[Federal Register: September 30, 2005 (Volume 70, Number 189)]
[Rules and Regulations]
[Page 57367-57375]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30se05-34]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 505
Medicare Program; Health Care Infrastructure Improvement Program;
Selection Criteria of Loan Program for Qualifying Hospitals Engaged in
Cancer-Related Health Care; Forgiveness of Indebtedness; Interim Final
Rule and Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 505
[CMS-1287-IFC]
RIN 0938-AO03
Medicare Program; Health Care Infrastructure Improvement Program;
Selection Criteria of Loan Program for Qualifying Hospitals Engaged in
Cancer-Related Health Care
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule with comment period sets forth the
criteria for implementing a loan program for qualifying hospitals
engaged in research in the causes, prevention, and treatment of cancer
as specified in section 1016 of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (MMA) (Pub. L. 108-173).
Specifically, this rule establishes a loan application process by which
qualifying hospitals including specified entities may apply for a loan
for the capital costs of health care infrastructure improvement
projects.
DATES: Effective Date: This interim final rule with comment period is
effective November 29, 2005.
Comment date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on November 29, 2005.
In commenting, please refer to file code CMS-1287-IFC. Because of
staff and resource limitations, we cannot accept comments by facsimile
(FAX) transmission.
Deadline for submission of loan requests: To be assured
consideration, applications must be received at the appropriate address
from November 29, 2005 through 5 p.m. on December 29, 2005.
ADDRESSES: Comments: You may submit comments in one of three ways (no
duplicates, please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/regulations/ecomments.
(Attachments should be in Microsoft Word, WordPerfect, or
Excel; however, we prefer Microsoft Word.)
2. By 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-1287-
IFC, P.O. Box 8020, Baltimore, MD 21244-8020.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. 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) 786-9994 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.
Applications: Applications must be submitted to the following
address: Centers for Medicare and Medicaid Services, Center for
Medicare Management, Hospital and Ambulatory Policy Group, Division of
Acute Care, Attention: Loan for Cancer Hospitals, Mail Stop C4-08-06,
7500 Security Boulevard, Baltimore, Maryland 21244-1850.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1016 of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amended title XVIII
of the Social Security Act (the Act) to establish section 1897 of the
Act, the Health Care Infrastructure Improvement Program. Section 1897
of the Act authorizes the Secretary to establish a loan program that
provides loans to qualifying hospitals for payment of the capital costs
of eligible projects.
Section 1897(c) of the Act as amended by section 6045 of the
Emergency Supplemental Appropriations Act for Defense, the Global War
on Terror, and Tsunami Relief, 2005 (Tsunami Relief Act of 2005) (Pub.
L. 109-13) defines a qualifying hospital as a hospital or entity that
is engaged in research in the causes, prevention, and treatment of
cancer; and is designated as a cancer center for the National Cancer
Institute (NCI) or is designated by the State legislature as the
official cancer institute of the State and such designation by the
State legislature occurred before December 8, 2003. Section 1897(c)(3)
of the Act also specifies that an entity has the same meaning as
specified in section 501(c)(3) of the Internal Revenue Code of 1986 and
is exempt from tax under section 501(a) of the Code; has at least one
existing memorandum of understanding or affiliation agreement with a
hospital located in the State in which the entity is located; and
retains clinical outpatient treatment for cancer on site as well as lab
research and education and outreach for cancer in the same facility.
Section 1897(d) of the Act specifies that an eligible project is a
project of a qualifying hospital that is designed to improve the health
care infrastructure of the hospital, including construction,
renovation, or other capital improvements.
Section 1897(f) of the Act states that the Secretary may forgive a
loan provided to a qualifying hospital, under terms and conditions that
are analogous to the loan forgiveness provision for student loans under
part D of title IV of the Higher Education Act of 1965, (20 U.S.C.
1087a et seq.). However, the Secretary shall condition such forgiveness
on the establishment by the hospital of--(1) an outreach program for
cancer prevention, early diagnosis and treatment that provides services
to a substantial majority of the residents of the State or region,
including residents of rural areas; (2) an outreach program that
provides services to multiple Indian tribes; and (3) unique research
resources (such as population databases); or an affiliation with an
entity that has unique research resources.
Furthermore, before the Tsunami Relief Act of 2005, section
1897(g)(1) of the Act appropriated $200,000,000 to carry out the loan
program. The funds allocated for the loan program are to remain
available during the period beginning on July 1, 2004, and ending on
September 30, 2008. However, the Congress rescinded $58,000,000 leaving
$142,000,000 available for the loan program. The statute also states
that not more than $2,000,000 can be used for the administration of the
loan program for each of the fiscal years (that is, 2004
[[Page 57369]]
through 2008). No administrative funding was used in fiscal year 2004.
In addition, section 1897(i) of the Act as amended by section
6045(b) of the Tsunami Relief Act of 2005 states that there shall be no
administrative or judicial review of any determination made by the
Secretary under this section.
