Federal Register / Vol. 72, No. 189 / Monday, October 1, 2007 / Notices 55775 

Dated: September 25, 2007. 

Maryam I. Daneshvar, 

Acting Reports Clearance Officer, Centers for 

Disease Control and Prevention. 

[FR Doc. E7–19301 Filed 9–28–07; 8:45 am] 

BILLING CODE 4163–18–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1399–GNC] 

RIN 0938–ZB02 

Medicare Program; Criteria and 

Standards for Evaluating Intermediary 

and Carrier Performance During Fiscal 

Year 2008 

AGENCY: Centers for Medicare and 

Medicaid Services (CMS), HHS. 

ACTION: General notice with comment 

period. 

SUMMARY: This general notice with 

comment period describes the criteria 

and standards to be used for evaluating 

the performance of fiscal intermediaries 

(FI) and carriers in the administration of 

the Medicare program. 

The results of these evaluations are 

considered whenever we enter into, 

renew, or terminate a FI agreement, 

carrier contract, or take other contract 

actions, for example, assigning or 

reassigning providers or services to a FI 

or designating regional or national 

intermediaries. We are requesting public 

comment on these criteria and 

standards. 

DATES: Effective Date: The criteria and 

standards are effective on October 1, 

2007. 

Comment Date: To be assured 

consideration, comments must be no 

later than 5 p.m. on November 30, 2007. 

ADDRESSES: In commenting, please refer 

to file code CMS–1399–GNC. 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–

1399—GNC, P.O. Box 8013, Baltimore, 

MD 21244–8013. 

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–1399—GNC Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7195 in advance to schedule your 

arrival with one of our staff members. 

7500 Security Boulevard, Baltimore, MD 

21244–1850; or Room 445–G, Hubert H. 

Humphrey Building, 200 Independence 

Avenue, SW., Washington, DC 20201. 

(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: Lee 

Ann Crochunis, (410) 786–3363. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this notice to assist us in 

fully considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1399—

GNC and the specific ‘‘issue identifier’’

that precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://www.cms.hhs.gov/ 

eRulemaking. Click on the link 

‘‘Electronic Comments on CMS 

Regulations’’ on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

A. Medicare Part A—Hospital Insurance 

Under section 1816 of the Social 

Security Act (the Act), public or private 

organizations and agencies participate 

in the administration of Part A (Hospital 

Insurance) of the Medicare program 

under agreements with CMS. These 

agencies or organizations, known as 

fiscal intermediaries (FIs), determine 

whether medical services are covered 

under Medicare, determine correct 

payment amounts and then make 

payments to the health care providers 

(for example, hospitals, skilled nursing 

facilities (SNFs), and community mental 

health centers) on behalf of the 

beneficiaries. Section 1816(f) of the Act 

requires us to develop criteria, 

standards, and procedures to evaluate 

an FI’s performance of its functions 

under its agreement. 

Section 1816(e)(4) of the Act requires 

us to designate regional agencies or 

organizations, which are already 

Medicare FIs under section 1816 of the 

Act, to perform claim processing 

functions for freestanding home health 

agency (HHA) claims. We refer to these 

organizations as Regional Home Health 

Intermediaries (RHHIs) under the 42 

CFR 421.117. 

The evaluation of FI, performance is 

part of our contract management 

process. These evaluations need not be 

limited to the current fiscal year (FY), 

other fixed term basis, or agreement 

term. 

B. Medicare Part B—Supplementary 

Medical Insurance 

Under section 1842 of the Act, we are 

authorized to enter into contracts with 

carriers to fulfill various functions in 

the administration of Part B, 

Supplementary Medical Insurance of 

the Medicare program. Beneficiaries, 

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55776 Federal Register / Vol. 72, No. 189 / Monday, October 1, 2007 / Notices 

physicians, and suppliers of services 

submit claims to these carriers. The 

carriers determine whether the services 

are covered under Medicare and the 

amount payable for the services or 

supplies, and then make payment to the 

appropriate party. 

