[Federal Register: February 22, 2008 (Volume 73, Number 36)]
[Rules and Regulations]
[Page 9679-9685]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22fe08-10]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 411 and 489
[CMS-6272-F]
RIN 0938-AN27
Medicare Program; Medicare Secondary Payer (MSP) Amendments
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: On February 24, 2006, we published an interim final rule with
comment period in the Federal Register that implemented amendments to
the Medicare Secondary Payer (MSP) provisions under Title III of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA). The MMA clarified the MSP provisions regarding the obligations
of primary plans and primary payers, the nature of the insurance
arrangements subject to the MSP rules, the circumstances under which
Medicare may make conditional payments, and the obligations of primary
payers to reimburse Medicare.
In this final rule, we are finalizing several clarifications made
to the MSP provisions. In addition, we are responding to public
comments on the February 24, 2006 interim final rule with comment
period that pertain to these MSP provisions.
DATES: Effective Date: These regulations are effective on March 24,
2008.
FOR FURTHER INFORMATION CONTACT: Suzanne Lewis, (410) 786-0970.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Background
Beginning in 1980, the Congress enacted a series of amendments to
section 1862(b) of the Social Security Act (the Act) (hereafter
referred to as the Medicare Secondary Payer (MSP) provisions) to
protect the financial integrity of the Medicare program by making
Medicare a secondary payer, rather than a primary payer of health care
services, when certain types of other health care coverage are
available. (Workers' compensation had already been primary to Medicare
since the implementation of the original Medicare statute.) In enacting
the MSP provisions, the Congress intended that the MSP provisions be
construed to make Medicare a secondary payer to the maximum extent
possible. These statutory provisions are set forth in regulations at 42
CFR part 411, Exclusions From Medicare and Limitations on Medicare
Payment.
On December 8, 2003, the Congress enacted the Medicare Prescription
Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-
173). The Congress passed section 301 under Title III of the MMA to
address several interpretations of the MSP provisions being pressed by
various parties that would, if ultimately accepted, severely limit the
applicability of the MSP provisions at considerable expense to the
Medicare program. As discussed in the February 24, 2006 interim final
rule with comment period (71 FR 9466) many of these interpretations
were presented in the context of Federal court litigation over the
meaning of various MSP provisions. The Congress rejected these attempts
to incorrectly limit the application and scope of the MSP statute.
In the MMA, the Congress clarified its original intent regarding
the MSP provisions under section 1862(b) of the Act, thereby indicating
that these interpretations were incorrect and that the Secretary's
interpretations were accurate. These clarifications were effective as
if enacted on the date of the original legislation.
Section 301(a) of the MMA amended section 1862(b)(2)(A)(ii) of the
Act to remove the term ``promptly.'' This amendment establishes that
various parties were incorrect in their interpretation that section
1862(b)(2)(A)(ii) of the Act applied only if the workers' compensation
law or plan, liability insurance, or no-fault insurance has paid or
could reasonably be expected to pay for services ``promptly.'' This
amendment also added language to section 1862(b)(2)(B) of the Act to
clarify that the Secretary may make payment subject to reimbursement if
the workers' compensation law or plan, liability insurance, or no-fault
insurance has not paid or could not reasonably be expected to pay for
services ``promptly.''
Section 301(b)(1) of the MMA amended section 1862(b)(2)(A) of the
Act to clarify the application of the term ``self-insured plan.'' It
establishes that ``an entity that engages in a business, trade, or
profession shall be deemed to have a self-insured plan if it carries
its own risk (whether by a failure to obtain insurance, or otherwise)
in whole or in part.''
Section 301(b)(2)(A) of the MMA amended section 1862(b)(2)(B) of
the Act to specify that a primary plan, and an entity that receives
payment from a primary plan, shall reimburse the appropriate Trust Fund
for any payment that the Secretary makes with respect to an item or
service if it is demonstrated that the primary plan has or had a
responsibility to make payment with respect to the item or service. It
added language establishing that a primary plan's responsibility for
this payment ``may be demonstrated by a judgment, a payment conditioned
upon the recipient's compromise, waiver, or release (whether or not
there is a determination or admission of liability) of payment for
items or services included in a claim against the primary plan or the
primary plan's insured, or by other means.''