II. Provisions of the Interim Final Rule With Comment Period
Section 1897 of the Act authorizes the Secretary to establish a
loan program that provides loans to qualifying hospitals for payment of
the capital costs of qualifying projects. Section 1897 of the Act also
provides that criteria be established for--(1) selecting among
qualifying hospitals that apply to participate in the loan program; and
(2) forgiving indebtedness. This interim final rule with comment period
establishes the loan program and the selection criteria for qualifying
hospitals to participate in the loan program. We will publish a
separate rule making document to describe the criteria for loan
forgiveness.
A. Overview of the Loan Program
The statute provides specific definitions for a qualifying hospital
and entity. However, in addition to being a ``hospital'' as defined in
section 1861(e) of the Act or an ``entity'' as defined in section
1897(c)(3) of the Act, the applicant must meet the criteria described
in section 1897(c)(2) of the Act in order to be considered a qualifying
hospital.
To be designated as a cancer center for the NCI of the National
Institutes of Health (NIH), the hospital must have been awarded a P30
Cancer Center Support Grant (CCSG) from NCI to fund the scientific
infrastructure of the cancer center, see http://www.cancer.gov/cancercenters/description.html
.
NCI designates two types of cancer centers: cancer centers, and
comprehensive cancer centers. NCI describes ``cancer centers'' as those
that have a scientific agenda that is primarily focused on basic
science, population-based research or clinical research, or any two of
the three components.
NCI describes ``comprehensive cancer centers'' as those that
integrate research activities across three major areas: Laboratory,
clinical, and population-based research. Hospitals that have been
awarded a CCSG and are designated by NCI as either a cancer center or a
comprehensive cancer center before December 8, 2003, will be considered
qualifying hospitals. We chose the December 8, 2003 date for the NCI
CCSG designation because it is the date of enactment of the MMA and
consistent with the statutory date for State legislature designation of
the official cancer institute of the State.
To be designated as the official cancer institute of the State, the
entity must be designated by the State legislature as ``the official
cancer institute of the State.'' Section 1897 of the Act specifies that
designation by the State legislature must have occurred before December
8, 2003.
In this rule, we have added Subchapter H--Health Care
Infrastructure Improvement Program to comply with section 1897 of the
Act. Specifically, we have added part 505--''Establishment of the
Health Care Infrastructure Improvement Program.'' We have added subpart
A--Loan Criteria. Section 505.1 sets forth the ``Basis and Scope'' of
part 505 which implements section 1016 of the MMA which amends Title
XVIII of the Act to add section 1897. Section 1897 of the Act, as
amended by section 6045 of the Tsunami Relief Act of 2005, authorizes
the Secretary to establish a loan program by which qualifying hospitals
may apply for a loan for the capital costs of the health care
infrastructure improvement projects.
In Sec. 505.3, for purposes of subpart A, we have set forth the
following definitions:
Eligible project means the project of a qualifying
hospital that is designed to improve the health care infrastructure of
the hospital, including construction, renovation, or other capital
improvements.
Entity is an entity described in section 501(c)(3) of the
Internal Revenue Code of 1986 and exempt from tax under section 501(a)
of the code. An entity also has at least one existing memorandum of
understanding or affiliation agreement with a hospital located in the
State in which the entity is located and retains clinical outpatient
treatment for cancer on site as well as lab research, education, and
outreach for cancer in the same facility.
Qualifying hospital means a hospital as defined at section
1861(e) of the Act (42 U.S.C. 1395x(e)) or an entity (as defined in
this section) that is--
(1) Engaged in research in the causes, prevention, and treatment of
cancer; and is either
(2) Designated as a cancer center for the National Cancer
Institute; or
(3) Designated by the State legislature as the official cancer
institute of the State before December 8, 2003.
B. Qualifying Hospital Criteria for the Loan Program
The statute provides the following two sets of criteria for
establishing the loan program: (1) Selecting among qualifying
hospitals; and (2) forgiving indebtedness (that is, deciding if the
loan funds may be forgiven). The statute also specifies conditions
under which a loan may be forgiven. These conditions are based upon the
qualifying hospital's establishment of the following:
An outreach program for cancer prevention, early
diagnosis, and treatment that provides services to a substantial
majority of the residents of a State or region, including residents of
rural areas;
An outreach program for cancer prevention, early
diagnosis, and treatment that provides services to multiple Indian
tribes; and
Unique research resources (such as population databases);
or an affiliation with an entity that has unique research resources.
Since the statute outlines specific criteria in which to forgive
loans, we believe that it is consistent with the Congressional intent
to give priority to qualifying hospitals that meet at least some of the
statutory conditions for loan forgiveness when selecting qualifying
hospitals for the loan program.
Although the statute does not require that these provisions be
adopted as criteria for receiving funds under the loan program, these
criteria are specified in statute for qualifying for loan forgiveness.
Therefore, we recognize that it is not possible to forgive the
qualifying hospital's debt if it had not initially been selected to
receive funds under the loan program.