Under section 1842(b)(2) of the Act, 

we are required to develop criteria, 

standards, and procedures to evaluate a 

carrier’s performance of its functions 

under its contract. Evaluations of 

Medicare fee-for-service (FFS) 

contractor performance need not be 

limited to the current Federal Fiscal 

Year (FFY), other fixed term basis, or 

contract term. The evaluation of carrier 

performance is part of our contract 

management process. 

C. Development and Publication of 

Criteria and Standards 

In addition to the statutory 

requirements, § 421.120, § 421.122, and 

§ 421.201, provide for publication of a 

Federal Register notice to announce 

criteria and standards for FIs and 

carriers before the beginning of each 

evaluation period. In the September 29, 

2006 Federal Register (71 FR 57513), we 

published a general notice with 

comment the current criteria and 

standards for FIs and carriers. 

To the extent possible, we make every 

effort to publish the criteria and 

standards before the beginning of the 

FFY, which is October 1. If we do not 

publish a Federal Register notice before 

the new FFY begins, readers may 

presume that until and unless notified 

otherwise, the criteria and standards 

that were in effect for the previous FFY 

remain in effect. 

In those instances in which we are 

unable to meet our goal of publishing 

the subject Federal Register notice 

before the beginning of the FFY, we may 

publish the criteria and standards notice 

at any subsequent time during the year. 

If we publish a notice in this manner, 

the evaluation period for the criteria and 

standards that are the subject of the 

notice will be effective beginning on the 

first day of the first month following 

publication of this notice in the Federal 

Register. Any revised criteria and 

standards will measure performance 

prospectively; that is, any new criteria 

and standards in the notice will be 

applied only to performance after the 

effective date listed on the notice. 

It is not our intention to revise the 

criteria and standards that will be used 

during the evaluation period once this 

information is published in a Federal 

Register notice. However, on occasion, 

either because of administrative action 

or statutory mandate, there may be a 

need for changes that have a direct 

impact on the criteria and standards 

previously published, or that require the 

addition of new criteria or standards, or 

that cause the deletion of previously 

published criteria and standards. If we 

must make these changes, we will 

publish an amended Federal Register 

notice before implementation of the 

changes. In all instances, necessary 

manual issuances will be published to 

ensure that the criteria and standards 

are applied uniformly and accurately. 

Also, as in previous years, this Federal 

Register notice will be republished and 

the effective date revised if changes are 

warranted as a result of the public 

comments received on the criteria and 

standards. 

The Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA) (Pub. L. 108–173) was 

enacted on December 8, 2003. Section 

911 of the MMA establishes the 

Medicare FFS Contracting Reform 

(MCR) initiative that will be 

implemented over the next several 

years. This provision requires that we 

use competitive procedures to replace 

our current FIs and carriers with 

Medicare Administrative Contractors 

(MACs). The MMA requires that we 

compete and transition all work to 

MACs by October 1, 2011. 

FIs and carriers will continue 

administering Medicare FFS work as 

may be required until the final 

competitively selected MAC is up and 

operating. We will continue to develop 

and publish standards and criteria for 

use in evaluating the performance of FIs 

and carriers as long as these types of 

contractors exist. 

II. Analysis of and Response to Public 

Comments Received on FY 2007 

Criteria and Standards 

We received five comments in 

response to the September 29, 2006 

Federal Register general notice with 

comment. All comments were reviewed, 

but none necessitated reissuance of the 

FY 2007 Criteria and Standards. 

Comments submitted did not pertain 

specifically to the FY 2007 Criteria and 

Standards. 

III. Criteria and Standards—General 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘CRITERIA AND 

STANDARDS—GENERAL’’ at the 

beginning of your comments.] 

Basic principles of the Medicare 

program are to pay claims promptly and 

accurately, and to foster good 

beneficiary and provider relations. 

Contractors must administer the 

Medicare program efficiently and 

economically. The goal of performance 

evaluation is to ensure that contractors 

meet their contractual obligations. We 

measure contractor performance to 

ensure that contractors do what is 

required of them by statute, regulation, 

contract, and our directives. 

