Federal Register / Vol. 71, No. 201 / Wednesday, October 18, 2006 / Proposed Rules 61445 

exchanges of property for an annuity 

contract (other than an annuity contract 

that either is a debt instrument subject 

to sections 1271 through 1275, or is 

received from a charitable organization 

in a bargain sale governed by § 1.1011–

2) after October 18, 2006. 

(ii) This paragraph (j) is effective for 

exchanges of property for an annuity 

contract (other than an annuity contract 

that either is a debt instrument subject 

to sections 1271 through 1275, or is 

received from a charitable organization 

in a bargain sale governed by § 1.1011–

2) after April 18, 2006 if the following 

conditions are met—

(A) The issuer of the annuity contract 

is an individual; 

(B) The obligations under the annuity 

contract are not secured, either directly 

or indirectly; and 

(C) The property transferred in 

exchange for the annuity contract is not 

subsequently sold or otherwise disposed 

of by the transferee during the two-year 

period beginning on the date of the 

exchange. For purposes of this 

provision, a disposition includes 

without limitation a transfer to a trust 

(whether a grantor trust, a revocable 

trust, or any other trust) or to any other 

entity even if solely owned by the 

transferor. 

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. E6–17301 Filed 10–17–06; 8:45 am] 

BILLING CODE 4830–01–P 

GENERAL SERVICES 

ADMINISTRATION 

41 CFR Part 102–35 

[FMR Case 2004–102–1; Docket 2006–0001; 

Sequence 3] 

RIN 3090–AH93 

Federal Management Regulation; 

Disposition of Personal Property 

AGENCY: Office of Governmentwide 

Policy, General Services Administration 

(GSA). 

ACTION: Proposed rule; reopening of 

comment period. 

SUMMARY: The General Services 

Administration is reopening the 

comment period for the subject 

proposed rule. The proposed rule 

pertains to amending the Federal 

Management Regulation (FMR) by 

revising coverage on personal property 

and moving it into Subchapter B of the 

FMR. A proposed rule was published in 

the Federal Register on September 12, 

2006 (71 FR 53646). 

DATES: Interested parties should submit 

comments in writing on or before 

November 17, 2006 to be considered in 

the formulation of a final rule. 

ADDRESSES: Submit comments 

identified by FMR case 2004–102–1 by 

any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Search for any 

document by first selecting the proper 

document types and selecting ‘‘General 

Services Administration’’ as the agency 

of choice. At the ‘‘Keyword’’ prompt, 

type in the FMR case number (for 

example, FMR Case 2006–102–1) and 

click on the ‘‘Submit’’ button. You may 

also search for any document by 

clicking on the ‘‘Advanced search/ 

document search’’ tab at the top of the 

screen, selecting from the agency field 

‘‘General Services Administration’’, and 

typing the FMR case number in the 

keyword field. Select the ‘‘Submit’’

button. 

• Fax: 202–501–4067. 

• Mail: General Services 

Administration, Regulatory Secretariat 

(VIR), 1800 F Street, NW., Room 4035, 

ATTN: Laurieann Duarte, Washington, 

DC 20405. 

Instructions: Please submit comments 

only and cite FMR case 2004–102–1 in 

all correspondence related to this case. 

All comments received will be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Robert Holcombe, Office of 

Governmentwide Policy, Personal 

Property Management Policy, at (202) 

501–3828, or e-mail at 

robert.holcombe@gsa.gov, for 

clarification of content. For information 

pertaining to status or publication 

schedules, contact the Regulatory 

Secretariat at (202) 501–4755, Room 

4035, GS Building, Washington, DC, 

20405. Please cite FMR case 2004–102–

1. 

Dated: October 12, 2006. 

Russ H. Pentz, 

Assistant Deputy Associate Administrator. 

[FR Doc. E6–17340 Filed 10–17–06; 8:45 am] 

BILLING CODE 6820–14–S 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 423 

[CMS–4119–P] 

RIN # 0938–AO58 

Medicare Program; Medicare Part D 

Data 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

allow the Secretary to use the claims 

information that is now being collected 

for Part D payment purposes for other 

research, analysis, reporting, and public 

health functions. The Secretary needs to 

use this data because other publicly 

available data are not, in and of 

themselves, sufficient for the studies 

and operations that the Secretary needs 

to undertake as part of the Department 

of Health and Human Service’s 

obligation to oversee the Medicare 

program, protect the public health, and 

respond to Congressional mandates. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on December 18, 2006. 

ADDRESSES: In commenting, please refer 

to file code CMS–4119–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–4119–

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 & 


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61446 Federal Register / Vol. 71, No. 201 / Wednesday, October 18, 2006 / Proposed Rules 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–4119–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. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Alissa DeBoy, (410) 786–6041; Nancy 

DeLew, (202) 690–7351. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this proposed rule to assist 

us in fully considering issues and 

developing policies. You can assist us 

by referencing the file code CMS–4119–

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. Introduction 

Under the Social Security Act (the 

Act), the Secretary has the authority to 

include in Part D sponsor contracts any 

terms or conditions the Secretary deems 

necessary and appropriate, including 

requiring the organization to provide the 

Secretary with such information as the 

Secretary may find necessary and 

appropriate. (See section 1857(e)(1) of 

the Act as incorporated into Part D 

through section 1860D–12(b)(3)(D) of 

the Act.) 

We propose to implement section 

1860D–12(b)(3)(D) of the Act to allow 

the Secretary to collect the same claims 

information now collected under the 

authority of section 1860D–15 of the Act 

for research, internal analysis, oversight, 

and public health purposes. While the 

purposes underlying such collection are 

discussed in more detail under this 

proposed rule, they include evaluating 

the new prescription drug benefit, 

including its effectiveness and impact 

on health outcomes, performing 

Congressionally mandated or other 

demonstration projects and studies, 

reporting to Congress and the public 

regarding expenditures and other 

statistics involving the new Medicare 

prescription drug benefit, studying and 

reporting on the Medicare program as a 

whole, and creating a research resource 

for the evaluation of utilization and 

outcomes associated with the use of 

prescription drugs. 

We note that because this proposed 

rule would apply to all Part D sponsors, 

it would apply to any entity offering a 

Part D plan, including both prescription 

drug plan sponsors and Medicare 

Advantage organizations offering 

qualified prescription drug coverage. 

We further note that the Part D 

prescription drug event payment data 

(hereinafter referred to as ‘‘claims data’’) 

will include data relating to any covered 

Part D drug, which per 42 CFR 423.100, 

includes not only drugs, but insulin, 

biologic products, certain medical 

supplies and vaccines. 

B. Statutory Basis 

On December 8, 2003, Congress 

enacted the Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003 (MMA) (Pub. L. 108–173). Title I 

of the MMA amended the Act to 

establish a new Part D in title XVIII of 

the Act and established a new voluntary 

prescription drug benefit program. As 

we stated in the preamble to the January 

28, 2005 final rule (70 FR 4197), 

implementing the new prescription drug 

benefit, we believe that the addition of 

outpatient prescription drug coverage to 

the Medicare program is the most 

significant change to the Medicare 

program since its inception in 1965. 

Unlike Parts A and B of the Medicare 

program, where Medicare acts as the 

payer and insurer and generally pays for 

items and services on a fee-for-service 

basis, the prescription drug benefit is 

based on a private market model. Under 

this model, CMS contracts with private 

entities—prescription drug plans 

(PDPs), Medicare Advantage (MA) 

plans, as well as other types of Medicare 

health plans—who then act as the 

payers and insurers for prescription 

drug benefits. These private entities 

generally are referred to as ‘‘Part D 

sponsors’’ in our rules. Section 1860D–

12 of the Act contains the majority of 

provisions governing the contracts CMS 

enters into with the Part D sponsors. 

That section, entitled, ‘‘Requirements 

for and contracts with prescription drug 

plan (PDP) sponsors,’’ incorporates by 

reference many of the contract 

requirements that previously were 

applicable to Medicare+Choice (now 

Medicare Advantage) plans. 

