65686 Federal Register / Vol. 72, No. 225 / Friday, November 23, 2007 / Proposed Rules 

E. Executive Order 13132: Federalism 

Executive Order 13132, entitled 

‘‘Federalism’’ (64 FR 43255, August 10, 

1999), requires EPA to develop an 

accountable process to ensure 

‘‘meaningful and timely input by State 

and local officials in the development of 

regulatory policies that have federalism 

implications.’’ ‘‘Policies that have 

federalism implications’’ is defined in 

the Executive Order to include 

regulations that have ‘‘substantial direct 

effects on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government.’’

This proposed rule does not have 

federalism implications. It will not have 

substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132. This action 

merely proposes to determine that the 

Imperial County area has not attained by 

its applicable attainment date, and to 

reclassify the Imperial County area as a 

moderate ozone nonattainment area and 

to adjust applicable deadlines. Thus, 

Executive Order 13132 does not apply 

to this rule. 

F. Executive Order 13175: Consultation 

and Coordination With Indian Tribal 

Governments 

Executive Order 13175, entitled 

‘‘Consultation and Coordination with 

Indian Tribal Governments’’ (65 FR 

67249, November 9, 2000), requires EPA 

to develop an accountable process to 

ensure ‘‘meaningful and timely input by 

tribal officials in the development of 

regulatory policies that have tribal 

implications.’’ This action does not have 

‘‘Tribal implications’’ as specified in 

Executive Order 13175. This action 

merely proposes to determine that the 

Imperial County area has not attained by 

its applicable attainment date, and to 

reclassify the Imperial County area as a 

moderate ozone nonattainment area and 

to adjust applicable deadlines. The 

Clean Air Act and the Tribal Authority 

Rule establish the relationship of the 

Federal government and Tribes in 

developing plans to attain the NAAQS, 

and this rule does nothing to modify 

that relationship. Thus, Executive Order 

13175 does not apply to this rule. 

G. Executive Order 13045: Protection of 

Children From Environmental Health 

and Safety Risks 

Executive Order 13045, ‘‘Protection of 

Children From Environmental Health 

and Safety Risks’’ (62 FR 19885, April 

23, 1997) applies to any rule that (1) is 

determined to be ‘‘economically 

significant’’ as defined under Executive 

Order 12866, and (2) concerns an 

environmental health or safety risk that 

EPA has reason to believe may have 

disproportionate effects on children. If 

the regulatory action meets both criteria, 

the Agency must evaluate the 

environmental health or safety effects of 

the planned rule on children, and 

explain why the planned regulation is 

preferable to other potentially effective 

and reasonably feasible alternatives 

considered by the Agency. This action 

is not subject to Executive Order 13045 

because it is not economically 

significant as defined in E.O. 12866, and 

because the Agency does not have 

reason to believe the environmental 

health risks or safety risks addressed by 

this rule present a disproportionate risk 

to children. This action merely proposes 

to determine that the Imperial Valley 

area has not attained the standard by the 

applicable attainment date, and to 

reclassify the Imperial Valley area as a 

moderate ozone nonattainment area and 

to adjust applicable deadlines. 

H. Executive Order 13211: Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use 

This action is not subject to Executive 

Order 13211, ‘‘Actions That 

Significantly Affect Energy Supply, 

Distribution, or Use’’ (66 FR 28355, May 

22, 2001), because it is not a significant 

regulatory action under Executive Order 

12866. 

I. National Technology Transfer 

Advancement Act 

As noted in the proposed rule, section 

12(d) of the National Technology 

Transfer Advancement Act of 1995 

(NTTAA), Public Law 104–113, section 

12(d) (15 U.S.C. 272 note) directs EPA 

to use voluntary consensus standards 

(VCS) in its regulatory activities unless 

to do so would be inconsistent with 

applicable law or otherwise impractical. 

Voluntary consensus standards are 

technical standards (e.g., materials 

specifications, test methods, sampling 

procedures, and business practices) that 

are developed or adopted by VCS 

bodies. The NTTAA directs EPA to 

provide Congress, through OMB, 

explanations when the Agency decides 

not to use available and applicable VCS. 