We have developed a contractor 

oversight program for FY 2008 that 

outlines what is expected of the 

contractor; measures the performance of 

the contractor; evaluates the contractor’s 

performance against those expectations; 

and provides for appropriate contract 

action based upon the evaluation of the 

contractor’s performance. 

As a means to monitor the accuracy 

of Medicare FFS payments, we have 

established the Comprehensive Error 

Rate Testing (CERT) program that 

measures and reports error rates for 

claims payment decisions made by 

carriers and FIs. Since November 2003, 

the CERT program has been measuring 

and reporting claims payment error 

rates for each individual carrier. FIspecific rates became available 

November 2004. 

These rates measure not only how 

well contractors are doing at 

implementing automated review edits 

and identifying which claims to subject 

to manual medical review, but they also 

measure the impact of the contractor’s 

provider outreach/education, as well as 

the effectiveness of the contractor’s 

provider call center(s). We will use 

these contractor-specific error rates as a 

means to evaluate a contractor’s 

performance. 

Several times throughout this notice, 

we refer to the appropriate reading level 

of letters, decisions, or correspondence 

that are mailed or otherwise transmitted 

to Medicare beneficiaries from 

intermediaries or carriers. In those 

instances, appropriate reading level is 

defined as whether the communication 

is below the eighth grade reading level 

unless it is obvious that an incoming 

request from the beneficiary contains 

language written at a higher level. In 

these cases, the appropriate reading 

level is tailored to the capacities and 

circumstances of the intended recipient. 

In addition to evaluating performance 

based upon our expectations for FY 

2008, we may also conduct follow-up 

evaluations throughout FY 2008 of areas 

in which contractor performance was 

out of compliance with statute, 

regulations, and our performance 

expectations during prior review years 

where contractors were required to 

submit a Performance Improvement 

Plan (PIP). 

We may also utilize Statement of 

Auditing Standards–70 (SAS–70) 

reviews as a means to evaluate 

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contractors in some or all business 

functions. 

In FY 2001, we established the 

Contractor Rebuttal Process as a 

commitment to continual improvement 

of contractor performance evaluation 

(CPE). We will continue the use of this 

process in FY 2008. The Contractor 

Rebuttal Process provides the 

contractors an opportunity to submit a 

written rebuttal of CPE findings of fact. 

Whenever we conduct an evaluation of 

contractor operations, contractors have 

7 calendar days from the date of the CPE 

review exit conference to submit a 

written rebuttal. The CPE review team 

or, if appropriate, the individual 

reviewer considers the contents of the 

rebuttal before the issuance of the final 

CPE report to the contractor. 

The FY 2008 CPE for FIs and carriers 

is structured into five criteria designed 

to meet the stated objectives. The first 

criterion, claims processing, measures 

contractual performance against claims 

processing accuracy and timeliness 

requirements, as well as activities in 

handling appeals. Within the claims 

processing criterion, we have identified 

those performance standards that are 

mandated by legislation, regulation, or 

judicial decision. These standards 

include claims processing timeliness, 

the accuracy of Medicare Summary 

Notices (MSNs), the timeliness of FI and 

carrier redeterminations, and the 

appropriateness of the reading level and 

content of FI and carrier 

redetermination letters. Further 

evaluation in the claims processing 

criterion may include, but is not limited 

to, the accuracy of claims processing, 

the percent of claims paid with interest, 

the accuracy of redeterminations, 

timeliness of forwarding case files to 

and effectuation of Qualified 

Independent Contractor (QIC) decisions, 

and effectuation of administrative law 

judge (ALJ) decisions. 

The second criterion, customer 

service, assesses the adequacy of the 

service provided to customers by the 

contractor in its administration of the 

Medicare program. Functions that may 

be evaluated under this criterion 

include, but will not be limited to, the 

following: (1) Timeliness and accuracy 

of all correspondence to providers; (2) 

monitoring the quality of replies 

provided by the contractor’s provider 

telephone customer service 

representatives (quality call 

monitoring); and (3) provider outreach 

and education activities. 

