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###### Department of Health and Human Services

###### Centers for Medicare & Medicaid Services

          - [CMS-2318-N]
          - RIN 0938-AQ42

# AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

# ACTION:

Notice.

# SUMMARY:

This notice contains charts providing the States' final allotments available to pay the Medicare Part B premiums for Qualifying Individuals (QIs) for the Federal fiscal year (FY) 2010 and the preliminary QI allotments for FY 2011. The amounts of these QI allotments were determined in accordance with the methodology set forth in regulations and reflect funding for the QI program made available under recent legislation.

# DATES:

*Effective dates:*                         This notice is effective on February 25, 2011. The final QI allotments for payment of Medicare Part B premiums for FY 2010 are effective October 1, 2009. The preliminary QI allotments for FY 2011 are effective October 1, 2010.                    

# FOR FURTHER INFORMATION CONTACT:

Richard Strauss, (410) 786-2019.

# SUPPLEMENTARY INFORMATION:

## I. Background

### A. Allotments for FY 2010

Section 111 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) and section 2 of the QI Program Supplemental Funding Act of 2008 (the SFA) (Pub. L. 110-379) provided $480 million for FY 2009 and $150 million for the first quarter of FY 2010 (that is, through December 31, 2009). Section 5005 of the American Recovery and Reinvestment Act of 2009 (ARRA, Pub. L. 111-5, enacted on February 17, 2009) extended the QI program by providing $412.5 million in additional funds for the remaining three quarters of FY 2010 and $150 million in funds for the first quarter of 2011 (that is, through December 31, 2010).

Most recently with respect to funding for the QI program for FY 2010, section 3 of the “Emergency Aid to American Survivors of the Haiti Earthquake Act” enacted on January 27, 2010 (Haiti Earthquake Act, Pub. L. 111-127) amended section 1933(g)(2)(M) of the Social Security Act (the Act) to provide an additional $50 million in funding for States' FY 2010 QI allotments. Prior to enactment of the Haiti Earthquake Act, there was only $562.5 million available for States' FY 2010 QI allotments. Under the current Medicaid statute, as amended by the Haiti Earthquake Act, a total of $612.5 million is available for States' QI program in FY 2010.

### B. Allotments for FY 2011 and Thereafter

As previously stated, section 5005 of the American Recovery and Reinvestment Act of 2009 (ARRA, Pub. L. 111-5, enacted on February 17, 2009) extended the QI program by providing $150 million in additional funds for the first quarter of FY 2011 (that is, through December 31, 2010). Section 3 of the “Emergency Aid to American Survivors of the Haiti Earthquake Act” enacted on January 27, 2010 (Haiti Earthquake Act, Pub. L. 111-127) amended section 1933(g)(2)(M) of the Social Security Act (the Act) and provided an additional $15 million for States' FY 2011 QI allotments; that brings the total funds available for the QI program in FY 2011 to $165 million. Most recently, section 110 of the Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309, enacted on December 15, 2010) amended section 1933 of the Social Security Act and provides for $720 million for the QI program in FY 2011 in addition to the currently available $165 million for a total of $885 million available for funding the QI program for FY 2011. Finally, the Medicare and Medicaid Extenders Act of 2010 (Pub. L. 111-309) also made available $280 million for the QI program for the first quarter of FY 2012 (that is, through December 31, 2011).

### C. Current Regulations and Methodology for Calculating the Fiscal Year QI Allotments

                    The amounts of the final FY 2010 and preliminary FY 2011 QI allotments, as contained in this notice, were determined in accordance with the methodology set forth in existing regulations at 42 CFR 433.10(c)(5), as amended in the                     **Federal Register**                     published on November 24, 2008 (73 FR 70893), and reflecting funding for the QI program made available under the legislation discussed above.                

## II. Charts

The final QI allotments for FY 2010 and the preliminary QI allotments for FY 2011 are shown by State in Chart 1 and Chart 2 below, respectively:

Chart 1—Final Qualifying Individuals Allotments for October 1, 2009 through September 30, 2010

Chart 2—Preliminary Qualifying Individuals Allotments for October 1, 2010 through September 30, 2011

The following describes the information contained in the columns of Chart 1 and Chart 2:

                    Column A—                    *State.*                     Column A shows the name of each State.                

Columns B through D show the determination of an Initial QI Allotment for FY 2010 (Chart 1) or FY 2011 (Chart 2) for each State, based only on the indicated Census Bureau data.