As previously stated, we will publish a separate rule-making
document on the forgiveness of indebtedness. We are seeking specific
comment on what additional criteria we should establish for any
qualifying hospitals that do not meet these initial criteria, in the
event that after granting loans to the initial applicants there are
residual funds up to the $140 million maximum available for loan funds.
In Sec. 505.5(a), we set forth the ``qualifying criteria''
requirements. To qualify for the loan program, the applicant must--
Meet the definition of a qualifying hospital as set forth
in Sec. 505.3 of this part; and
Request a loan for the capital costs of an eligible
project as defined in Sec. 505.3 of this part. The capital costs for
which a qualifying hospital may obtain a loan are limited to the
reasonable costs incurred by the hospital, and capitalized
[[Page 57370]]
on the Medicare cost report, for any facility or item of equipment that
it has acquired the possession or use of at the time the loan funding
is awarded.
C. Selection Criteria
In Sec. 505.5(b), we set forth the ``selection criteria''
requirements. In selecting loan recipients, we will prioritize
qualifying hospitals that meet the following criteria:
The hospital is located in a State which based on
population density is defined as a rural State. A rural State is one of
ten States with the lowest population density. The ten States are
prioritized beginning with the State with the lowest population
density. Population density is determined based on the most recent
available U.S. Census Bureau data.
The hospital is located in a State with presence of
multiple Indian tribes in the State. After prioritizing based on
paragraph (b)(1), States are further prioritized based on the States
with the most Indian tribes. The number of Indian tribes in the State
is based on the most recent data available published in ``Indian
Entities Recognized and Eligible to Receive Services from the United
State Bureau of Indian Affairs'' (68 FR 68180) published on December 5,
2003.
1. Rural States
We recognize that conducting outreach to Indian tribes in sparsely
populated, rural areas presents additional barriers and challenges.
According to the Health Resources and Services Administration's (HRSA)
History of the Rural Health Care Services Outreach Grant Program
(2004), the rural population of the U.S. differs significantly from the
urban population in such parameters as age, income, education, and
health status. The HRSA report can be found at http://www.ruralhealth.hrsa.gov/funding/outreachhistory.asp.
The HRSA report
also states that generally, non-metropolitan populations have higher
rates of poverty and unemployment and have fewer years of education
than their metropolitan counterparts. Also according to the HRSA
report, rural residents also experience poorer health status.
Furthermore, the same report maintains that there are higher rates of
chronic disease, infant mortality, accidental injuries related to
farming activities, occupational hazards, and trauma mortality in rural
areas as compared to metropolitan areas. In accordance with the HRSA
report, lack of access to health care in rural communities compounds
the effect of these health problems and that long distances between
rural and urban communities and inadequate public transportation
systems for rural areas further worsen these conditions.
Additionally, cancer care requires a sophisticated set of surgical
and medical resources; however currently those resources are more
commonly found in large urban settings. Finally, the HRSA report found
that greater proportions of rural cancer patients are diagnosed at
later stages than urban patients and are less likely than urban
patients to receive state-of-the-art cancer treatments.
These factors illustrate some of the difficulties faced when trying
to develop new and innovative cancer care outreach systems in rural
communities.
Given the inherent barriers in conducting outreach in rural areas
and the statutory priority placed on a qualifying hospital establishing
an outreach program that services a substantial majority of the
residents of a State, including residents of rural areas, we are
prioritizing applicant entities located in rural States. One way to
identify States that are rural is based on population density. Using
population density as a measure of rural status is consistent with
another section of the statute, which directs the establishment of a
rural community hospital demonstration in States with low population
densities (see section 410A of the MMA).
Section 410A of the MMA established a Rural Community Hospital
Demonstration Program where the Secretary was given the authority to
determine rural areas and select States with low population densities.
In implementing section 410A of the statute, the Secretary determined
the ten States with the lowest population density. Using Census Data
released in 2004, the ten States with the lowest population density
are: Alaska, Idaho, Montana, Nebraska, Nevada, New Mexico, North
Dakota, South Dakota, Utah, and Wyoming.
Since the loan forgiveness criteria in section 1016 of the MMA also
focus on rural populations (that is, establishing outreach programs
that provide services to residents of rural areas) and in order to be
consistent, for purposes of implementing section 1016 of the MMA, we
have chosen to use the same criteria we used to implement section 410A
of the MMA to determine States with low population density. Therefore,
we are requiring that qualifying hospitals be located in 1 of the 10
States with the lowest population density in order to receive funding
under section 1897 of the Act.
2. Indian Tribes
The statute places a priority for loan forgiveness on qualifying
hospitals that conduct outreach to multiple Indian tribes. Therefore,
we believe it is important that funds under section 1897 of the Act be
directed to qualifying hospitals in States that have a significant
presence of Indian tribes. To identify States that have a significant
presence of Indian tribes, we looked to the list of ``Indian Entities
Recognized and Eligible to Receive Services from the United States
Bureau of Indian Affairs.'' The most recent notice was published in the
Federal Register on December 5, 2003 (68 FR 68180) by the Department of
the Interior, Bureau of Indian Affairs.