Section 301(b)(3) of the MMA amended section 1862(b)(2) of the Act
to
[[Page 9680]]
further delineate those entities (that is, ``primary payers'') from
which the United States may seek reimbursement. It amended language
specifying that the United States may bring an action against ``all
entities that are or were required or responsible (directly, as an
insurer or self-insurer, as a third-party administrator, as an employer
that sponsors or contributes to a group health plan, or large group
health plan, or otherwise) to make payment with respect to the same
item or service (or any portion thereof) under a primary plan.'' This
amendment specified that the United States may recover double damages
against these entities. Also, it amended language clarifying that the
United States may recover payment from ``any entity that has received
payment from a primary plan or from the proceeds of a primary plan's
payment to any entity.''
Under section 301(d) of the MMA, these provisions are effective as
if enacted on the date of the original legislation to reflect the
original MSP provisions and Congressional intent at issue. This final
rule amends 42 CFR part 411 and Sec. 489.20(i)(2)(ii) of our
regulations to implement these MSP provisions.
B. Requirements for Issuance of Regulations
Section 902 of the MMA amended section 1871(a) of the Act and
requires the Secretary, in consultation with the Director of the Office
of Management and Budget, to establish and publish timelines for the
publication of Medicare final regulations based on the previous
publication of a Medicare proposed or interim final regulation. Section
902 of the MMA also states that the timelines for these regulations may
vary but shall not exceed 3 years after publication of the preceding
proposed or interim final regulation except under exceptional
circumstances.
This final rule finalizes provisions set forth in the February 2006
interim final regulations. In addition, this final rule has been
published within the 3-year time limit imposed by section 902 of the
MMA. Therefore, we believe that the final rule is in accordance with
the Congress' intent to ensure timely publication of final regulations.
II. Provisions of the Interim Final Regulations
As is the case with group health plan and large group health plan
insurance, Medicare may not make payment if payment with respect to the
same item or service has been made or can reasonably be expected to be
made under workers' compensation, no-fault, or liability insurance.
However, Medicare may make a payment conditioned on reimbursement when
the workers' compensation, no-fault, or liability insurance plan
(including a self-insured plan) has not made or cannot reasonably be
expected to make payment with respect to this item or service promptly.
As discussed in the February 2006 interim final rule, in accordance
with section 301(a) of the MMA, we removed the word ``promptly'' from
Sec. 411.20(a)(2), Sec. 411.40(b)(1)(i), and Sec. 411.50(c)(1) and
(c)(2) to clarify that these Medicare payments are conditional and must
be reimbursed whenever a primary payer's responsibility to make payment
is demonstrated.
In Sec. 411.21, we removed the definitions for ``third party
payer'' and ``third party payment'' and replaced them with definitions
for ``primary payer'' and ``primary payment.'' We also provided a
definition for ``primary plan.'' We made these changes to conform to
the statutory language under the MMA. Consistent with these changes, we
made nomenclature changes to replace the terms ``third party payer,''
``third party payment,'' and ``third party plan'' with ``primary
payer,'' ``primary payment,'' or ``primary plan,'' respectively, under
part 411 throughout subparts B through H. In Sec. 411.33(f)(4), we
replaced the term ``third party'' with ``primary payer.'' We also
amended Sec. 489.20(i)(2)(ii) to replace ``third party payment'' with
``primary payment.''
In the February 2006 interim final rule with comment period, we
also added language to the definition of ``self-insured'' plan in Sec.
411.50(b) in accordance with section 301(b)(1) of the MMA. We clarified
that an entity that engages in a business, trade, or profession is
deemed to have a ``self-insured'' plan for liability insurance if it
carries its own risk, in whole or in part. Any such entity's self-
insured status may be demonstrated, among other ways, by the failure to
obtain insurance.