The third criterion, payment 

safeguards, evaluates whether the 

Medicare Trust Fund is safeguarded 

against inappropriate program 

expenditures. Intermediary and carrier 

performance may be evaluated in the 

areas of Medical Review (MR), Medicare 

Secondary Payer (MSP), Overpayments 

(OP), and Provider Enrollment (PE). In 

addition, FIs performance may be 

evaluated in the area of Audit and 

Reimbursement (A&R). 

In FY 1996, the Congress enacted the 

Health Insurance Portability and 

Accountability Act (HIPAA), Medicare 

Integrity Program, giving us the 

authority to contract with entities other 

than, but not excluding, Medicare 

carriers and intermediaries to perform 

certain program safeguard functions. In 

situations where one or more program 

safeguard functions are contracted to 

another entity, we may evaluate the 

flow of communication and information 

between a Medicare FFS contractor and 

the payment safeguard contractor. All 

benefit integrity functions have been 

transitioned from the intermediaries and 

carriers to the program safeguard 

contractors. 

Mandated performance standards for 

FIs in the payment safeguards criterion 

include the accuracy of decisions on 

SNF demand bills and the timeliness of 

processing Tax Equity and Fiscal 

Responsibility Act (TEFRA) target rate 

adjustments, exceptions, and 

exemptions. There are no mandated 

performance standards for carriers in 

the payment safeguards criterion. FIs 

and carriers may also be evaluated on 

any Medicare Integrity Program (MIP) 

activities if performed under their 

agreement or contract. 

The fourth criterion, fiscal 

responsibility, evaluates the contractor’s 

efforts to protect the Medicare program 

and the public interest. Contractors 

must effectively manage Federal funds 

for both the payment of benefits and the 

costs of administration under the 

Medicare program. Proper financial and 

budgetary controls, including internal 

controls, must be in place to ensure 

contractor compliance with its 

agreement with HHS and CMS. 

Additional functions reviewed under 

this criterion may include, but are not 

limited to, adherence to approved 

budget, compliance with the Budget and 

Performance Requirements (BPRs), and 

compliance with financial reporting 

requirements. 

The fifth and final criterion, 

administrative activities, measures a 

contractor’s administrative management 

of the Medicare program. A contractor 

must efficiently and effectively manage 

its operations. Proper systems security 

(general and application controls), 

Automated Data Processing (ADP) 

maintenance, and disaster recovery 

plans must be in place. A contractor’s 

evaluation under the administrative 

activities criterion may include, but is 

not limited to, establishment, 

application, documentation, and 

effectiveness of internal controls that are 

essential in all aspects of a contractor’s 

operation, as well as the degree to 

which the contractor cooperates with us 

in complying with the Federal 

Managers’ Financial Integrity Act of 

1982 (FMFIA). Administrative activities 

evaluations may also include reviews 

related to contractor implementation of 

our general instructions and data and 

reporting requirements. 

We have developed separate measures 

for RHHIs in order to evaluate the 

distinct RHHI functions. These 

functions include the processing of 

claims from freestanding HHAs, 

hospital-affiliated HHAs, and hospices. 

Through an evaluation using these 

criteria and standards, we may 

determine whether the RHHI is 

effectively and efficiently administering 

the program benefit or whether the 

functions should be moved from one FIs 

to another in order to gain that 

assurance. 

In sections IV. through VI. of this 

notice, we list the criteria and standards 

to be used for evaluating the 

performance of intermediaries, RHHIs, 

and carriers. 

IV. Criteria and Standards for Fiscal 

Intermediaries 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Criteria and Standards for 

Intermediaries’’ at the beginning of your 

comments.] 