One of the incorporated provisions at 

section 1860D–12(b)(3)(D)of the Act is 

section 1857(e)(1) of the Act, which 

provides broad authority for the 

Secretary to add terms to its contracts 

with Part D sponsors, including terms 

that require the sponsor to provide the 

Secretary ‘‘with such information * * * 

as the Secretary may find necessary and 

appropriate.’’ We believe that the broad 

authority of section 1860D–12(b)(3)(D) 

of the Act authorizes us to collect much 

of the information CMS is already 

collecting in order to properly pay 

sponsors under the statute. However 

because, as discussed below, the 

statutory section governing CMS’s 

payment of Part D sponsors (section 

1860D–15 of the Act) contains 

provisions that might be viewed as 

limiting such collection, we are 

engaging in this rulemaking in order to 

resolve the statutory ambiguity, as well 

as to explain how we plan to implement 

the broad authority of section 1860D–

12(b)(3)(D) of the Act. 

Most of the payment provisions with 

respect to Part D sponsors are found in 


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1We note that there are other provisions outside 

of section 1860D–15 that also contain payment 

provisions. For example, section 1860D–14 

discusses how CMS pays low-income subsidy. 

section 1860D–15 of the Act.1 Sections 

1860D–15(d) and (f) of the Act authorize 

the Secretary to collect any information 

he needs to carry out that section; 

however, those subsections also state 

that ‘‘information disclosed or obtained 

pursuant to [the provisions of section 

1860D–15 of the Act] may be used by 

officers, employees, and contractors of 

the Department of Health and Human 

Services only for the purposes of, and to 

the extent necessary in, carrying out 

[section 1860D–15 of the Act].’’

(sections 1860D–15(d)(2)(B) and (f)(2) of 

the Act). 

In the January 28, 2005 Medicare 

prescription drug benefit final rule (70 

FR 4399), we stated that the section 

1860D–15 of the Act restriction applies 

only in cases where section 1860D–15 of 

the Act is the authority for collecting the 

information. Where information is 

collected under an independent 

authority (even if the collected 

information duplicates the data 

collected under section 1860D–15 of the 

Act) no restriction would apply. Thus, 

for example, we noted that quality 

improvement organizations (QIOs) have 

independent authority to collect Part D 

claims data in order to evaluate the 

quality of services provided by Part D 

sponsors and would not be barred from 

collecting such data despite the 

restrictions of section 1860D–15 of the 

Act. In the January 28, 2005 final rule 

(70 FR 4399) we stated the following: 

[W]e interpret sections 1860D–15(d) and (f) 

of the Act as limiting the use of information 

collected under the authority of that section. 

If information is collected under some other 

authority, however, we do not believe that 

section 1860D–15 of the Act would limit its 

use-because the information would not be 

collected ‘‘pursuant to the provisions’’ of 

section 1860D–15 of the Act. QIOs have 

independent authority to collect data, and to 

fulfill their responsibilities. To the extent 

QIOs need access to data from the 

transactions between pharmacies and Part D 

sponsors, these data could be extracted from 

the claims data submitted to us. 

Similar to the statutory provisions 

authorizing QIOs to collect the 

information they need to perform their 

statutory duties, section 1860D–

12(b)(3)(D) of the Act recognizes that the 

Secretary will need to collect a broad 

array of data in order to properly carry 

out his responsibilities as Secretary of 

the Department of Health and Human 

Services. Thus, if the Secretary 

determines it is necessary and 

appropriate for him to collect Part D 

data in order to carry out 

responsibilities outside section 1860D–

15 of the Act, then section 1860D–15 of 

the Act would not serve as an 

impediment to such collections. 

We also do not believe that language 

in sections 1860D–12(b)(3)(D) and 

1857(e)(1) of the Act noting that the 

authority to collect information exists 

only ‘‘except as otherwise provided,’’

and in a manner that is ‘‘not 

inconsistent with this Part,’’ would 

serve as a hindrance to the independent 

collection of Part D claims. Again, this 

is due to the clear language of section 

1860D–15 of the Act, which, on its face, 

restricts the use of information only 

when such information is collected 

under the authority of that section. 

Thus, nothing in section 1860D–15 of 

the Act will conflict with or be 

inconsistent with claims information 

collected under the authority of section 

1860D–12(b)(3)(D) of the Act. 

Most likely Congress included the 

broad grant of authority in section 

1860D–15 of the Act in order to ensure 

that the Secretary—without engaging in 

any rulemaking—would have the 

legislative authority to collect any 

necessary data in order to pay Part D 

sponsors correctly. However, we do not 

believe that the Congress intended to 

restrict the Secretary when the Secretary 

otherwise has independent authority to 

collect identical information to that 

collected under section 1860D–15 of the 

Act. For example, the Secretary will 

need to evaluate Part D claims 

information in order to determine how 

access to Part D drug benefits affects 

beneficiary utilization of services under 

Parts A and B of the Medicare program. 

When Congress enacted the MMA, one 

of the stated reasons was to ensure that 

‘‘by lowering the cost of critical 

prescription drugs, seniors will better be 

able to manage their health care, and 

ultimately live longer, healthier lives.’’

Press Release, House Ways and Means 

Committee, Seniors’ Wait for Affordable 

Rx Drugs Comes to an End. President 

Bush Signs Historic Medicare Bill into 

Law (December 8, 2003) (available at 

http://waysandmeans.house.gov/ 

news.asp). In order to determine 

whether lowering the costs of 

prescription drugs actually reduces 

health expenditures or improves health 

outcomes for seniors, however, the 

Secretary will need to match individual 

level Parts A and B data with Part D 

claims data. In this way, the Secretary 

will be able to evaluate the effectiveness 

and efficiency of the Part D benefit and 

report to Congress and others on the 

progress of the program. 

Similarly, we do not believe that 

section 1860D–15 of the Act was 

intended to prohibit the Secretary from 

reporting to both the public and to the 

Congress. For example, we are required 

to report to the Congress regarding 

whether mandated disease management 

demonstrations are budget neutral and 

whether beneficiaries in these 

demonstrations are on the appropriate 

medications. Part D claims data are 

needed for these budget neutrality 

calculations as well as quality measures 

assessing appropriate use of 

medications. We may also need to make 

reports under the Part D program, for 

example, the publication of statistics 

detailing aggregate Medicare and 

beneficiary spending by class of drug, 

average number of drugs used by 

beneficiaries, total Medicare program 

spending, and other similar statistics. In 

order to derive such statistics, we would 

need to collect Part D claims data. These 

examples demonstrate that in a wide 

variety of situations it will be 

‘‘necessary and appropriate’’ for CMS to 

evaluate the same information collected 

under section 1860D–15 of the Act, even 

though such information would not be 

used to implement section 1860D–15 of 

the Act. In these situations, we believe 

the clear language of section 1860D–

12(b)(3)(D) of the Act provides the 

authority to collect the necessary 

information, and nothing about such 

collection will be inconsistent or in 

conflict with any other part of the 

statute. 

II. Provisions of the Proposed Rule 

A. Information To Be Collected 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Information to be collected’’ at the 

beginning of your comments.] 

We would be collecting the same 

claims information collected under 

section 1860D–15 of the Act. We note 

that although section 1860D–12(b)(3)(D) 

of the Act would permit us to 

independently collect claims data from 

Part D sponsors, in order to ensure that 

Part D sponsors would not have to 

submit the claims information twice, we 

propose to access the claims data 

submitted under section 1860D–15 of 

the Act. This access avoids Part D 

sponsors engaging in duplicative efforts. 

Thus throughout this preamble, we may 

refer to ‘‘accessing’’ rather than 

‘‘collecting’’ Part D data. The claims 

data for 2006 includes 37 data elements. 

We refer readers to the Prescription 

Drug Event data instructions which can 

be accessed at http://www.cms.hhs.gov/ 

DrugCoverageClaimsData/ 

01_PDEGuidance.asp#TopOfPage for a 

full description of this information. 

These instructions define each data 

element and its specific potential use for 


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CMS’s payment process. Generally 

stated, these data elements include the 

following: 

• Identification of the Part D sponsor 

and Part D plan through contract 

number and plan benefit package 

identification number. 

• Health insurance claim number, 

which identifies the particular 

beneficiary receiving the prescription. 

• Patient date of birth and gender. 

• Date of service. 

• Date paid by the plan. 

• Identification of pharmacy where 

the prescription was filled. 

• Identification of prescribing health 

care professional. 