The statute places a top priority for loan forgiveness on hospitals
that are conducting outreach programs, specifically, on outreach
programs that provide services to multiple Indian tribes. Since the
Congress provided special recognition in the loan forgiveness criteria
to qualifying hospitals providing outreach services to multiple Indian
tribes, we believe it is appropriate to focus on this same criteria in
prioritizing which qualifying hospitals should be granted a loan.
Therefore, we have based the second loan selection criterion on the
presence of multiple Indian tribes, that is, that the qualifying
hospital be located in a State with a large number of Indian tribes. We
do not believe, in light of our understanding of the congressional
intent, that it would be appropriate to initially provide for loans
under section 1897 of the Act to qualifying hospitals in States which
do not have a significant Indian tribe presence.
Therefore, in light of this priority on hospitals providing
outreach to Indian tribes, the second criterion we are using to further
rank qualifying hospitals is based on the number of Indian tribes
within a State. Qualifying hospitals located in 1 of the 10 States with
the lowest population densities (States that meet the first criterion)
will be ranked subsequently according to the number of Indian tribes,
in which the States with the most Indian tribes are given top priority.
We believe hospitals and entities located in States with many Indian
tribes, spread over a large, sparsely populated area, should be given
first priority for loans under section 1897 of the Act, given the focus
in the statute on rural populations and Indian tribes.
Table 1 below, shows the 10 least densely populated States, and
ranks them according to the number of Indian tribes.
[[Page 57371]]
Table 1.--Least Densely Populated States
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Population
Rank for purposes of Section 1016 of the Number of Indian density--average
MMA State tribes population per
square mile
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1.......................................... Alaska....................... 229 1.2
2.......................................... New Mexico................... 23 15.7
3.......................................... Nevada....................... 19 21.3
4.......................................... South Dakota................. 9 10.2
5.......................................... Montana...................... 7 6.4
6.......................................... Utah......................... 7 29.1
7.......................................... Nebraska..................... 6 22.7
8.......................................... North Dakota................. 4 9.2
9.......................................... Idaho........................ 4 16.8
10......................................... Wyoming...................... 2 5.2
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Source: ``Indian Entities Recognized and Eligible to Receive Services from the United State Bureau of Indian
Affairs.'' The most recent notice was published in the Federal Register on December 5, 2003 (68 FR 68180).
U.S. Census Bureau, Population Division, Population Estimates Program, Population Density for States and Puerto
Rico, July 1, 2004, http://www.census.gov/popest/gallery/maps/popdens_2004.html.
D. Application and Selection Criteria (Sec. 505.11)
1. Application Requirements
Qualifying hospitals interested in applying for the loan program
must complete the loan application form which is available at http://www.cms.hhs.gov/providers/hipps.
The qualifying hospital must provide
all appropriate supporting documentation for each answer made on the
loan application. The appropriate official (that is, a Chief Financial
Officer, Chief Executive Officer or equivalent) of the qualifying
hospital must provide signatures for each place indicated on the
application. In accordance with the foregoing discussion, we believe
qualifying hospitals located in States with multiple (or a significant
number) of Indian tribes and low population density, should be given
first priority for loans under section 1897 of the Act.
2. Submission of Application
We will begin to accept applications on September 30, 2005. All
applications must be received by CMS no later than 5 p.m. on December
29, 2005. The request must be mailed or delivered by courier service.
Facsimile (fax) or other electronic means are not acceptable. The
request must be typed or clearly printed in ink. Qualifying hospitals
must mail or deliver an original copy of their loan application to the
following address: Centers for Medicare & Medicaid Services, Center for
Medicare Management, Hospital and Ambulatory Policy Group, Division of
Acute Care, Attention: Loan for Cancer Hospitals Mail Stop C4-08-06
7500 Security Boulevard Baltimore, Maryland 21244-1850.
Applicants may want to send their application by a delivery method
that guarantees a signed receipt, which indicates delivery and date of
delivery of their loan request. The address listed above is applicable
for both United States mail and courier service delivery.
3. Evaluation Process
When we receive applications from qualifying hospitals, we will
first evaluate the applicants to determine whether they meet the
minimum qualifications as specified in section 1897 of the Act (that
is, they are NCI designated cancer centers or designated as the
official cancer institute of the State). We will then rank applicant
entities based on the criteria as specified in Sec. 505.5. We will
continue to evaluate the request for funds under the loan program from
any applicants in the highest ranking State, and subsequently move to
the next highest ranking State, until the funds allocated under the
loan program are exhausted.
If there are multiple qualified applicants from the State with
requests for funds under the loan program that exceed the amount of
funds remaining, we will pro-rate all loan requests of entities in that
State to determine the loan amount for each applicant.
