[Federal Register: December 5, 2007 (Volume 72, Number 233)]
[Rules and Regulations]
[Page 68699-68741]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05de07-22]
[[Page 68699]]
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Part V
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 422 and 423
Medicare Program; Revisions to the Medicare Advantage and Part D
Prescription Drug Contract Determinations, Appeals, and Intermediate
Sanctions Processes; Final Rule
[[Page 68700]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 422 and 423
[CMS-4124-FC]
RIN 0938-AO78
Medicare Program; Revisions to the Medicare Advantage and Part D
Prescription Drug Contract Determinations, Appeals, and Intermediate
Sanctions Processes
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This rule with comment period finalizes the Medicare program
provisions relating to contract determinations involving Medicare
Advantage (MA) organizations and Medicare Part D prescription drug plan
sponsors, including eliminating the reconsideration process for review
of contract determinations, revising the provisions related to appeals
of contract determinations, and clarifying the process for MA
organizations and Part D plan sponsors to complete corrective action
plans. In this final rule with comment period, we also clarify the
intermediate sanction and civil money penalty (CMP) provisions that
apply to MA organizations and Medicare Part D prescription drug plan
sponsors, modify elements of their compliance plans, retain voluntary
self-reporting for Part D sponsors and implement a voluntary self-
reporting recommendation for MA organizations, and revise provisions to
ensure HHS has access to the books and records of MA organizations and
Part D plan sponsors' first tier, downstream, and related entities.
Although we have decided not to finalize the mandatory self-reporting
provisions that we proposed, CMS remains committed to adopting a
mandatory self-reporting requirement. To that end, we are requesting
comments that will assist CMS in crafting a future proposed regulation
for a mandatory self-reporting requirement.
DATES: Effective date: These regulations are effective on January 4,
2008, except for the amendments to Sec. Sec. 422.503, 422.504,
423.504, and 423.505, which are effective January 1, 2009.
Comment Period: We will consider comments on the mandatory self-
reporting provisions discussed in section II of this final rule with
comment period at the appropriate address, as provided below, no later
than February 4, 2008.
ADDRESSES: In commenting, please refer to file code CMS-4124-FC.
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-4124-FC, 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 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-4124-FC, 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) 786-9994 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.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Christine Reinhard, (410) 786-2987.
Kevin Stansbury, (410) 786-2570.
Stephanie Kaisler, (410) 786-0957, for issues regarding voluntary
self-reporting, access to records, and compliance.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on
mandatory self-reporting to assist us in fully considering issues and
developing policies. You can assist us by referencing the file code
CMS-4124-FC and ``self-reporting.''
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.
Abbreviations
Because of the many terms to which we refer by abbreviation in this
final rule with comment period, we are listing these abbreviations and
their corresponding terms in alphabetical order below:
ALJ Administrative Law Judge
BBA Balanced Budget Act of 1997
CAP Corrective Action Plan
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid Services
DAB Departmental Appeals Board
FWA Fraud, Waste, and Abuse
HHS U.S. Department of Health and Human Services
MA Medicare Advantage
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
M+C Medicare + Choice
OIG Office of the Inspector General
[[Page 68701]]
PBM Pharmaceutical Benefit Manager
PDE Prescription Drug Event
I. Background
On May 25, 2007, we published a proposed rule in the Federal
Register (72 FR 29368, hereafter referred to as the proposed rule),
setting forth the proposed provisions relating to contract
determinations involving Medicare Advantage (MA) organizations and
Medicare Part D prescription drug plan sponsors, intermediate sanction
and civil money penalty (CMP) provisions, compliance plans, mandatory
self-reporting, and provisions to ensure the Department of Health and
Human Services (HHS) has access to the books and records of MA
organizations and Part D plan sponsors' first tier, downstream, and
related entities. In this final rule with comment period we are
finalizing the majority of the provisions of the proposed rule, with
some clarifications in response to public comments. At this time, we
are not finalizing the proposed provision for mandatory self-reporting
of potential fraud and abuse, but we intend to issue future rulemaking
on this topic, as discussed below in section II.
A. Overview of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA)
The President signed the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA) (Pub. L. 108-173) into law on
December 8, 2003. The MMA established the Medicare prescription drug
benefit program and renamed the Medicare+Choice (M+C) program the
Medicare Advantage (MA) program. In accordance with the MMA, we revised
the existing Medicare regulations applicable to the MA program at 42
CFR part 422 and published regulations governing the prescription drug
benefit program at 42 CFR part 423.
As we have gained more experience with MA organizations and Part D
prescription drug plan sponsors, we proposed clarifications to the
Medicare program provisions relating to contract determinations
involving MA organizations and Medicare Part D prescription drug plan
sponsors, including eliminating the reconsideration process for review
of contract determinations; revising the provisions related to appeals
of contract determinations and clarifying the process for MA
organizations and Part D plan sponsors to complete corrective action
plans. We proposed clarifications to the intermediate sanction and
civil money penalty (CMP) provisions that apply to MA organizations and
Medicare Part D prescription drug plan sponsors. We also proposed
changes in both programs to clarify elements of the compliance plan
requirements, such as training and education, and changes to clarify
our access to the books and records of a MA organization or Part D
sponsor's first tier, downstream, and related entities. Finally, we
proposed a self-reporting requirement as part of both MA organization
and Part D sponsor's compliance plans. We have decided at this time not
to finalize the provision requiring mandatory self-reporting of
potential fraud and misconduct. Until such time as such a provision is
finalized, we have chosen to retain voluntary self-reporting for Part D
sponsors and implement a recommendation for voluntary self-reporting
for MA Organizations.
B. Relevant Legislative History and Overview
The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) established
the M+C program. Under section 1851(a)(1) of the Social Security Act
(the Act), every individual with Medicare Parts A and B, except for
individuals with end-stage renal disease (ESRD), could elect to receive
benefits either through the original Medicare program or an M+C plan,
if one was offered where the beneficiary lived. The primary goal of the
M+C program was to provide Medicare beneficiaries with a wider range of
health plan choices.
The Medicare, Medicaid, and State Children's Health Insurance
Program (SCHIP) Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L.
106-113), amended the M+C provisions of the BBA. Further amendments
were made to the M+C program by the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-
554), enacted December 21, 2000.
The President signed the MMA into law on December 8, 2003. Title I
of the MMA added new sections 1860D-1 through 1860D-42 to the Act
creating the Medicare Prescription Drug Benefit program, a landmark
change to the Medicare program since its inception in 1965.
Sections 201 through 241 of Title II of the MMA made significant
changes to the M+C program. As directed by Title II of the MMA, we
renamed the M+C program the MA program. We also revised our regulations
to include new payment and bidding provisions based largely on risk, to
recognize the addition of regional Preferred Provider Organization
(PPO) plans, to address the provision of prescription drug benefits
under the Medicare Part D regulations, and to make other changes.
The MMA, at section 1860D-12(b)(3) of the Act, directed that
specific aspects of the MA contracting requirements apply to the
prescription drug plan benefit program. Consequently, the processes for
contract determinations and the administrative appeal rights in the two
programs are virtually identical.
We published the regulations implementing the MA and prescription
drug benefit regulations separately, though their development and
publication were closely coordinated. On August 3, 2004, we published
proposed rules for the MA program (69 FR 46866) and prescription drug
benefit program (69 FR 46632). The final regulations implementing both
the MA and prescription drug programs were published on January 28,
2005 (70 FR 4588 and 70 FR 4194, respectively). We revised some of our
proposed provisions in the final rules in response to public comments.
For further discussion of the revisions we made to our proposed rules,
see the final rules cited above. We have not issued previous guidance,
other than regulatory requirements regarding contract determinations,
corrective action plans, contract determination appeals, intermediate
sanctions, or CMPs. However, we have published guidance on how to
develop an effective fraud, waste and abuse (FWA) prevention program.
This guidance is found in Chapter 9 of the Prescription Drug Benefit
Manual entitled ``Part D Program to Control Fraud, Waste and Abuse.''
This rule makes further revisions to the MA and prescription drug
regulations.
II. Summary of the Provisions of the Proposed Rule and Analysis of and
Response to Public Comments
In response to the publication of the May 25, 2007 proposed rule,
we received 58 timely items of correspondence from the public. We
received numerous comments from various trade associations and health
insurance providers. Comments also originated from other providers,
suppliers, and practitioners, health care consulting firms, and private
citizens.
Brief summaries of each proposed provision, a summary of the public
comments we received (with the exception of specific comments on the
paperwork burden or the impact analysis), and our responses to the
comments are set forth below. Comments related to the paperwork burden
and the impact analysis are addressed in the Collection of Information
and Impact Analysis Sections in this preamble.
[[Page 68702]]
A. General Comments on the Proposed Rule
Comment: We received a question related to the applicability of the
Part 423 provisions to Medicare cost contractors who offer Part D
plans.
Response: Cost plans, per 42 CFR 417.440(b)(2)(ii), which offer a
Part D prescription drug program as an optional supplemental benefit,
must offer the benefits ``in accordance with applicable requirements
under Part 423.'' The current proposed revisions do not change the
existing regulations. Therefore, the Part 423 regulations would
continue to apply to cost plans just as they have prior to the
publication of this rule.
B. Proposed Changes to the Medicare Advantage Program and the
Prescription Drug Benefit Program
Our experience involving contract determinations, appeals,
intermediate sanctions, and CMPs since the enactment of the BBA of 1997
led us to propose changes to our regulations. In the proposed rule, we
proposed to simplify the procedures for contract determinations; to
clarify the procedures regarding submission and review of corrective
action plans; to clarify the procedures for imposition of intermediate
sanctions and CMPs; and to clarify the procedures to appeal CMPs
imposed under the MA and Part D programs.
In addition, we proposed revisions to the appeal procedures for all
types of contract determinations, which would make these procedures
identical for decisions not to contract, nonrenewals, and terminations.
We proposed to provide for enhanced beneficiary protections when we
decide to terminate a plan on an expedited basis.
In the proposed rule, we also proposed changes and clarifications
to Subpart K, contract requirements under the MA and Part D programs.
We proposed changes to clarify HHS' access to the books and records of
a MA organization or Part D sponsor's first tier, downstream, and
related entities. We also proposed changes to clarify that certain
elements of the compliance plan apply to first tier, downstream, and
related entities. We also proposed mandatory self-reporting in both the
MA and Part D programs, but we are not finalizing the provision at this
time.
Below, we set forth the final regulatory changes, and corresponding
final implementation dates:
------------------------------------------------------------------------
Implementation
Regulation change date
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Incorporation of Fraud, Waste, and Abuse Prevention 1/1/2009
Measures into Compliance Plan......................
Requirement to apply Compliance Plan's training and 1/1/2009
communication requirements to first tier,
downstream, and related entities...................
Voluntary procedures for MA organizations for self- 1/1/2009
reporting potential fraud and misconduct...........
Requirement to obtain access to Part D sponsor's 1/1/2009
first tier, downstream, and related entity's books
and records through contractual arrangements.......
Elimination of CMS' requirement to inform 1/4/2008
organization of renewal............................
Change date of CMS' notification of non-renewal from 1/4/2008
May 1 to August 1..................................
Provide for same administrative appeal rights 1/4/2008
(including Corrective Action Plans (CAPs)) for all
contract determinations (non-renewal, expedited
termination, termination)..........................
Change regarding CAP process may be provided prior 1/4/2008
to notification of termination, and the imposition
of time limits on Corrective Action Plans..........
Change immediate termination to expedited 1/4/2008
termination with CMS setting the effective date of
termination........................................
Elimination of Reconsideration Step for contract 1/4/2008
determination appeals..............................
Implementation of Burden of Proof for contract 1/4/2008
determinations.....................................
Ability for a hearing officer to issue summary 1/4/2008
judgment...........................................
Request for Administrator review, submission of 1/4/2008
information, and timeframe associated with
Administrator review...............................
Settlement of Civil Money Penalties................. 1/4/2008
Appeal procedures for Civil Money Penalties......... 1/4/2008
------------------------------------------------------------------------
We did not receive any comments on the implementation dates we
proposed and are generally finalizing the implementation dates as we
proposed, with minor modification to reflect that certain provisions
will be effective on January 4, 2008. However, since we are not
implementing the proposed mandatory self-reporting requirement at this
time, we have only included a reference to an implementation date for
the voluntary self-reporting recommendation for MA organizations in the
above chart. We are retaining the existing voluntary self-reporting
recommendation for Part D sponsors so that recommendation is currently
in effect and will remain in effect in the future.