This action merely proposes to 

determine that the Imperial County area 

has not attained by the applicable 

attainment date, and to reclassify the 

Imperial County area as a moderate 

ozone nonattainment area and to adjust 

applicable deadlines. Therefore, EPA 

did not consider the use of any 

voluntary consensus standards. 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898 (59 FR 7629, 

February 16, 1994) establishes Federal 

executive policy on environmental 

justice. Its main provision directs 

Federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

EPA has determined that this 

proposed rule will not have 

disproportionately high and adverse 

human health or environmental effects 

on minority or low-income populations 

because it does not affect the level of 

protection provided to human health or 

the environment. This action merely 

proposes to determine that the Imperial 

County area did not attain the 8-hour 

ozone NAAQS by the applicable 

attainment date, to reclassify the 

Imperial County area as a moderate 

ozone nonattainment area and to adjust 

applicable deadlines. 

List of Subjects in 40 CFR Part 81 

Environmental protection, Air 

pollution control. 

Authority: 42 U.S.C. 7401 et seq. 

Dated: November 14, 2007. 

Laura Yoshii, 

Acting Regional Administrator, Region IX. 

[FR Doc. E7–22868 Filed 11–21–07; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 455 

[CMS–2271–P] 

RIN 0938–AO97 

Medicaid Integrity Program; Eligible 

Entity and Contracting Requirements 

for the Medicaid Integrity Audit 

Program 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 


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Federal Register / Vol. 72, No. 225 / Friday, November 23, 2007 / Proposed Rules 65687 

SUMMARY: Section 1936 of the Social 

Security Act (the Act) (as added by 

section 6034 of the Deficit Reduction 

Act of 2005 (DRA)) established the 

Medicaid Integrity Program to promote 

the integrity of the Medicaid program by 

requiring CMS to enter into contracts 

with eligible entities to: Review the 

actions of individuals or entities 

furnishing items or services (whether on 

a fee-for-service, risk, or other basis) for 

which payment may be made under an 

approved State plan and/or any waiver 

of such plan approved under section 

1115 of the Act; audit claims for 

payment of items or services furnished, 

or administrative services rendered, 

under a State plan; identify 

overpayments to individuals or entities 

receiving Federal funds; and educate 

providers of services, managed care 

entities, beneficiaries, and other 

individuals with respect to payment 

integrity and quality of care. 

This proposed rule would provide 

requirements for an eligible entity to 

enter into a contract under the Medicaid 

integrity audit program. The proposed 

rule would also establish the contracting 

requirements for eligible entities. The 

requirements would include procedures 

for identifying, evaluating, and 

resolving organizational conflicts of 

interest that are generally applicable to 

Federal acquisition and procurement; 

competitive procedures to be used; and 

procedures under which a contract may 

be renewed. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on December 24, 2007. 

ADDRESSES: In commenting, please refer 

to file code CMS–2271–P. 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–2271–

P, P.O. Box 8010, Baltimore, MD 21244–

1850. 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–2271–P, 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–

8148 in advance to schedule your 

arrival with one of our staff members. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) Comments mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by mailing 

your comments to the addresses 

provided at the end of the ‘‘Collection 

of Information Requirements’’ section in 

this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Barbara Rufo, 410–786–5589 or Crystal 

High, 410–786–8366. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–2271–P. 

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. Current Law 

States and the Federal government 

share in the responsibility for 

safeguarding Medicaid program 

integrity. States must comply with 

Federal requirements designed to ensure 

that Medicaid funds are properly spent 

(or recovered, when necessary). CMS is 

the primary Federal agency responsible 

for providing oversight of States’

activities and facilitating their program 

integrity efforts. 

B. Medicaid Integrity Program 

Section 6034 of the Deficit Reduction 

Act (DRA) of 2005 (Pub. L. 109–171, 

enacted on February 8, 2006) added a 

new section 1936 to the Act that 

established the Medicaid Integrity 

Program, referenced as the ‘‘Program’’

hereafter, to combat Medicaid fraud and 

abuse. The Program is intended to 

identify, recover, and prevent Medicaid 

overpayments. It is also intended to 

support the efforts of the State Medicaid 

agencies through a combination of 

oversight and technical assistance. 

Although individual States work to 

ensure the integrity of their respective 

Medicaid programs, the Program 

represents CMS’ first national strategy to 

detect and prevent Medicaid fraud and 

abuse. The Program would provide CMS 

with the ability to more directly ensure 

the accuracy of Medicaid payments and 

to deter those who would exploit the 

program. 