4. Capital Costs Criteria
Section 1897 of the Act provides for making loans to a qualified
hospital to pay for the capital costs of projects. Projects are defined
as those designed to improve the health care infrastructure of the
hospital, including construction, renovation, or other capital
improvements. Therefore, the capital costs for which a qualifying
hospital may obtain funds under the loan program will be based on the
reasonable costs incurred by the hospital. In addition, the capital
costs are to be appropriately capitalized on the Medicare cost report,
for any facility or item of equipment that it has acquired the
possession or use of at the time of application for the loan program.
In determining the reasonableness of the amount of the loan for any
particular facility or item for purposes of the loan program, the
hospital and CMS will follow Medicare reasonable cost principles as
specified in Medicare regulations and program operating instructions.
Payment based on reasonable cost principles is a long-standing and
established methodology used by Medicare and we believe it is
appropriate to apply it to the loan program.
Accordingly, a qualifying hospital that has acquired or built a
facility and/or has acquired equipment as an eligible project defined
at Sec. 505.3 and the acquisition costs of the asset(s) are
appropriately reported on its Medicare cost report following Medicare
reasonable cost principles, could apply for a loan not to exceed the
net book value of the asset(s) as of the date of its application to CMS
for the loan program. Since CMS has been directed to implement section
1897 of the Act, we believe that it is appropriate to apply the
standard Medicare interest rate specified in 45 CFR 30.13(a),
established by the Secretary of the Treasury, and published quarterly
in the Federal Register, which we use for our Medicare program, to the
loan program.
Alternatively, if a qualifying hospital had not acquired the
possession or use of the asset(s) by the date of the application for
the funds available under the loan program, the reasonable cost of the
asset(s) could nevertheless be the basis for the hospital to apply for
funds available under the loan program if the hospital has entered into
a contractual obligation via a binding written agreement before
December 8, 2003 (the date of enactment of the
[[Page 57372]]
MMA) in order to ensure that the funds are being used in accordance
with the program.
The amount of the loan cannot exceed the cost of the asset as of
the date the application is due to CMS September 30, 2005 based on the
cost in the binding written agreement and following Medicare reasonable
cost principles.
E. Terms of the Loan Program
In Sec. 505.7, we set forth the ``terms and conditions'' of the
loan program.
In order to be awarded funds under the loan program, a
participating entity must meet the criteria of a qualified hospital or
entity as specified in Sec. 505.3.
1. Loan Obligation (Sec. 505.7(a))
An authorized official of each qualifying hospital must execute a
promissory note, loan agreement, or any other approved form that we may
designate, to ensure compliance with the terms of the loan program.
2. Schedule of Loan (Sec. 505.7(b))
Each loan recipient will receive a lump sum distribution for which
payment of principal and interest is deferred for 60 months beginning
with the day we notify the qualifying hospital of award notification.
The loan repayment period is 20 years. However, the loan recipient must
agree to furnish to us cancer care data during the deferment period.
3. Bankruptcy Protection (Sec. 505.7(c))
In the event a loan recipient should file for bankruptcy protection
in a court of competent jurisdiction or should otherwise evidence
insolvency, we may terminate the deferment and require immediate
payment of the loan. If a loan recipient should file for bankruptcy
protection in a court of competent jurisdiction or should otherwise
evidence insolvency after the deferment period we will require
immediate repayment of the outstanding principal and interest due.
Those payments may be deducted from any Medicare payments otherwise due
that hospital.
4. Loan Forgiveness (Sec. 505.7(d))
As previously mentioned, we are publishing a separate rule making
document regarding the forgiveness of indebtedness in which we will
propose criteria as specified in the statute.
5. Default (Sec. 505.7(e))
Additionally, if a loan recipient fails to make any payment in
repayment of a loan under the loan program within 10 days of its due
date, the loan recipient may be considered in default on the loan.
Under the Federal Debt Collection Act, upon default, all principal and
interest become due immediately, and we reserve the right to collect on
any remaining principal and interest due. Those payments may be
deducted from any Medicare payments otherwise due that hospital.
F. Loan Repayment (Sec. 505.7(f))
The loan recipient agrees to make payments every month for 20 years
until the loan, including interest, is repaid. For qualifying hospitals
that are ineligible for loan forgiveness, payments are due starting on
the first day of the next month following the deferment period.
Payments will be made monthly until all of the principal and interest
owed are paid in full. Interest will be charged on the unpaid principal
until the full amount of principal has been paid. A loan recipient will
pay interest at a yearly rate based upon the rate as fixed by the
Secretary of the Treasury which is published quarterly in the Federal
Register as specified in 45 CFR 30.13(a). Payments must be mailed to:
CMS/Division of Accounting Operations, P.O. Box 7520, Baltimore, MD
21207-0520.
G. Payments
1. Interest Rate and Monthly Payment Changes (Sec. 505.7(g))
The regulations in 42 CFR part 405 subpart C provide authority for
us to collect interest on certain payments. Therefore, to the extent
that payments are due, we are establishing that interest charges and
payments be made consistent with Sec. 405.378.
2. Loan Recipient's Right To Prepay (Sec. 505.7(h))
A loan recipient has the right to make payments of principal at any
time before they are due. A payment of principal only is known as a
``prepayment.'' A loan recipient may make full prepayment or partial
prepayment without paying any prepayment charge. When a prepayment is
made, the qualifying hospital must provide us with written notice.