• Identification of dispensed product 

using national drug code (NDC) number. 

• Indication of whether drug was 

compounded or mixed. 

• Indication of prescriber’s 

instruction regarding substitution of 

generic equivalents or order to 

‘‘dispense as written.’’

• Quantity dispensed (for example, 

number of tablets, grams, milliliters, or 

other unit). 

• Days supply. 

• Fill number. 

• Dispensing status and whether the 

full quantity is dispensed at one time, 

or the quantity is partially filled. 

• Identification of coverage status, 

such as whether the product dispensed 

is covered under the plan benefit 

package or under Part D or both. This 

code also identifies whether the drug is 

being covered as part of a Part D 

supplemental benefit. 

• Indication of whether unique 

pricing rules apply, for example because 

of an out-of-network or Medicare as 

Secondary Payer services. 

• Indication of whether beneficiary 

has reached the catastrophic coverage 

threshold—which triggers reduced 

beneficiary cost-sharing and reinsurance 

payments. 

• Ingredient cost of the product 

dispensed. 

• Dispensing fee paid to pharmacy. 

• Sales tax. 

• Amount paid on the claim that is 

both below and above the catastrophic 

coverage threshold. 

• Amount paid by patient and not 

reimbursed by a third party (such as 

copayments, coinsurance, or 

deductibles). 

• Amount of third party payment that 

would count toward a beneficiary’s ‘‘out 

of pocket’’ costs in meeting the 

catastrophic coverage threshold, such as 

payments on behalf of a beneficiary by 

a qualifying State Pharmacy Assistance 

Program (SPAP). 

• Low income cost sharing subsidy 

amount (if any). 

• Reduction in patient liability due to 

other payers paying on behalf of the 

beneficiary. This would exclude payers 

whose payments count toward a 

beneficiary’s out of pocket costs, such as 

SPAPs. 

• Amount paid by the plan for 

standard benefits, such as amounts paid 

for supplemental Part D benefits. 

B. Purpose of CMS Collecting 

Information 

[If you choose to comment on issues in this 

section, please include the caption ‘‘Purpose 

of CMS Collecting Information’’ at the 

beginning of your comments.] 

We need to use Medicare Part D 

prescription drug related data for a wide 

variety of statutory and other purposes 

including—

• Reporting to the Congress and the 

public on the overall statistics 

associated with the operation of the 

Medicare prescription drug benefit; 

• Conducting evaluations of the 

Medicare program; 

• Making legislative proposals with 

respect to the programs we administer, 

including the Medicare, Medicaid, and 

the State Children’s Health Insurance 

Program; and 

• Conducting demonstration projects 

and making recommendations for 

improving the economy, efficiency, or 

effectiveness of the Medicare program. 

When the Congress passed the MMA 

in December 2003, allowing coverage of 

outpatient prescription drugs under the 

new Medicare Part D benefit, this 

addition, we believe, was the most 

fundamental change to the Medicare 

program since its inception in 1965. 

With this fundamental change to the 

program, it is critical that the Secretary 

maintain the ability to evaluate and 

oversee the progress of the new benefit 

and how it affects other parts of the 

Medicare, Medicaid, and State 

Children’s Health Insurance programs. 

We have discussed in a variety of 

public settings, including an open door 

forum on this topic in the summer of 

2005, the critical importance of the new 

Medicare Part D prescription drug event 

data—hereafter referred to as ‘‘claims’’

data—for studies on the impact of drug 

coverage on Medicare beneficiaries, 

spending for other Medicare health care 

services, efforts to improve the quality 

of health care services for Medicare 

beneficiaries with chronic illnesses, 

efforts to address health disparities by 

understanding how drugs are being used 

and how well they work in minority 

populations and in other populations 

which are often not studied in clinical 

trials (for example, older patients, 

patients with multiple co-morbid 

diseases, people with a disability), 

providing protection against adverse 

drug events through effective postmarket surveillance on the safety of 

drugs for Medicare beneficiaries, and 

other studies to improve public health. 

Part D claims data must be linked at the 

individual beneficiary level to Parts A 

and B claims data to facilitate these 

studies. Individually identifiable data 

are required to link data across files, 

over time and to conduct multivariate 

analyses. As we discuss in greater detail 

in section II.C.2 of this preamble, CMS 

is developing a chronic care database 

that will link these Medicare Parts A, B, 

and D claims at the beneficiary level. 

This database will be an important new 

tool to facilitate our research, on a wide 

variety of topics that focus on improving 

the quality of and reducing the cost of 

health care services. 

As discussed in greater detail in 

section II.C. of this preamble, we believe 

that when information is collected 

under the auspices of section 1860D–

12(b)(3)(D) of the Act, the restrictions of 

section 1860D–15 of the Act would not 

apply to such collections. Thus, any 

information collected for Part D 

purposes under this proposed rule 

would no longer be subject to the 

section 1860D–15 of Act limitations and 

could be shared outside of CMS as 

appropriate. Thus, for example, to the 

extent otherwise permitted by law, we 

would be able to share the data we 

collect under section 1860D–12(b)(3)(D) 

of the Act with entities outside of CMS 

including, for example, the Food and 

Drug Administration (in order to 

oversee the safety and effectiveness of 

prescription drugs and conduct postmarket surveillance), as well as the 

Agency for Healthcare Quality and 

Research (AHRQ), in order to analyze 

comparative clinical effectiveness. 

Moreover, when we share such data, we 

do not believe any restrictions included 

in section 1860D–15 of the Act would 

apply. 

In section II.C. of this preamble, we 

provide a detailed explanation of a 

number of purposes for which the Part 

D data collected under the section 

1860D–12(b)(3)(D) authority would be 

used. We also request comments on 

whether there should be any limitations 

on data when shared for purposes other 

than fulfilling CMS’s responsibility to 

administer the Part D program. 

1. Public Reporting (Proposed 

§ 423.505(b)(8) and (f)(3)(i)) 

We believe we need the Part D claims 

information in order to report to the 

Congress and the public on overall 

statistics associated with the Part D 

program. For example, we need to 

preserve the ability to report on the 


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2Section 101(e) of the MMA specifically 

extended the study authority in section 1875(b) to 

include the prescription drug program under Title 

XVIII. Section 1875 now states in pertinent part that 

the Secretary ‘‘shall make a continuing study of the 

operation and administration of this title * * * and 

shall transmit to the Congress annually a report 

concerning the operation of such programs.’’

performance of the Part D benefit 

program. We note that Congress 

specifically amended title XVIII of the 

Act to address reporting on all aspects 

of that title, including Part D.2 We 

anticipate we may wish to report 

statistics on issues such as the 

experience of Medicaid beneficiaries as 

their pharmacy coverage changes from 

the Medicaid to the Medicare program. 

In order to analyze this information, we 

will need to have access to identifying 

beneficiary information (such as HIC 

number), information about the drug 

dispensed (including NDC, quantity and 

days supply), information about the 

amount paid by the beneficiary 

(including amounts paid on the claim, 

reimbursed by third parties, counting 

toward TROOP, low-income cost 

sharing subsidy, amount paid for 

standard benefits, and amount paid for 

non standard benefits). We anticipate 

potentially using this information to 

report statistics to Congress or the 

public or both with respect to the drug 

utilization of this unique population 

and whether they continue to receive 

the same mix of prescriptions as 

previously. We might also use such 

information to evaluate and report on 

this population’s cost-sharing and 

whether there were any changes in their 

out-of-pocket costs vis-a-vis Medicaid 

coverage of prescription drugs. 

Another example of an issue on 

which we may want to report would 

include Medicare beneficiary utilization 

under the new drug benefit by class of 

drug. For example, we may want to 

report statistics on what classes of drugs 

are most utilized by the Medicare 

population, and whether there has been 

variation in such utilization across 

gender, age, and year. This would 

require access to such information as 

HIC number, date of birth and gender, 

date of service, and information about 

the drug itself (such as NDC, quantity 

and supply). 

We may also want to include in its 

national program statistics publications 

information about the Part D program 

that would require drug claims data. 