Section 6034 of the DRA amends title 

XIX of the Act by redesignating the 

former section 1936 as section 1937; and 

inserting the new 1936 ‘‘Medicaid 

Integrity Program.’’ The new section 

1936 states the Secretary will promote 

the integrity of the Medicaid program by 

entering into contracts with eligible 


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entities to carry out the following 

activities: 

Review of actions of individuals or 

entities furnishing items or services 

(whether on a fee-for-service, risk, or 

other basis) for which payment may be 

made under the State plan approved 

under title XIX (or under any waiver of 

such plan approved under section 1115 

of the Act) to determine whether fraud, 

waste, or abuse has occurred, or is likely 

to occur, or whether such actions have 

a potential for resulting in an 

expenditure of funds under title XIX in 

a manner which is not intended under 

the provisions of title XIX. 

Audit of claims for payment for items 

or services furnished, or administrative 

services rendered, under a State plan 

under title XIX, including cost reports, 

consulting contracts, and risk contracts 

under section 1903(m) of title XIX. 

Identification of overpayments to 

individuals or entities receiving Federal 

funds under title XIX. 

Education of providers of services, 

managed care entities, beneficiaries, and 

other individuals with respect to 

payment integrity and quality of care. 

Section 1936 of the Act also mandates 

that the Secretary will by regulation 

establish procedures which will include 

the following: 

• Procedures for identifying, 

evaluating, and resolving organizational 

conflicts of interest that are generally 

applicable to Federal acquisition and 

procurement. 

• Competitive procedures to be used 

when entering into new contracts under 

this section; when entering into 

contracts that may result in the 

elimination of responsibilities under 

section 202(b) of the Health Insurance 

Portability and Accountability Act of 

1996; and any other time considered 

appropriate by the Secretary. 

• Procedures under which a contract 

under this section may be renewed 

without regard to any provision of law 

requiring competition if the contractor 

has met or exceeded the performance 

requirements established in the current 

contract. 

CMS has determined not to address in 

this proposed rule the above bullet that 

references the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA). We have determined that 

section 202(b) of HIPAA addressed 

certain Medicare contracting issues 

which, because of structural differences 

between the Medicare and Medicaid 

programs, such as the fact that the 

Federal government does not utilize 

carriers or fiscal intermediaries in the 

Federal administration of the Medicaid 

program, do not pertain to the Medicaid 

contracting environment. Moreover, we 

have also determined that the 

provisions of the Social Security Act 

established by section 202(b) of HIPAA 

have since been repealed by section 911 

of the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003. We invite public comment on this 

approach. 

II. Provisions of the Proposed 

Regulations 

In accordance with section 1936 of 

the Act, we would, through this 

proposed rule at new subpart D, 

§ 455.200, define eligible entities that 

may enter into contracts under this 

Program to carry out activities as 

described above as well as establish 

contracting requirements for such 

entities. The approach taken in this 

proposed rule is consistent with a 

similar approach taken in the Medicare 

Integrity Program, which has very 

similar statutory requirements. 

A. Basis and Scope 

Following the mandate of section 

1936 of the Act, this proposed rule, in 

subpart C, § 455.200(b), Basis and 

Scope, would add additional language 

stating that part of the Medicaid 

Integrity Program’s scope is to carry out 

the Medicaid integrity audit functions. 

Subpart C would apply to entities that 

seek to compete for, or receive an award 

of, a contract under section 1936 of the 

Act. 

B. Definition of Eligible Entity 

In accordance with section 1936 of 

the Act, the proposed § 455.230 would 

describe that an eligible entity may 

enter into a Medicaid integrity audit 

program contract if it: 

• Demonstrates the capability to carry 

out the contractor activities; 

• In carrying out such activities, 

agrees to cooperate with the Inspector 

General of the Department of Health and 

Human Services, the Attorney General, 

and other law enforcement agencies, as 

appropriate, in the investigation and 

deterrence of fraud and abuse in relation 

to title XIX and in other cases arising 

out of such activities; 

• Maintains an appropriate written 

code of conduct and compliance 

policies that include, without 

limitation, an enforced policy on 

employee conflicts of interest; 

• Complies with such conflict of 

interest standards as are generally 

applicable to Federal acquisition and 

procurement; and, 

• Meets other requirements the 

Secretary may impose. 

It would not be possible to identify in 

this rule every possible contractor 

requirement that may appear in a future 

solicitation. In order to permit 

maximum flexibility to tailor our 

contractor eligibility requirements to 

specific solicitations while satisfying 

section 1936 of the Act, any additional 

requirements would be contained in the 

applicable solicitation. 