In accordance with section 301(b)(2)(A) of the MMA, we added a new
Sec. 411.22 to clarify that a primary payer, and an entity that
receives payment from a primary payer, become obligated to reimburse
CMS if and when it is demonstrated that the primary payer has or had
primary payment responsibility. This responsibility may be demonstrated
by a judgment, a payment conditioned upon the recipient's compromise,
waiver, or release (whether or not there is a determination or
admission of liability) of payment for items and services included in a
claim against the primary payer, or by other means, including but not
limited to a settlement, award, or contractual obligation. This means
that a primary payer may not extinguish its obligations under the MSP
provisions by paying the wrong party--for example, by paying the
Medicare beneficiary or the provider when it should have reimbursed the
Medicare program. Primary payers are expected to reimburse CMS when it
is demonstrated that they have or had payment responsibility.
In accordance with section 301(b)(3) of the MMA, in Sec. 411.21,
Sec. 411.22, and Sec. 411.24(e) also clarified that the Medicare
program may seek reimbursement from a primary payer, or any or all the
entities responsible or required to make payment as a primary payer.
With respect to debts where a group health plan or large group health
plan is the primary plan, the amendments make clear that all employers
that sponsor or contribute to the group health plan or large group
health plan are primary payers required to reimburse Medicare
regardless of whether the group health plan or large group health plan
was an insured plan (that is, the employer or other plan sponsor
purchased insurance) or was self-insured by the employer or other plan
sponsor. Medicare may also seek reimbursement from any entity that has
received payment from a primary payer. Entities that receive payment
include, but are not limited to, beneficiaries, attorneys, and
providers or suppliers (including physicians).
Furthermore, in the February 2006 interim final rule with comment
period, we revised Sec. 411.24(e) by adding language pertaining to
Medicare's authority to recover conditional payments. Specifically, in
accordance with section 301(b)(3) of the MMA, we specified at Sec.
411.24(e) that CMS has a direct right of action to recover from any
primary payer. We made a technical revision at Sec. 411.24(f)(2) to
replace the words ``is primary'' with ``is a primary plan.''
Consistent with section 301(b)(2)(A) of the MMA, the February 2006
interim rule with comment period clarified at Sec. 411.24(i)(1) that,
like liability insurance and disputed claims under group health plans
and no-fault insurance, workers' compensation insurance and plans must
also reimburse Medicare, although it paid some other entity, if it knew
or should have known that the claimant was a Medicare beneficiary.
Where Medicare has already recovered payment from the entity,
reimbursement to Medicare by the workers' compensation insurance or
plan is not required. However, nothing
[[Page 9681]]
in the February 2006 interim final rule with comment period will be
construed to require us to first pursue the entity which receives
payment before it can pursue the primary payer. Also consistent with
section 301(b)(2)(A) of the MMA, we added language to Sec. 411.45,
Sec. 411.52, and Sec. 411.53 to specify that any conditional payment
that Medicare makes is based upon the recovery rules under subpart B of
part 411. In addition, at Sec. 411.52, we clarified the basis for
which Medicare makes payment in liability cases. We revised Sec.
411.53 by removing the phrase ``, or the provider or supplier,'' in the
existing paragraph (a) to clarify that it is the beneficiary's
responsibility to file a claim for no-fault benefits.
III. Analysis of and Responses to Public Comments
We received five comments from the public on the February 2006
interim final rule with comment period. The comments received and our
responses to those comments are discussed below.
A. General Comments
Comment: A commenter stated that the February 2006 interim final
rule with comment period would ``refrain'' CMS from making conditional
payments where there is no anticipation of reimbursement ``promptly''
while broadening CMS' recovery scope for reimbursement of conditional
payments. The commenter also stated concern that the consequences of
this would be enormous for injured employees in the State of Indiana.
Response: We recognize the commenter's concerns and note that we
will continue to be permitted to make conditional payments when
liability insurance, no-fault insurance, or workers compensation do not
pay promptly. In addition, we will continue to recover any conditional
payments made. Furthermore, we will continue to not make conditional
payments when the ``injured employee'' also has group health plan
coverage that is primary to Medicare. The group health plan is expected
to fulfill its responsibilities under the statute.