Such statistics include aggregate 

Medicare and beneficiary spending by 

class of drug, the total number of 

prescriptions by class of drug, average 

beneficiary cost-sharing amounts, 

catastrophic coverage utilization, 

geographic variation in utilization and 

pricing, third party payers paying on 

behalf of beneficiaries, whether drugs 

being dispensed are covered by plans, 

the average number of drugs used by 

beneficiaries, and other similar 

statistics. In order for us to be able to 

produce these types of program 

statistics, the following claims 

information are necessary: 

• Ingredient cost of the product 

dispensed. 

• Dispensing fee paid. 

• Sales tax. 

• Amount paid on the claim that is 

both below and above the catastrophic 

coverage threshold. 

• Amount paid by a patient and not 

reimbursed by a third party. 

• Amount of third party payment that 

would count toward a beneficiary’s outof-pocket costs in meeting the 

catastrophic threshold. 

• Low income cost sharing subsidy 

amount, if any. 

• Reduction in patient liability due to 

other payers paying on behalf of the 

beneficiary. 

• Amount paid by the plan for 

standard benefits. 

• Amount paid by the plan for 

nonstandard benefits. 

• Identification of coverage status. 

• Identification of dispensed product 

using the national drug code number. 

• Identification of whether the drug 

was compounded or mixed. 

• Identification of prescriber’s 

instruction regarding substitution of 

generic equivalents or order to 

‘‘dispense as written’’. 

• Quantity dispensed. 

• Days supply. 

• Fill number. 

• Dispensing status and whether the 

full quantity is dispensed at one time, 

or the quantity is partially filled; (for 

example, to calculate utilization by drug 

classes). 

• Health insurance claim number—

++ Patient date of birth and gender, 

++ Identification of whether unique 

pricing rules apply; and 

++ Identification of whether a 

beneficiary has triggered the 

catastrophic threshold (for example, to 

calculate average beneficiary costsharing, amounts and average number of 

drugs purchased). 

2. Evaluations of the Medicare Program 

(Proposed § 423.505(b)(8) and (f)(3)(ii)) 

We also anticipate that we would 

need to collect prescription drug claims 

information in order to conduct 

evaluations of the Medicare prescription 

drug program, including evaluations 

and oversight of the plans themselves. 

For example, we anticipate that in some 

cases, in order to evaluate the 

effectiveness of a plan’s utilization 

management techniques we may need 

access to the claims information for a 

particular plan. For example, we have 

already announced on our Web site in 

frequently asked question 4483, (http:// 

questions.cms.hhs.gov/), that in certain 

cases, plans could cover over-thecounter medications as part of a costreduction strategy. We stated that in 

certain cases nonprescription drugs (for 

example, Prilosec OTC and Claritin) 

were available by prescription when 

first marketed. Once off-prescription, 

these products may offer significantly 

less expensive alternatives to branded 

prescription medications, and work just 

as well for most patients. Therefore 

stated that plans could provide such 

over-the-counter drugs as part of a costeffective drug utilization management 

(for example, step therapy) program. In 

cases where a plan offered coverage of 

such over-the-counter drugs, we wish to 

preserve the ability to monitor whether: 

(1) The over-the-counter drugs are in 

fact being accessed and (2) whether it 

appears the step-therapy is saving 

money. Such evaluation, we believe, 

would require access to information on 

the claim identifying the Part D sponsor 

and plan, information with respect to 

the drug prescribed, as well as 

information about beneficiary and plan 

payment. In this way we would be able 

to compare the amount spent on the 

over-the-counter drug against what 

would have been spent if a beneficiary 

had utilized a prescription drug on the 

plan’s formulary. We would likely need 

to review alternatives to the 

nonprescription drug and determine the 

average plan payments for such 

nonprescription drugs. We believe we 

would need to aggregate such 

information to determine whether the 

plan decreased its overall spending by 

offering the step-therapy protocol. 

Furthermore, in order for us to 

evaluate the Medicare program overall, 

it is necessary to evaluate how the 

prescription drug benefit interacts with 

benefits provided under Parts A, B, and 

C, as well as Medicaid and the SCHIP 

program. It will be important to 

determine how the Part D benefit affects 

these programs. For example, it will be 

important to determine if the provision 

of the Part D benefit decreases spending 

under Medicare Parts A and B because 

patients are more readily able to obtain 

necessary medications while living in 

the community, which may help them 

comply with drug regimens and avoid 

more expensive inpatient care. Part D 

data could be used to determine the 

impact of the Part D benefit on reducing 

medical complications and as a result 


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reducing costs incurred in other parts of 

the Medicare program, for example, by 

reducing hospitalizations and 

procedures. In order to evaluate the 

effect of Part D on Part C and other 

programs’ spending, we would likely 

need to evaluate aggregated and 

nonaggregated claims data, including 

elements relating to health insurance 

claim number, date of service, date of 

birth, gender, the drug dispensed, its 

quantity, whether it was compounded 

or mixed and other information relating 

to the drug coverage received by the 

beneficiary. 

3. Legislative Proposals 

We also believe that we would need 

to collect claims data to support 

legislative proposals offered to Congress 

relating to programs administered by 

CMS, including the Medicare, Medicaid 

and State Children’s Health Insurance 

programs. Claims information could be 

used to derive statistics that would 

illustrate why certain changes to the 

Medicare statute should be considered, 

or why certain research and 

demonstration projects should be 

funded. For example, if we were to 

develop a proposal to move coverage of 

some drugs now covered under Part B 

to Part D or vice versa, we would need 

access to claims data to derive statistics 

to assess the cost impact of such a 

proposal. 

Thus, we would likely need to access 

claims data relating to the drug 

dispensed as well as the cost incurred 

under Part D. To analyze the cost 

incurred under Part D, we would need 

to see the amount paid by the plan (for 

example, ingredient cost, dispensing fee 

and sales tax) as well as whether we 

were required to pay reinsurance on the 

claim (for example, amount incurred 

above and below catastrophic), whether 

we paid a low income subsidy for the 

claim, the amount of beneficiary cost 

sharing, whether the drug was part of a 

basic supplemental benefit, and whether 

the drug was covered by the plan. This 

would allow us to assess costs involved 

with moving coverage from one part of 

the program to another. 

4. Demonstration Projects and Research 

Studies 

We would also need the various 

elements of the Part D claims data to 

conduct demonstration projects and 

make recommendations for improving 

the economy, efficiency, or effectiveness 

of the Medicare program. Conducting 

demonstration projects and making 

recommendations for improving the 

Medicare program based on the 

evaluation of the effect of prescription 

drug coverage on health outcomes, 

safety or Medicare spending should 

positively affect patient care and 

provider satisfaction, as well as aid us 

in administering the various programs 

under our charge. Below, we describe 

the categories of data elements on the 

prescription drug claims and explain 

why our studies and projects require 

collection of such elements. It is also 

important to note that this proposed 

rule would permit retrospective studies 

of the administrative records 

(prescription drug event data) of Part D 

services for analysis after the services 

have already been provided. As such, 

research using Part D claims data is not 

comparable to clinical trials which are 

more prospective in nature and involve 

patients who may have access to certain 

drugs and other patients who may not 

have access to those drugs. We note that 

while we currently have studies 

underway that will require these 

collections, we anticipate that other 

similar studies will be conducted in the 

future that would also require 

collections of the data elements 

included on the Part D claims. 

An illustrative list of the studies 

currently underway is attached to this 

proposed rule as Appendix A. The 

categories of these elements are as 

follows: 

(a) Drug Plan Identifiers (Such as the 

Part D Sponsor and Benefit Package 

Identifier) 

In our follow-up analysis on 

beneficiaries who participated in the 

replacement drug demonstration 

(section 641 of the MMA), we will be 

evaluating how enrollment in Part D 

affects the cost sharing and utilization of 

these beneficiaries. We would need plan 

identifiers in order to compare how 

utilization and cost sharing of this 

population varies plan by plan and to 

analyze such variation according to the 

design of the plan selected. Without 

plan identifiers, we could not tie 

particular cost sharing or utilization to 

a plan and determine whether certain 

plan design features minimized 

beneficiary cost-sharing. Moreover, in 

evaluating other managed care and fee 

for service demonstrations, we will 

sometimes need plan identifiers in order 

to compare enrollees in demonstration 

plans to enrollees in other MA plans 

and fee-for-service beneficiaries in the 

same geographic area. Drug plan 

identifiers will assist in matching 

beneficiaries to specific Part D 

prescription plan coverage. 