C. Distribution Table
The following crosswalk table references the changes we are making
to the prescription drug and the MA programs. We proposed making the
same changes to 42 CFR parts 422 and 423 with minimal differences. The
crosswalk lists the section headings, for parts 422 and 423, and
indicates if the section is being deleted.
Table 1.--Crosswalk of Part 422 and Part 423 CFR Sections
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Section references in
Section heading part 422 Section references in part 423
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Definitions....................................... 422.2................... 423.4
Compliance Plan................................... 422.503(b)(4)(vi)....... 423.504(b)(4)(vi)
Access to Facilities and Records.................. 422.504(e) and 423.505(e)
422.503(d)(2)(iii).
Contract Provisions............................... 422.504(i).............. 423.505(i)
Effective Date and Term of Contract............... 422.505................. 423.506
Non-renewal of contract........................... 422.506................. 423.507
[[Page 68703]]
Termination of contract by CMS.................... 422.510................. 423.509
Notice of contract determination.................. 422.644................. 423.642
Effect of contract determination.................. 422.646................. 423.643
Reconsideration: applicability.................... 422.648 (delete)........ 423.644 (delete)
Request for reconsideration....................... 422.650 (delete)........ 423.645 (delete)
Opportunity to submit evidence.................... 422.652 (delete)........ 423.646 (delete)
Reconsidered determination........................ 422.654 (delete)........ 423.647 (delete)
Notice of reconsidered determination.............. 422.656 (delete)........ 423.648 (delete)
Effect of reconsidered determination.............. 422.658 (delete)........ 423.649 (delete)
Right to a hearing and burden of proof............ 422.660................. 423.650
Request for hearing............................... 422.662................. 423.651
Postponement of effective date of a contract 422.664................. 423.652
determination when a request for a hearing with
respect to a contract determination is filed
timely.
Time and Place of Hearing......................... 422.670................. 423.655
Discovery......................................... 422.682................. 423.661
Prehearing and Summary Judgment................... 422.684................. 423.662
Review by the Administrator....................... 422.692................. 423.666
Reopening of initial contract determination or 422.696................. 423.668
intermediate sanction or decision of a hearing
officer or the Administrator.
Effect of revised determination................... 422.698 (delete)........ 423.669 (delete)
Types of intermediate sanctions and civil money 422.750................. 423.750
penalties.
Basis for imposing intermediate sanctions and 422.752................. 423.752
civil money penalties.
Procedures for imposing intermediate sanctions and 422.756................. 423.756
civil money penalties.
Collection of civil money penalty imposed by CMS.. 422.758................. 423.758
Determinations regarding the amount of civil money 422.760................. 423.760
penalties and assessment imposed by CMS.
Settlement of penalties........................... 422.762................. 423.762
Other applicable provisions....................... 422.764................. 423.764
Basis and scope................................... 422.1000................ 423.1000
Definitions....................................... 422.1002................ 423.1002
Scope and applicability........................... 422.1004................ 423.1004
Appeal rights..................................... 422.1006................ 423.1006
Appointment of representatives.................... 422.1008................ 423.1008
Authority of representatives...................... 422.1010................ 423.1010
Fees for services of representatives.............. 422.1012................ 423.1012
Charge for transcripts............................ 422.1014................ 423.1014
Filing of briefs with the Administrative Law Judge 422.1016................ 423.1016
or Departmental Appeals Board, and opportunity
for rebuttal.
Notice and effect of initial determinations....... 422.1018................ 423.1018
Request for hearing............................... 422.1020................ 423.1020
Parties to the hearing............................ 422.1022................ 423.1022
Designation of hearing official................... 422.1024................ 423.1024
Disqualification of Administrative Law Judge...... 422.1026................ 423.1026
Prehearing conference............................. 422.1028................ 423.1028
Notice of prehearing conference................... 422.1030................ 423.1030
Conduct of prehearing conference.................. 422.1032................ 423.1032
Record, order, and effect of prehearing conference 422.1034................ 423.1034
Time and place of hearing......................... 422.1036................ 423.1036
Change in time and place of hearing............... 422.1038................ 423.1038
Joint hearing..................................... 422.1040................ 423.1040
Hearing on new issues............................. 422.1042................ 423.1042
Subpoenas......................................... 422.1044................ 423.1044
Conduct of hearing................................ 422.1046................ 423.1046
Evidence.......................................... 422.1048................ 423.1048
Witnesses......................................... 422.1050................ 423.1050
Oral and written summation........................ 422.1052................ 423.1052
Record of hearing................................. 422.1054................ 423.1054
Waiver of right to appear and present evidence.... 422.1056................ 423.1056
Dismissal of request for hearing.................. 422.1058................ 423.1058
Dismissal for abandonment......................... 422.1060................ 423.1060
Dismissal for cause............................... 422.1062................ 423.1062
Notice and effect of dismissal and right to 422.1064................ 423.1064
request review.
Vacating a dismissal of request for hearing....... 422.1066................ 423.1066
Administrative Law Judge's decision............... 422.1068................ 423.1068
Removal of hearing to Departmental Appeals Board.. 422.1070................ 423.1070
Remand by the Administrative Law Judge............ 422.1072................ 423.1072
Right to request Departmental Appeals Board review 422.1074................ 423.1074
of Administrative Law Judge's decision or
dismissal.
Request for Departmental Appeals Board review..... 422.1076................ 423.1076
Departmental Appeals Board action on request for 422.1078................ 423.1078
review.
Procedures before Departmental Appeals Board on 422.1080................ 423.1080
review.
[[Page 68704]]
Evidence admissible on review..................... 422.1082................ 423.1082
Decision or remand by the Departmental Appeals 422.1084................ 423.1084
Board.
Effect of Departmental Appeals Board decision..... 422.1086................ 423.1086
Extension of time for seeking judicial review..... 422.1088................ 423.1088
Basis, timing, and authority for reopening an 422.1090................ 423.1090
Administrative Law Judge or Board decision.
Revision of reopened decision..................... 422.1092................ 423.1092
Notice and effect of revised decision............. 422.1094................ 423.1094
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We did not receive any comments on the crosswalk distribution table
and have made no substantial changes to it. We are finalizing the table
as proposed.
D. Proposed Changes to Part 422--Medicare Advantage Program and Part
423--Medicare Prescription Drug Benefit Program
Sections 422.2 and 423.4--Definitions
We proposed to correct a technical oversight in both regulations by
including the definitions of ``downstream entity,'' ``first tier
entity,'' and ``related entity,'' in the overall definitions sections
of both the MA and Part D regulations at Sec. 422.2 and Sec. 423.4 to
ensure that these terms are used consistently throughout both programs.
Since these three terms are only defined in Subpart K of parts 422 and
423, we proposed to add them to Subpart A, General Provisions at Sec.
422.2 and Sec. 423.4.
Please see page 29372 of the proposed rule for a flow chart that
provides examples of, and describes the relationships between, Part D
sponsors, and first tier, downstream, and related entities.
Comment: A few commenters requested more explicit definitions of
first tier, downstream, and related entities. They asked us to provide
clarification for the terms record retention, administrative services,
written arrangements, acceptable to CMS, CMS instructions, and
directors. We also received a request that we clarify the phrase ``a
written agreement, acceptable to CMS,'' found in the definition of
``downstream entity,'' and a request that we clarify which entities are
involved in such an arrangement.
Response: The terms ``first tier entity,'' ``downstream entity,''
and ``related entity'' are already defined in Subpart K of parts 422
and 423, and we are only including them in Subpart A, General
Provisions at Sec. 422.2 and Sec. 423.4 for clarity, since these
terms were originally defined in only Subpart K. Examples of downstream
entities include, but are not limited to, pharmacy benefit managers,
mail order pharmacies, retail pharmacies, firms providing agent/broker
services, agents, brokers, marketing firms, and call center firms. We
are neither providing definitions nor clarifications for the terms
``record retention,'' ``administrative services,'' ``written
arrangements,'' ``acceptable to CMS,'' ``CMS instructions,'' or
``directors,'' since these terms are longstanding terms used by us and
the industry. We are finalizing the definitions of ``first tier
entity'' and ``related entity'' as proposed.
Based upon an unintentional oversight in the proposed regulation,
we are revising the definition of ``downstream entity'' for improved
clarity, as described below. The definition of a Part D ``downstream
entity'' at Sec. 423.4 states that a ``[d]ownstream entity means any
party that enters into a written arrangement acceptable to CMS, below
the level of the arrangement between a Part D plan sponsor (or
applicant) and a first tier entity.'' In response to this comment, we
are modifying the proposed definition to address with whom the entity
is entering into a written arrangement. The definition is revised to
read: ``Downstream entity means any party that enters into a written
arrangement, acceptable to CMS, with persons or entities involved with
the Part D benefit, below the level of the arrangement between a Part D
plan sponsor (or applicant) and a first tier entity. These written
arrangements continue down to the level of the ultimate provider of
both health and administrative services.'' We are making similar
changes to the definition of ``downstream entity'' in the MA regulation
at Sec. 422.2.
Comment: One commenter questioned whether a pharmacist is a
downstream entity.
Response: As illustrated in the sample flowchart provided on p.
29372 of the proposed rule, and below, a pharmacist would be considered
a downstream entity as defined in the regulation.
[[Page 68705]]
[GRAPHIC] [TIFF OMITTED] TR05DE07.014
Sections 422.503 and 423.504--General Provisions
The current regulations at Sec. 423.504 include a requirement that
a Part D sponsor's compliance plan consist of training and education,
and effective lines of communication between the compliance officer,
and the organization's employees, contractors, agents, directors, and
managers. The terms ``contractor'' and ``agent'' are not defined in the
current regulations, and it has been unclear to the industry which
entities are subject to the training and education, and the effective
lines of communication requirements. In response to industry concerns
and to eliminate the confusion associated with using the term
``contractor'', currently used in those sections, we proposed to revise
paragraphs (b)(4)(vi)(C) and (b)(4)(vi)(D) of Sec. 423.504. The
proposed revision clarified that a compliance plan must consist of
training and education, and effective lines of communication between
the compliance officer and the Part D sponsor's employees, managers,
and directors, as well as the Part D sponsor's ``first tier,
downstream, and related entities'' which are defined at 422.500 and
423.501. This change clarifies that Part D plan sponsors need to apply
these training and communication requirements to all entities they are
partnering with to provide benefits or services in the Part D program,
not just to their direct employees within their organizations.
Pursuant to our authority under Sec. 1856(b)(1) of the Act to
establish MA standards by regulation, we also proposed to make the same
changes in the MA program. We similarly proposed to require MA
organizations to apply their training and education and effective lines
of communication requirements to their first tier, downstream, and
related entities, in an effort to make the compliance plan requirements
uniform across MA organizations, Medicare Advantage Prescription Drug
Plans (MA-PDs), and other Part D sponsors. Additionally, we proposed
clarifying paragraph (b)(4)(vi) in Sec. 422.503 and Sec. 423.504 by
removing what we believe to be a duplicative and confusing ``final
element'' of the compliance plan--a comprehensive ``fraud, waste, and
abuse plan to detect, correct, and prevent fraud, waste, and abuse,''
at paragraph (b)(4)(vi)(H) of both regulations. We proposed to remove
this element because since the Part D program's inception, we received
feedback from many Part D sponsors indicating that it was not clear
whether we were requiring a fraud, waste, and abuse (FWA) plan separate
and distinct from a compliance plan.
In April 2006, we issued Chapter 9 of the Prescription Drug Benefit
Manual (``Part D Program to Control Fraud, Waste and Abuse,'' hereafter
referred to as ``Chapter 9'') as best practices guidance for Part D
sponsors to develop an FWA plan. We intend for Chapter 9 to be similar
to the type of best practices guidance issued by the Office of the
Inspector General (OIG) in its Compliance Program Guidance for drug
manufacturers and health care providers. While we clarified in Chapter
9 that Part D sponsors could choose whether to incorporate FWA measures
in a compliance plan, we believe the final element continues to cause
potential confusion to the industry, and therefore, proposed to remove
this element from (b)(4)(vi) of Sec. 422.503 (for MA-PDs) and Sec.