                    Column B—                    *Number of Individuals.*                     Column B contains the estimated average number of Medicare beneficiaries for each State that are not covered by Medicaid whose family income is at least 120 but less than 135 percent of the federal poverty level. With respect to the                     *final FY 2010 QI allotment (Chart 1),*                     Column B contains the number of such individuals for the years 2006 through 2008, as obtained from the Census Bureau's Annual Social and Economic Supplement to the 2009 Current Population Survey. With respect to the                     *preliminary FY 2011 QI                               ( print page 15317)                            allotment (Chart 2),*                     Column B contains the number of such individuals for the years 2007 through 2009, as obtained from the Census Bureau's Annual Social and Economic Supplement to the 2010 Current Population Survey.                

                    Column C—                    *Percentage of Total.*                     Column C provides the percentage of the total number of individuals for each State, that is, the Number of Individuals for the State in Column B divided by the sum total of the Number of Individuals for all States in Column B.                

                    Column D—                    *Initial QI Allotment.*                     Column D contains each State's Initial QI Allotment for FY 2010 (Chart 1) or FY 2011 (Chart 2), calculated as the State's Percentage of Total in Column C multiplied by the total amount available Nationally for QI allotments for the fiscal year. The total amount available Nationally for QI allotments each fiscal year is $612,500,000 for FY 2010 (Chart 1) and $885,000,000 for FY 2011 (Chart 2).                

Columns E through L show the determination of the States' Final QI Allotments for FY 2010 (Chart 1) or Preliminary QI Allotments for FY 2011 (Chart 2).

                    Column E—                    *FY 2010 Estimated QI Expenditures.*                     Column E contains the States' estimates of their total QI expenditures for FY 2010 (Chart 1) or FY 2011 (Chart 2) based on information obtained from States in the summer of 2010.                

                    Column F—                    *Need (Difference).*                     Column F contains the additional amount of QI allotment needed for those States whose estimated expenditures in Column E exceeded their Initial QI allotments in Column D for FY 2010 (Chart 1) or for FY 2011 (Chart 2) for such States, Column F shows the amount in Column E minus the amount in Column D. For other “Non-Need” States, Column F shows “NA”.                

                    Column G—                    *Percent of Total Need States.*                     For States whose projected QI expenditures in Column E are greater than their initial QI allotment in Column D for FY 2010 (Chart 1) or FY 2011 (Chart 2), respectively, Column G shows the percentage of total need, determined as the amount for each Need State in Column F divided by the sum of the amounts for all States in Column F. For Non-Need States, the entry in Column G is “NA”.                

                    Column H—                    *Reduction Pool for Non-Need States.*                     Column H shows the amount of the pool of surplus QI allotments for FY 2010 (Chart 1) or FY 2011 (Chart 2), respectively, for those States that project QI expenditures for the fiscal year that are less than the Initial QI allotment for the fiscal year (referred to as non-need States). For States whose estimates of QI expenditures for FY 2010 or FY 2011, respectively, in Column E are equal to or less than their Initial FY 2010 or FY 2011 QI allotments in Column D for FY 2010 or FY 2011, Column H shows the amount in Column D minus the amount in Column E. For the States with a need, Column H shows “Need”. The reduction pool of excess QI allotments is equal to the sum of the amounts in Column H.                

                    Column I—                    *Percent of Total Non-Need States.*                     For States whose projected QI expenditures in Column E are less than their Initial QI allotment in Column D for FY 2010 (Chart 1) or FY 2011 (Chart 2), Column I shows the percentage of the total reduction pool in Column H, determined as the amount for each Non-Need State in Column H divided by the sum of the amounts for all States in Column H. For Need States, the entry in Column I is “Need”.                

                    Column J—                    *Reduction Adjustment for Non-Need States.*                     Column J shows the amount of adjustment needed to reduce the Initial QI allotments in Column D for FY 2010 (Chart 1) or FY 2011 (Chart 2) for Non-Need States in order to address the total need shown in Column F. The amount in Column J is determined as the percentage in column I for Non-Need States multiplied by the lesser of the total need in Column F (equal to the sum of Needs in Column F) or the total Reduction Pool in Column H (equal to the sum of the Non-Need amounts in Column H). For Need States, the entry in Column J is “Need”.                

                    Column K—                    *Increase Adjustment for Need States.*

Column K shows the amount of adjustment to increase the Initial QI Allotment in Column D for FY 2010 (Chart 1) or FY 2011 (Chart 2) for Need States in order to address the total need shown for the fiscal year in Column F. The amount in Column K is determined as the percentage in Column G for Need States multiplied by the lesser of the total need in Column F (equal to the sum of Needs in Column F) or the total Reduction Pool in Column H (equal to the sum of the Non-Need amounts in Column H). For Non-Need States, the entry in Column K is “NA”.