(b) Beneficiary Identifiers (Such as 

Health Insurance Claim Number, Date of 

Birth, and Gender) 

Our current and future research, 

demonstration and evaluation projects 

will require collection of beneficiary 

identifiers in order to link Part D claims 

with Parts A and B claims at the 

beneficiary level. For example, in order 

to link Parts A and B data with Part D 

claims data, we would need to know the 

beneficiary’s HIC number, name, and 

date of birth, in order to match claims 

appropriately. Once the data are linked 

they will be used in studies that 

evaluate drug utilization and its impact 

on other health care services, studies 

that measure the impact of the new drug 

benefit on improvements to beneficiary 

access to needed medications, and 

studies that link beneficiary 

characteristics, for example, age, race, 

sex, with drug data. For example, in the 

Medicare chronic condition data 

warehouse, we will use beneficiary 

identifiers such as HIC number, name, 

age, race and sex, in order to develop 

the public database under section 723 of 

the MMA which links data at the 

beneficiary level. The purpose of the 

database is to permit studies of chronic 

illness in the Medicare population to 

improve quality of health care and 

reduce the cost of health care services. 

Similarly, in all of our demonstration 

projects that use Part D claims data as 

part of the budget neutrality test, 

beneficiary identifiers are needed to link 

Parts A, B, and D claims data to examine 

the total cost of the demonstration 

intervention group compared to the 

control group. 

(c) Information About the Drug 

Dispensed (Such as NDC Code, Days 

Supply, Quantity, Generic 

Identification, Compounding, Refills, 

and Dispensing Status) 

We are engaged in a number of 

projects and studies which will require 

collection of information with respect to 

the specific drug that is dispensed to 

enrollees. For example, in the mandated 

chiropractic demonstration (section 651 

of the MMA), we will need to collect 

information on the drug dispensed to 

determine whether the use of 

chiropractic services reduces the use of 

pain medication. The purpose of the 

demonstration is to test whether the 

expanded coverage of chiropractic 

services results in offsetting decreases in 

other covered services such as pain 

medications, since the demonstration is 

required to be budget neutral. Therefore, 

we will need to study the use of pain 

medications in the demonstration and 

control groups to determine if the 


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demonstration appears to be causing a 

reduction in the use of pain 

medications. 

We will also use drug dispensed in 

the Chronic Condition Warehouse 

(section 723 of the MMA) to refine 

identification of beneficiaries with 

chronic conditions (for example, insulin 

use and diabetes), to facilitate analysis 

of medication usage for beneficiaries 

with chronic illness, and to analyze the 

effectiveness of different treatment 

modalities. We also anticipate that we 

will engage in future studies and 

analyses that measure and examine 

quality of services or patient outcomes 

by utilization of certain types of 

medication. For example, we may 

conduct a study to determine whether 

access to beta blockers reduces the risk 

of heart attacks. 

In addition, we may perform studies 

that examine medication adherence and 

persistence patterns, which in turn can 

be used as control factors in outcomes 

research or to examine, for example, 

how specific medication therapy 

management programs under Part D 

affected medication adherence and 

persistence. 

(d) Prescriber Identification 

We need to know who prescribed the 

drug for studies that assess appropriate 

prescribing practices such as those that 

would link physician payment to 

quality measures. We are exploring 

value-based purchasing initiatives, in 

which we may collect data on the extent 

to which physicians are appropriately 

prescribing needed medications. 

(e) Payment Amounts 

We need to know payment amounts, 

including dispensing fee, amount paid 

below and above the catastrophic 

threshold, amount paid by patient and 

other third parties, sales tax, and low 

income subsidies for a variety of studies 

that assess the impact of the drug 

benefit on beneficiary cost-sharing, 

Medicare program payments, and total 

drug spending. In our demonstration 

evaluations, including disease 

management, physician group practice, 

chiropractor, and follow-up on the 

Medicare replacement drug 

demonstration, we will analyze the 

impact of the demonstration 

interventions on drug spending and 

utilization as well as total Medicare 

spending. Because these analyses often 

disaggregate the treatment group 

beneficiaries into categories based on 

characteristics identified as the analysis 

is underway (for example, source of 

referral into demonstration, disease, 

length of time in demonstration, interval 

between hospitalization and entry into 

demonstration, etc.), claims detail needs 

to be retained at the patient level so they 

can be included in any group or 

subgroup analysis into which a 

particular beneficiary falls in order to 

determine aggregate cost statistics for 

the particular grouping. 

We propose to revise § 423.505(b)(8) 

by clarifying that Part D plan sponsors 

must comply with the disclosure and 

reporting requirements set forth by 

§ 423.505(f). Furthermore, we propose to 

add a new § 423.505(f)(3) which would 

specify that, as part of the existing 

information disclosure, we would 

access the drug claims and related 

information that is already submitted to 

CMS for purposes the Secretary deems 

necessary and appropriate. These 

purposes would include, but not be 

limited to—

• Reporting to the Congress and the 

public or both on overall statistics 

associated with the operation of the 

Medicare prescription drug program; 

• Conducting evaluations of the 

overall Medicare program, including the 

interaction between prescription drug 

coverage under Part D of title XVIII of 

the Act and the services and utilization 

under Parts A, B, and C of title XVIII of 

the Act, titles XIX, and XXI of the Act; 

• Making legislative proposals to the 

Congress regarding Federal health care 

programs and related programs; 

• Conducting demonstration projects 

and making recommendations for 

improving the economy, efficiency, or 

effectiveness of the Medicare program. 

C. Sharing Data With Entities Outside of 

CMS (Proposed § 423.505(f)(5)) 

[If you choose to comment on issues in this 

section, please include the caption ‘‘Sharing 

Data with Entities Outside of CMS’’ at the 

beginning of your comments.] 

In addition to collecting claims data 

for use in administering the Medicare 

Part D program under the authority of 

section 1860D–12(b)(3)(D) of the Act, 

CMS also believes that it is in the 

interest of public health to share some 

of the information collected under that 

authority with entities outside of CMS. 

As stated above, when information is 

collected under the authority of section 

1860D–12(b)(3)(D) of the Act, we do not 

believe that the statutory language in 

section 1860D–15(d) and (f) of the Act 

(requiring the information collected 

under the authority of that section to be 

used only in implementing such 

section) would apply, since any initial 

collection would be effectuated outside 

of section 1860D–15 of the Act. 

Therefore, we are proposing to add 

§ 423.505(f)(5) that would specify that 

we could use and share the claims 

information we collect under 

§ 423.505(f) with both outside entities 

and other government agencies, without 

regard to any restriction included in 

§ 423.322(b). 

1. Other Government Agencies 

In particular, Department of Health 

and Human Services’ public health 

agencies such as NIH, FDA, and AHRQ 

have researchers that would also need to 

use Medicare Part D prescription drug 

related data for studies to improve 

public health consistent with the 

missions of these agencies. These 

studies will assess outcomes, and 

investigate clinical effectiveness, 

appropriateness of health care items and 

services (including prescription drugs), 

and develop strategies for improving the 

efficiency and effectiveness of clinical 

care. In addition, we believe that 

oversight agencies, such as the OIG, 

GAO, and CBO would need access to 

both aggregated and nonaggregated 

claims data in order to conduct 

evaluations of the Part D program. The 

NIH would need access to Medicare Part 

D data, linked to data from Medicare 

Parts A and B, in order to address its 

mission of conducting and supporting 

research regarding the cause, diagnosis, 

prevention, and cure of human diseases 

in order to improve the health of the 

nation. A wealth of information about 

diseases and their treatments can 

potentially be obtained from 

observational studies of therapeutic 

drug usage in Medicare patients. 