423.504 (for Part D sponsors).
We continue to believe an effective compliance plan includes
procedures and policies for preventing fraud, waste, and abuse, and so
proposed changes to the introductory clause of Sec. 423.504(b)(4)(vi)
that reflect our policy stance. Congress mandated that Part D sponsors
have a ``program to control fraud, waste, and abuse.'' See Sec. 1860D-
4(c)(1)(D) of the Act. Therefore, we are also clarifying that if Part D
plan sponsors develop an effective compliance plan that incorporates
measures to detect, prevent, and correct fraud, waste, and abuse, this
compliance plan would also satisfy the statutory requirement that
sponsors have a FWA plan in place. Part D sponsors should continue to
look to Chapter 9 as recommended guidance for the types of measures we
recommend in detecting and preventing fraud, waste, and abuse. Chapter
9 can be viewed at: http://www.cms.gov/PrescriptionDrugCovContra/Downloads/PDBManual_Chapter9_FWA.pdf
.
We recognize that Chapter 9 was specifically developed for Part D
sponsors and is not applicable for MA organizations that do not offer a
prescription drug benefit. In the interim,
[[Page 68706]]
MA organizations should refer to Chapter 9 as a reference regarding how
to incorporate fraud, waste, and abuse detection and prevention into
their compliance plans. We plan to develop separate guidelines for MA
organizations for implementation by January 1, 2009.
Pursuant to our authority under section 1856(b)(1) of the Act, we
also proposed to make the same change to the introductory clause of
Sec. 422.503(b)(4)(vi), so that the compliance plan requirements for
MA organizations will be identical to those for Part D sponsors. We
proposed that MA organizations must include ``measures to detect,
correct, and prevent fraud, waste, and abuse'' throughout the 7
elements of the compliance plan requirement. Before this proposed
change, only MA-PDs were explicitly required to include detection and
prevention of fraud, waste, and abuse into their compliance plans.
However, it has always been our expectation that fraud, waste, and
abuse would be addressed through the implementation of all 7 elements
in a MA organization's compliance plan, enumerated at paragraphs (A)
through (G) of Sec. 422.504(b)(4)(vi). It has been our longstanding
policy that an effective MA compliance plan addresses the detection,
correction, and prevention of fraud, waste, and abuse in the MA
program, and we believe that our proposed change makes this policy
explicit in our regulations. As previously stated in this final rule
with comment period, MA organizations may refer to Chapter 9 in the
interim, and further guidance on the types of measures we recommend in
detecting and preventing fraud, waste, and abuse will be developed
specifically for MA organizations.
Comment: A number of respondents requested further clarification
regarding who must provide training and education under the compliance
plan and who must be trained and educated.
Response: We did not intend to imply that MA organizations and Part
D sponsors are required to directly provide Part D compliance training
and education to all of their first tier, downstream, and related
entities. Instead, we seek to reaffirm the role and responsibilities of
the MA organization and Part D sponsor in this area. To the extent that
aspects of the compliance plan are delegated, it is important to
remember that the MA organization's or Part D sponsor's compliance
officer must maintain appropriate oversight of those delegated
activities. The Part D sponsor and the MA organization maintain
ultimate responsibility regardless of whether training has been
delegated to the first tier, downstream, or related entities. In
accordance with the Part D and MA applications, the Part D sponsor or
MA organization must attest it will implement a compliance plan that
includes effective training and education between the compliance
officer, organization employees, contractors, agents and directors. In
addition, as part of plan audits, CMS will verify that all necessary
training has been provided. Therefore, CMS would expect that a Part D
sponsor and MA organization would have training logs and copies of
attestations from the first tier, downstream or related entities to
comply with this requirement. As previously stated in this final rule
with comment period, MA organizations may refer to Chapter 9 in the
interim, and further guidance will be developed for MA organizations.
Comment: A few commenters questioned ``who would be responsible''
for implementing the compliance program's fraud, waste, and abuse
detection and prevention efforts related to Part D.
Response: The MA organization or Part D sponsor is ultimately
responsible for meeting the compliance plan requirement to implement
measures for detecting and preventing fraud, waste, and abuse. However,
we realize that each MA organization and Part D sponsor has a unique
business model and structure, and that some will choose to perform
certain functions themselves while some MA organizations and Part D
sponsors will subcontract certain functions and rely on the expertise
and operations that first tier, downstream, and related entities offer.
The job of the compliance officer cannot be delegated. But MA
organizations and Part D sponsors have the flexibility to determine
how, and to what extent, they will delegate their compliance
activities, which may include training and education to control fraud,
waste, and abuse. MA organizations and Part D sponsors have the
flexibility to determine how and to what extent they will delegate
other aspects of their contractual requirements. To the extent that any
compliance activities are delegated to first tier, downstream, and
related entities, MA organizations and Part D sponsors are ultimately
responsible for compliance plan oversight, including monitoring
training and education, and complying with all statutory and regulatory
requirements, as well as any additional guidance identified by us. One
option MA organizations and Part D sponsors may choose is to
contractually require their first tier, downstream, and related
entities to train their own workforce on delegated activities and
establish lines of communication to the appropriate managers in those
entities. We recommend that Part D sponsors review chapter 9 of the
Prescription Drug Benefit Manual for further guidance regarding
accountability and oversight of first tier, downstream, and related
entities. As previously stated in this final rule with comment period,
MA organizations may refer to Chapter 9 in the interim, and further
guidance will be developed specifically for MA organizations.
MA organizations and Part D sponsors should consider requiring that
any first tier, downstream, and related entities performing activities
on behalf of the MA organization or Part D sponsor, provide their own
training in accordance with Sec. 422.504(b)(4)(vi)(C) or Sec.
423.504(b)(4)(vi)(C) respectively, or where there are sufficient
organizational similarities, the MA organization or sponsor may choose
to make its training programs available to these entities. This will
allow the first tier, downstream, and related entities the choice of
accessing the MA organization or Part D sponsor's training and
education materials, or providing proof to them of their compliance
with the training and education requirement. For further guidance,
please refer to chapter 9 of the Prescription Drug Benefit Manual.
Employees with specific responsibilities in Medicare Part D
business areas should receive specialized training on issues posing
compliance risks based on their job function (for example, pharmacist,
statistician, and so on), upon initial hire, when requirements change,
or when an employee works in an area previously found to be
noncompliant with program requirements or associated with past
misconduct. Such training should also be required at least annually
thereafter as a condition of employment. Specialized training content
may be developed by the sponsor or employees may attend professional
education courses that help meet this objective. Further discussion
related to this subject may be found in Chapter 9.
In Chapter 9, we discuss how delegation of training would be
applicable, if deemed appropriate by the sponsor, for General
Compliance Training and Specialized Compliance Training. We did not
make any changes to our proposed provisions as a result of this
comment.
Comment: We received some comments suggesting that we should work
with the industry to develop a
[[Page 68707]]
standardized training and communication plan applicable to all
stakeholders, and make it available on the internet. This way,
stakeholders would receive one comprehensive training and communication
package.
Response: We believe this to be a valuable suggestion, and we will
take it under consideration.
Comment: Some commenters requested that we conduct certifications
to verify that training and education had been completed for Part D
plans and their first tier, downstream, and related entities.
Response: At this time, we do not require a certification process
but rather, through our audit and review process, will determine
whether or not the training and education requirements were fulfilled.
We hold the Part D sponsor or MA organization responsible for
fulfilling this requirement regardless of whether first tier,
downstream, and related entities certify to that effect. We may revisit
the idea of certification in the future.
Comment: One respondent questioned who downstream entities should
contact with ``compliance concerns.''
Response: We have contracted with program integrity contractors who
will use innovative techniques to monitor and analyze data to help
identify and prevent fraud, waste, and abuse. Any person or entity at a
first tier, downstream, or related entity level that wishes to report
potential fraud or misconduct may contact a program integrity
contractor and/or the MA organization or the Part D sponsor, depending
on the type of violation.
Comment: Another respondent questioned who would be responsible for
reporting potential prescription drug fraud.
Response: The Part D sponsor or MA organization maintains ultimate
responsibility regardless of whether oversight duties have been
delegated. To the extent that any of the compliance activities for
Parts C or D are delegated, it is important that the MA or Part D
compliance officer maintain appropriate oversight of those duties that
have been delegated. The compliance officer is responsible for
determining whether voluntary self-reporting of any potential fraud or
misconduct related to the MA or Part D program is appropriate. In
addition, first tier, downstream, and related entities are encouraged
to report fraud, waste, or abuse to the program integrity contractor
and/or the MA organization or the Part D sponsor.
Sections 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3)--Mandatory
Self-Reporting
At Sec. 422.503(b)(4)(vi)(G)(3) and Sec. 423.504(b)(4)(vi)(G)(3),
we proposed mandatory self-reporting of potential fraud or misconduct
in both the MA and Part D programs. We believe that it is important for
the government to have information on potential fraud or misconduct as
soon as possible. The comments we received on the May 25, 2007,
proposed rule highlighted the challenges in establishing the parameters
of a mandatory self-reporting process in the context of MA and PDP
plans. Commenters expressed several concerns during the public comment
period, including the need for us to better define what constitutes
``potential'' fraud and misconduct, the process for reporting, and the
need to be consistent with other agencies' guidance regarding self-
reporting. After reviewing these comments, we determined that
additional analysis needs to be undertaken and additional information
sought before implementing a mandatory self-reporting requirement.
In the meantime, we believe that self-reporting is a valuable
component of an MA organization's or Part D sponsor's compliance plan.
Therefore, in an effort to make the compliance plan requirements
uniform across MA organizations, Medicare Advantage Prescription Drug
Plans (MA-PDs), and other Part D sponsors, we will amend proposed
paragraph (b)(4)(vi)(G)(3) of both Sec. Sec. 422.503 and 423.504 to
read: A MA organization or Part D sponsor ``should have procedures for
voluntary self-reporting of potential fraud or misconduct * * *.'' We
are essentially retaining the voluntary self-reporting recommendation
for Part D sponsors, but merely moving it within the regulatory text to
accommodate other regulatory changes we are making, and implementing a
voluntary self-reporting recommendation for MA organizations. We are
strongly recommending that, if after conducting a reasonable inquiry,
it is determined that potential fraud or misconduct has occurred, the
conduct should be promptly referred to the program integrity contractor
for further investigation. While we are not requiring mandatory self-
reporting in this final rule with comment period, there may be
instances under federal criminal and fraud and abuse statutes where MA
organizations and Part D sponsors are potentially subject to
prosecution if certain issues are not properly addressed. We further
note that our decision not to amend the existing MA and PDP
requirements further at this time does not mean that organizations may
not be liable under other Federal laws or regulations if they fail to
disclose a violation they have discovered.
We wish to call attention to the existing guidance we provide on
self-reporting. Key documents include Chapter 9 of the Prescription
Drug Benefit Manual, concerning fraud, waste, and abuse (at http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/PDBManual_Chapter9_FWA.pdf
) and the Medicare Part D Reporting Requirements for
Contract Year 2007 (at http://www.cms.hhs.gov/PrescriptionDrugCovContra/Downloads/PartDReportingRequirements_CurrentYear.pdf
). While these documents are not codified rules, the
guidance they contain provides clear direction to plans as to our
expectations. We will periodically revise these guidelines to reflect
additional guidance on ways to improve reporting of fraud, waste, and
abuse.
We are committed to implementing mandatory self-reporting and we
intend to issue a proposed rule. Finally, we believe that it would be
valuable to obtain additional input at this time, in order to inform
our evaluative, analytic, and guidance efforts. Accordingly, we are
asking for additional public comments on this issue. Specifically, we
ask for comments regarding the following:
We proposed requiring MA organizations and Part D sponsors
to report potential ``fraud or misconduct.'' We seek guidance as to how
to define what kinds of offenses would constitute fraud and misconduct
for purposes of this reporting requirement. We seek specific examples
of what constitutes potential fraud and misconduct.