Comment: A commenter believes that CMS' waiver of proposed
rulemaking is not justified. The commenter stated that conforming
regulatory language to statutory amendments does not justify waiving
proposed rulemaking nor does it render a ``notice-and-comment
procedure'' ``impracticable, unnecessary, or contrary to the public
interest.'' The commenter suggested that CMS recharacterize and
republish the February 2006 interim final rule with comment period as a
proposed rule with appropriate time for public comments.
Response: We recognize the commenter's concerns. However, it is
unnecessary to undertake notice and comment rulemaking because we are
merely conforming existing regulations to the statutory changes
affected by section 301 of the MMA.
Comment: The commenter also believes that CMS' adoption of a
comment due date as the effective date for the regulation is
inappropriate and renders any comments moot. The commenter suggested
that CMS adopt an effective date for the revised regulations that is on
or after the date of Federal Register publication of a final rule, not
before its promulgation.
Response: In the February 2006 interim final rule (71 FR 9466),
``MMA Amendments to the Medicare Secondary payer (MSP) Provisions,'' we
explained that the clarifications regarding the Congress's original
intent in implementing the MSP provisions under section 1862(b) of the
Social Security Act made by section 301 of the MMA were effective as if
enacted on the date of the original legislation. In the February 2006
interim final rule (71 FR 9468), we explained that because the interim
final rule merely conformed part 411 and Sec. 489.20(i)(2)(ii) of the
regulations to statutory changes affected by section 301 of the MMA, we
found good cause to waive the notice of proposed rulemaking and issue
the rule on an interim basis. We published the February 2006 interim
final rule with a 60-day public comment period, providing the public
adequate time to comment on the rule. In addition, there was a 60-day
delay in the effective date of that rule. Although the effective date
and the date of the close of the public comment period coincided, we
believe the public comments are not moot because we are required to
publish a subsequent final rule in which we consider and address all
timely public comments on the preceding interim final rule. We have
addressed the timely public comments in section III of this final rule,
``Analysis of and Responses to Public Comments.'' Based on our
consideration of the public comments, Sec. 411.22 and Sec. 411.25
have been amended to further clarify the reimbursement obligations and
notice requirements of primary payers. Section 411.45 has been amended
to replace the word ``capacity'' with ``incapacity'' so that there is
consistency between the language used in Sec. 411.45 and Sec. 411.53
This final rule will be effective 30 days after date of
publication.
Comment: A commenter expressed the view that only beneficiaries and
not beneficiaries, providers, and other entities should be responsible
and have the burden of updating the Coordination of Benefits (COB)
files.
Response: This comment is outside of the scope of the February 2006
interim final rule. Please note that beneficiaries, providers,
physicians, other suppliers, and other entities all have appropriate
obligations to ensure our COB records are updated.
Comment: A commenter believes that the February 2006 interim final
rule with comment period should require that ``when a payer other than
Medicare is determined to be the primary payer, the payer should be
required to pay at least the Medicare payment amount for the service.''
The commenter also believes that CMS should address ``the undue
administrative burden'' created when a payer is determined to be
primary and makes payment to a physician at a rate that is different
than the Medicare amount that has already been paid to the physician.
Response: This comment is outside of the scope of the February 2006
interim final rule. However, we note that the MSP statute prohibits a
group health plan from ``taking Medicare entitlement into account''
when Medicare is the secondary payer. The group health plan must make
the same primary payment it makes for non-Medicare entitled
individuals. We recognize the commenter's concerns. Providers,
physicians, and other suppliers are required by the MSP statute at 42
U.S.C. 1395 y(6)(b) to identify payers primary to Medicare and to bill
them before billing Medicare. Regulations at Sec. 411.24(h) require
entities that receive duplicate primary payment to reimburse Medicare
within 60 days. It is reasonable to expect providers, physicians, and
other suppliers to reconcile payments received for services to Medicare
beneficiaries and to comply with these requirements.
B. Definitions
In the February 2006 interim final rule, to conform to the
statutory language under the MMA, we removed the definitions for
``third party payer'' and ``third party payment'' and replaced them
with ``primary payer'' and ``primary payment.'' We also added a new
definition for ``primary plan.''
Comment: A commenter believes that the definition of ``third party
payer'' and ``third party payment'' in the previous version of the
regulation excluded the application of the MSP provisions to
individuals if they are Medicare beneficiaries; are engaged in a
business, trade, or profession; and are self-insured for purposes of
liability insurance.