Because drug usages can be used as a 

surrogate measure for the existence and 

severity of diseases, Medicare Part D 

data could be used to investigate the 

incidence and prevalence of particular 

diseases, disease progression, and the 

health outcomes of people with the 

diseases, trends in disease and their 

treatments, and even the relative 

effectiveness of alternative therapeutic 

approaches. Moreover, matching Part D 

claims data with the Surveillance 

Epidemiology and End Results (SEER) 

cancer registry would enable additional 

studies of cancer treatment and 

outcomes. Given the large number of 

patients involved, studies could also be 

designed to identify comorbidities that 

would be undetectable in conventional, 

prospective cohort studies. In addition, 

studies that correlate drug prescribing 

patterns with geography or patient 

demographics or examine trends over 

time could be used to identify 

differences and possible remediable 

problems with the health care system, to 

assess the magnitude of health 

disparities related to the delivery of care 

and indirectly assess the impact of new 

medical findings and other influences 


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on prescribing and other health care 

practices. 

We also propose to share the 

information collected under the 

authority of section 1860D–12(b)(3)(D) 

of the Act with the FDA. The FDA’s 

mission includes a mandate to ensure 

the safety and efficacy of drugs for the 

American people. Patients age 65 and 

older are more likely to experience 

serious or fatal adverse drug events than 

younger individuals because of their 

generally poorer health and because 

they typically take multiple medications 

for chronic conditions, which increases 

their opportunity for experiencing 

adverse drug effects. Part D data could 

be used to monitor patterns of drug use 

in the elderly and the disabled with the 

goal of identifying unsafe or suboptimal 

patterns of use, either with respect to 

the particular types of drugs being used 

or with respect to the dose or duration 

of use of these drug products. 

Additionally, Part D data could be used 

to identify rare but serious 

complications that certain patients may 

have with drugs more quickly and 

effectively than is achieved with the 

current surveillance systems. Formal 

epidemiologic studies could also be 

performed, to examine the nature and 

magnitude of risk conferred by 

particular medications, to identify risk 

factors for adverse event occurrence, or 

to assess the effect of risk management 

programs intended to reduce 

prescription drug risks. 

A third agency we believe would need 

access to the Part D claims data is the 

Agency for Healthcare Research and 

Quality (AHRQ). AHRQ’s mission to 

conduct health services and outcomes 

studies in assessing the effectiveness of 

health care items and services, 

improving the quality of health care, 

promoting efficiency and patient safety, 

and reducing medical error will be 

enhanced by access to Medicare Part D 

claims data. Section 1013 of the MMA 

requires AHRQ to conduct research, 

demonstrations, and evaluations 

designed to improve the quality, 

effectiveness, and efficiency of 

Medicare, Medicaid, and the State 

Children’s Health Insurance Program. 

To implement section 1013 of MMA, 

AHRQ has established a new research 

initiative called the Effective Health 

Care (EHC) program. The EHC program 

supports research on the outcomes, 

comparative clinical effectiveness, and 

appropriateness of pharmaceuticals, 

devices, and health care services. 

Included in the EHC program is a 

research network of 13 centers with over 

60 affiliated health scientists and the 

capacity to—(1) scientifically analyze 

administrative, survey, and clinical 

databases; (2) develop and apply new 

scientific methods, instruments, and 

methodologies; and (3) operate and 

analyze computerized surveillance and 

monitoring systems. The availability of 

Medicare Part D data, linked to data 

from Medicare Parts A and B, would 

greatly enhance the capacity of the EHC 

program to carry out research and 

program evaluations designed to 

improve the quality of CMS programs as 

mandated in section 1013 of the MMA. 

Other agencies within DHHS, such as 

the Centers for Disease Control and 

Prevention, the Health Resources and 

Services Administration (HRSA), or the 

Office of the Assistant Secretary for 

Planning and Evaluation, may also need 

the prescription drug data to perform 

evaluations or assess policies. 

We believe oversight agencies may 

also require access to the Part D claims 

data. These agencies would include the 

Office of the Inspector General (OIG), 

the Government Accountability Office 

(GAO), the Congressional Budget Office 

(CBO), and the Medicare Payment 

Advisory Commission (MedPAC). We 

believe these agencies may require 

access to data in order to evaluate the 

cost-effectiveness of various policies 

under the Part D program, to evaluate 

spending for various classes of drugs 

under such program, to analyze brandname versus generic prescribing trends, 

and to conduct other oversight activities 

that are not specifically related to 

payment. For these reasons, we believe 

it would be appropriate to share some 

Part D data with these oversight 

agencies. 

Given these necessities, we propose to 

allow broad access for other agencies to 

our Part D claims data linked to our 

other claims data files. Other agencies, 

including the agencies listed above, 

would enter into a data use agreement, 

similar to what is used today (and 

described in greater detail in section 

II.C.2). This would allow the sharing of 

event level cost data, however, through 

a data use agreement we would protect 

confidentiality of beneficiary 

information and ensure that the use of 

Part D claims data serves a legitimate 

research purpose. We would also ensure 

that any system of records with respect 

to claims data is updated to reflect the 

most current uses of such data. We 

request comments on this proposed rule 

that would help us in our efforts to 

improve knowledge relevant to the 

public health. Specifically, we request 

guidance on how we can best serve the 

needs of other agencies through the 

sharing of information it collects under 

section 1860D–12(b)(3)(D) of the Act 

while at the same addressing the 

legitimate concerns of the public and of 

Part D plans that we appropriately guard 

against the potential misuse of data in 

ways that would undermine protections 

put in place to ensure confidentiality of 

beneficiary information, and the 

nondisclosure of proprietary data 

submitted by Part D plans. 

2. External Researchers 

External researchers, such as those 

based in universities, regularly request 

and analyze Medicare data for their 

research studies, many of which are 

designed to address questions of clinical 

importance. We believe researchers who 

study a broad range of topics need 

access to the Part D claims linked to 

Parts A and B claims data as well. The 

research questions that have been 

previously addressed through analyses 

of Parts A and B claims have 

contributed to very significant 

improvements in the public health, have 

been critical in assessing the quality of 

care and costs of care for patients in the 

Medicare program, and have in many 

cases spurred other types of research. As 

such, we believe that a data source that 

includes Parts A and B claims as well 

as their attendant Part D claims would 

be used in a similarly constructive 

manner, such that greater knowledge on 

a range of topics, both clinical and 

economic, will be generated. This 

knowledge is expected to contribute 

positively to the evaluation and 

functioning of the Medicare program, 

and to improve the clinical care of 

beneficiaries. 

We will specifically address the needs 

of a segment of external researchers as 

part of our implementation of section 

723 of the MMA, which requires the 

Secretary to develop a plan to ‘‘improve 

the quality of care and reduce the cost 

of care for chronically ill Medicare 

beneficiaries.’’ Congress specifically 

stated that the plan should provide for 

the collection of data in a data 

warehouse (see section 723(b)(3) of the 

MMA). We will implement section 723 

of the MMA by populating a chronic 

care condition data warehouse (CCW) 

which would be accessible by private 

researchers in order for such researchers 

to conduct studies related to improving 

quality and reducing costs of care for 

chronically ill Medicare beneficiaries. 

The CCW will include a beneficiary 

sample and will include Part D claims, 

in order to allow researchers to analyze 

prescription drug information. In this 

way, researchers would be able to 

receive a complete picture of a 

beneficiary’s care, and determine 

whether the treatment of chronically ill 

beneficiaries (including Parts A, B and 

D treatment) is as effective and efficient 

as possible. 


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In addition to the section 723 of the 

MMA data warehouse, we are planning 

to make available Medicare Part D 

claims data linked to other Medicare 

claims files to external researchers on 

the same terms as other Medicare Parts 

A and B data are released today, with 

appropriate protections for beneficiary 

confidentiality. These data would be 

disseminated under our standard data 

use agreement protocols. This means 

that each data request would be 

evaluated to determine whether—

• A legitimate research purpose is 

presented by a responsible party, 

• The minimum data needed to 

conduct the study will be released, and 

• The confidentiality of beneficiary 

information is protected. 

See our Agreement for Use of Centers 

for Medicare and Medicaid Services 

Data Containing Individual Specific 

Information at http:// 

www.resdac.umn.edu/docs/CMS-R02352-v2-locked.doc. In addition, we 

would ensure that our system of records 

for claims data would permit these 

usages of the data. 

We request comments on the 

proposed use of the data for research 

purposes that would help CMS in its 

efforts to improve knowledge relevant to 

public health. We also ask for comments 

on whether we should consider 

additional regulatory limitations for 

external researchers beyond our existing 

data use agreement protocols in order to 

further guard against the potential 

misuse of data for non-research 

purposes, commercial purposes, or to 

ensure that proprietary plan data or 

confidential beneficiary data is not 

released. 