Alternatively, we seek input as to whether there is an
alternate formulation, rather than ``fraud or misconduct'' that would
better describe the categories of offenses that should be reported to
CMS (for example violations of administrative, civil and/or criminal
authorities).
Who are the entities that would be responsible for
reporting to CMS (sponsor, first tier, downstream entities)?
At what point would CMS require that a MA or Part D plan
report a potential issue that could fall into the category of offenses
that would require self-reporting (for example, upon initial discovery
or after an opportunity for reasonable inquiry or due diligence)?
How should this information be reported to CMS (through
the MEDICs, disclosure to the CMS plan manager, or
[[Page 68708]]
CMS central office)? Please provide a discussion of the advantages or
disadvantages of any of these or other reporting mechanisms.
In addition to the specific questions raised above, please
provide us with any other comments or constructive feedback that might
assist us in crafting a mandatory self-reporting requirement.
Sections 422.504 and 423.505--General Provisions
We proposed to clarify which entities under contract to MA
organizations and Part D sponsors are subject to the contract
provisions in the MA and Part D programs. Currently, the contract
provisions at 422.504 and 423.505 refer to such entities as the MA
organization or Part D sponsor's ``contractors'' and
``subcontractors,'' which as we described in the proposed rule, are
undefined terms in the statute and regulations. We proposed, where
applicable, to delete the term ``contractor,'' because of potential
confusion and redundancy, and replace the term ``subcontractor'' with
the terms ``first tier entity'' and ``downstream entity'' in 422.504(e)
and (i), to clarify which entities are subject to the contract
provisions at 422.504.
We also proposed, where applicable, to delete the term
``contractor,'' and replace the term ``subcontractor'' with the terms
``first tier entity'' and ``downstream entity'' in the Part D contract
provisions at 423.505(e) and (i) for the same reasons. We believed
using ``first tier and downstream, entities'' instead of
``subcontractor'' would lessen the potential for confusion in the Part
D program. Please see page 29372 of the proposed rule for examples of
first tier, downstream, and related entities.
Comment: We received a number of technical comments concerning the
definitions of ``contractor'' and ``subcontractor.''
Response: Based on these comments, we are correcting a few
typographical errors in Sec. 423.505(i)(3)(v) by replacing the phrase
``related entity, contractor or subcontractor'' with the phrase ``first
tier, downstream, and related entities'' to be consistent with the
other parts of the regulation. In Sec. Sec. 423.505(i)(3), and
Sec. Sec. 423.505(i)(3)(ii), (i)(4), and (i)(4)(v), we are deleting
the term ``pharmacy'' as it was included in error and is redundant.
Section 423.505(i)(4) will now read: ``If any of the Part D plan
sponsor's activities or responsibilities under its contract with CMS is
delegated to other parties, the following requirements apply to any
first tier, downstream, and related entity,'' and Sec.
423.505(i)(4)(v) will read: ``All contracts or written arrangements
must specify that the first tier, downstream, or related entity must
comply with all applicable Federal laws, regulations, and CMS
instructions.'' We also are making similar corrections to Sec.
422.504(i)(3), (i)(3)(ii), and (i)(4) where the term ``provider'' was
left in the regulations unintentionally. All references to ``provider''
have been deleted in the final regulations.
We proposed to add a provision to the contracts and written
arrangements between sponsors and their first tier, downstream, and
related entities at Sec. 423.505(i)(3)(iv) to clarify that this
information can be provided to either the Part D sponsor to give to
CMS, or can be provided directly to CMS or its designees. We discussed
in the proposed rule at page 29373 our existing authority under section
1860D-12(b)(3)(c) of the Act and Sec. 422.504(e) and Sec. 423.505(e)
to inspect and audit any books, contracts, requests, and records of a
Part D sponsor or MA organization relating to the Part D program.
Because of the proposed contract provision, we also proposed to
redesignate Sec. 423.505(i)(3)(iv) as Sec. 423.505(i)(3)(v). We are
finalizing these changes as proposed.
Comment: A few commenters questioned our authority to access the
books and records of first tier, downstream and related entities. One
commenter suggested a need for more formal rulemaking on this topic.
Response: We have existing authority under section 1860D-
12(b)(3)(c) of the Act and Sec. 422.504(e)(2) and Sec. 423.505(e)(2)
to inspect and audit any books, contracts, and records of a Part D
sponsor or MA organization and its first tier, downstream, and related
entities that pertain to any aspect of services performed,
reconciliation of benefit liabilities, and determination of accounts
payable under the contract or as the Secretary may deem necessary to
enforce the contract. Therefore, it is not necessary, as the commenters
suggested, to propose a more formal regulation and offer another public
comment period. These third party disclosure requirements were
finalized in the final MA and Part D rules and were approved under the
Paperwork Reduction Act approval under OMB 0938-1004 (Part C)
and OMB 0938-1000 (Part D). Additionally, in the preamble to
the Part D proposed rule, published on January 28, 2005 (70 FR 4194),
we clearly stated our inspection and audit rights with respect to a
Part D sponsor and its contractors, subcontractors, and related
entities under the section entitled ``Access to Facilities and
Records'' (69 FR 46632-46712). In this regulation, we have further
clarified that our access rights apply to ``first tier, downstream, and
related entities,'' and not ``contractors, subcontractors, and related
entities.''
The limited rebate and other price concession information provided
to the Part D sponsor by its contracting entities may provide some
payment information to us, but it may not be enough for us to determine
in all cases whether appropriate payments have been made to the
sponsor. Therefore, it may be necessary for us to rely on our authority
to access books and records to obtain more detailed rebate and other
price concession information in order to verify proper payments were
made to the Part D sponsor.
Comment: We received a number of comments questioning whether books
and records must be made available to us directly or through the Part D
sponsor.
Response: We have chosen not to be prescriptive regarding whether
first tier, downstream, and related entities must make their books and
records available to us directly or through the Part D Sponsor. It is
our opinion that this is considered to be part of the negotiation
process between the Part D sponsor and its first tier, downstream, and
related entities. The provision must be clear as to whether or not the
requested documentation is to be submitted through the Part D sponsor
to us (or our designee(s)), or submitted directly to us (or our
designee(s)). The parties could also decide to have such books and
records made directly available to us, or our designee(s), through
onsite access. The Part D sponsor must be prepared to submit evidence
of this agreed upon provision in its executed contracts to us. To
clarify, the ``designee'' either refers to entities under a program
integrity contract with us, or entities, such as law enforcement,
working in collaboration with us to fight fraud, waste and abuse in the
Medicare Part D program.
HHS, the Comptroller General, or its designees have the authority
to collect any information from the first tier, downstream, or related
entities that is related to the Medicare Part D prescription drug
transaction. Examples of the type of information collected are provided
at Sec. 423.505(e)(2).
In addition to proposing a new contract provision at Sec.
423.505(i)(4)(iv), we also proposed minor regulatory changes which
clarify the Part D sponsor's CMS contractual requirements. While we
continue to believe our regulations clearly state our authority to
access the books and records of a Part D sponsor's first tier,
downstream, and related entities, we proposed to add language about
these
[[Page 68709]]
partnering entities to Sec. 423.505(b)(10), and proposed to
consolidate Sec. 423.505(e)(2) and (3) into one provision at (e)(2).
We proposed these revisions to make explicit the Part D plan sponsor's
contractual obligation to ensure HHS, the Comptroller General, or their
designees have access to any books and records related to the Part D
program, including those of a sponsor's first tier, downstream, and
related entities. These revisions do not impose any new requirements on
Part D sponsors or its partnering entities. We are finalizing these
proposed provisions without change.
Comment: A few commenters noted that the proposed revision to Sec.
422.504 and Sec. 423.505 has not prescribed ``typical'' data sets to
be reported within the context of our request for books and records of
first tier, downstream, and related entities. Another commenter
indicated that the information that could be collected is too broad.
Response: We want to clarify that the ``books and records'' we are
entitled to access do not make up a typical data set included in the
Medicare Part D Reporting Requirements. There is no report form to be
defined, as the format will be dependent upon the information being
requested and the unique circumstances upon which the request is based.
The scope of the information collected will be based on the type of
audit being performed. If upon review of the information submitted we,
or our designee(s), determine that additional information or
clarification is warranted, the scope of the review may be expanded.
Comment: A commenter suggested that we should rely on subpoena
authority, regulation, provider contracts, or some other method to
collect books and records in connection with investigations.
Response: We do not have subpoena authority; however, our law
enforcement partners such as OIG and DOJ do. The government may use a
variety of methods to obtain records and books from entities under
contract with MA organizations and/or Part D sponsors. There may be
instances where we may need to see books and records without involving
law enforcement. These provisions at Sec. 422.504 and Sec. 423.505
only clarify one method we may employ to do so.
We clarified in the preamble to the proposed rule that HHS, the
Comptroller General, or their designees have the authority under the
statute to request records from MA organizations and Part D sponsors or
their first tier, downstream, or related entities. MA organizations and
Part D plan sponsors must maintain, as required by Sec. 423.505(d),
``books, records, documents and other evidence of accounting procedures
and practices,'' pertaining to determinations of amounts payable under
the contract, agreements, contracts, and subcontracts. Since Part D
sponsors have delegated many Part D functions to their first tier
entities, we are aware that many of these records reside with first
tier and downstream entities, such as pharmaceutical benefits managers
(PBMs). We are taking the opportunity again, in this final rule with
comment period, to make explicit that we have the authority to request
for verification of payment purposes, any records relating to rebates
and any other price concessions between PBMs and manufacturers that may
impact payments made to sponsors in the Part D program.
Comment: We received a comment addressing the 10-year record
retention requirement.
Response: This requirement was implemented in a prior regulation
and is outside the scope of this final rule with comment period.
Comment: A number of commenters expressed concern that information
submitted by first tier, downstream, and related entities, especially
proprietary information, would not be kept confidential by us.
Response: As an agency, we are subject to various Federal
disclosure laws, such as the Trade Secrets Act, the Privacy Act, and
the Freedom of Information Act (FOIA) (5 U.S.C. 552). We are also
subject to confidentiality and disclosure regulations at 42 CFR Part
401 Subpart B. In addition, sections 1860D-15(d)(2)(B) and (f)(2) of
the Act place restrictions on the Secretary's disclosure of certain
payment data collected in the Part D program to anyone outside of HHS.
Therefore, we believe there are sufficient legal restrictions to
protect the disclosure of such proprietary data outside of the agency.
Comment: One commenter questioned our need to gather information
about rebate agreements between potential first tier and downstream
entity contracted partners.
Response: Our proposal to obtain rebate and price-concession
related records is supported by statute. Sections 1860D-15(d)(2) and
1860D-15(f)(1)(A) of the Act authorize us to request any information
``necessary'' to carry out the payment provisions in section 1860D-15
of the Act, which include payments of direct subsidies, reinsurance,
and risk corridor costs to sponsors. While the rebate and other price
concession information reported by the sponsors may provide some
payment information, it may not be enough for us to determine in all
cases whether appropriate payments have been made to the sponsor. It
may be ``necessary'' for us to obtain more detailed rebate and other
price concession information from first tier, downstream, and related
entities in order to verify proper payments made to the sponsor. For
example, we must receive accurate and complete rebate and other price
concession information in order to determine what was ``actually paid''
and to clearly reflect what was a gross prescription drug covered cost,
which excludes administrative costs.
As stated in the CMS 2007 Prescription Drug Sponsor Call Letter,
``CMS must assume that if a PBM retains a portion of the manufacturer
rebates it negotiates on behalf of the Part D sponsors then the direct
payment the sponsor pays the PBM for its services will be less, that
is, the sponsor receives a price concession from the PBM.'' If the
rebates are passed completely through to the Plan then the charge from
the PBM to the Plan would be an administrative cost that will need to
be deducted from the ``gross covered prescription drug costs'' which
along with the ``actually paid costs'' are a basis for CMS payment to
the plans.
In addition, such rebate and other price concession information is
critical to our oversight efforts in curbing fraud, waste, and abuse in
the Part D program. Under section 1860D-2(d)(3) of the MMA, Congress
granted us the right to conduct periodic audits of a sponsor's
financial statements, books, and records ``to protect against fraud and
abuse and to ensure proper disclosure and accounting'' in the Part D
program.