                    Column L—                    *Final FY 2010 QI Allotment (Chart 1) or Preliminary FY 2011 QI Allotment (Chart 2).*

Column L contains the Final QI Allotment for each State for FY 2010 (Chart 1) or the Preliminary QI Allotment for FY 2011 (Chart 2). For States that need additional QI allotment amounts for the fiscal year based on Estimated QI Expenditures in Column E as compared to their Initial QI allotments in Column D for the fiscal year (States with a projected need amount are shown in Column F), Column L is equal to the Initial QI allotment in Column D for FY 2010 (Chart 1) or FY 2011 (Chart 2) plus the amount determined in Column K for Need States. For Non-Need States (States with a projected surplus in Column H), Column L is equal to the QI Allotment in Column D reduced by the Reduction Adjustment amount in Column J.
      ( print page 15318)          ( print page 15319)    

## III. Waiver of Notice With Comment and 30-Day Delay in Effective Date

                    We ordinarily publish a notice of proposed rulemaking in the                     **Federal Register**                     and invite public comment on a proposed rule. The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed, and the terms and substance of the proposed rule, or a description of the subjects and issues involved. This procedure can be waived, however, if an agency finds good cause that a notice-and-comment procedure is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and its reasons in the rule issued. In addition, we also normally provide a delay of 30 days in the effective date. However, if adherence to this procedure would be impractical, unnecessary, or contrary to public interest, we may waive the delay in the effective date in accordance with the Administrative Procedure Act (5 U.S.C. 551*et seq.*).                

                    We are publishing this notice without a comment period or delay in effective date because of the need to notify individual States of the limitations on Federal funds for their Medicaid expenditures for payment of Medicare Part B premiums for qualifying individuals. Some States have                           ( print page 15320)                        experienced deficits in their current allotments that have caused them to deny benefits to eligible applicants, while other States project a surplus in their allotments. This notice adjusts the allocation of Federal funds, which will reduce the impact of States denying coverage to eligible QIs when there is sufficient funding to cover all or some of these individuals. Because access to Medicare Part B coverage for QIs, who without this coverage would have difficulty paying for needed health care, is critically important, we believe that it is in the public interest to waive the usual notice and comment procedure which we undertake before making a rule final. Moreover, we are not making any changes to the process we use for allocating allotments. We are simply implementing a process already set forth in regulations. For these reasons, we also believe a notice and comment process would be unnecessary.                

Therefore, for the reasons discussed above, we find that good cause exists to dispense with the normal requirement that a notice cannot become effective any earlier than 30 days after its publication. States that will have access to additional funds for QIs need to know that these funds are available as soon as possible. While we believe the surplus States that will have diminished amounts available for this FY will have sufficient funds for enrolling all potential QIs in their States, they also need to know as soon as possible that a certain amount of their unused allocation will no longer be available to them for this FY.

## IV. Collection of Information Requirements

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).

## V. Regulatory Impact Statement

We have examined the impact of this notice as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132 on Federalism and the Congressional Review Act (5 U.S.C. 804(2)).

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 one year). This notice does not reach the economic threshold and thus is not considered a major rule.

The RFA requires agencies to analyze options for regulatory relief for small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $7 million to $34.5 million in any one year. Individuals and States are not included in the definition of a small entity.

This notice codifies our procedures for implementing provisions of the Balanced Budget Act of 1997 to allocate, among the States, Federal funds to provide Medicaid payment for Medicare Part B premiums for low-income Medicare beneficiaries. The total amount of Federal funds available during a Federal fiscal year and the formula for determining individual State allotments are specified in the law. We have applied the statutory formula for the State allotments. Because the data specified in the law were not initially available, we used comparable data from the U.S. Census Bureau on the number of possible qualifying individuals in the States. This notice also permits, in a specific circumstance, reallocation of funds to enable enrollment of all eligible individuals to the extent of the available funding.

We believe that the statutory provisions implemented in this notice will have a positive effect on States and individuals. Federal funding at the 100 percent matching rate is available for Medicare cost-sharing for Medicare Part B premium payments for qualifying individuals and, with the reallocation of the State allotments, a greater number of low-income Medicare beneficiaries will be eligible to have their Medicare Part B premiums paid under Medicaid. The changes in allotments will not result in fewer individuals receiving the QI benefit in any State. The FY 2010 and FY 2011 costs for this provision have been included in the Mid-session Review of the FY 2011 President's Budget.

Section 1102(b) of the Social Security Act requires us to prepare a regulatory impact analysis for any rule that may have a significant impact on the operations of a substantial number of small rural hospitals. The analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds.

We are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined and certify that this notice will not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $130 million. This notice will have no consequential effect on the governments mentioned or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. Since this notice 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 notice was not reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program)

Dated: February 9, 2011.

Donald M. Berwick,

Administrator, Centers for Medicare & Medicaid Services.

                        Dated:                         *February 28, 2011*

Kathleen Sebelius,

*Secretary.*

BILLING CODE 4120-01-P

BILLING CODE 4120-01-C

[FR Doc. 2011-6565 Filed 3-18-11; 8:45 am]