H. State and Local Permits (Sec. 505.9)
In Sec. 505.9, we set forth the ``State and local permit''
requirements. Consistent with section 1897 of the Act, the entity must
agree to the following terms and conditions: The provision of a loan
under section 1897 shall not--
Relieve the hospital of any obligation to obtain any
required State or local permit or approval with respect to the project;
Limit the right of any unit of State or local government
to approve or regulate any rate of return on private equity invested in
the project; or
Otherwise supersede any State or local law (including any
regulation) applicable to the construction or operation of the project.
III. 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.
IV. Waiver of Proposed Rulemaking
We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule before
the effective date of the rule. This procedure can be waived, however,
when an agency finds good cause that a notice and comment procedure is
impracticable, unnecessary or contrary to the public interest. We find
good cause to implement this rule as an interim final rule because the
delay involved in the prior notice and comment procedure for the loan
program for the infrastructure for cancer centers would be
impracticable and contrary to the public interest.
The Congress enacted section 1897 of the Act to provide a loan
program for a qualifying hospital to improve the health care
infrastructure of the hospital. The program is designed to enable a
number of cancer hospitals to expand or improve their healthcare
infrastructure, develop enhanced capacity and research resources, and
serve the medical needs of their populations. We believe that it is not
in the public interest to delay the loan program and prevent the
affected parties from having access to such services.
The Congress provided $142,000,000 for the loan program effective
July 1, 2004 through September 30, 2008, and not more than $2,000,000
may be used for the administration of the loan program for each of the
fiscal years (that is, 2004 through 2008).
These legislative changes demonstrate that the Congress has
concerns about the improvement of the cancer-related health care
hospital infrastructure in the United States. As specified in section
1897(c)(2) of the Act, in order to receive funds under the loan
program, an applicant entity is required to--(1) be engaged in research
into the causes, prevention, and treatment of cancer; (2) be designated
as a cancer center for the
[[Page 57373]]
NCI, or be designated by the State legislature as the official cancer
institute of the State before December 8, 2003. Delay in issuing this
interim final rule with comment period could hinder our programmatic
objective of improving cancer care and outreach, particularly with
respect to the residents in rural areas, and Indian tribes. For
example, this interim final rule with comment period provides funding
to hospitals in rural areas that engage in research in the causes,
prevention, and treatment of cancer and that establish an outreach
program for cancer prevention, early diagnosis, and treatment.
Beneficiary access to quality cancer care in underserved or rural areas
is a critical programmatic objective. It is not in the public interest
to delay finalizing this loan program which is designed to serve this
purpose.
The Congress further indicated that the selection criteria for
making loans consider the extent of medical benefit gained from
projects to expand or improve the health care infrastructure for which
this loan program is intended. The funds made available to improve that
infrastructure are only available for a time-limited period (ending
September 30, 2008) and nearly 1 year has passed since those funds were
first made available. It would be impracticable and contrary to the
public interest to issue a proposed rule and further delay access to
these time-limited funds.
In accordance with the foregoing, we believe that it would be
impracticable and contrary to the public interest to delay
implementation of the loan program pending the process of publishing
both a proposed rule and a final rule. Publishing these provisions in
an interim final rule with comment period will give the public an
opportunity to submit comments. Publication of this interim final rule
with comment period will serve the public interest by ensuring that
providers have access to funds, and that beneficiaries, Indian tribes,
and residents of rural areas have access to improved cancer outreach
services, as expeditiously as possible, consistent with Congressional
intent. Therefore, in order to establish the loan application process
and selection criteria to award the funds of the time-limited loan
program, we find good cause to waive proposed rulemaking for the
revised requirements set forth under the Administrative Procedure Act
(5 U.S.C. 553(b))and to issue these regulations in final. However, we
are providing a 60 day period for public comment, as indicated at the
beginning of this rule.
V. Collection of Information Requirements
The collection of information requirements at 5 CFR 1320 are
applicable to requirements affecting 10 or more entities. While this
regulation contains information collection requirements, because we
believe that these requirements will affect less than 10 entities, we
believe that these collection requirements are exempt from OMB for
review and approval, as specified at 5 CFR 1320.3(c)(4). Consequently,
this rule does not need to be reviewed by the Office of Management and
Budget under the authority of the Paperwork Reduction Act of 1995.
VI. Regulatory Impact
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 interim final rule with comment period is a major rule in which
$142 million is appropriated to carry out the Health Care
Infrastructure Improvement Program.