In addition, we propose that a 

contractor under section 1936 of the Act 

may perform any or all of the contractor 

functions as are listed and described 

under ‘‘contractor functions.’’

C. Contractor Functions 

In accordance with section 1936 of 

the Act, section 455.232 would identify 

the functions of the Medicaid integrity 

audit program contractor as follows: 

• Review of the actions of individuals 

or entities furnishing items or services 

(whether on a fee-for-service, risk, or 

other basis) for which payment may be 

made under a State plan approved 

under title XIX (or under any waiver of 

such plan approved under section 1115 

of the Act) to determine whether fraud, 

waste, or abuse has occurred, is likely 

to occur, or whether such actions have 

the potential for resulting in an 

expenditure of funds under title XIX in 

a manner which is not intended under 

the provisions of title XIX. 

• Audit of claims for payment for 

items or services furnished, or 

administrative services rendered, under 

a State plan under title XIX, including 

(a) cost reports; (b) consulting contracts; 

and (c) risk contracts under section 

1903(m) of the Act. 

• Identification of overpayments to 

individuals or entities receiving Federal 

funds under title XIX. 

• Educating providers of service, 

managed care entities, beneficiaries, and 

other individuals with respect to 

payment integrity and quality of care. 

D. Competitive Procedures and 

Requirements 

Section 455.234 would specify that a 

Medicaid integrity audit contract will be 

awarded in accordance with 48 CFR 

chapters 1 and 3 (the Federal 

Acquisition Regulation (FAR) and the 

Health and Human Services Acquisition 

Regulation, respectively), this subpart, 

and all other applicable laws and 

regulations. In accordance with section 

1936 of the Act, we would specify that 

these competitive procedures and 

requirements will be used as follows: 

• When entering into new contracts 

under this section. 

• At any other time considered 

appropriate by the Secretary. In 

addition, we propose to specify in 

§ 455.234 that an entity must meet the 

eligibility requirements established in 

proposed § 455.230 to become eligible to 


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Federal Register / Vol. 72, No. 225 / Friday, November 23, 2007 / Proposed Rules 65689 

be awarded a Medicaid integrity audit 

program contract. 

E. Renewal of Contracts 

Renewing a contract, when 

appropriate, results in continuity for 

both CMS and the contractor and can be 

in the best interest of the Program. If a 

contract is not renewed, we must ensure 

that sufficient time is provided to 

transfer and reassign the Medicaid 

integrity audit program functions as 

described in this subpart. Therefore, in 

§ 455.236, we would specify that an 

initial contract term will be defined in 

the Medicaid integrity audit program 

contract and a renewal clause may be 

included in the contract. We also would 

specify that we may, but are not 

required to, renew the Medicaid 

integrity audit program contracts 

without regard to any provision of law 

requiring competition if the contractor 

has met or exceeded the performance 

requirements established in the current 

contract. 

In accordance with sections 1936(c)(2) 

and (3) of the Act, we would specify in 

§ 455.236(b) that we may renew a 

Medicaid integrity audit program 

contract without competition if the 

contractor continues to meet all 

requirements of the proposed subpart C, 

the contractor meets or exceeds the 

performance requirements established 

in its current contract, and it is in the 

best interest of the government. 

At § 455.236(a) we propose that if 

CMS does not renew a contract, the 

contract will end in accordance with its 

terms. The contractor will not have a 

right to a hearing or judicial review 

regarding our renewal decision. 

F. Conflict of Interest 

This proposed rule would establish at 

§ 455.238 the process for identifying, 

evaluating, and resolving conflicts of 

interest as mandated by sections 

1936(c)(2) and (3) of the Act. 

Establishing such a process would 

ensure that business arrangements of 

potential contractors do not inhibit 

competition between providers, 

suppliers, or other types of business 

related to the Medicaid program, or 

have the potential of harming the 

government’s interests. 

We would adhere to the requirements 

of the FAR’s organizational conflict of 

interest requirements found at 48 CFR 

subpart 9.5 when soliciting contracts for 

the Medicaid integrity audit program. 

Due to the sensitive nature of the work 

to be performed under the contract, the 

need to preserve public trust, and the 

history of fraud and abuse in the 

Medicaid program, we would maintain 

the presumption that each prospective 

contract involves a significant potential 

organizational conflict of interest. 

Prior to awarding a Medicaid integrity 

audit program contract, the contracting 

officer will draft an organizational 

conflict of interest clause specific to the 

contractor for inclusion in the contract. 