Given the history of rebate reporting problems the government has
encountered with PBMs in administering the Medicaid Drug Rebate Act, we
believe we must have the ability to evaluate and inspect records
relating to Part D rebates and other price concessions in order to
fulfill our statutory duty of protecting beneficiaries from fraud and
abuse and to ensure the financial integrity of the Part D program.
Therefore, we are restating in this final rule with comment period that
we reserve the right to request records relating to Part D rebates and
price concessions from the sponsor's first tier entities, downstream,
and related entities when appropriate.
Comment: A commenter questioned whether certain contracted partners
are considered to be downstream entities.
Response: In Exhibit 1 of the proposed rule, on p. 29372, and in
this final rule with comment period, we
[[Page 68710]]
provided examples of first tier and downstream entities. We encourage
you to contact the CMS staff listed at the beginning of this final rule
with comment period if you have any questions as to whether a
contracted partner is a downstream entity.
Sections 422.505 and 423.506--Effective Date and Term of Contract
We proposed removing Sec. 422.505(c)(1) and Sec. 423.506(c)(1),
which state that contracts with MA organizations or Part D plan
sponsors are only renewed if CMS informs the MA organization or Part D
sponsor that it has authorized a renewal. Section 1857(c)(1) of the Act
provides that the contract renews automatically, unless CMS or the
organization notifies the other party of its intent to terminate the
contract at the end of the existing contract term. Therefore, we
proposed to revise Sec. 422.505(c) and Sec. 423.506(c) to state that
in accordance with Sec. 422.506 and Sec. 423.507, contracts are
renewed annually only if the MA organization or Part D plan sponsor has
not provided us with a notice of intent not to renew and we have not
provided the MA organization or Part D plan sponsor with a notice of
intent not to renew. This change better aligns the regulations with the
statute and we are finalizing the provision as proposed.
Comment: One commenter asked whether contracts needing amendment as
a result of this final rule with comment period could be made at the
time of contract renewal.
Response: As indicated in the proposed rule and finalized here, the
implementation date of this provision is January 1, 2009. Therefore,
all revised contracts need to be in place by that date. We did not make
any changes based on this comment and are finalizing the provision as
proposed.
Sections 422.506 and Sec. 423.507 Nonrenewal of a Contract
We proposed revising the introductory text for Sec. 422.506(b)(2)
and Sec. 423.507(b)(2). In addition, we proposed revising Sec.
422.506(b)(2)(i) and Sec. 423.507(b)(2)(i). The existing provisions
require us to provide plans with notice of both renewal and nonrenewal
decisions by May 1. We proposed that a notice only be provided if we
decide not to renew an MA organization or a Part D plan sponsor's
contract with us. As discussed in the proposed rule, Section 1857(c)(1)
of the Act provides for an automatically renewable contract and does
not require us to provide notice when we decide to renew a plan or
sponsor's contract with us.
We proposed revising the Sec. 422.506(b)(2) introductory text and
the Sec. 423.507(b)(2) introductory text to clarify that we must
provide notice of our decision not to authorize renewal of a contract.
In addition, we proposed to revise Sec. 422.506(b)(2)(i) and Sec.
423.507 (b)(2)(i) to require that we provide such notice by September 1
of the contract year, rather than May 1. If an MA organization or Part
D sponsor receives a nonrenewal notice from CMS, we will not provide
information regarding the MA or Part D plans that the organization or
sponsor offers in certain hard copy materials, such as the ``Medicare &
You'' handbook. Information regarding the plans would continue to be
available on the CMS Web site. For purposes of this final rule with
comment period, a nonrenewal would take effect on January 1 of the
following contract year (unless a nonrenewal is being appealed through
the administrative appeals process and the appeals process is ongoing,
or additional time is required to comply with our requirements with
respect to providing notice to beneficiaries of the nonrenewal, in
which case the nonrenewal may become effective during the following
calendar year), whereas a termination may take effect at any time
during the contract year. Our proposed provisions make contract renewal
automatic, without notice, unless we notify the MA organization or
Medicare Part D plan sponsor of our intent to nonrenew the contract by
September 1 of the current contract year. Please see the proposed rule
for our rational for changing the nonrenewal notification date to a
date later than May 1.
Comment: We received several comments concerning the proposed
September 1 nonrenewal notification date. Several commenters believed
that plans will have to incur significant expenditures prior to
September 1 to prepare for the following calendar year, and that a
September 1 date would require plans to incur expenditures that would
not have been incurred before the existing May 1 nonrenewal
notification date, in the event that we take action to nonrenew a plan.
Response: We understand that MA organizations and Part D sponsors
expend effort in preparing for the following contract year. Therefore,
while we will not retain the existing May 1 nonrenewal notification
date, we are revising our proposal and finalizing a notification date
of August 1, instead of our proposed September 1 notification date.
We understand that MA organizations and Part D sponsors expend
effort in preparing for the following contract year. Therefore, while
we will not retain the existing May 1 nonrenewal notification date, we
are responding to commenters' concerns and revising our proposal and
finalizing a notification date of August 1, instead of our proposed
September 1 notification date. We believe that this is an appropriate
compromise. While we appreciate commenters' concerns, we believe we
have a significant countervailing interest in moving the current May 1
nonrenewal notification date to later in the calendar year. As we
explained in the preamble to the proposed rule, these additional months
will allow us to have access to significantly more information about
plan performance, which will allow for more informed and educated
decisions about MA organizations and Part D sponsors that have serious
compliance problems and may be the subject of a nonrenewal
determination. We believe that allowing for the opportunity to access
this data will benefit both CMS and the MA organizations and Part D
sponsors.
Comment: Another commenter said that the September 1 date would not
provide for enough time for beneficiary notification.
Response: As explained above, we are finalizing a nonrenewal
notification date of August 1, rather than September 1 as we proposed.
We believe this change is more likely to result in administrative
appeals of CMS nonrenewal actions being completed in time to allow for
90 days notice of the nonrenewal to be provided to members and the
general public prior to the end of the calendar year.
Comment: One commenter requested clarification as to whether
deficiencies could be cured after receiving the notice of an intent to
nonrenew. The commenter stated that a September 1 date would not give
enough time for an organization to make necessary changes to come into
compliance for the next contract year. This commenter also expressed
concern about the inability of a plan to participate in the program for
the following year because of the timeframes associated with Corrective
Action Plans (CAPs) and appeal rights, potentially rendering a plan's
appeal rights moot.
Response: We believe comments related to plan participation in the
following calendar year based on CAP submission dates reflect a
misunderstanding of our proposals in the proposed rule. We clarified in
our proposed rule that we will offer plans an opportunity to submit an
acceptable CAP prior to notifying them of our intent to nonrenew or
terminate their
[[Page 68711]]
contract. If an acceptable CAP is submitted to us, we will not take
action to nonrenew or terminate the sponsor or organization's contract.
Once a sponsor or organization receives a nonrenewal notification from
us (or a termination notice), the sponsor or organization is not
entitled to an additional opportunity to submit another CAP. We will
not be required to provide any additional time for a MA organization or
Part D sponsor to come into compliance or cure deficiencies once we
have notified a sponsor or organization of our intent to nonrenew (or
terminate) its contract. We proposed this clarification in an effort to
streamline the CAP and nonrenewal process. We have added additional
language at Sec. 422.506, Sec. 422.510, Sec. 423.507, and Sec.
423.509 to expressly clarify that the opportunity to submit an
acceptable CAP is afforded to a MA organization or Part D sponsor prior
to our decision to nonrenew or terminate a contract.
With respect to the comment regarding ongoing administrative
appeals, if a MA organization or Part D sponsor is in the process of
appealing a nonrenewal or termination, and the appeal process has not
been concluded, the organization will be able to participate in the
program the following calendar year until such time during the
following calendar year as the appeals process is concluded and
appropriate notice is provided to beneficiaries. Therefore, appeal
rights will not be moot.
Comment: Several commenters believed that the September 1 date
would place an undue burden on pharmacies to join plan provider
networks and the commenters recommended that we provide some sort of
contingent renewal notice for organizations and sponsors to send to
providers for the following year.
Response: MA organizations and Part D sponsors who have not
received a request for a CAP from us as a result of deficiencies are
not in jeopardy of receiving a nonrenewal notification, making the need
for a contingent nonrenewal notice unnecessary. Furthermore, as
explained above, we are changing the proposed September 1 nonrenewal
notification date to August 1, affording pharmacies an additional month
to make network decisions.
We proposed redesignating Sec. 422.506(b)(3) as Sec.
422.506(b)(4) and redesignating Sec. 423.507(b)(3) as Sec.
423.507(b)(4). We proposed adding a new paragraph at Sec.
422.506(b)(3) and Sec. 423.507(b)(3) which would clarify the CAP
process for nonrenewals. The Act requires us to provide MA
organizations and Part D plan sponsors with a reasonable opportunity to
develop a CAP prior to terminating a contract, either through the
termination process or the nonrenewal process. The CAP process for
nonrenewals would be the same process as we proposed for terminations.
We proposed a more defined process than currently exists and we
proposed a process and timeframes for the submission and review of
CAPs. Our proposal clarified that, in the future, once we issue a
nonrenewal notice or a termination notice, the MA organization or Part
D plan sponsor will not be entitled to an opportunity to submit a CAP.
We will provide that opportunity to organizations and sponsors prior to
issuing a notice of intent to nonrenew or terminate a contract. MA
organizations and Part D plan sponsors should take very seriously any
request from us to develop and implement a CAP since a failure to fully
comply may result in a nonrenewal or termination action.
Comment: One commenter questioned whether the termination and CAP
process applied to all contract years and if the termination would be
retroactive to the beginning of a plan contract.
Response: The most recent finding of deficiencies and the request
for a CAP would be relied upon to support a termination or other
contract determination. Prior CAPs may provide additional information
to us and support for our action if the MA organization or Part D
sponsor has had continued compliance problems that have not been
resolved, but would not be the basis of a contract determination if the
prior CAPs have been accepted by us and implemented to our
satisfaction. A termination action would affect the existing contract
with us. Given that we have already adopted automatically renewable
multi-year contracts, failure to substantially carry out a contract
term necessarily would apply to the entire term of the contract (that
is, the life of the contract). Part D and MA contracts are evergreen,
so the existing contract is not just the current calendar year's
contract, but is a continuing contract that existed during prior
calendar years (assuming the Part D sponsor or MA organization
participated in the program in prior calendar years).
We proposed time limits at Sec. 422.506(b)(3) and Sec.
423.507(b)(3) for the development and implementation of a CAP. We
proposed to provide the MA organization or Part D plan sponsor 45 days
in which to submit a CAP to us. If we find that the CAP is
unacceptable, the MA organization or Part D plan sponsor would have an
additional 30 days to revise and resubmit the CAP. If we then find the
CAP acceptable, we would provide the MA organization or Part D plan
sponsor with a deadline by which the CAP must be implemented. If we
find that the second version of the CAP is unacceptable, we would be
under no obligation to accept further revisions to the CAP and would
have the discretion to proceed directly to issuing a notice of
nonrenewal to the MA organization or Part D plan sponsor.
Comment: One commenter requested clarification on whether the
timeframe is measured in business or calendar days. The commenter
requested that we leave open lines of communication with organizations
with respect to working to develop acceptable CAPs. The commenter was
concerned that there would only be one chance to provide an acceptable
CAP.
Response: We are clarifying here, and at Sec. Sec. 422.506(3) and
423.507(3), that the CAP timeframes are measured in calendar days. We
will provide MA organizations and Part D sponsors two opportunities to
submit acceptable CAPs. Prior to requesting a CAP, or simultaneous with
a request for a CAP, we will inform the MA organization or Part D
sponsor about the deficiencies that must be addressed and corrected. If
the first CAP submission is unacceptable to us, we will inform the MA
organization or Part D sponsor as to what is unacceptable. The MA
organization or Part D sponsor will then have a second opportunity to
submit an acceptable CAP.
It is our intent to assist plans in submitting acceptable CAPs,
while implementing a limit on the number of CAP submissions in order to
bring some closure to this process when Part D sponsors or MA
organizations are unable or unwilling to bring their organizations into
compliance with our requirements. Aside from the clarification
explained above regarding the use of calendar days, we are finalizing
our proposed processes and timeframes for the submission and review of
CAPs as proposed.
