52706 Federal Register / Vol. 69, No. 166 / Friday, August 27, 2004 / Notices 

agencies to assess all costs and benefits 

of available regulatory alternatives and, 

when rules are necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic environments, public health 

and safety, other advantages, 

distributive impacts, and equity). We 

believe that this notice is consistent 

with the regulatory philosophy and 

principles identified in the Executive 

Order. The formula for the allotments is 

specified in the statute. Since the 

formula is specified in the statute, we 

have no discretion in determining the 

allotments. This notice merely 

announces the results of our application 

of this formula, and therefore does not 

reach the economic significance 

threshold of $100 million in any one 

year. 

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 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 

million to $29 million in any one year. 

Individuals and States are not included 

in the definition of a small entity; 

therefore, this requirement does not 

apply. 

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 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. 

The Unfunded Mandates Reform Act 

of 1995 requires that agencies prepare 

an assessment of anticipated costs and 

benefits before publishing any notice 

that may result in an annual 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $110 million or more 

(adjusted each year for inflation) in any 

one year. Since participation in the 

SCHIP program on the part of States is 

voluntary, any payments and 

expenditures States make or incur on 

behalf of the program that are not 

reimbursed by the Federal government 

are made voluntarily. This notice will 

not create an unfunded mandate on 

States, tribal, or local governments 

because it merely notifies States of their 

SCHIP allotment for FY 2005. Therefore, 

we are not required to perform an 

assessment of the costs and benefits of 

this notice. 

Low-income children will benefit 

from payments under SCHIP through 

increased opportunities for health 

insurance coverage. We believe this 

notice will have an overall positive 

impact by informing States, the District 

of Columbia, and U.S. Territories and 

Commonwealths of the extent to which 

they are permitted to expend funds 

under their child health plans using 

their FY 2005 allotments. 

Under Executive Order 13132, we are 

required to adhere to certain criteria 

regarding Federalism. We have 

reviewed this notice and determined 

that it does not significantly affect 

States’ rights, roles, and responsibilities 

because it does not set forth any new 

policies. 

For these reasons, we are not 

preparing analyses for either the RFA or 

section 1102(b) of the Act because we 

have determined, and we certify, that 

this notice will not have a significant 

economic impact on a substantial 

number of small entities or a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

In accordance with the provisions of 

Executive Order 12866, this notice was 

reviewed by the Office of Management 

and Budget.

(Section 1102 of the Social Security Act (42 

U.S.C. 1302).) (Catalog of Federal Domestic 

Assistance Program No. 93.767, State 

Children’s Health Insurance Program)

Dated: May 17, 2004. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services.

Dated: June 14, 2004. 

Tommy G. Thompson, 

Secretary.

[FR Doc. 04–19573 Filed 8–26–04; 8:45 am] 

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–4067–PN] 

RIN 0938–ZA53

Medicare and Medicaid Programs; 

Application by the Utilization Review 

Accreditation Commission (URAC) for 

Deeming Authority for Medicare 

Advantage

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Proposed notice.

SUMMARY: This proposed notice 

announces the receipt of an application 

from the Utilization Review 

Accreditation Commission for 

recognition as a national accreditation 

program for managed care organizations 

that wish to participate in the Medicare 

Advantage program. The statute requires 

that within 60 days of receipt of an 

organization’s complete application, we 

will announce our receipt of the 

accreditation organization’s application 

for approval, describe the criteria we 

will use in evaluating the application, 

and provide at least a 30-day public 

comment period.

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on September 27, 2004.

ADDRESSES: In commenting, please refer 

to file code CMS–4067–PN. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

three ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http://

www.cms.hhs.gov/regulations/

ecomments. (Attachments should be in 

Microsoft Word, WordPerfect, or Excel; 

however, we prefer Microsoft Word.) 

2. By 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–4067-PN, P.O. 

Box 8016, Baltimore, MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. 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–

3159 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 

Federal Register / Vol. 69, No. 166 / Friday, August 27, 2004 / Notices 52707

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:

Heidi Adams, (410) 786–1094.

SUPPLEMENTARY INFORMATION:

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this proposed notice to assist 

us in fully considering issues and 

developing policies. You can assist us 

by referencing the file code CMS–4067–

PN 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. After the close of the 

comment period, CMS posts all 

electronic comments received before the 

close of the comment period on its 

public Web site. Comments received 

timely will 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 (410) 

786–7195. 

This Federal Register document is 

available from the Federal Register 

online database through GPO Access, a 

service of the U.S. Government Printing 

Office. The Web site address is: http://

www.gpoaccess.gov/fr/index.html. 

I. Background 

[If you choose to comment on issues 

in this section, please include the 

caption ‘‘Background’’ at the beginning 

of your comments.] 