A. Claims Processing Criterion 

The claims processing criterion 

contains the following three mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted 

nonperiodic interim payment claims are 

paid within statutorily specified 

timeframes. Clean claims are defined as 

claims that do not require Medicare FIs 

to investigate or develop outside of their 

Medicare operations on a prepayment 

basis. Specifically, the Act specifies that 

clean nonperiodic interim payment 

electronic claims be paid no earlier than 

the 14th day after the date of receipt, 

and that interest is payable for any clean 

claims if payment is not issued by the 

31st day after the date of receipt. 

Standard 2. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

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Standard 3. All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

party submits documentation after the 

request, in which case the decisionmaking timeframe is extended for up to 

14 calendar days for each submission. 

Because FIs process many claims for 

benefits under the Part B portion of the 

Medicare Program, we also may 

evaluate how well a FI follows the 

procedures for processing appeals of 

any claims for Part B benefits. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Accuracy of claims processing. 

• Remittance advice transactions. 

• Establishment and maintenance of a 

relationship with Common Working File 

(CWF) Host. 

• Accuracy of redetermination 

decisions. 

• QIC case file requirements. 

• Accuracy and timeliness of 

processing appeals as set forth in part 

405, subpart I (§ 405.900 et seq.). 

B. Customer Service Criterion 

Functions that may be evaluated 

under this criterion include, but are not 

limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 

• Entering valid call center 

performance data in the customer 

service assessment and management 

system or its successor the provider 

inquiry evaluation system. 

• Providing timely and accurate 

written replies to providers that address 

the concerns raised and are written with 

an appropriate customer-friendly tone 

and clarity. 

• Ensuring written correspondence is 

evaluated for quality. 

• Conducting provider outreach and 

education-activities. 

• Effectively maintaining an Internet 

Web site dedicated to furnishing 

providers and physicians timely, 

accurate, and useful Medicare program 

information. 

C. Payment Safeguards Criterion 

The Payment Safeguard criterion 

contains the following two mandated 

standards: 

Standard 1. Decisions on SNF 

demand bills are accurate. 

Standard 2. TEFRA target rate 

adjustments, exceptions, and 

exemptions are processed within 

mandated timeframes. Specifically, 

applications must be processed to 

completion within 75 days after receipt 

by the contractor or returned to the 

hospitals as incomplete within 60 days 

of receipt. 

FIs may also be evaluated on any MIP 

activities if performed under their Part 

A contractual agreement. These 

functions and activities include, but are 

not limited to, the following: 

• Audit and Reimbursement 

+ Performing the activities specified 

in our general instructions for 

conducting audit and settlement of 

Medicare cost reports. 

+ Establishing accurate interim 

payments. 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision-making on medical reviews. 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately following MSP claim 

development and edit procedures. 

+ Auditing hospital files and claims 

to determine that claims are being filed 

to Medicare appropriately. 

+ Supporting the Coordination of 

Benefits Contractor’s efforts to identify 

responsible payers primary to Medicare. 

+ Supporting the MSP Recovery 

functions for provider, physician or 

other supplier debts and duplicate 

provider, physician or other supplier 

payments. 

+ Accurately reporting MSP savings. 

• Overpayments 

+ Collecting and referring Medicare 

debts in a timely manner. 

+ Accurately reporting and collecting 

overpayments. 

+ Adhering to our instructions for 

management of Medicare Trust Fund 

debts. 

• Provider Enrollment 

+ Complying with assignment of staff 

to the provider enrollment function and 

training the staff in procedures and 

verification techniques. 

+ Complying with the operational 

standards relevant to the process for 

enrolling providers. 

D. Fiscal Responsibility Criterion 

We may review the FI’s efforts to 

establish and maintain appropriate 

financial and budgetary internal 

controls over benefit payments and 

administrative costs. Proper internal 

controls must be in place to ensure that 

contractors comply with their 

agreements with us. 

Additional functions that may be 

reviewed under the fiscal responsibility 

criterion include, but are not limited to, 

the following: 

• Adherence to approved program 

management and MIP budgets. 

• Compliance with the BPRs. 