Sections 422.510 and 423.509--Termination of Contract by CMS
We proposed revising Sec. 422.510(a)(1) and Sec. 423.509(a)(1) to
clarify one of the bases for contract termination. The existing
provision states that we may terminate an MA organization or Part D
plan sponsor's contract with us if the MA organization or Part D plan
sponsor ``failed substantially to carry out the terms of its contract
with CMS.'' We proposed language to clarify that we may terminate an MA
organization or Part D plan sponsor's contract if the organization
substantially failed to carry
[[Page 68712]]
out the terms of its contract with us during the current calendar year
or for a prior calendar year. This clarification is consistent with
section 1857(c)(1) of the Act, which states that a contract must be for
a period of at least 1 year with the contract being automatically
renewable from term to term (that is, calendar year to calendar year),
absent notice from either party of an intent to terminate the contract
at the end of the current term. Given that we have already adopted
automatically renewable multi-year contracts, failure to substantially
carry out a contract term necessarily would apply to the entire term of
the contract (that is, the life of the contract).
We have made a minor change to the regulatory text at Sec. Sec.
422.510(a)(1) and 423.509(a)(1) to clarify our proposal. The change is
a technical edit to accurately reflect the multi-year nature of our
contracts with MA organizations and Part D sponsors.
We proposed revising Sec. 422.510(b) and Sec. 423.509(b)
introductory text and revising the paragraph heading for Sec.
422.510(b)(2) and Sec. 423.509(b)(2) to delete the term ``immediate''
and replace it with ``expedited''. In addition, we proposed revising
Sec. 422.510(b)(2)(i) and Sec. 423.509(b)(2)(i) to state that an
expedited termination would take effect on a date specified by us.
According to the existing regulations, an immediate termination takes
effect once the MA organization or Part D plan sponsor receives notice
that we intend to immediately terminate the plan's contract with us and
a plan's enrollees are automatically disenrolled from the plan on the
date such notice is received. The proposed change will provide greater
protection for Medicare beneficiaries because we would have time
between notifying a plan of an expedited termination decision and the
actual date of termination to provide enrollees of the MA or Part D
plan with enough information to enroll in another plan. We are
finalizing this proposal without change.
Comment: We received a recommendation that we auto-enroll
beneficiaries into another plan for seamless continuity of care,
provided the beneficiary was able to make another health care choice.
Another commenter felt that the effective date should be made in
consultation with the terminated plan to better meet the needs of
beneficiaries.
Response: We will take actions to ensure beneficiaries are
protected and that continuity of care is a priority in our planning for
all termination actions. We are not addressing beneficiary auto-
enrollment in regulation since it is an operational issue. We have
considered the suggestion that we involve the terminated plan in
determining the effective date of the termination but believe that we
are in the best position to determine the effective date of the
termination. Determining the effective date of an expedited termination
is a decision that should be made solely by us. We are finalizing the
provision as proposed.
Comment: A few commenters did not believe we should be able to
terminate a contract based on deficiencies during prior years.
Commenters also stated that deficiencies that have been cured should
not be the basis for a contract termination.
Response: We clarify here that failure to carry out contract terms
means the MA organization or Part D sponsor is not currently in
compliance. The failure to be in compliance currently may be a
continuation of a failure to be in compliance in the previous year and/
or the result of an incident(s) that occurred during the prior year or
years. For example, a notice of intent to terminate provided to an
organization in February of the current year might be based on the
organization failing to provide an acceptable CAP for an audit that
occurred in December of the previous year. In addition, the
deficiencies found in December of the previous year may be unresolved
deficiencies from a prior audit, never having been cured. We need the
ability to look into previous contract terms for uncured deficiencies.
We proposed the ability to terminate a contract based on current, open
deficiencies, no matter how long they have been open deficiencies. It
is not our intent to terminate a contract based on deficiencies that
have been, and remain, cured.
Comment: One commenter recommended an expedited hearing process for
expedited terminations.
Response: The current regulations provide for a hearing process to
occur after an immediate, proposed expedited, termination has occurred.
Current regulations do not provide for an expedited appeals process.
Our proposed changes to the appeals process do not provide for an
expedited appeals process. We do not believe an expedited appeals
process is warranted. However, we note that eliminating the
reconsideration process for all contract determinations, as we have
proposed and are finalizing, will have the effect of accelerating the
appeals process for all contract determinations. We are finalizing this
provision as proposed.
Comment: One commenter requested guidance or examples of what we
consider to be ``imminent and serious risk to enrollees.''
Response: We do not wish to provide examples of what ``imminent and
serious risk to enrollees'' might entail because of the complexities of
each and every expedited termination that may take place. Each case is
different and we do not feel that past examples will necessarily help
plans in preventing future expedited terminations.
We also proposed to clarify that we are able to invoke the
expedited termination process when a determination regarding an MA
organization is made according to Sec. 422.510(a)(5). The existing
regulations state that we invoke the current immediate termination
process when a determination is made according to Sec. 422.510(a)(4)
for the MA program and Sec. 423.509(a)(4) or (a)(5) for the Medicare
Part D program. By adding (a)(5) as a basis for an expedited
termination for MA organizations, the grounds for expedited
terminations would be identical for the MA and Part D programs. The
addition of Sec. 422.510(a)(5) would provide consistency between the
Part C regulations and the Part D regulations.
Comment: One commenter did not agree that expedited terminations
should be based on instances where an MA organization or Part D sponsor
provides ``false'' data without any fraudulent intent or knowledge that
false data was provided. The commenter believes that expedited
terminations should be reserved for instances of beneficiary harm and
intentional fraud.
Response: We proposed in the Part C regulations, at 422.510, that
the submission of false data may serve as the basis for an immediate
termination (proposed name change to expedited termination) to
correlate with existing Part D regulations. Our ability to immediately
terminate based on the submission of false data has already been
subject to notice and comment during the comment period for the
existing Part D regulations. We now proposed this change to the Part C
regulations to ensure that the Part C and Part D regulations mirror
each other where appropriate. We believe that this change is necessary
to ensure the integrity of the Part C program and to continue to ensure
that conduct under both the Part C and Part D programs is handled
similarly. Therefore, we are finalizing our proposal without
modification.
We proposed to amend our procedures at Sec. 422.510(c) and Sec.
423.509(c) to more clearly define the process for the submission and
review of CAPs prior to a termination action.
[[Page 68713]]
The Act requires us to provide MA organizations and Part D plan
sponsors with a reasonable opportunity to develop and implement a CAP
before we terminate the organization or sponsor's contract. The CAP
process we proposed is the same process for nonrenewals outlined above
and which we proposed at Sec. 422.506 and Sec. 423.507, providing for
a more structured process and timeframes for the development and
implementation of a CAP. We received comments concerning CAPs as
applied to terminations, and have addressed them above in Sec. Sec.
422.506 and 423.507, given that the CAP process is identical for
nonrenewals and terminations.
Subpart N--Medicare Contract Determinations and Appeals
We proposed revisions to subpart N of 42 CFR part 422 and 42 CFR
part 423 to coordinate and improve the contract determination and
appeals processes for MA organizations and Part D plan sponsors. We
proposed eliminating the reconsideration process for appeals of all
types of contract determinations. We also proposed to make the appeals
process consistent for all three types of contract determinations
(terminations, nonrenewals, and decisions by us not to enter into a
contract with an applicant). In addition, we proposed that the MA
organization or Part D plan sponsor have the burden of proof in
appealing a contract determination. Please see the proposed rule for a
more detailed explanation of our proposals.
Sections 422.644 and 423.642--Notice of Contract Determination
We proposed to make conforming changes to Sec. 422.644(b)(2) and
Sec. 423.642(b)(2) as a result of the changes we are making to the
immediate termination process. Consistent with the proposed revisions
we have previously described, we proposed to revise Sec. 422.644(c)
and Sec. 423.642(c) to state that we would determine the effective
date of an expedited termination. We also proposed adding Sec.
422.510(a)(4) as a basis for which we may undertake an expedited
termination. We are finalizing these provisions as proposed.
We also proposed to revise the provisions at Sec. 422.644(d) and
Sec. 423.642(d) to conform to the proposed change previously described
whereby we would provide notice of nonrenewal to MA organizations or
Part D plan sponsors by September 1, rather than the current May 1.
Please see above for a discussion of nonrenewal notification dates. We
are finalizing these proposals with a modification to reflect the fact
that we are finalizing the nonrenewal notification date as August 1,
rather than September 1 as we proposed.
Sections 422.646 and 423.643--Effect of Contract Determination
We proposed making conforming changes to the provisions at Sec.
422.646 and Sec. 423.643 to reflect our proposal to eliminate the
reconsideration process. The current regulations state that a contract
determination is final unless an MA organization or Part D plan sponsor
requests reconsideration. Since we proposed eliminating the
reconsideration process, we also proposed a conforming change to
indicate that a contract determination would be a final decision unless
a timely request for a hearing is filed.
Comment: One commenter felt that eliminating a step for ``informal
collaboration'' with us would create a process that is not in the best
interest of beneficiaries. The commenter stated that by eliminating the
reconsideration process, we appear to be eliminating opportunities to
remedy potential problems prior to taking a formal contract action.
Response: We have reviewed the comment and have decided to finalize
our proposal without modification. The commenter seems to be under the
impression that the existing reconsideration process is an informal,
collaborative process which provides the organization with another
opportunity to come into compliance with our requirements. The
commenter is misinformed about the nature of the current
reconsideration process. The reconsideration is the first formal step
in the administrative appeals process for organizations. The time for
informal collaboration is prior to the commencement of an appeal, and
prior to the seeking of reconsideration.
Sections 422.660 and 423.650--Right to a Hearing and Burden of Proof
We proposed conforming changes to the provisions at Sec.
422.660(a) and 423.650(a) to reflect our proposal to eliminate the
reconsideration process. These provisions would state that if we
determine that an applicant is not qualified to enter into a contract
with us and the applicant chooses to appeal the determination, a
hearing before a CMS hearing officer would be the first step in the
appeal process. We proposed to make similar conforming changes to Sec.
422.660(b) and Sec. 423.650(b), to indicate that a hearing before a
CMS hearing officer would be the first step in appealing a nonrenewal
determination or a termination decision. We did not receive any
comments on these provisions and are revising them as proposed.
We proposed to add a new provision at Sec. 422.660(c) and at Sec.
423.650(c) to clarify that the burden of proof would be on the MA
organization or Part D plan sponsor at a hearing appealing a CMS
contract determination. The MA organization or Part D plan sponsor must
demonstrate that they were in compliance at the stated time by a
preponderance of the evidence. We believe case law supports our
decision to place the burden of proof on the affected party in an
administrative hearing on a contract determination involving a Part D
plan sponsor or MA organization. See Hillman Rehabilitation Center, DAB
No.1611 (1999), aff'd Hillman Rehabilitation Center v. U.S. No.98-3789
(GEB) (D.N.J. May 13, 1999).
Comment: We received comments related to our effort to clarify that
burden of proof is on the MA Organization or Part D sponsor. Commenters
stated that the burden of proof should be on us, and not the
organization or sponsor, since we are taking the contract action and
that imposing the burden of proof on the organization or sponsor is
contrary to traditional principles of jurisprudence and is unfair. One
commenter suggested that if the burden is on the organization or
sponsor, then there should be a rebuttable presumption of non-
compliance with the organization or sponsor assuming the burden of
proof to rebut the presumption on a going forward basis. The commenter
stated that if the organization or sponsor submits at least colorable
evidence of substantial compliance the burden of persuasion should
shift to CMS to prove non-compliance by clear and convincing evidence.
Another commenter stated that putting the burden of proof on the
organization or sponsor effectively removes the organization or
sponsor's ability to self-regulate and come into compliance once the
compliance issue has been identified. The commenter stated that the
date of compliance must allow for entities to fix identified
deficiencies and cure the deficiencies.
Response: We have considered these comments and have determined
that the proposed provision should be finalized without modification.