Under the Medicare program, eligible 

beneficiaries may receive covered 

services through a managed care 

organization (MCO) that has a Medicare 

Advantage (MA) (formerly, 

Medicare+Choice) contract with the 

Centers for Medicare & Medicaid 

Services (CMS). The regulations 

specifying the Medicare requirements 

that must be met in order for an MCO 

to enter into an MA contract with CMS 

are located at 42 CFR part 422. These 

regulations implement part C of Title 

XVIII of the Social Security Act (the 

Act), which specifies the services that 

an MCO must provide and the 

requirements that the organization must 

meet to be an MA contractor. Other 

relevant sections of the Act are parts A 

and B of Title XVIII and part A of Title 

XI pertaining to the provision of 

services by Medicare certified providers 

and suppliers. 

Generally, for an organization to enter 

into an MA contract, the organization 

must be licensed by the State as a risk 

bearing organization as set forth in part 

422 of our regulations. Additionally, the 

organization must file an application 

demonstrating that it meets other 

Medicare requirements in part 422 of 

our regulations. Following approval of 

the contract, we engage in routine 

monitoring and oversight audits of the 

MA organization to ensure continuing 

compliance. The monitoring and 

oversight audit process is 

comprehensive and uses a written 

protocol that itemizes the Medicare 

requirements the MA organization must 

meet. 

As an alternative for meeting some 

Medicare requirements, an MA 

organization may be exempt from CMS 

monitoring of certain requirements in 

subsets listed in section 1852(e)(4)(B) of 

the Act as a result of an MA 

organization’s accreditation by a CMSapproved accrediting organization (AO). 

In essence, the Secretary ‘‘deems’’ that 

the Medicare requirements are met 

based on a determination that the AO’s 

standards are at least as stringent as 

Medicare requirements. As we specify at 

§ 422.157(b)(2) of our regulations, the 

term for which an AO may be approved 

by CMS may not exceed 6 years. For 

continuing approval, the AO will have 

to re-apply to CMS. 

The applicant organization is 

generally recognized as an entity that 

accredits MCOs that are licensed as a 

health maintenance organization (HMO) 

or a preferred provider organization 

(PPO).

II. Approval of Deeming Organizations 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Approval of Deeming Organizations’’

at the beginning of your comments.] 

Section 1852(e)(4)(C) of the Act 

requires that within 210 days of receipt 

of an application, the Secretary shall 

determine whether the applicant meets 

criteria specified in section 1865(b)(2) of 

the Act. Under these criteria, the 

Secretary will consider for a national 

accreditation body, its requirements for 

accreditation, its survey procedures, its 

ability to provide adequate resources for 

conducting required surveys and 

supplying information for use in 

enforcement activities, its monitoring 

procedures for provider entities found 

out of compliance with the conditions 

or requirements, and its ability to 

provide the Secretary with necessary 

data for validation. 

Section 1865(b)(3)(A) of the Act 

further requires that we publish, within 

60 days of receipt of an organization’s 

complete application, a notice 

identifying the national accreditation 

body making the request, describing the 

nature of the request, and providing at 

least a 30-day public comment period. 

We have 210 days from our receipt of 

a completed application to publish 

approval or denial of the application. 

The purpose of this notice is to inform 

the public of our consideration of the 

Utilization Review Accreditation 

Commission’s (URAC’s) application for 

approval of deeming authority of MA 

organizations that are licensed as an 

HMO for the following six categories: 

• Quality improvement. 

• Access to services. 

• Antidiscrimination. 

• Information on advance directives. 

• Provider participation rules. 

• Confidentiality and accuracy of 

enrollees’ records. 

This notice also solicits public 

comment on the ability of the 

applicant’s accreditation program to 

meet or exceed the Medicare 

requirements for which it seeks 

authority to deem. 

III. Evaluation of Deeming Request 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Evaluation of Deeming Request’’ at the 

beginning of your comments.] 

On June 4, 2004, URAC submitted all 

the necessary information to permit us 

to make a determination concerning its 

request for approval as a deeming 

authority for MA organizations that are 

licensed as an HMO. Under § 422.158(a) 

of the regulations, our review and 

evaluation of a national accreditation 

organization will consider, but not 

necessarily be limited to, the following 

information and criteria: 

• The equivalency of URAC’s 

requirements for HMOs to CMS’

comparable MA organization 

requirements. 

• URAC’s survey process, to 

determine the following: 

+ The frequency of surveys. 

+ The types of forms, guidelines and 

instructions used by surveyors. 

+ Descriptions of the accreditation 

decision making process, deficiency 

notification and monitoring 

process, and compliance 

52708 Federal Register / Vol. 69, No. 166 / Friday, August 27, 2004 / Notices 

enforcement process. 

• Detailed information about 

individuals who perform accreditation 

surveys including—

+ Size and composition of the survey 

team; 

+ Education and experience 

requirements for the surveyors; 

+ In-service training required for 

surveyor personnel; 

+ Surveyor performance evaluation 

systems; and 

+ Conflict of interest policies relating 

to individuals in the survey and 

accreditation decision process.