In general we would not enter into a 

Medicaid integrity audit program 

contract with an offeror or an existing 

Medicaid integrity audit program 

contractor that has been determined to 

have, or that has the potential for, an 

unresolved organizational conflict of 

interest. 

At § 455.238(a), we would specify that 

an offeror for a Medicaid integrity audit 

program contract is, and the Medicaid 

integrity audit program contractors are, 

subject to the conflict of interest 

standards and requirements of the FAR 

organizational conflict of interest 

guidance found at 48 CFR subpart 9.5, 

and the requirements and standards that 

are contained in each individual 

contract awarded to perform the 

functions described under section 1936 

of the Act. 

In § 455.238(b), we would include 

post award discussions. We would 

specify that we consider that a post 

award conflict of interest has developed 

if, during the term of the contract, the 

contractor or any of its employees, 

agents, or subcontractors received, 

solicited, or arranged to receive any fee, 

compensation, gift, payment of 

expenses, offer of employment, or any 

other thing of value from any entity that 

is reviewed, audited, investigated, or 

contacted during the normal course of 

performing activities under a Medicaid 

integrity audit program contract. We 

incorporate the definition of ‘‘gift’’ from 

the Standards of Ethical Conduct for 

Employees of the Executive Branch [5 

CFR 2635.203(b)]. 

In addition, in § 455.238(c) we 

propose that if CMS has determined that 

a contractor’s activities are creating a 

conflict, then a conflict of interest has 

occurred during the term of the contract. 

If such an event has occurred, among 

other actions, we may, as we deem 

appropriate: 

• Not renew the contract for an 

additional term; 

• Modify the contract; or 

• Terminate the contract. 

The proposed provisions do not 

describe all of the information that may 

be required, or the level of detail that 

would be required. We wish to have the 

flexibility to tailor the requirements to 

each individual procurement. Because 

potential offerors may have questions 

about whether information submitted in 

response to a solicitation, including 

information regarding potential conflicts 

of interest, may be redisclosed under the 

Freedom of Information Act (FOIA), we 

provide the following information. 

To the extent that a proposal 

containing information is submitted to 

us as a requirement of a competitive 

solicitation under 41 U.S.C. Chapter 4, 

Subchapter IV, we would withhold the 

proposal when requested under the 

FOIA. This withholding is based upon 

41 U.S.C. 253b(m). However, there is 

one exception to this policy. It involves 

any proposal that is set forth or 

incorporated by reference in the 

contract awarded to the proposing 

offeror. Such a proposal may not receive 

categorical protection. Rather, we would 

withhold, under 5 U.S.C. 552(b)(4), 

information within the proposal that is 

required to be submitted that constitutes 

trade secrets or commercial or financial 

information that is privileged or 

confidential, provided the criteria 

established by National Parks & 

Conservation Association v. Morton, 498 

F.2d 765 (D.C. Cir. 1974), as applicable, 

are met. For any such proposal, we 

would follow pre-disclosure notification 

procedures set forth at 45 CFR 5.65(d). 

Any proposal containing the 

information submitted to us under an 

authority other than 41 U.S.C. Chapter 

4, Subchapter IV, and any information 

submitted independent of a proposal 

would be evaluated solely on the 

criteria established by National Parks & 

Conservation Association v. Morton and 

other appropriate authorities to 

determine if the proposal in whole or in 

part contains trade secrets or 

commercial or financial information 

that is privileged or confidential and 

protected from disclosure under 5 

U.S.C. 552(b)(4). Again, for any such 

proposal, we would follow predisclosure notification procedures set 

forth at 45 CFR 5.65(d) and will also 

invoke 5 U.S.C. 552(b)(6) to protect 

information that is of a highly sensitive 

personal nature. It should be noted that 

the protection of proposals under FOIA 

does not preclude us from releasing 

contractor proposals when necessitated 

by law, such as in the case of a lawful 

subpoena. 

G. Conflict of Interest Resolution 

We propose to describe at § 455.240(a) 

how a conflict of interest may be 

resolved. We would state that a 

Conflicts of Interest Review Board may 

be established and convened at any time 

during the term of the contract, as well 

as during the procurement process, to 

evaluate and assist the contracting 

officer in resolving conflicts of interest. 