D. Beneficiary Access to Part D Data 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Beneficiary Access to Part D Data’’ at the 

beginning of your comments.] 

We are considering the use of Part D 

claims data for projects involving the 

development of personalized 

beneficiary medication history record 

that would be accessible by Medicare 

beneficiaries. We are requesting 

comments on this proposed use of Part 

D data collected under the authority of 

section 1860D–12(b)(3)(D) of the Act. 

E. Applicability 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Applicability’’ at the beginning of your 

comments.] 

The proposed revision does not affect 

the applicability of HIPAA to the 

Department or any other appropriate 

parties, nor does it affect the 

applicability of the Privacy Act (5 U.S.C. 

552a and b) or the Trade Secrets Act (18 

U.S.C. 1905). 

F. Limitations 

[If you choose to comment on issues in this 

section, please include the caption 

‘‘Limitations’’ at the beginning of your 

comments.] 

This proposed rule in no way affects 

or limits our already existing ability to 

collect data that is not identical to that 

collected under section 1860D–15 of the 

Act, such as enrollment, formulary, 

price comparison, quality assurance and 

utilization review data. Much of that 

data is already collected under other 

authorities in the statute. For example, 

section 1860D–1(c)(1) of the Act allows 

for data collection, such as price 

comparison data, to facilitate providing 

information to beneficiaries in order to 

allow informed decisions among the 

available choices for Part D coverage 

(see also § 423.48). Similarly, section 

1860D–4(c) of the Act authorizes data 

collection to evaluate sponsors’

utilization management, quality 

assurance, medication therapy 

management, and fraud, waste and 

abuse programs (see § 423.153(b)(3), 

(c)(5), and (d)(6)). Even in cases where 

data collection is not specifically 

mandated by statute, to the extent the 

collection is not identical to the data 

collected under section 1860D–15 of the 

Act, we do not believe it is necessary to 

resolve any statutory ambiguity, because 

the section 1860D–15 of the Act rules on 

using such information would not 

apply. Finally, this proposed rule does 

not address uses already permitted 

under section 1860D–15 of the Act, such 

as OIG or others conducting audits and 

evaluations necessary to ensure accurate 

and correct payment and to otherwise 

oversee Medicare reimbursement under 

Part D, price variation studies, risk score 

refinement studies including the 

mandated geographic variation in price 

and utilization study, the reinsurance 

demonstration evaluation, or other such 

uses. 

III. Collection of Information 

Requirements 

This document does not impose new 

information collection requirements on 

Medicare Part D plans. Medicare Part D 

sponsors are already required to submit 

Medicare Part D claims information by 

virtue of section 1860D–15 of the Act. 

Consequently, since there are no new 

information collection requirements on 

Medicare Part D plans, this document 

will not require a review by the Office 

of Management and Budget under the 

authority of the Paperwork Reduction 

Act of 1995. 

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 

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). Neither plan sponsors 

nor pharmacies are required to perform 

any new task or purchase any new 

equipment or increase their labor force. 

This proposed rule does 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 million to $29 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 that this rule will 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. This proposed rule impacts Part D 

sponsors, not small rural hospitals. 


rmajette on PROD1PC67 with PROPOSALS
61454 Federal Register / Vol. 71, No. 201 / Wednesday, October 18, 2006 / Proposed Rules 

3 ‘‘Polypharmacy’’ is defined most simply as 

‘‘excessive or unnecessary use of prescription or 

nonprescription medications.’’ From Critical 

Thinking: Administering Medications to Elderly 

Patients (2007) citing Jones, 1997. 

Therefore we are not preparing an 

analysis for section 1102(b) of the Act, 

because we have determined that this 

proposed rule will 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 will 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 does not impose 

any costs on State or local governments, 

the requirements of E.O. 13132 are not 

applicable. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 423 

Administrative practice and 

procedure, Medicare, Prescription 

Drugs, Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR Chapter IV part 423 as follows: 

PART 423—VOLUNTARY MEDICARE 

PRESCRIPTION DRUG BENEFIT 

1. The authority citation for part 423 

continues to read as follows: 

Authority: Secs. 1102, 1860D–1 through 

1860D–42, and 1871 of the Social Security 

Act (42 U.S.C. 1302, 1395w–101 through 

1395w–152 and 1395hh). 

Subpart K—Application Procedures 

and Contracts with PDP Sponsors 

2. Section 423.505 is amended by—

A. Revising paragraph (b)(8). 

B. Redesignating paragraph (f)(3) as 

(f)(4). 

C. Adding new paragraphs (f)(3) and 

(f)(5). 

The revision and additions read as 

follows: 

§ 423.505 Contract provisions. 

* * * * * 

(b) * * * 

(8) Comply with the disclosure and 

reporting requirements in § 423.505(f), 

§ 423.514, and § 423.329(b) for 

submitting current and prior drug 

claims and related information to CMS 

for its use in risk adjustment 

calculations and for the purposes of 

implementing § 423.505(f), § 423.514, 

and § 423.329(b). 

* * * * * 

(f) * * * 

(3) Drug claims and related 

information, as the Secretary deems 

necessary and appropriate for purposes 

including but not limited to—

(i) Reporting to Congress and the 

public on overall statistics associated 

with the operation of the Medicare 

prescription drug program; 

(ii) Conducting evaluations of the 

overall Medicare program, including the 

interaction between prescription drug 

coverage under Part D of Title XVIII of 

the Social Security Act and the services 

and utilization under Parts A, B, and C 

of title XVIII of the Act and titles XIX 

and XXI of the Act; 

(iii) Making legislative proposals to 

the Congress regarding Federal health 

care programs and related programs; 

and 

(iv) Conducting demonstration 

projects and making recommendations 

for improving the economy, efficiency, 

or effectiveness of the Medicare 

program. 

* * * * * 

(5) CMS may use the information 

collected under this subsection and 

share it with other government agencies 

and outside entities, in accordance with 

applicable Federal law. Any restriction 

set forth by § 423.322(b) must not be 

construed to limit the Secretary’s 

authority for these purposes. 

* * * * * 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program). 

Dated: July 11, 2006. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: August 21, 2006. 

Michael O. Leavitt, 

Secretary. 

Editorial Note: The following Appendix 

will not appear in the Code of Federal 

Regulations. 

Appendix A—Current CMS Studies 

1. Effect of Part B vs. Part D Drug Coverage 

On January 1, 2005, the Secretary reported 

to Congress on his recommendations for 

providing benefits under Part D for 

outpatient prescription drugs which are 

currently covered under Part B. The report 

was mandated in section 101(c) of the MMA. 

The study concluded that, while it would not 

be desirable to move coverage of separately 

billable Part B drugs to Part D for most 

categories of Part B drugs, it may be worth 

considering for a limited number of drugs. 

The report recommended that the decision 

with respect to changing coverage for this 

limited number of drugs be based upon 

experience with the Medicare Replacement 

Drug Demonstration (which provided 

Medicare coverage for certain drugs between 

enactment of MMA in 2003 and the start of 

the Part D drug benefit in 2006) and at least 

2 years of experience with the Part D 

program. 

This follow-on study would further 

examine the relationship between Part B and 

Part D drug coverage using Part B and Part 

D claims and would include an assessment 

of the impact of such a change on 

beneficiaries, Part D sponsors and the Federal 

budget. 

2. Dual Eligible Drug Coverage Transition 

From Medicaid to Medicare 

We will analyze Part D claims and other 

data for changes in dual eligibles’ drug use 

and costs and the impact of the change in 

drug coverage on other Medicare and 

Medicaid services. Baseline drug data from 

Medicaid will allow person-level studies that 

analyze pharmacy use linked to all other 

Medicare (Parts A, B, and D claims) and 

Medicaid benefits before and after MMA 

implementation. The study will examine 

Medicare and Medicaid interactions with 

pharmacy services for specific 

subpopulations including people with 

disabilities and chronic diseases in 

community or institutional settings. 