Response: The MMA clarifies that all entities (including sole
proprietorships
[[Page 9682]]
and partnerships) that engage in a business, trade, or profession are
deemed to be self-insured to the extent that they do not purchase
liability insurance. This does not constitute a change in the way we
have administered the MSP provisions.
In the February 2006 interim final rule, to implement the statutory
amendment to section 1862(b)(2)(A) of the Act, we added language to the
current definition of ``self-insured plan'' to read as follows: ``Self-
insured plan means a plan under which an individual, or a private or
governmental entity, carries its own risk instead of taking out
insurance with a carrier. This term includes a plan of an individual or
other entity engaged in a business, trade, or profession, a plan of a
non-profit organization such as a social, fraternal, labor,
educational, religious, or professional organization, and the plan
established by the Federal government to pay liability claims under the
Federal Tort Claims Act. An entity that engages in a business, trade,
or profession is deemed to have a self-insured plan for purposes of
liability insurance if it carries its own risk (whether by a failure to
obtain insurance, or otherwise) in whole or in part.''
Comment: A commenter questioned whether any individual engaged in a
business trade or profession may be personally liable to the extent a
claim is asserted against the individual and the claim is satisfied
through a settlement, judgment, or award from the personal assets of
the individual or otherwise.
Response: The commenter is correct that an individual who is
engaged in a business, trade, or profession is deemed to be self-
insured for purposes of the MSP liability provisions to the extent that
he or she does not purchase liability insurance. An individual not
engaged in a business, trade, or profession is not deemed to be self-
insured.
Comment: A commenter expressed concern that the definition of self-
insured plan would not only include a legally separate business entity
owned by a Medicare beneficiary, but it would encompass business
entities such as a sole proprietorship and partnership, through which
the beneficiary retains personal legal liability and where the
beneficiary is either uninsured or under-insured. The commenter also
stated that the Medicare beneficiary's business could be construed as
having a self-insured plan obligated to repay benefits, but the
beneficiary would still be personally liable, in effect.
Response: The commenter is correct that an individual engaged in a
business, trade, or profession is personally liable in a liability
insurance situation to the extent that he or she does not purchase
liability insurance.
B. Reimbursement Obligations of Primary Payers and Entities That
Received Payment From Primary Payers
In the February 2006 interim final rule, to implement one of the
statutory amendments to section 1862(b)(2)(B) of the Act, we added a
new Sec. 411.22 to state that a primary payer, and an entity that
receives payment from a primary payer, must reimburse us for any
payment if it is demonstrated that the primary payer has or had
responsibility to make payment. A primary plan's responsibility for
payment may be demonstrated by a judgment; a payment conditioned upon
the recipient's compromise, waiver, or release (whether or not there is
a determination or admission of liability) of payment for items or
services included in a claim against the primary payer or the primary
payer's insured; or by other means, including but not limited to a
settlement, award, or contractual obligation.
Comment: A commenter stated that Sec. 411.22 should clarify that
``if a judgment or other legal proceeding determines that a payer
(other than Medicare) is the primary payer, and the payer mistakenly
reimburses the physician rather than Medicare (which has already
provided reimbursement to the physician for the service), then it is
the payer and/or Medicare's responsibility to notify the physician.''
The same commenter is concerned that the ``double damage'' language of
Sec. 411.24(c)(2) can be interpreted to apply to physicians.
Response: We disagree. It is reasonable to expect providers,
physicians, and other suppliers to realize that they have received
duplicate primary payments and to reimburse Medicare as required by
Sec. 411.24(h). Section 411.24(c)(2) specifically says we may ``* * *
recover from the primary payer * * *'' As defined in Sec. 411.21, a
``primary payer'' is ``* * * any entity that is or was required or
responsible to make payment with respect to an item or service (or any
portion thereof) under a primary plan. These entities include, but are
not limited to, insurers or self-insurers, third party administrators,
and all employers that sponsor or contribute to group health plans or
large group plans.'' ``Physicians'' in their capacity as ``physicians''
clearly do not fall within the definition of ``primary payer.''