We would determine when or if the 

Board will be convened. We would, at 

§ 455.240(b), specify that a resolution of 


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65690 Federal Register / Vol. 72, No. 225 / Friday, November 23, 2007 / Proposed Rules 

an organizational conflict of interest is 

a determination by the contracting 

officer that: 

• The conflict is mitigated; 

• The conflict precludes award of a 

contract to the offeror; 

• The conflict requires that we 

modify an existing contract; 

• The conflict requires that we 

terminate an existing contract; or 

• It is in the best interest of the 

government to contract with the offeror 

or contractor even though the conflict of 

interest exists. 

An offeror’s or contractor’s method of 

mitigating conflicts of interest will be 

evaluated on a case by case basis. We 

have provided examples of methods an 

offeror or contractor may use to mitigate 

organizational conflicts of interest. The 

examples are not an all-inclusive list of 

possible methods of mitigation nor are 

we obligated to approve a mitigation 

method that uses one of the provided 

examples. Possible methods of 

mitigation include: 

• Divestiture, or reduction in the 

amount, of the financial relationship the 

organization has in another organization 

to a level acceptable to us and 

appropriate for the situation. 

• If shared responsibilities create the 

conflict, a plan, subject to our approval, 

to separate lines of business and 

management or critical staff from work 

on the Medicaid integrity audit program 

contract. 

• If the conflict exists because of the 

amount of financial dependence upon 

the Federal Government, negotiating a 

phasing out of other contracts or grants 

that continue in effect at the start of the 

Medicaid integrity audit program 

contract. 

• If the conflict exists because of the 

financial relationships of individuals 

within the organization, divestiture of 

the relationships by the individual 

involved. 

• If the conflict exists because of an 

individual’s indirect interest, divestiture 

of the interest to levels acceptable to us 

or removal of the individual from the 

work under the Medicaid integrity audit 

program contract. 

By providing a process for the 

identification, evaluation, and 

resolution of conflicts of interest, we not 

only protect the government’s interests 

but help to ensure that the contractors 

do not hinder competition in their 

service areas by misusing their position 

as a Medicaid integrity audit program 

contractor. 

III. Collection of Information 

Requirements 

This document does not impose any 

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). 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Regulatory Impact Statement 

[If you wish to comment on issues in 

this section, please include the caption 

‘‘Regulatory Impact Statement’’ at the 

beginning of your comments.] 

We have examined the impact of this 

rule as required by Executive Order 

12866 (September 1993, Regulatory 

Planning and Review), the Regulatory 

Flexibility Act (RFA) (September 19, 

1980, Pub. L. 96–354), section 1102(b) of 

the Social Security Act, the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and Executive Order 13132. 

Executive Order 12866 directs agencies 

to assess all costs and benefits of 

available regulatory alternatives and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This rule would not 

reach the economic threshold and thus 

is not considered a major rule. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses. For purposes of the RFA, 

small entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals and most other providers and 

suppliers are small entities, either by 

nonprofit status or by having revenues 

of $6.5 million to $31.5 million in any 

1 year. Individuals and States are not 

included in the definition of a small 

entity. We are not preparing an analysis 

for the RFA because we have 

determined, and the Secretary certifies, 

that this rule would not have a 

significant economic impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 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 are not 

preparing an analysis for section 1102(b) 

of the Act because we have determined, 

and the Secretary certifies, that this rule 

would not have 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 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 

proposed rule would not exceed this 

established threshold level. This rule 

would have no consequential effect on 

State, local, or tribal governments or on 

the private sector. 

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 regulation would 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 in Part 455 

Fraud, Grant programs—health, 

Health facilities, Health professions, 

Investigations, Medicaid, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services would amend 42 CFR 

chapter IV as set forth below: 

PART 455—PROGRAM INTEGRITY; 

MEDICAID 

1. The authority citation for part 455 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

2. A new § 455.200 is added to read 

as follows: 


ebenthall on PROD1PC69 with PROPOSALS
Federal Register / Vol. 72, No. 225 / Friday, November 23, 2007 / Proposed Rules 65691 

§ 455.200 Basis and scope. 

(a) Statutory basis. This subpart 

implements section 1936 of the Act that 

establishes the Medicaid Integrity 

Program, under which the Secretary will 

promote the integrity of the program by 

entering into contracts with eligible 

entities to carry out the activities under 

this subpart C. 

(b) Scope. This subpart provides for 

the limitation on a contractor’s liability 

to carry out a contract under the 

Medicaid Integrity Program and to carry 

out the Medicaid integrity audit 

program functions. 

3. A new § 455.230 is added to read 

as follows: 

§ 455.230 Eligibility requirements. 