• Compliance with financial 

reporting requirements. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities Criterion 

We may measure an FI s 

administrative ability to manage the 

Medicare program. We may evaluate the 

efficiency and effectiveness of its 

operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. 

We may measure an FI’s efficiency 

and effectiveness in managing its 

operations. Proper systems security 

(general and application controls), ADP 

maintenance, and disaster recovery 

plans must be in place. A FI must also 

test system changes to ensure the 

accurate implementation of our 

instructions. 

Our evaluation of FI under the 

administrative activities criterion may 

include, but is not limited to, reviews of 

the following: 

• Systems security. 

• ADP maintenance (configuration 

management, testing, change 

management, and security). 

• Implementation of the Electronic 

Data Interchange (EDI) standards 

adopted for use under HIPAA. 

• Disaster recovery plan and systems 

contingency plan. Data and reporting 

requirements implementation. 

• Internal controls establishment and 

use, including the degree to which the 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of our general 

instructions. 

V. Criteria and Standards for Regional 

Home Health Intermediaries (RHHIs) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Criteria and Standards for RHHIs’’ at 

the beginning of your comments.] 

The following three standards are 

mandated for the RHHI criterion: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted 

nonperiodic interim payment home 

health and hospice claims are paid 

within statutorily specified timeframes. 

Clean claims are defined as claims that 

do not require Medicare FIs to 

investigate or develop them outside of 

their Medicare operations on a 

prepayment basis. Specifically, the 

statute specifies that clean non-periodic 

interim payment electronic claims be 

paid no earlier than the 14th day after 

the date of receipt, and that interest is 

payable for any clean claims if payment 

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is not issued by the 31st day after the 

date of receipt. 

Standard 2. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 3: All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

party submits documentation after the 

request, in which case the decisionmaking timeframe is extended for up to 

14 calendar days for each submission. 

We may use this criterion to review 

an RHHI’s performance for handling the 

HHA and hospice workload. This 

includes processing HHA and hospice 

claims timely and accurately, properly 

paying and settling HHA cost reports, 

and accurately processing 

redeterminations of initial 

determinations from beneficiaries, 

HHAs, and hospices. 

VI. Criteria and Standards for Carriers 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘’Criteria and Standards for Carriers’’ at 

the beginning of your comments.] 

A. Claims Processing Criterion 

The claims processing criterion 

contains the following four mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted claims 

are processed within statutorily 

specified timeframes. Clean claims are 

defined as claims that do not require 

Medicare carriers to investigate or 

develop outside of their Medicare 

operations on a prepayment basis. 

Specifically, the Act specifies that clean 

non-periodic interim payment 

electronic claims be paid no earlier than 

the 14th day after the date of receipt, 

and that interest is payable for any clean 

claims if payment is not issued by the 

31st day after the date of receipt. 

Standard 2. Ninety-eight percent of 

MSNs are properly generated. Our 

expectation is that MSN messages are 

accurately reflecting the services 

provided. 

Standard 3. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 4. All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

party submits documentation after the 

request, in which case the decisionmaking timeframe is extended for up to 

14 calendar days for each submission. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Accuracy of claims processing. 

• Remittance advice transactions. 

• Establishment and maintenance of 

relationship with Common Working File 

(CWF) Host. 

• Accuracy of redetermination 

decisions. 

• QIC case file requirements. 

• Accuracy and timeliness of 

processing appeals as set forth in part 

405, subpart I (§ 405.900 et seq.). 

B. Customer Service Criterion 

Contractors must meet our 

performance expectations that providers 

are served by prompt and accurate 

administration of the program in 

accordance with all applicable laws, 

regulations, and our general 

instructions. 

Functions that may be evaluated 

under this criterion include, but are not 

limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 

• Entering valid call center 

performance data in the customer 

service assessment and management 

system or its successor the provider 

inquiry evaluation system. 

• Providing timely and accurate 

written replies to providers that address 

the concerns raised and are written with 

an appropriate customer-friendly tone 

and clarity. 

