Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 15755

elsewhere in this issue of the Federal 

Register.] 

(j) [Reserved]. For further guidance, 

see § 1.861–9T(j).

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement.

[FR Doc. 04–6620 Filed 3–25–04; 8:45 am] 

BILLING CODE 4830–01–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Parts 61 and 63

[LA–69–2–7617b; FRL–7638–6] 

Approval of the Clean Air Act Section 

112(l) Program for Hazardous Air 

Pollutants and Delegation of Authority 

to the State of Louisiana

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: The Louisiana Department of 

Environmental Quality (LDEQ) has 

submitted updated regulations for 

receiving delegation of EPA authority 

for implementation and enforcement of 

National Emission Standards for 

Hazardous Air Pollutants NESHAPs) for 

all sources (both part 70 and non-part 70 

sources). These regulations apply to 

certain NESHAPs promulgated by EPA, 

as amended through July 1, 2002. The 

delegation of authority under this notice 

does not apply to sources located in 

Indian Country. EPA is providing notice 

that proposes to approve the delegation 

of certain NESHAPs to LDEQ.

DATES: Written comments must be 

received by April 26, 2004.

ADDRESSES: Comments must be 

submitted to Mr. Jeffery Robinson, Air 

Permits Section, Multimedia Planning 

and Permitting Division (6PD–R), U.S. 

Environmental Protection Agency, 

Region 6, 1445 Ross Avenue, Suite 700, 

Dallas, Texas 75202–2733. Comments 

may also be submitted electronically or 

through hand delivery/courier by 

following the detailed instructions in 

section I.B. of the Supplementary 

Information section of the direct final 

rule located in the Rules section of this 

Federal Register.

FOR FURTHER INFORMATION CONTACT: Mr. 

Jeffery Robinson, Air Permit Section, 

Air Permits Section, Multimedia 

Planning and Permitting Division (6PD–

R), U.S. Environmental Protection 

Agency, Region 6, 1445 Ross Avenue, 

Suite 700, Dallas, Texas 75202–2733, at 

(214) 665–6435, or at 

robinson.jeffrey@epa.gov.

SUPPLEMENTARY INFORMATION: In the 

final rules section of this Federal 

Register, EPA is approving LDEQ’s 

request for delegation of authority to 

implement and enforce certain 

NESHAPs for all sources (both part 70 

and non-part 70 sources). LDEQ has 

adopted certain NESHAPs by reference 

into Louisiana’s state regulations. In 

addition, EPA is waiving its notification 

requirements so sources will only need 

to send notifications and reports to 

LDEQ. 

The EPA is taking direct final action 

without prior proposal because EPA 

views this as a noncontroversial action 

and anticipates no adverse comments. A 

detailed rationale for this approval is set 

forth in the preamble to the direct final 

rule. If no adverse comments are 

received in response to this action rule, 

no further activity is contemplated. If 

EPA receives adverse comments, the 

direct final rule will be withdrawn, and 

all public comments received will be 

addressed in a subsequent final rule 

based on this proposed rule. EPA will 

not institute a second comment period 

on this action. Any parties interested in 

commenting must do so at this time. 

Please note that if EPA receives adverse 

comment on an amendment, paragraph, 

or section of this rule and if that 

provision may be severed from the 

remainder of the rule, EPA may adopt 

as final those provisions of the rule that 

are not the subject of an adverse 

comment. For additional information, 

see the direct final rule which is 

published in the Rules section of this 

Federal Register.

Authority: 42 U.S.C. 7412.

Dated: March 9, 2004. 

Richard E. Greene, 

Regional Administrator, Region 6.

[FR Doc. 04–6300 Filed 3–25–04; 8:45 am] 

BILLING CODE 6560–50–P

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 421

[CMS–1219–P] 

RIN 0938–AL76

Medicare Program; Durable Medical 

Equipment Regional Carrier (DMERC) 

Service Areas and Related Matters

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

SUMMARY: This proposed rule would 

allow us to change the geographical 

boundaries served by the regional 

contractors that process durable medical 

equipment claims and to make other 

minor changes in the contract 

administration of the durable medical 

equipment regional carriers (DMERCs). 

It would allow us to increase or 

decrease the number of DMERCs, to 

change the boundaries of DMERCs 

based on criteria other than the 

boundaries of the Common Working 

File, and to name new contractors to 

perform statistical analysis or maintain 

the national supplier clearinghouse. We 

would publish the changes and their 

justifications in a Federal Register

notice, rather than through notice and 

comment rulemaking. 

Although we are proposing to allow 

changes to the number and 

configuration of regional carriers, we are 

not proposing to alter the criteria and 

factors that we use in awarding 

contracts. 