CMS may enter into a contract with 

an entity to perform the activities 

described at § 455.232, if it meets the 

following conditions: 

(a) The entity has demonstrated 

capability to carry out the activities 

described below. 

(b) In carrying out such activities, the 

entity agrees to cooperate with the 

Inspector General of the Department of 

Health and Human Services, the 

Attorney General, and other law 

enforcement agencies, as appropriate, in 

the investigation and deterrence of fraud 

and abuse in relation to Title XIX of the 

Social Security Act and in other cases 

arising out of such activities. 

(c) Maintains an appropriate written 

code of conduct and compliance 

policies that include, without 

limitation, an enforced policy on 

employee conflicts of interest. 

(d) The entity complies with such 

conflict of interest standards as are 

generally applicable to Federal 

acquisition and procurement. 

(e) The entity meets such other 

requirements the Secretary may impose. 

4. A new § 455.232 is added to read 

as follows: 

§ 455.232 Medicaid integrity audit program 

contractor functions. 

The contract between CMS and a 

Medicaid integrity audit program 

contractor specifies the functions the 

contractor will perform. The contract 

may include any or all of the following 

functions: 

(a) Review of the actions of 

individuals or entities furnishing items 

or services (whether on a fee-for-service, 

risk, other basis) for which payment 

may be made under a State Plan 

approved under title XIX of the Act (or 

under any waiver of such plan approved 

under section 1115 of the Act) to 

determine whether fraud, waste, or 

abuse has occurred, is likely to occur, or 

whether such actions have the potential 

for resulting in an expenditure of funds 

under title XIX in a manner which is not 

intended under the provisions of title 

XIX. 

(b) Auditing of claims for payment for 

items or services furnished, or 

administrative services rendered, under 

a State Plan under title XIX to ensure 

proper payments were made. This 

includes: Cost reports, consulting 

contracts, and risk contracts under 

section 1903(m) of the Act. 

(c) Identifying if overpayments have 

been made to individuals or entities 

receiving Federal funds under title XIX. 

(d) Educating providers of service, 

managed care entities, beneficiaries, and 

other individuals with respect to 

payment integrity and quality of care. 

5. A new § 455.234 is added to read 

as follows: 

§ 455.234 Awarding of a contract. 

(a) CMS awards and administers 

Medicaid integrity audit program 

contracts in accordance with acquisition 

regulations set forth at 48 CFR chapters 

1 and 3, this subpart, and all other 

applicable laws and regulations. These 

competitive procedures and 

requirements for awarding Medicaid 

integrity audit program contracts are to 

be used as follows: 

(1) When entering into new contracts 

under this section. 

(2) At any other time considered 

appropriate by the Secretary. 

(b) An entity is eligible to be awarded 

a Medicaid integrity audit program 

contract only if it meets the eligibility 

requirements established in § 455.202, 

48 CFR chapter 3, and all other 

applicable laws and requirements. 

6. A new § 455.236 is added to read 

as follows: 

§ 455.236 Renewal of a contract. 

(a) CMS specifies the initial contract 

term in the Medicaid integrity audit 

program contract. CMS may, but is not 

required to, renew a Medicaid integrity 

audit program contract without regard 

to any provision of law requiring 

competition if the contractor has met or 

exceeded the performance requirements 

established in the current contract. 

(b) CMS may renew a Medicaid 

integrity audit program contract without 

competition if all of the following 

conditions are met: 

(1) The Medicaid integrity audit 

program contractor continues to meet 

the requirements established in this 

subpart. 

(2) The Medicaid integrity audit 

program contractor meets or exceeds the 

performance requirements established 

in its current contract. 

(3) It is in the best interest of the 

government. 

(c) If CMS does not renew a contract, 

the contract will end in accordance with 

its terms. The contractor will not have 

a right to a hearing or judicial review 

regarding CMS’ renewal or non-renewal 

decision. 

7. A new § 455.238 is added to read 

as follows: 

§ 455.238 Conflict of interest. 

(a) Offerors for Medicaid integrity 

audit program contracts, and Medicaid 

integrity audit program contractors, are 

subject to the following requirements: 

(1) The conflict of interest standards 

and requirements of the Federal 

Acquisition Regulation organizational 

conflict of interest guidance, found 

under 48 CFR subpart 9.5. 

(2) The standards and requirements 

that are contained in each individual 

contract awarded to perform activities 

described under section 1936 of the Act. 