3. Evaluation of Disease Management 

Interventions 

CMS has several projects underway to 

evaluate the impact of Congressionally 

mandated disease management interventions 

(for example, sections 649 and 721 of the 

MMA, and earlier legislation) on beneficiary 

health outcomes, satisfaction, and Medicare 

expenditures. Part D claims data will be used 

to estimate the effects of these programs on 

adherence to evidence based medicine, such 

as the percent of patients who are on the 

appropriate medications for their condition. 

Part D claims data will be used to measure 

the cost/utilization differences between 

control and intervention groups in these 

programs, and to assess the costs of their 

medications. A very important aspect of 

disease management interventions is to 

reduce adverse drug interactions. Access to 

Part D claims data would allow us to assess 

whether the disease management 

intervention has any impact on 

polypharmacy.3 All of these are factors 

which disease management programs are 

expected to influence. Part D data claims data 


rmajette on PROD1PC67 with PROPOSALS
Federal Register / Vol. 71, No. 201 / Wednesday, October 18, 2006 / Proposed Rules 61455 

will also be used in budget neutrality 

calculations. 

4. Medicare Health Care Quality 

Demonstration 

Section 646 of the MMA mandates a 5-year 

demonstration program under which we will 

test major changes to improve quality of care 

while increasing efficiency across an entire 

health care system. Broadly stated, the goals 

of the Medicare Health Care Quality 

demonstration are to improve patient safety; 

enhance quality; increase efficiency; and 

reduce scientific uncertainty and the 

unwarranted variation in medical practice 

that results in both lower quality and higher 

costs. Projects approved under this 

demonstration will be expected to achieve 

significant improvements in safety, 

effectiveness, efficiency, patientcenteredness, timeliness and equity: the six 

aims for improvement in quality identified 

by the Institute of Medicine in its Crossing 

the Quality Chasm report. 

Each factor to be addressed in the 

evaluation of this demonstration can be 

directly or indirectly related to prescription 

drug use, hence the need for Part D claims 

and other data. For example, research on 

patient safety has illuminated the way that 

prescription drug errors represent a nexus 

that ties together the benefits of health 

information technology and the need to 

reduce care fragmentation, and improve care 

coordination. 

5. Expanded Coverage for Chiropractic 

Services Evaluation 

Section 651 of the MMA mandated a 

budget neutral chiropractor demonstration. 

Achievement of budget neutrality for the 

expanded coverage of chiropractic services 

under the demonstration is likely to depend 

on the abilities of these services to substitute 

for the use of ambulatory services by 

allopathic physicians (for example, primary 

care physicians, orthopedic surgeons, and, 

possibly, neurologists) and to reduce the 

need for medications. Prevention of the need 

for surgical procedures and associated 

hospitalizations is also possible, but is likely 

to be infrequent over the course of a 2-year 

demonstration. 

Information on medication consumption 

under Part D will be a key component of the 

evaluation. For example, use of pain 

medications may be reduced by chiropractic 

services in patients with back pain, extremity 

pain due to arthritis, and in patients with 

migraine headaches. Reduction in the use of 

pain medications may, in turn, have 

beneficial effects on the need for treatment of 

complications associated with these 

medications. 

6. Adult Medical Day Care Evaluation 

Section 703 of the MMA mandated an 

adult medical day care demonstration. In the 

evaluation, we will compare patient 

outcomes and costs of furnishing care for 

beneficiaries receiving some of their home 

health services in an adult day care setting, 

with outcomes and costs for beneficiaries 

receiving these services principally at home 

under current rules. Drug claims will be used 

to help identify matched comparison groups 

and to explore differences between 

beneficiaries who elect to enroll in the 

demonstration and those who decline to 

enroll or are excluded. 

7. Follow-Up of Medicare Beneficiaries 

Enrolled in the Medicare Replacement Drug 

Demonstration 

Section 641 of the MMA mandated the 

Medicare Replacement Drug Demonstration 

that served as a bridge to the implementation 

of a full-scale Medicare prescription drug 

benefit. It targeted vulnerable beneficiaries 

with disabling or life threatening conditions. 

Many of the covered drugs were expensive 

‘‘specialty’’ biologics, costing more than 

$20,000 per year. A review of benefit designs 

under Part D suggests specialty drugs are 

commonly being placed on fourth and fifth 

tiers with relatively high levels of patient 

cost sharing. Plan-level information from Part 

D coupled with individual drug claims data 

will allow us to examine levels of plan 

uptake among demonstration participants, 

the features of plan design selected, and the 

effect of Part D on patient cost-sharing for 

this vulnerable population. 

8. Value-Based Purchasing Initiatives 

Many evidence-based guidelines 

underscore the importance of pharmacologic 

therapy to providing high-quality patient 

care. Yet, under prescribing of drugs with a 

known beneficial effect remains a common 

problem (for example, beta-blockers for 

treatment of hypertensive patients with a 

history of myocardial infarction). As 

Medicare moves toward value-based 

purchasing, it will be critical to design a 

payment system that provides incentives for 

physicians to appropriately prescribe proven 

pharmacologic therapies. This will require 

individual Part D claims linkable to a 

physician’s practice. 

9. Medicare Physician Group Practice 

Demonstration 

Section 412 of the Benefits Improvement 

and Protection Act mandated the Medicare 

Physician Group Practice Demonstration. 

This demonstration is a shared savings model 

that rewards physician groups for improving 

the quality and efficiency of health care 

services delivered to Medicare FFS 

beneficiaries. The financial model includes 

all Part A and Part B spending for 

beneficiaries assigned to the physician group 

as well as for the comparison population. 

Part D claims data will be used for budget 

neutrality calculations. Physician groups can 

also use the Part D claims data to improve 

quality by managing medications for their 

Medicare patients. 

10. Chronic Care Data Warehouse 

Section 723 of the MMA mandates 

development of recommendations for 

improving the quality of care for chronically 

ill Medicare beneficiaries. To implement this 

sector we are developing a chronic care 

warehouse to be made available to 

researchers who want to study chronic 

illnesses in the Medicare population. The 

CCW consolidates beneficiary level Medicare 

enrollment and utilization data with MDS 

and OASIS assessment data to facilitate the 

study of the Medicare population with 

chronic conditions. Congress specifically 

directed us to identify any new data needs 

and develop a methodology to address these 

data needs. The absence of drug data is a 

significant gap in data available to study 

chronically ill Medicare beneficiaries. 

Integrating Part D enrollment information 

and drug claims data into the CCW will 

address this data need and greatly enhance 

the analytic power and utility of the CCW. 

[FR Doc. 06–8750 Filed 10–13–06; 4:05 pm] 

BILLING CODE 4120–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 73 

[DA 06–1901; MB Docket No. 06–11; RM–

11304] 

Radio Broadcasting Services; Crowell, 

TX 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule; dismissal. 

SUMMARY: At the petitioner’s request, the 

Audio Division has dismissed the 

proposal of Jeraldine Anderson 

(‘‘Anderson’’) to allot Channel 250A at 

Crowell, Texas. Anderson had filed a 

petition for rule making proposing the 

allotment of Channel 250A at Crowell, 

Texas, as the community’s second local 

FM transmission service. The Audio 

Division further dismissed the 

counterproposal submitted in the 

proceeding by Linda Crawford 

(‘‘Crawford’’), upon Crawford’s request 

to withdraw that proposal. Finally, the 

Audio Division dismissed the 

counterproposal submitted in the 

proceeding by LKCM Radio Group, L.P., 

licensee of FM Station KFWR, Mineral 

Wells, Texas; Fort Worth Media Group 

GP, LLC, licensee of FM Station KYBE, 

Frederick, Oklahoma; and LKCM Radio 

Licenses, LP, the proposed assignee of 

KFWR and KYBE (collectively, ‘‘Joint 

Parties’’). The Joint Parties’

counterproposal was dismissed for 

failure to meet the Commission’s 

minimum distance separation 

requirements with respect to FM Station 

KRZB, Channel 248C2, Archer City, 

Texas. 

FOR FURTHER INFORMATION CONTACT: 

Deborah Dupont, Media Bureau, (202) 

418–2180. 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Report 

and Order, MB Docket No. 06–11, RM–

11304, adopted September 20, 2006, and 

released September 22, 2006. The full 

text of this Commission decision is 

available for inspection and copying 

during normal business hours in the 

FCC Reference Information Center, 


rmajette on PROD1PC67 with PROPOSALS