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, all
hospitals are considered small businesses according to the Small
Business Administration's latest size standards with total revenues of
$26 million or less in any 1 year (for further information, see the
Small Business Administration's regulation at 65 FR 69432, November 17,
2000). Individuals and States are not included in the definition of a
small entity. This interim final rule with comment period affects
qualifying hospitals as defined by section 1897 as--(1) a hospital or
entity as defined in Sec. 505.3 that is engaged in research in the
causes, prevention, and treatment of cancer; and (2) designated as a
cancer center for the National Cancer Institute (NCI) or is designated
by the State legislature as the official cancer institute of the State
and such designation by the State legislature occurred before December
8, 2003. We believe a total of 61 facilities meet the definition of
qualifying hospitals as specified in Sec. 505.3 (that is, 60 NCI
cancer centers and 1 State legislature designated cancer institute).
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. None of the 61 eligible
facilities that we have identified are 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 interim final rule
with comment period does not mandate any requirements for State, local,
or tribal governments, nor will it result in expenditures by the
private sector of $120 million in any 1 year.
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. As specified in section 1897 of the Act, no provisions
under the loan program will relieve an obligation of State, local
permits or limit or otherwise supersede any State or local law.
B. Anticipated Effects
1. Effects on Hospitals
The provisions of this interim final rule with comment period are
limited to qualifying hospitals. Only 61 facilities
[[Page 57374]]
meet the definition of qualified hospitals as specified in Sec. 505.3.
Since the capital costs of projects which the loan program is designed
to pay for are likely to be substantial and expensive, we expect only a
small percentage of the 61 eligible facilities will actually be granted
loans under this provision before the funds are exhausted. For the few
qualifying hospitals that will receive funds under the loan program, we
expect they will use the money on projects that are designed to improve
the healthcare infrastructure of the hospital including construction,
renovation, or other capital improvements and which would result in
better facilities in which to provide cancer care to our beneficiaries.
However, we believe that the effect will be limited to those few
qualifying hospitals that will receive loan funds. Thus, the provisions
in this IFC will not have a significant economic impact on a
substantial number of hospitals.
2. Effects on the Medicare and Medicaid programs
This interim final rule with comment period will have little impact
on the Medicare trust fund. The Congress provided $142,000,000 for the
loan program effective July 1, 2004 through September 30, 2008, and not
more than $2,000,000 may be used for the administration of the loan
program for each of the fiscal years (that is, 2004 through 2008).
C. Alternatives Considered
We considered no alternatives to the policies in this interim final
rule with comment period since the statute authorizes the establishment
of these policies.
D. Conclusion
For these reasons, we are not preparing further analyses for either
the RFA or section 1102(b) of the Act because we have determined that
this rule will not have a significant economic impact on a substantial
number of small entities or a significant impact on the operations of a
substantial number of small rural hospitals.
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 505
Administrative practice and procedure, Health facilities, Loan
programs, Infrastructure improvement program, Reporting and
recordkeeping, and Rural areas.
0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV by adding a new subchapter H
(consisting of a new part 505) to read as follows:
SUBCHAPTER H--HEALTH CARE INFRASTRUCTURE IMPROVEMENT PROGRAM
PART 505--ESTABLISHMENT OF THE HEALTH CARE INFRASTRUCTURE
IMPROVEMENT PROGRAM
Subpart A--Loan Criteria
Secs.
505.1 Basis and scope.
505.3 Definitions.
505.5 Loan criteria.
505.7 Terms of the loan.
505.9 State and local permits.
505.11 Loan application requirements and procedures.
Subpart B--[Reserved]
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C 1302 and 1395hh).
Subpart A--Loan Criteria
Sec. 505.1 Basis and scope.
This part implements section 1016 of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (MMA) which amends
section 1897 of the Act. Section 1897 of the Act as amended by section
6045 of the Tsunami Relief Act of 2005 authorizes the Secretary to
establish a loan program by which qualifying hospitals may apply for a
loan for the capital costs of the health care infrastructure
improvement projects. Section 1897 of the Act appropriates $142,000,000
for the loan program including program administration. The funds are
available beginning July 1, 2004 through September 30, 2008. This part
sets forth the criteria that CMS uses to select among qualifying
hospitals.
Sec. 505.3 Definitions.
For purposes of this subpart, the following definitions apply:
Eligible project means the project of a qualifying hospital that is
designed to improve the health care infrastructure of the hospital,
including construction, renovation, or other capital improvements.
Entity is an entity described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from tax under section 501(a) of the
code. An entity must also have at least one existing memorandum of
understanding or affiliation agreement with a hospital located in the
State in which the entity is located and retains clinical outpatient
treatment for cancer on site as well as laboratory research, education,
and outreach for cancer in the same facility.
Qualifying hospital means a hospital as defined at section 1861(e)
of the Act (42 U.S,C. 1395x(e)) or an entity (as defined in this
section) that is engaged in research in the causes, prevention, and
treatment of cancer; and is either designated as a cancer center for
the National Cancer Institute; or designated by the State legislature
as the official cancer institute of the State before December 8, 2003.
Sec. 505.5 Loan criteria.
(a) Qualifying criteria. To qualify for the loan program, the
applicant must meet the following conditions:
(1) Meet the definition of a ``qualifying hospital'' as set forth
in Sec. 505.3 of this part.