However, a physician as an employer which sponsors or contributes to a
group health plan, including a self-insured group health plan, may be a
``primary payer.''
Comment: A commenter believes that Sec. 411.22 could be
interpreted to allow Medicare to seek reimbursement from the provider
first, before going to the primary payer. The commenter suggested that
CMS further clarify Sec. 411.22 by including language stating that
Medicare will pursue reimbursement from the primary payer first; and
that Medicare will not seek payment from providers that have not been
paid by the primary payer for the claim in question.
Response: Section 1862(b)(2)(B)(iii) of the Act gives Medicare the
authority to recover from the party responsible for making primary
payment; any entity that has received a primary payment from Medicare
and a primary plan; and from providers, physicians, and other suppliers
who fail to file a proper claim. Accordingly, it would be inappropriate
to limit Medicare's recovery options.
Comment: A commenter stated that Sec. 411.22 suggests that CMS
anticipates that primary payers will reimburse Medicare immediately and
directly upon a ``demonstration'' that a given payer has or had primary
payment responsibility, thereby relieving CMS and its contractors of
the requirement to issue a demand letter. The commenter asked for
direction as to whom and in what form the reimbursement is to be made
and, as well, the nature of the supporting information to be provided.
The commenter also requested clarification as to whether entities that
receive ``payment from a primary payer'' are required to notify
Medicare of mistaken or conditional payments. Specifically, the
commenter asked whether the notice requirements in Sec. 411.25 (which
states that if a primary payer learns that CMS has made a Medicare
primary payment for services for which the primary payer has made or
should have made primary payment, it must give notice to that effect to
the Medicare intermediary or carrier that paid the claim) extend to
both primary payers and entities that receive ``payment from a primary
payer.''
Response: We have modified Sec. 411.22 and Sec. 411.25 to address
this comment in part. In addition, we will provide notice as to where
and in what format the repayment should be made. Section 411.25 applies
only to primary payers.
Comment: A commenter is questioned how a ``contractual obligation''
can of itself ``demonstrate'' an obligation to make a primary payment
for a particular claim because a contractual obligation is a generic
statement of responsibility applicable to all claims. The commenter
believes the contract itself cannot
[[Page 9683]]
``demonstrate'' that a particular claim meets its criteria for
responsibility to make payment. The commenter stated that some other
step must be taken to apply the contract terms to the facts and
circumstances of a particular case, for example, analysis and
conclusions evidenced by judgments, formal written settlements, awards,
etc. The commenter noted that in the group health plan context, issues
of primary responsibility to pay are usually not resolved by judgments,
settlements, or awards, etc. The commenter requested clarification
regarding how ``responsibility for payment'' would be demonstrated in
these circumstances.
Response: A contract can establish that a primary plan is obligated
to make primary payment for designated covered items and services under
the plan. A primary payer has the obligation upon learning that
Medicare has paid for certain items and services provided to an
individual for which it has primary payment responsibility to determine
if it is the proper primary payer for those items and services. This
determination constitutes a demonstration of primary payment
responsibility for those items and services and the consequential
obligation to repay Medicare.
Comment: A commenter stated that, in the context of Sec. 411.25,
CMS has consistently taken the position that ``learns'' means ``is, or
should be, aware.'' The commenter would like CMS to clarify whether the
obligation to reimburse CMS arises only when responsibility to pay is
``demonstrated'' in accordance with the terms of Sec. 411.22 or
whether it also arises when the primary payer ``learns'' of the
existence of a conditional payment under Sec. 411.25. The commenter
requested that CMS clarify whether the notice requirements of Sec.
411.25 and the reimbursement requirements of Sec. 411.22 must be
satisfied at the same time or whether they are separate obligations
that must be satisfied separately.
Response: Section 1862(b)(2)(B)(ii) of the Act specifically states
that the obligation to repay Medicare arises when primary payment
responsibility is demonstrated. Thus, the primary payer is obligated to
repay Medicare whenever it learns in any manner or form that it has
primary payment responsibility. We have modified Sec. 411.22 and Sec.
411.25 to address this comment.