(b) Post-award conflicts of interest: 

CMS considers that a post-award 

conflict of interest has developed if, 

during the term of the contract, one of 

the following occurs: 

(1) The contractor or any of its 

employees, agents, or subcontractors 

received, solicited, or arranged to 

receive any fee, compensation, gift 

(defined at 5 CFR 2635.203(b)), payment 

of expenses, offer of employment, or any 

other thing of value from any entity that 

is reviewed, audited, investigated, or 

contacted during the normal course of 

performing activities under the 

Medicaid integrity audit program 

contract. 

(2) CMS determines that the 

contractor’s activities are creating a 

conflict of interest. 

(c) If CMS determines that a conflict 

of interest exists during the term of the 

contract, among other actions, CMS 

may: 

(1) Not renew the contract for an 

additional term. 

(2) Modify the contract. 

(3) Terminate the contract. 

8. A new § 455.238 is added to read 

as follows: 

§ 435.240 Conflict of interest resolution. 

(a) Review Board: CMS may establish 

a Conflicts of Interest Review Board to 

assist in resolving organizational 

conflicts of interest. 

(b) Resolution: Resolution of an 

organizational conflict of interest is a 

determination by the contracting officer 

that: 

(1) The conflict is mitigated. 

(2) The conflict precludes award of a 

contract to the offeror. 

(3) The conflict requires that CMS 

modify an existing contract. 

(4) The conflict requires that CMS 

terminate an existing contract. 


ebenthall on PROD1PC69 with PROPOSALS
65692 Federal Register / Vol. 72, No. 225 / Friday, November 23, 2007 / Proposed Rules 

(5) It is in the best interest of the 

government to contract with the offeror 

or contractor even though the conflict of 

interest exists and a request for waiver 

is approved in accordance with 48 CFR 

9.503. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: June 15, 2007. 

Leslie V. Norwalk, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: August 20, 2007. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. E7–22773 Filed 11–21–07; 8:45 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 483 

[CMS–2266–P] 

RIN 0938–AO82 

Medicare and Medicaid Programs; 

Waiver of Disapproval of Nurse Aide 

Training Program in Certain Cases and 

Nurse Aide Petition for Removal of 

Information for Single Finding of 

Neglect 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

permit a waiver of nurse aide training 

disapproval as it applies to skilled 

nursing facilities, in the Medicare 

program, and nursing facilities, in the 

Medicaid program, that are assessed a 

civil money penalty of at least $5,000 

for noncompliance that is not related to 

quality of care. This is a statutory 

provision enacted by section 932 of the 

Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173, enacted 

December 8, 2003.) 

In addition, this proposed rule would 

codify an additional statutory provision 

enacted by section 4755 of the Balanced 

Budget Act of 1997 (BBA) (Pub. L. 105–

33, enacted on August 5, 1997) that 

requires the State to establish a 

procedure to permit a nurse aide to 

petition the State to have a single 

finding of neglect removed from the 

nurse aide registry if the State 

determines that the employment and 

personal history of the nurse aide does 

not reflect a pattern of abusive behavior 

or neglect and the neglect involved in 

the original finding was a single 

occurrence. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on December 24, 2007. 

ADDRESSES: In commenting, please refer 

to file code CMS–2266–P. 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–2266–

P, P.O. Box 8017, Baltimore, MD 21244–

8017. 

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–2266–P, 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. 

Room 445–G, Hubert H. Humphrey 

Building, 200 Independence Avenue, 

SW., Washington, DC 20201; or 7500 

Security Boulevard, Baltimore, MD 

21244–1850. 

(Because access to the interior of the 

HHH Building is not readily available to 

persons without Federal Government 

identification, commenters are 

encouraged to leave their comments in 

the CMS drop slots located in the main 

lobby of the building. A stamp-in clock 

is available for persons wishing to retain 

a proof of filing by stamping in and 

retaining an extra copy of the comments 

being filed.) 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by mailing 

your comments to the addresses 

provided at the end of the ‘‘Collection 

of Information Requirements’’ section in 

this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: Pat 

Miller, (410) 786–6780. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–2266–P 

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. Waiver of Disapproval of Nurse Aide 

Training Program in Certain Cases 

To participate in the Medicare and or 

Medicaid programs, long-term care 

facilities must be certified as meeting 

Federal participation requirements. 

Long-term care facilities include skilled 

nursing facilities (SNFs) for Medicare 

and nursing facilities (NFs) for 

Medicaid. The Federal participation 


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