Plans, following an audit, receive a report notifying the plan of any
non-compliance. Following the report, plans have an opportunity to
dispute the findings. For those compliance issues not related to formal
audits, we continue to notify the plan about deficiencies of which we
become aware, giving the plan an opportunity to
[[Page 68714]]
dispute the allegation. Whenever a plan is found to be non-compliant,
we will request a CAP to cure the deficiencies. We are finalizing
regulations that will provide a MA organization of Part D sponsor with
an opportunity to submit an acceptable CAP before we decide to take
contract action. It is important to understand that the date we notify
an organization of our intent to take a termination or nonrenewal
action is not the first time the organization learns that it is out of
compliance with our requirements.
In addition, we also proposed that the MA organization or Part D
sponsor must demonstrate substantial compliance with the relevant MA or
Part D plan requirements as of the earliest of the following dates: (1)
The date the organization or sponsor received written notice of the
contract determination; (2) the date of the most recent on-site audit
conducted as the basis of the termination; (3) or the date of the
alleged breach of the current contract or past substantial
noncompliance as determined by CMS.
Comment: We received a comment stating that the date of compliance
should be the hearing date, not the earliest of the three dates
proposed in the regulation. The commenter stated that using the
earliest of the three dates violates due process.
Response: We have reviewed the comment and do not believe requiring
compliance at the earliest of the three dates violates due process. MA
organizations and Part D sponsors are required to be in compliance at
all times. If we used the hearing date as the date by which we measured
compliance, we would have absolutely no way of disputing a MA
organizations or Part D sponsor's assertion that they are currently in
compliance. Under no circumstance to we believe that the date for
determining compliance should be after the date of termination
notification. We are finalizing the proposal without modification.
Sections 422.662 and 423.651--Request for a Hearing
We proposed to revise Sec. 422.662(b) and Sec. 423.651(b) to
conform to our proposed change to eliminate the reconsideration
process. These provisions specify that a request for a hearing must be
filed within 15 days after the date of the initial determination. We
did not receive any comments on this provision and are adopting it as
proposed.
Sections 422.664 and 423.652--Postponement of Effective Date of a
Contract Determination When a Request for a Hearing Is Filed Timely
We proposed to revise Sec. 422.664 and Sec. 423.652 to postpone
the effective date of a contract determination when an MA organization
or Part D sponsor timely requests a hearing to appeal the contract
determination. However, the postponement would not override the
requirement that any final decision in favor of the plan or sponsor
must be issued by July 15 for an initial contract to be effective for
the upcoming year. Thus, if an organization's application is not
approved and the hearing officer's decision is not provided until
August, the applicant would not be able to have a contract for the next
year. This is consistent with our current process. We do not currently
postpone the effective date of termination in cases of immediate
termination, and did not propose any change in policy with respect to
expedited terminations. We did not receive any comments on this
provision and are adopting it as proposed.
Sections 422.670 and 423.655--Time and Place of Hearing
We proposed revising Sec. 422.670(a) and Sec. 423.655(a), to
require the hearing officer to send written notice to the parties
specifying the general and specific issues to be resolved at the
hearing, outlining the burden of proof and providing any information
about the hearing procedures. In addition, the notice would inform the
parties that they may conduct formal discovery. We did not receive any
comments on this provision and are adopting it as proposed.
Sections 422.682 and 423.661--Discovery
We proposed revising Sec. 422.682 and Sec. 423.661, to clarify
the scope of permissible discovery, and to require the hearing officer
to conclude discovery and provide all documents to both the hearing
officer and the opposing party at least 10 days prior to the hearing.
We did not receive any comments on this provision and are adopting it
as proposed.
Sections 422.684 and 423.662--Prehearing and Summary Judgment
We proposed to amend the provisions at Sec. 422.684 and Sec.
423.662 (and revise the section heading accordingly) to permit the
hearing officer to rule on a motion for summary judgment filed by
either of the parties to the hearing. In ruling on such a motion, we
propose that the hearing officer would be bound by CMS regulations and
general instructions. Where no factual dispute exists, the hearing
officer may make a decision on the papers, without the need for a
hearing. We did not receive any comments on this provision and are
adopting it as proposed.
Sections 422.692 and 423.666--Review by the Administrator
The existing regulations only explicitly permit Administrator
review of a hearing officer's decision in appeals of a contract
termination. We clarify that this review is available for all appeals
of CMS contract terminations, including decisions not to contract with
an applicant and nonrenewals.
We proposed revising the provisions at Sec. 422.692(a) and Sec.
423.666(a) to allow us to request Administrator review of a hearing
officer's decision regarding a contract determination. The existing
regulations permit only the MA organization or Part D sponsor to
request Administrator review. In addition, we proposed to amend the
same provisions to permit both the parties to submit written arguments
to the Administrator.
Comment: One commenter did not feel that we should be able to
request an appeal to the Administrator.
Response: We believe that we should have the right to request a
review by the Administrator. We feel that appeal rights should be
provided to both parties to provide for an equal opportunity to be
heard by the Administrator. Therefore, we are not making any changes to
the proposed regulations based on these comments.
We proposed revising the provisions at Sec. 422.692(b) and Sec.
423.666(b), to permit the Administrator, upon receipt of a request for
Administrator review, to accept or decline to review the hearing
decision. The existing regulations require the Administrator to review
the decision when a request for review is received. We believe that
providing the Administrator with the discretion to accept or decline
the request for review would lead to a more expeditious resolution of
appeals of contract determinations.
Comment: We received a comment stating that the Administrator
failing to take action within 30 days authorizes an unstructured,
unrecorded exercise of the Administrators decision that can hide
unequal treatment which evades review. The commenter stated that the
Administrator taking no action does not afford the plan the level of
review of other plans in which the Administrator reviews the appeal.
Response: We believe the Administrator has the authority to either
[[Page 68715]]
accept to review Hearing Officer decisions or to decline to review
Hearing Officer decisions. This right is well-founded in current
Provider Reimbursement Review Board policy. We are not making any
changes to the proposed regulation as a result of this comment.
We proposed redesignating Sec. 422.692(c) as Sec. 422.692(e) and
redesignating Sec. 423.666(c) as Sec. 423.666(e). We proposed adding
a new Sec. 422.692(c) and Sec. 423.666(c), to require the
Administrator to make a determination as to whether to accept or
decline the request for review within 30 days of the request of the
review. The failure of the Administrator to make a determination within
30 days of the request would be treated as a decision to decline the
request for review. We believe that providing this timeline assists all
parties in reaching a final decision in an expeditious manner. We did
not receive any comments on this provision and are adopting it as
proposed.
In addition, we proposed amending our existing regulations to add a
new paragraph at Sec. 422.692(d) and Sec. 423.666(d) which specifies
that Administrator review is based on the hearing record and any
written arguments submitted by the parties. However, review would not
be based on any new evidence, such as evidence that was not before the
hearing officer. We believe the specified sources provide a sufficient
basis for the Administrator to make a determination.
Comment: A commenter stated that Administrator review should not be
limited to the record but should accept additional evidence.
Response: The Administrator review does allow for each party to
submit additional arguments, but the current regulation does not
provide for additional evidence to be submitted. We feel that the
hearing record is sufficient, with enough information provided for the
Administrator to make a determination. Therefore, we are not making any
changes to the proposed regulations based on these comments.
Sections Sec. Sec. 422.696 and 423.668--Reopening of Initial Contract
Determination or Intermediate Sanction or Decision of a Hearing Officer
of the Administrator
We proposed to revise the section headings for Sec. 422.696 and
Sec. 423.668 from ``Reopening of a contract or reconsidered
determination or decision of a hearing officer or the Administrator''
to ``Reopening of an initial contract determination or decision of a
hearing officer or the Administrator'' to conform to our proposed
elimination of the reconsideration process described above. We did not
receive any comments on this provision and are adopting it as proposed.
Sections Sec. Sec. 422.698 and 423.669--Effect of Revised
Determination
We proposed a conforming change to reflect our proposed elimination
of the reconsideration process by removing in its entirety Sec.
422.698 and Sec. 423.669, ``Effect of revised determination.'' We did
not receive any comments on this provision and are adopting it as
proposed.
Subpart O--Intermediate Sanctions
We proposed several changes to our regulations in Subpart O--
Intermediate Sanctions in 42 CFR Part 422 and 42 CFR Part 423, to
clarify our policies and procedures for imposing intermediate sanctions
and Civil Money Penalties (CMPs) on MA organizations and Part D
sponsors. Specifically, we proposed to modify the appeals procedures
for intermediate sanctions and clarify which set of procedures affected
parties should use to appeal a CMP.
General Comments:
Comment: We received a few comments concerning bifurcated hearings
for intermediate sanctions and/or CMPs. The commenters felt that one
hearing should be used for both CMS imposed intermediate sanctions or
CMPs and OIG imposed CMPs.
Another commenter expressed concern that there is no explanation as
to when both CMS and OIG may impose CMPs based upon the same set of
facts. The commenter stated that only in the most egregious cases
should both CMS and the OIG impose CMPs.
Response: Appeals of CMS intermediate sanctions or CMPs and OIG
imposed CMPs are governed by different regulatory processes and
therefore cannot be combined in one hearing. In addition, CMS and OIG
may impose sanctions/CMPs under different and independent authorities.
The regulations currently provide for both OIG and CMS to impose
sanctions on the same set of facts. We have considered the comment and
are not making any changes to the regulations.
Sections Sec. Sec. 422.750 and 423.750--Types of Intermediate
Sanctions and Civil Monetary Penalties
We proposed reorganizing Sec. 422.750 and Sec. 423.750, to
distinguish the three different types of intermediate sanctions from
CMPs. We also proposed to clarify that each of the three intermediate
sanctions, (suspension of enrollment, suspension of payment, and
suspension of marketing) would remain in effect until we are satisfied
that the reasons for the initial suspensions have been corrected and
are not likely to reoccur. This revision reflects our current policy
and practice.
Comment: We received a comment stating that the suspension of all
marketing activities is too severe for ``noncompliant behavior.'' The
commenter stated that the suspension should only be for the particular
MA or Part D plan that is non-compliant.
Response: We are revising Sec. 422.750(a) and Sec. 423.750(a) to
clarify that the marketing sanctions will be imposed only on CMS-
specified plans. We did not intend to expand the scope of the sanction
with our proposed change. Therefore, we have changed the proposed
regulatory language to be consistent with the existing provisions.
For clarity, we proposed specifying at Sec. 422.750(b) and Sec.
423.750(b) that we may impose CMPs in the dollar amounts specified in
Sec. 422.760 and Sec. 423.760. We proposed to remove the prior
reference at Sec. 422.750(a)(1) and Sec. 423.750(a)(1) to the range
of CMPs because it is confusing. We did not receive any comments on
this provision and are adopting it as proposed.
Sections Sec. Sec. 422.752 and 423.752--Basis for Imposing
Intermediate Sanctions and Civil Money Penalties
At Sec. 422.752 and Sec. 423.752, we proposed to reorganize the
regulation to clarify the breakdown of responsibility between CMS and
the OIG for imposing intermediate sanctions and CMPs based on the type
of violation involved. Specifically, we clarify that CMS may impose a
suspension of enrollment, payment, or marketing on an MA organization
or Part D sponsor for violations specified in Sec. 422.752(a)(1)
through (a)(8) and for violations specified in Sec. 423.752(a)(1)
through (a)(6).
As part of the reorganization to the regulation, we also proposed
to add a new Sec. 422.752(c) and Sec. 423.752(c), to clarify that in
addition to the intermediate sanctions, we continue to have authority
to impose CMPs for contract determinations made under Sec. 422.510(a)
and Sec. 423.509(a). However, as specified in Sec. 422.752(c)(2) and
Sec. 423.752(c)(2), OIG would continue to have sole authority to
impose CMPs for any determinations concerning the MA organization or
the Part D sponsor committing or participating in false, fraudulent, or
abusive activities affecting the Medicare program, including the
submission of false or
[[Page 68716]]
fraudulent data, as stated in Sec. 422.510(a)(4) and Sec.
423.509(a)(4). We did not receive any comments on this provision and
are adopting it as proposed.
Sections Sec. Sec. 422.756 and 423.756--Procedures for Imposing
Intermediate Sanctions and Civil Money Penalties
At Sec. 422.756 and Sec. 423.756, we proposed to eliminate the
existing informal reconsideration process used for review of a decision
by CMS to impose an intermediate sanction, and allow an MA organization
or Part D sponsor to proceed directly to a hearing, pursuant to the
same procedures used to appeal contract determinations in Subpart N.