• Ensuring written correspondence is 

evaluated for quality. 

• Conducting provider outreach and 

education, activities. 

• Effectively maintaining an Internet 

Web site dedicated to furnishing 

providers timely, accurate, and useful 

Medicare program information. 

C. Payment Safeguards Criterion 

Carriers may be evaluated on any MIP 

activities if performed under their 

contracts. In addition, other carrier 

functions and activities that may be 

reviewed under this criterion include, 

but are not limited to the following: 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision-making on medical reviews. 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately following MSP claim 

development/edit procedures. 

+ Supporting the Coordination of 

Benefits Contractor’s efforts to identify 

responsible payers primary to Medicare. 

+ Supporting the Medicare 

Secondary Payer Recovery functions for 

provider, physician or other supplier 

debts and duplicate provider, physician 

or other supplier payments. 

+ Accurately reporting MSP savings. 

• Overpayments 

+ Collecting and referring Medicare 

debts in a timely manner. 

+ Accurately reporting and collecting 

overpayments. 

+ Compliance with our instructions 

for management of Medicare Trust Fund 

debts. 

• Provider Enrollment 

+ Complying with assignment of staff 

to the provider enrollment function and 

training staff in procedures and 

verification techniques. 

+ Complying with the operational 

standards relevant to the process for 

enrolling suppliers. 

D. Fiscal Responsibility Criterion 

We may review the carrier’s efforts to 

establish and maintain appropriate 

financial and budgetary internal 

controls over benefit payments and 

administrative costs. Proper internal 

controls must be in place to ensure that 

contractors comply with their contracts. 

Additional functions that may be 

reviewed under the Fiscal 

Responsibility criterion include, but are 

not limited to, the following: 

• Adherence to approved program 

management and MIP budgets. 

• Compliance with the BPRs. 

• Compliance with financial 

reporting requirements. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities Criterion 

We may measure a carrier’s 

administrative ability to manage the 

Medicare program. We may evaluate the 

efficiency and effectiveness of its 

operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. 

We may measure a carrier’s efficiency 

and effectiveness in managing its 

operations. Proper systems security 

(general and application controls), ADP 

maintenance, and disaster recovery 

plans must be in place. Also, a carrier 

must test system changes to ensure 

accurate implementation of our 

instructions. 

Our evaluation of a carrier under this 

criterion may include, but is not limited 

to, reviews of the following: 

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55780 Federal Register / Vol. 72, No. 189 / Monday, October 1, 2007 / Notices 

• Systems security. 

• ADP maintenance (configuration 

management, testing, change 

management, and security). 

• Disaster recovery plan/systems 

contingency plan. 

• Data and reporting requirements 

implementation. 

• Internal controls establishment and 

use, including the degree to which the 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of the Electronic 

Data Interchange (EDI) standards 

adopted for use under the HIPAA. 

• Implementation of our general 

instructions. 

VII. Action Based on Performance 

Evaluations 

[If you choose to comment on this 

section, please include the caption 

‘‘Action Based on Performance 

Evaluations’’ at the beginning of your 

comments.] 

We evaluate a contractor’s 

performance against applicable program 

requirements for each criterion. Each 

contractor must certify that all 

information submitted to us relating to 

the contract management process, 

including, without limitation, all files, 

records, documents and data, whether 

in written, electronic, or other form, is 

accurate and complete to the best of the 

contractor’s knowledge and belief. A 

contractor is required to certify that its 

files, records, documents, and data are 

not manipulated or falsified in an effort 

to receive a more favorable performance 

evaluation. A contractor must further 

certify that, to the best of its knowledge 

and belief, the contractor has submitted, 

without withholding any relevant 

information, all information required to 

be submitted for the contract 

management process under the 

authority of applicable law(s), 

regulation(s), contract(s), or our manual 

provision(s). Any contractor that makes 

a false, fictitious, or fraudulent 

certification may be subject to criminal 

or civil prosecution, as well as 

appropriate administrative action. This 

administrative action may include 

debarment or suspension of the 

contractor, as well as the termination or 

nonrenewal of a contract. 