C. Conditional Payments and Mental Incapacity
In the February 2006 interim final rule with comment period, we
added language to Sec. 411.45, Sec. 411.52, and Sec. 411.53 to
specify that any conditional payment that Medicare makes is based upon
the recovery rules under subpart B of part 411.
Comment: A commenter expressed concern with the inconsistency in
the language used when we state that conditional payment may be made
where a beneficiary ``because of physical or mental capacity failed to
file a proper claim'' (Sec. 411.45) or ``because of physical or mental
incapacity failed to meet a claim-filing requirement (Sec. 411.53).
The commenter suggested that CMS use either the term ``capacity'' or
``incapacity'' for consistency of application and evidentiary
requirements. The commenter also suggested that CMS define what a
beneficiary must do to establish ``capacity'' or ``incapacity.''
Response: We agree and will use the term ``incapacity.'' However,
we do not believe it is necessary to define what a beneficiary must do
to establish ``incapacity.'' ``Incapacity'' is determined on a case-
specific basis. A provider, physician, or other supplier is responsible
for demonstrating on a claim-specific basis that the beneficiary was
physically or mentally incapable of providing the information necessary
for the provider, physician, or other supplier to submit a proper
claim.
IV. Provisions of the Final Regulations
For the most part, this final rule incorporates the provisions of
the February 2006 interim final rule with comment period. Those
provisions of this final rule that differ from the February 2006
interim final rule are as follows:
Section 411.22 and Sec. 411.25 have been amended to
further clarify the reimbursement obligations and notice requirements
of primary payers.
Section 411.45 has been amended to replace the word
``capacity'' with ``incapacity'' so that there is consistency between
the language used in Sec. 411.45 and Sec. 411.53.
V. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comment on each of these issues
for the following sections of this document that contain information
collection requirements. Section 411.25 primary payer's notice of
primary payment responsibility.
Section 411.25(a) requires a primary payer to provide information
about primary payment responsibility and the information about Medicare
Secondary Payer situation to the entity or entities designated by CMS
to receive the information. Primary payers must provide this
information upon demonstration that CMS made a Medicare primary payment
for services for which the primary payer has made or should have made
primary payment. As stated earlier in the preamble of this document, a
demonstration of the primary payers responsibility includes a judgment,
a payment conditioned upon the recipients compromise, waiver, or
release (whether or not there is a determination of admission or
liability of payment for items or services included in a claim against
the primary plan or the primary plan's insured, or by other means).
Section 411.25(c) states that the primary payer must provide
additional information to the designated entity or entities as needed.
The information may be required for the entity or entities to update
CMS' system of records.
The burden associated with the requirements in Sec. 411.25 is the
time and effort associated with a primary payer gathering and providing
of information about primary payer responsibilities, Medicare secondary
payer situations, and additional information used to update the CMS'
system of records. While these requirements are subject to the PRA, the
associated burden is approved under OMB control number 0938-0214, with
an expiration date of May 31, 2009.
As required by section 3504(h) of the Paperwork Reduction Act of
1995, we have submitted a copy of this document to the Office of
Management and Budget (OMB) for its review of these information
collection requirements.
VI. Regulatory Impact Statement
We have examined the impacts of this final rule as required by
Executive Order 12866 (September 1993, Regulatory Planning and Review),
the
[[Page 9684]]
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). We have
determined that the effect of this final rule on the economy and the
Medicare program is not economically significant, since it merely
clarifies certain MSP provisions to reflect original congressional
intent and ratifies the manner in which we have implemented/
administered the MSP provisions. If the technical and clarifying
amendments had not been enacted, ``savings'' reflected in the table
below would have been lost and Medicare expenditures would have
increased. The table reflects the potential impact of a Fifth Circuit
Court decision that held that the MSP liability provision did not apply
when there was no liability insurance purchased or no formal plan of
self-insurance recognized under the Internal Revenue Code. This placed
a small portion of future MSP liability savings at risk. It was assumed
that over time, some U.S. Circuit Courts could have reached a similar
conclusion so that the potential losses of future MSP liability savings
would increase slowly over time in addition to the projected growth of
Medicare benefits. It was further assumed that some individuals who
repaid Medicare before 2003 would sue for refunds and that favorable
decisions would be rendered in some, but not all, cases. It was also
assumed that the refunds of past MSP liability savings would peak about
2007. Lastly, it was assumed that MSP liability collections represent
approximately 70 percent Part A claims payments and 30 percent Part B
claims payments (which are based on historic MSP liability savings).