(2) Request a loan for the capital costs of an ``eligible project''
as defined in Sec. 505.3 of this part. The capital costs for which a
qualifying hospital may obtain a loan are limited to the reasonable
costs incurred by the hospital, and capitalized on the Medicare cost
report, for any facility or item of equipment that it has acquired the
possession or use of at the time the loan funding is awarded.
(b) Selection criteria. In selecting loan recipients, CMS
prioritizes qualifying hospitals that meet the following criteria:
(1) The hospital is located in a State that, based on population
density, is defined as a rural State. A rural State is one of ten
States with the lowest population density. An applicant entity is
required to be located in one of these ten States. The ten States are
prioritized beginning with the State with the lowest population
density. Population density is determined based on the most recent
available U.S. Census Bureau data.
(2) The hospital is located in a State with multiple Indian tribes
in the State. After prioritizing based on paragraph (b)(1) of this
section, States are further prioritized based on the States with the
most Indian tribes. The number of Indian tribes in a State is based on
the most recent data available published in ``Indian Entities
Recognized and Eligible to Receive Services from the United State
Bureau of Indian Affairs.'' (68 FR 68180) published on December 5,
2003.
(c) CMS will send written notice to qualifying hospitals that have
been selected to participate in the loan program under this part.
Sec. 505.7 Terms of the loan.
All loan recipients must agree to the following loan terms:
(a) Loan obligation. An authorized official of a qualifying
hospital must execute a promissory note, loan agreement, or a form
approved by CMS and accompanied by any other
[[Page 57375]]
documents CMS may designate. The loan recipient must provide required
documentation in a timely manner.
(b) Schedule of loan. A loan recipient receives a lump sum
distribution for which payment of principal and interest is deferred
for 60 months beginning with the day of award notification from CMS.
The loan repayment period is 20 years.
(c) Bankruptcy protection. In the event a loan recipient files for
bankruptcy protection in a court of competent jurisdiction or otherwise
proves to be insolvent, CMS may terminate the deferment period
described in paragraph (b) of this section and require immediate
payment of the loan. If a loan recipient should file for bankruptcy
protection in a court of competent jurisdiction or should otherwise
evidence insolvency after the deferment period we will require
immediate repayment of the outstanding principal and interest due.
Those payments may be deducted from any Medicare payments otherwise due
that hospital.
(d) Loan forgiveness. CMS does not require a loan recipient to
begin making payments of principal or interest at the end of the 60-
month deferment period if it determines that the loan recipient meets
the criteria for loan forgiveness under section 1897 of the Act, as
determined by the Secretary.
(e) Default. If a loan recipient fails to make any payment in
repayment of a loan under this subpart within 10 days of its due date,
the loan recipient may be considered to have defaulted on the loan.
Upon default, all principal and accrued interest become due
immediately, and CMS may require immediate payment of any outstanding
principal and interest due. Those payments may be deducted from any
Medicare payments otherwise due that hospital.
(f) Loan repayment. The loan recipient must meet the following
conditions:
(1) Make payments every month for 20 years until the loan,
including interest payments, are paid in full.
(2) Pay interest on the unpaid principal until the full amount of
principal has been paid.
(3) Pay interest at a yearly rate based upon the rate as fixed by
the Secretary of the Treasury and set forth at 45 CFR 30.13(a).
(4) If a loan recipient fails to make any payment in repayment of a
loan under this subpart within 10 days of its due date, that payment
may be deducted from any Medicare payments otherwise due to the
recipient.
(g) Interest rate and monthly payment charges. CMS calculates
interest charges and payments consistent with Sec. 405.378 of this
chapter.
(h) Loan recipient's right to prepay. A loan recipient has the
right to make payments of principal at any time before they are due. A
loan recipient may make full prepayment or partial prepayment without
paying any prepayment charge. If a prepayment is made, the loan
recipient must provide written notice to CMS at CMS, Division of
Accounting Operations, P.O. Box 75120, Baltimore, MD 21207-0520.
Sec. 505.9 State and local permits.
With respect to an eligible project, the provision of a loan under
this part shall not--
(a) Relieve the recipient of the loan or any obligation to obtain
any required State or local permit or approval with respect to the
project.
(b) Limit the right of any unit of State or local government to
approve or regulate any rate of return on private equity invested in
the project.
(c) Supersede any State or local law (including any regulation)
applicable to the construction or operation of the project.
Sec. 505.11 Loan application requirements and procedures.
(a) The loan application must be received by CMS no later than 5
p.m. e.d.t. on December 29, 2005.
(b) The requested information must be typed or clearly printed in
ink and the loan recipient must mail or deliver an original copy of the
loan to CMS. The loan application must contain the following
information:
(1) Qualifying hospital's name and street address.
(2) Qualifying hospital's Medicare provider number.
(3) Name, title, and telephone number of a contact person
submitting the application.
(4) Provide all appropriate supporting documentation for each
answer made on the loan application.
Subpart B--[Reserved]
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: June 28, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: August 3, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-19306 Filed 9-23-05; 4:00 pm]
BILLING CODE 4120-03-P