If a contractor meets the level of 

performance required by operational 

instructions, it meets the requirements 

of that criterion. When we determine a 

contractor is not meeting performance 

requirements, we will use the terms 

‘‘major nonconformance’’ or ‘‘minor 

nonconformance’’ to classify our 

findings. A major nonconformance is a 

nonconformance that is likely to result 

in failure of the supplies or services, or 

to materially reduce the usability of the 

supplies or services for their intended 

purpose. A minor nonconformance is a 

nonconformance that is not likely to 

materially reduce the usability of the 

supplies or services for their intended 

purpose, or is a departure from 

established standards having little 

bearing on the effective use or operation 

of the supplies or services. The 

contractor will be required to develop 

and implement PIPs for findings 

determined to be either a major or minor 

nonconformance. The contractor will be 

monitored to ensure effective and 

efficient compliance with the PIP, and 

to ensure improved performance when 

requirements are not met. 

The results of performance 

evaluations and assessments under all 

criteria applying to FIs, carriers, and 

RHHIs will be used for contract 

management activities and will be 

published in the contractor’s annual 

Report of Contractor Performance (RCP). 

We may initiate administrative actions 

as a result of the evaluation of 

contractor performance based on these 

performance criteria. Under sections 

1816 and 1842 of the Act, we consider 

the results of the evaluation in our 

determinations when—

• Entering into, renewing, or 

terminating agreements or contracts 

with contractors; and 

• Deciding other contract actions for 

intermediaries and carriers (such as 

deletion of an automatic renewal 

clause). These decisions are made on a 

case-by-case basis and depend primarily 

on the nature and degree of 

performance. More specifically, these 

decisions depend on the following: 

+ Relative overall performance 

compared to other contractors. 

+ Number of criteria in which 

nonconformance occurs. 

+ Extent of each nonconformance. 

+ Relative significance of the 

requirement for which nonconformance 

occurs within the overall evaluation 

program. 

+ Efforts to improve program quality, 

service, and efficiency. 

+ Deciding the assignment or 

reassignment of providers and 

designation of regional or national 

intermediaries for classes of providers. 

We make individual contract action 

decisions after considering these factors 

in terms of their relative significance 

and impact on the effective and efficient 

administration of the Medicare program. 

In addition, if the cost incurred by the 

FIs, RHHI, or carrier to meet its 

contractual requirements exceeds the 

amount that we find to be reasonable 

and adequate to meet the cost that must 

be incurred by an efficiently and 

economically operated FIs or carrier, 

these high costs may also be grounds for 

adverse action. 

VIII. Collection of Information 

Requirements 

This document does not impose 

information collection and record 

keeping requirements. Consequently the 

Office of Management and Budget need 

not review it under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3501 et seq.). 

IX. Response to Comments 

Because of the large number of items 

of correspondence we normally receive 

on Federal Register documents 

published for comment, we are unable 

to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the ‘‘Comment Date’’

section of this notice, and, if we proceed 

with a subsequent document, we will 

respond to the comments in the section 

entitled as ‘‘Analysis of and Response to 

Public Comments Received on FY 2008 

Criteria and Standards’’ of that 

document. 

Authority: Sections 1816(f), 1834(a)(12), 

and 1842(b) of the Social Security Act (42 

U.S.C. 1395h(f), 1395m(a)(12), and 1395u(b)). 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance, and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: May 24, 2007. 

Leslie V. Norwalk, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Editorial Note: This document was 

received at the Office of the Federal Register 

on September 26, 2007. 

[FR Doc. 07–4826 Filed 9–28–07; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

[Docket No. 2007N–0353] 

Drug Products Containing 

Hydrocodone; Enforcement Action 

Dates 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Notice. 

SUMMARY: The Food and Drug 

Administration (FDA) is announcing its 

intention to take enforcement action, as 

described in this notice, against 

mstockstill on PROD1PC66 with NOTICES