Medicare Savings Retained
[Rounded to the nearest $10 million]
------------------------------------------------------------------------
Part A Part B Total Year
------------------------------------------------------------------------
2003...................................... $0 $0 $0
2004...................................... 10 0 10
2005...................................... 10 0 10
2006...................................... 10 0 10
2007...................................... 20 0 20
2008...................................... 10 0 10
2009...................................... 20 0 20
2010...................................... 20 10 30
2011...................................... 20 10 30
2012...................................... 20 10 30
2013...................................... 20 10 30
2014...................................... 20 10 30
2015...................................... 20 10 30
------------------------------------------------------------------------
Therefore, this final rule is not a major rule as defined in Title
5, United States Code, section 804(2) and is not an economically
significant rule under Executive Order 12866.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6 million to $29 million in any 1 year. Individuals and States are not
included in the definition of a small entity. We have determined and we
certify that this final rule will not have a significant economic
impact on a substantial number of small entities because there is and
will be no change in the administration of the MSP provisions.
Therefore, we are not preparing an analysis for the RFA.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule or notice having the effect of a
rule may have a significant impact on the operations of a substantial
number of small rural hospitals. This analysis must conform to the
provisions of section 604 of the RFA. For purposes of section 1102(b)
of the Act, we define a small rural hospital as a hospital that is
located outside of a Core-Based Statistical Area and has fewer than 100
beds. We have determined that this final rule will not have a
significant effect on the operations of a substantial number of small
rural hospitals because there is and will be no change in the
administration of the MSP provisions. Therefore, we are not preparing
an analysis for section 1102(b) of the Act.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule or notice having the effect of a rule whose mandates
require spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. That threshold level is currently approximately
$120 million. This final rule has no consequential effect on State,
local, or tribal governments or on the private sector because there is
and will be no change in the administration of the MSP provisions.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this final rule does not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 411
Kidney diseases, Medicare, Reporting and recordkeeping
requirements.
42 CFR Part 489
Health facilities, Medicare, Reporting and recordkeeping
requirements.
0
Accordingly, the interim final rule amending 42 CFR Chapter IV, which
was published on February 2006 (71 FR 9466), is adopted as a final rule
with the following changes:
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT
0
1. The authority citation for part 411 continues to read as follows:
Authority: Sections 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
0
2. Section 411.22 is amended by adding a paragraph (c) as follows:
Sec. 411.22 Reimbursement obligations of primary payers and entities
that received payment from primary payers.
* * * * *
(c) The primary payer must make payment to either of the following:
(1) To the entity designated to receive repayments if the
demonstration of primary payer responsibilities is other than receipt
of a recovery demand letter from CMS or designated contractor.
(2) As directed in a recovery demand letter.
0
3. Section 411.25 is amended by--
A. Revising the section heading.
0
B. Revising paragraphs (a) and (c).
The revisions read as follows:
[[Page 9685]]
Sec. 411.25 Primary payer's notice of primary payment responsibility.
(a) If it is demonstrated to a primary payer that CMS has made a
Medicare primary payment for services for which the primary payer has
made or should have made primary payment, it must provide notice about
primary payment responsibility and information about the underlying MSP
situation to the entity or entities designated by CMS to receive and
process that information.
* * * * *
(c) The primary payer must provide additional information to the
designated entity or entities as the designated entity or entities may
require this information to update CMS' system of records.
Sec. 411.45 [Amended]
0
4. Section 411.45(a)(2) is amended by removing the word ``capacity''
and adding the word ``incapacity'' in its place.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: September 4, 2007.
Herb B. Kuhn,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: October 19, 2007.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was received at the Office of the
Federal Register on February 12, 2008.
[FR Doc. E8-2938 Filed 2-21-08; 8:45 am]
BILLING CODE 4120-01-P