(See Sec. 422.660 through Sec. 422.698 and Sec. 423.650 through
Sec. 423.669.) We believe it would be more efficient and effective to
allow the MA organization or Part D sponsor to proceed to a hearing in
appealing an intermediate sanction. We note that a request to appeal an
intermediate sanction before a hearing officer does not delay the
intermediate sanction from taking effect on the date specified in the
sanction notice. We did not receive any comments on this provision and
are adopting it as proposed.
Because we proposed to eliminate the informal reconsideration
process, we proposed that an MA organization or Part D sponsor have an
opportunity to present information to us that may affect our decision
to impose an intermediate sanction prior to the sanction taking effect.
We recognize there may be occasions when we receive information that we
previously did not have when making a decision to impose an
intermediate sanction. Therefore, we proposed that MA organizations and
Part D sponsors have an opportunity to submit a written rebuttal
statement as specified at Sec. 422.756(a)(2) and Sec. 423.756(a)(2),
and to require the rebuttal statement be provided to us within ten (10)
calendar days after the MA organization or sponsor receives notice of
the intermediate sanction. The 10 calendar days begin the day after the
notice of intermediate sanction is mailed to the plan. A notice of
intermediate sanction is sent by overnight mail and by e-mail or fax.
In some cases we may decide to take multiple actions, for example,
contract termination, intermediate sanction, or CMP, against an MA
organization or Part D sponsor. We proposed to have the appeals of CMPs
go to an ALJ while the appeals of other actions, such as an
intermediate sanction or a termination, will be before a CMS hearing
official. Although the same underlying conduct may be the basis for
both actions we believe that the separate processes would result in
more consistent decision making by hearing officers and ALJs. We did
not receive any comments on this provision and are adopting as
proposed.
In addition, in preparing this final rule with comment period, we
recognized that we inadvertently omitted some corresponding revisions
to the existing regulatory text. These changes are necessary to
implement the policies that we articulated in the proposed rule and are
finalizing here. Specifically, we are revising Sec. 422.756(c) and
Sec. 423.756(c) to reflect the fact that we have eliminated the
reconsideration process and that an intermediate sanction imposed by
CMS will go into effect on the date specified in the notice (15 days
after the date of notification) and a reconsideration, or now an appeal
to a hearing officer, will not delay the effective date of the
sanction. See page 29379 of the proposed rule. We are also revising
Sec. Sec. 422.756(d) and 423.756(d) to reflect the fact that we have
eliminated the reconsideration process, that an appeal will not delay
the effective date of the sanction, and that where the exception at
Sec. 422.756(d)(2) or Sec. 423.756(d)(2) applies, CMS may make the
sanction effective on a specified date prior to 15 days after the date
of notification. The changes to Sec. 422.756(d)(2) and Sec.
423.756(d)(2) are consistent with our existing authority. We interpret
the existing provisions to allow us to make a sanction effective at any
time when there is a serious threat to an enrollee's health and safety,
including prior to 15 days after notification. It is critical that we
continue to have the ability to protect the interests of Part C and D
enrollees by taking immediate action in some cases.
In addition, upon review, we realized that some typographical
corrections to the proposed regulatory text at Sec. 423.756(f) were
necessary. Specifically, in the proposed rule, we realized that we had
typographical errors at Sec. 423.756(f)(2) and (f)(2)(v). We have
corrected the cross-reference to Sec. 423.509(c)(1) and replaced it
with a cross-reference to Sec. 423.752(c)(1). We have also replaced
the reference at (f)(2)(v) to Sec. 423.650 with a reference to Subpart
T since those are now the appeals provisions that govern appeals of
CMPs.
Sections Sec. Sec. 422.758 and 423.758--Collection of Civil Money
Penalties Imposed by CMS
At Sec. 422.758 and Sec. 423.758 we proposed to revise the
section heading ``Maximum amount of civil money penalties imposed by
CMS'' to read ``Collection of civil money penalties imposed by CMS.''
In addition, we proposed to revise Sec. 422.758 and Sec. 423.758.
Specifically, we proposed that we would initiate collection of the CMPs
if the MA organization or Part D sponsor does not timely request a
hearing, or if our decision to impose a CMP is upheld by an ALJ. We did
not receive any comments on this provision and are adopting as
proposed.
Sections Sec. Sec. 422.760 and 423.760--Determinations Regarding the
Amount of Civil Money Penalties and Assessment Imposed By CMS
We proposed redesignating the existing Sec. 422.760 as Sec.
422.764 and redesignating the existing Sec. 423.760 as Sec. 423.764
because in this rule we have explicitly outlined the CMP appeals
procedures in proposed subpart T in parts 422 and 423.
We proposed adding a new Sec. 422.760 and Sec. 423.760 to clarify
that we use the statutory factors in section 1128(A) of the Act in
determining the appropriate amount of civil money penalties or
assessments to impose on an MA organization or Part D sponsor. These
factors, if applicable, include the nature of the conduct, the degree
of culpability, the prior history of offenses, the financial condition
of the MA organization or Medicare Part D sponsor presenting the
claims, and other matters as fair administration may require. These
factors are based on the same statutory factors used in other Medicare
enforcement programs, including the nursing facility enforcement
context.
We also proposed to clarify, in Sec. 422.760(b) and Sec.
423.760(b), the amounts that may be assessed for CMPs that we impose.
Comment: We received a comment stating that we should provide for
additional mitigating factors that would affect the penalty
determination as a result of the MA organization or Part D sponsor's
noncompliance/deficiencies. The commenter suggested that we review
mitigating factors such as the corrective action that the organization
has taken and the nature and extent to which the organization has
cooperated with CMS.
Response: We have reviewed the comment and believe that
consideration of mitigating factors is already included in the proposed
provision. We state that factors that may be reviewed include the
degree of culpability of the MA organization, the history of the prior
offenses by the organization and other matters as justice may require.
We believe these proposed factors provide sufficient opportunity for us
to adjust
[[Page 68717]]
sanctions as warranted. We are finalizing our proposal without
modification.
Sections Sec. Sec. 422.762 and 423.762--Settlement of Penalties
We proposed to add a new Sec. 422.762 and Sec. 423.762 to clarify
that in accordance with section 1128A(f) of the Act, we have the
authority to settle CMPs imposed by us. This provision would make it
explicit that the parties may agree to settle the dispute instead of
litigating an appeal. We did not receive any comments on this provision
and are adopting as proposed.
Sections Sec. Sec. 422.764 and 423.764--Other Applicable Provisions
We proposed to redesignate Sec. 422.760 and Sec. 423.760 as Sec.
422.764 and Sec. 423.764 respectively to conform to the changes
proposed at the new Sec. 422.760 and Sec. 423.760. No substantive
changes to the text were proposed. We did not receive any comments on
this provision and are adopting it as proposed.
Subpart T--Appeal Procedures for Civil Money Penalties
We proposed to reserve subparts P, Q, R, and S in Part 422. In
addition, we proposed to add a new subpart T in Part 422 and Part 423,
respectively. These new subparts would outline the CMP appeal
procedures for MA organizations and Part D sponsors.
Our current MA and Part D regulations do not specify which
procedures an MA organization or Part D sponsor must use to appeal a
CMS-imposed penalty under either of these two programs. The regulations
at 42 CFR part 422.760 and 42 CFR part 423.760 state only that the
provisions of section 1128A of the Act (except paragraphs (a) and (b))
apply to CMPs under this subpart to the same extent that they apply to
a CMP or procedure under section 1128A of the Act. Nor have we issued
any guidance directing parties to the appropriate appeals procedures
for MA and Part D CMPs.
Therefore, to ensure a consistent approach in this area, we
proposed incorporating appeals procedures for parties to use when
appealing a CMP imposed under the MA or Part D program in a new subpart
T in Parts 422 and 423 respectively.
Based on certain statutory requirements and policy considerations,
we proposed to adopt CMP appeals procedures almost identical to those
in part 498 of Title 42, which are used by certain Medicare providers
and suppliers to challenge adverse agency enforcement decisions. Part
498 sets forth the rules for administrative and judicial review of CMS
determinations that affect participation in the Medicare and Medicaid
programs for a wide array of medical providers of services. These
rules, issued on June 12, 1987 (52 FR 22446), have been used by CMS for
more than 20 years and provide established appeals procedures for
various types of adverse agency determinations, including civil money
penalties imposed on nursing facilities. For numerous reasons laid out
in the proposed rule, we believe the part 498 appeals procedures are
the most appropriate procedures to use for hearing disputes involving a
wide range of violations. We did not receive any comments on this
provision and are generally adopting it as proposed. We are making a
technical revision to remove proposed paragraphs Sec. 422.1004(a)(2)
and (a)(3), and Sec. 423.1004(a)(2) and (a)(3) because they were
inadvertently retained from the part 498 procedures.
While the statute authorizing CMPs in the MA and Part D programs
requires the provisions of section 1128A of the Act, (except for
subsections (a) and (b)), to apply to MA and Part D CMP proceedings, it
does not require that section 1128A's provisions apply to other CMP
appeals procedures in the exact same manner, or without some
consideration for the MA or Part D program's unique characteristics. In
fact, section 1857(g)'s ``same manner'' language appears throughout the
Act and serves as the statutory basis for several different types of
CMP enforcement and appeals procedures. Because program violations may
vary by the type and nature of the violation, we have modified our CMP
appeal procedures when necessary. Since the MA and Part D programs
differ from the nursing facility program, we proposed modifying certain
sections of part 498 to take into account some of these differences.
For example, we proposed removing the reconsideration step in the
MA and Part D CMP appeals procedures since this step in part 498 only
applies to initial determinations made for prospective providers
entering the Medicare or Medicaid program and is not applicable to CMP
appeals. Removing the reconsideration step in subpart T would also help
expedite the CMP appeals process.
Since it is not clearly stated in part 498's regulations, we
proposed to make explicit in our regulations that in a hearing of a CMP
appeal before an ALJ or the Departmental Appeals Board (DAB), the
ultimate burden of persuasion would rest on the MA organization or Part
D sponsor. See the proposed rule for instances when the DAB has held
that in a provider termination proceeding by the Secretary, the
facility bears the ultimate burden of proving it is in compliance with
program requirements (Hillman Rehabilitation Center, DAB No.1611
(1999), aff'd Hillman Rehabilitation Center v. U.S. No.98-3789 (GEB)
(D.N.J. May 13, 1999)). We believe the administrative caselaw supports
our decision to place the burden of proof on the affected party in an
administrative hearing on the imposition of MA and Part D CMPs. We did
not receive any comments on this provision and are finalizing it as
proposed.
III. Provisions of the Final Rule With Comment Period
In this final rule with comment period, we are adopting the
provisions as set forth in the May 25, 2007 proposed rule with the
following revisions:
Amend Sec. 422.2, ``Definitions,'' by--
Revising the proposed definition of the term ``downstream
entity'' to read as follows: Downstream entity means any party that
enters into a written arrangement, acceptable to CMS, with persons or
entities involved with the MA benefit, below the level of the
arrangement between an a MA organization (or applicant) and a first
tier entity. These written arrangements continue down to the level of
the ultimate provider of both health and administrative services.
Amend Sec. 422.503 ``General Provisions'' by--
Revising proposed paragraph (b)(4)(vi)(G)(3) to read as
follows: The MA organization should have procedures to voluntarily
self-report potential fraud or misconduct related to the MA program to
CMS or its designee.
Amend Sec. 422.504 ``Contract provisions'' by--
Revising proposed paragraph (e)(2) for clarity.
Revising proposed paragraph (i)(2)(i) for clarity.
Revising paragraphs (i)(3) introductory text, (i)(3)(ii),
and (i)(3)(iii) for clarity, and by deleting the term ``providers.''
Revising paragraph (i)(4) introductory text by deleting
the phrase ``provider or.''
Amend Sec. 422.506 by--
Revising proposed paragraph (b)(2)(i) to make the date of
notice of nonrenewal by CMS August 1.
Revising proposed paragraph (b)(3)(i) to clarify that a MA
organizat