 95 percent of the health care industry is
considered small businesses according to the Small Business
Administration's size standards with total revenues of $6 million to
$29 million or less in any 1 year. Individuals and States are not
included in the definition of a small entity. Because there are no
additional costs or documented savings resulting from the
implementation of this rule, this rule would not have a significant
impact on small businesses.
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 Metropolitan
Statistical Area and has fewer than 100 beds. Because there are no
additional costs or documented savings resulting from the
implementation of this rule, this rule would not have a significant
impact on 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 not have
an effect on the governments mentioned and the private sector costs
would be less than $120 million threshold.
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. This rule would not have a substantial effect on State or
local governments.
B. Anticipated Effects
1. Effects on Medicare Providers
This rule could affect all Medicare provider types with a Medicare
overpayment. This proposed rule would allow Medicare providers falling
within these provisions a 6-month period to pay back debt owed to
Medicare without being required to file extensive financial
documentation. We believe that this short time period may permit a
provider to generate or secure the necessary capital to liquidate the
debt without filing the financial documentation required to secure a
longer repayment schedule.
2. Effects on Other Providers
There would be no effect on other providers.
3. Effects on the Medicare and Medicaid Programs
There would be no additional costs or documented savings resulting
from the implementation of this rule. There may be savings due to a
possible reduction in paperwork.
C. Alternatives Considered
We considered adopting mathematically precise distinctions between
``hardship'' and ``extreme hardship,'' but rejected this approach. To
select any type of numerical threshold, for example, defining ``extreme
hardship'' as 15 percent of total overpayments in an effort to
distinguish it from the test for ``hardship,'' would result in
inequitable outcomes for different providers and suppliers as discussed
in the ``extreme hardship'' section of the preamble. We believe the
proposed approach will lead to more equitable solutions.
In implementing section 935 of the MMA, we want to assure providers
and suppliers that we will be looking closely at the financial picture
each of them has that has prompted them to seek an ERS. Analyzing these
financial profiles is a complex undertaking that does not lend itself
to overly simplified numerical cutoffs that may qualify some for longer
repayment periods but deny them to others that ought to be just as
eligible. We seek comment on other alternative ways to distinguish
between ``hardship'' and ``extreme hardship'' in an effort to establish
a standardized approach to applying the two definitions.
D. Executive Order 12866 Statement
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 401
Claims, Freedom of information, Health facilities, Medicare,
Privacy.
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 401--GENERAL ADMINISTRATIVE REQUIREMENTS
1. The authority citation for part 401 continues to read as
follows:
Authority: Secs. 1102, 1871, and 1893 of the Social Security Act
(42 U.S.C. 1302, 1395hh, and 1395ddd). Subpart F is also issued
under the authority of the Federal Claims Collection Act (amended
1996) (31 U.S.C. 3711).
2. In Sec. 401.601, paragraph (a) is revised to read as follows:
Sec. 401.601 Basis and scope.
(a) Basis. This subpart implements for CMS the Federal Claims
Collection Act (FCCA) of 1966 (amended 1996) (31 U.S.C. 3711), and
conforms to the regulations (31 CFR parts 900-904) issued jointly by
the Department of the Treasury and the Department of Justice that
generally prescribe claims collection standards and procedures under
the FCCA for the Federal government. This subpart also implements
section 1893(f)(1) of the Act regarding the use of repayment plans.
* * * * *
3. In Sec. 401.603, add a new definition for ``Extended repayment
schedule'' to read as follows:
Sec. 401.603 Definitions.
* * * * *
Extended repayment schedule means installment payments to pay back
a debt.
Sec. 401.607 [Amended]
4. In Sec. 401.607--
A. Redesignate paragraph (c)(2) as paragraph (c)(3).
B. Add a new paragraph (c)(2).
The revisions read as follows:
Sec. 401.607 Claims collection.
* * * * *
(c) * * *
(2) Extended repayment schedule.
(i) For purposes of this paragraph (c)(2), the following
definitions apply:
Hardship exists when the total amount of all outstanding
overpayments (principal and interest) not included in an approved,
existing repayment schedule is 10 percent or greater than the total
Medicare payments made for the cost reporting period covered by the
most recently submitted cost report for a provider filing a cost
report, or for the
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previous calendar year for a supplier or non cost-report provider.
Extreme hardship exists when a provider or supplier qualifies as
being in ``hardship'' as defined in this paragraph and the provider's
or supplier's request for an extended repayment schedule (ERS) is
approved under paragraph (c)(3) of this section.
(ii) CMS or its contractor reviews a provider's or supplier's
request for an ERS. For a provider or a supplier not paid by Medicare
during the previous year or paid only during a portion of that year,
the contractor or CMS will use the last 12 months of Medicare payments.
If less than a 12-month payment history exists, the number of months
available is annualized to equal an approximate yearly Medicare payment
level for the provider or supplier.
(iii) For a provider or supplier requesting an ERS, CMS or its
contractor evaluates the request based on the definitions and
information submitted under this paragraph (c)(2). For a provider or
supplier whose situation does not meet the definitions in paragraph
(c)(2)(i) of this section, CMS or its contractor evaluates the ERS
request using the information in paragraph (c)(3) of this section in
deciding to grant an ERS.
(iv) CMS or its contractor is not required to grant an ERS to a
provider or supplier if there is reason to suspect the provider or
supplier may file for bankruptcy, cease to do business, discontinue
participation in the Medicare program, or there is an indication of
fraud or abuse committed against the Medicare program.
(v) CMS or its contractor may grant a provider or a supplier an ERS
of at least 6 months if repaying an overpayment within 30 days would
constitute a ``hardship'' as defined in paragraph (c)(2)(i) of this
section. If a provider or supplier is granted an ERS for 6 months under
paragraph (c)(2)(i) of this section, missing one installment payment
constitutes a default and the total balance of the overpayment will be
recovered immediately.
(vi) CMS or its contractor may grant a provider or a supplier an
ERS of 36 months and up to 60 months if repaying an overpayment would
constitute an ``extreme hardship'' as defined in paragraph (c)(2)(i) of
this section.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare-Hospital Insurance; and Program No. 93.774, Medicare-
Supplementary Medical Insurance Program)
Dated: April 5, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: May 17, 2006.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was received at the Office of the
Federal Register on November 20, 2006.
[FR Doc. E6-19960 Filed 11-24-06; 8:45 am]
BILLING CODE 4120-01-P