• Descriptions of the organization’s—

+ Data management and analysis 

system; 

+ Policies and procedures for 

investigating and responding to 

complaints against accredited 

organizations; and 

+ Types and categories of 

accreditation offered and MA 

organizations currently accredited 

within those types and categories. 

In accordance with § 422.158(b) of our 

regulations, the applicant must provide 

documentation relating to—

• Its ability to provide data in a CMScompatible format; 

• The adequacy of personnel and 

other resources necessary to perform the 

required surveys and other activities; 

and 

• Assurances that it will comply with 

ongoing responsibility requirements 

specified in § 422.157(c) of our 

regulations. 

Additionally, the accrediting 

organization must provide CMS the 

opportunity to observe its accreditation 

process on site at a managed care 

organization and must provide any 

other information that CMS requires to 

prepare for an onsite visit to the AO’s 

offices. 

These site visits will help to verify 

that the information presented in the 

application is correct and to make a 

determination on the application. 

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. 

Upon completion of our evaluation, 

including evaluation of comments 

received as a result of this notice, we 

will publish a final notice in the Federal 

Register announcing the result of our 

evaluation. 

V. Regulatory Impact Statement 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was not reviewed by the Office of 

Management and Budget.

Authority: Section 1852 of the Social 

Security Act (42 U.S.C. 1395w–22).

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program).

Dated: August 18, 2004. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services.

[FR Doc. 04–19260 Filed 8–26–04; 8:45 am] 

BILLING CODE 4120–01–P

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

Notice of Hearing: Reconsideration of 

Disapproval of Minnesota’s Medicaid 

State Plan Amendment 03–06

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Notice of hearing.

SUMMARY: This notice announces an 

administrative hearing on October 21, 

2004, at 10 a.m., 233 North Michigan 

Avenue,Suite 600; RE–6E Board Room; 

Chicago, Illinois 60601 to reconsider our 

decision to disapprove Minnesota State 

PlanAmendment (SPA) 03–06.

DATES: Requests to participate in the 

hearing as a party must be received by 

the presiding officer by September 13, 

2004.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes; Presiding 

Officer,CMS,Lord Baltimore Drive,Mail 

Stop: LB–23–20,Baltimore, Maryland 

21244,Telephone: 410–786–2055.

SUPPLEMENTARY INFORMATION: This 

notice announces an administrative 

hearing to reconsider our decision to 

disapprove Minnesota’s Medicaid State 

Plan Amendment (SPA) 03–06. This 

SPA was submitted on March 31, 2003, 

with a proposed effective date of 

January 1, 2003. This amendment would 

modify the State’s reimbursement 

methodology for nursing facility 

services. Specifically, it would increase 

a disproportionate share nursing facility 

add-on made to 14 of the State’s countyowned nursing facilities. The Centers 

for Medicare & Medicaid Services (CMS) 

was unable to approve SPA 03–06 

because the State did not document that 

the proposed payment methodology, in 

combination with funding requirements 

under section 4.19 D of the State’s plan, 

meet the conditions specified in 

sections 1902(a)(2), 1902(a)(30)(A), and 

1902(a)(19) of the Social Security Act 

(the Act) and are consistent with the 

overall Federal-state financial 

partnership under title XIX of the Act. 

In formal requests for additional 

information and several subsequent 

discussions, CMS asked that the State 

describe any transfers of funds between 

providers and State or local 

governments, and indicate whether the 

providers kept 100 percent of the total 

computable funds given as Medicaid 

payments. The State did not provide the 

requested information on transfers of 

funds between providers and local 

governments, nor did it indicate that the 

providers keep 100 percent of the total 

computable funds given as Medicaid 

payments. 

The State provided information about 

the flow of funds between the State and 

local governments and from the State to 

providers. However, the State did not 

provide information about the flow of 

funds from providers to the State or to 

local governments. This information is 

necessary in order to validate the 

funding sources of the non-Federal 

share of Medicaid payments and to 

determine the appropriateness of the 

payment levels. If providers refund part 

or all of the Medicaid payments to the 

State or its political subdivisions, the 

proposed payment rate would not 

reflect the net expenditure by the State, 

and the net non-Federal share would 

not meet the requirements of section 

1902(a)(2) of the Act. Moreover, if such 

refunds are made by providers, it is an 

indication that the full payment amount 

is not required to ensure Medicaid 

beneficiaries access to the providers’

services. The result is that payments 

under this section of the plan would not 

be in compliance with the requirement 

under section 1902(a)(30)(A) of the Act 

that payment rates must be consistent 

with ‘‘efficiency, economy, and quality 

of care.’’

Since the State has not provided the 

necessary information regarding 

provider payment retention, CMS could 

not find that SPA 03–06 is consistent 

with the requirement of section 

1902(a)(19) of the Act that requires that 

care and services will be provided 

consistent with ‘‘simplicity of 

administration and the best interests of 

the recipients.’’ The best interest of 

recipients is not served by a proposed 

payment structure that would divert 

Medicaid payments from the providers 

to the State and shift financial burdens 

from the State to the Federal