The intent of this proposed rule 

would be to improve the contract 

process by swiftly meeting the 

challenges of the changing healthcare 

industry, addressing the changing needs 

of beneficiaries, suppliers, and the 

Medicare program, and facilitating our 

efforts to provide interested parties with 

the best value Medicare claims 

processing services. While we are not 

proposing to reconfigure the DMERC 

service boundaries at this time, the 

changes set forth in this proposed rule 

would provide a mechanism to swiftly 

make these kinds of changes without 

repeatedly invoking full rulemaking.

DATES: We will consider comments if 

we receive them at the appropriate 

address, as provided below, no later 

than 5 p.m. on May 25, 2004.

ADDRESSES: In commenting, please refer 

to file code CMS–1219–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit electronic comments 

to http://www.cms.hhs.gov/regulations/

ecomments or to http://

www.regulations.gov; or 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–1219–

P, P.O. Box 8016, Baltimore, MD 21244–

8016. 

Please allow sufficient time for mailed 

comments to be timely received in the 

event of delivery delays. 

If you prefer, you may deliver (by 

hand or courier) your written comments 

(one original and two copies) to one of 

15756 Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 

the following addresses: Room 445–G, 

Hubert H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201, or Room C4–26–

05, 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 

could be considered late. 

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. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:

Kimberly Nyland, (410) 786–2289.

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this rule to assist us in fully 

considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1219–P 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments:

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.access.gpo.gov/nara/index.html.

I. Background 

A. Legislative Overview of Durable 

Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) 

Claims Administration Covering 1966 

Through 1992

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Background’’ at the beginning of your 

comments.] 

Medicare has covered medically 

necessary items of durable medical 

equipment, prosthetics, orthotics, and 

supplies (DMEPOS) under Part B since 

the inception of the program in 1966. In 

the original authorizing legislation for 

the Medicare program, coverage was 

provided under sections 1832 and 

1861(s) of the Social Security Act (the 

Act) (Pub. L. 89–97). Since that time, the 

coverage and payment rules for 

DMEPOS, which may now be found in 

sections 1832, 1834, and 1861 of the Act 

and their implementing regulations 

have changed significantly. 

From 1986 to 1992, the number of 

complaints about fraud and abuse in the 

DMEPOS benefit began to increase 

markedly, and a variety of government 

investigations identified specific 

weaknesses in the program. We sought 

solutions to known claims processing 

problems, including the increasing level 

of fraud and abuse in billing. 

Subsequently, the Omnibus Budget 

Reconciliation Act of 1987 (OBRA 1987) 

Pub. L. 100–203, enacted on December 

22, 1987, authorized the Secretary to 

designate, by regulation, regional 

carriers to process DMEPOS claims. (See 

sections 1834(a)(12) and 1834(h)(3) of 

the Act.)

Before 1993, Medicare Part B claims 

for DMEPOS items and services were 

assigned to each of the more than 30 

local Medicare carriers and represented, 

on average, only 5 percent of each 

carrier’s overall workload. After much 

review, we concluded that this structure 

was not the most effective one for 

administering DMEPOS claims under 

Medicare. It was difficult for carriers to 

devote significant administrative review 

resources to this small percentage of 

claims. 

In addition, DMEPOS claims were 

generally complex and time-consuming 

to process. The protocol for suppliers to 

obtain a Medicare billing number was 

ill-defined and required little 

identifying information or compliance 

with any particular business or 

operational standards. 

Furthermore, carriers’ medical review 

policies varied significantly and 

contributed to inconsistent claims 

processing decisions. Finally, certain 

DMEPOS suppliers who engaged in 

unethical practices were able to exploit 

our local Medicare carriers by electing 

to submit claims to carriers that 

provided more generous coverage, paid 

more than other carriers, or both. As 

documented in program audits and 

congressional hearings, fraudulent 

suppliers could do this easily by 

manipulating our then existing ‘‘point of 

sale’’ claims jurisdiction rule; these 

suppliers could simply locate their 

business offices where conditions were 

most favorable. The collective impact of 

these issues resulted in significant abuse 

of the Medicare program by a subset of 

the DMEPOS supplier community, 

without any measurable improvement 

in patient care and outcomes. 

B. Agency and Congressional Efforts To 

Reform DMEPOS Claims 

Administration, 1987 Through 1994 

To address the problem of fraud and 

abuse in the supplier community, we 

initiated an effort to reform the 

administration of the DMEPOS benefit 

category using several strategies. On 

November 6, 1991, we published a 

proposed rule (56 FR 56612) setting 

forth a new framework for DMEPOS 

claims processing. In that rule, we 

proposed to limit the number of carriers 

handling DMEPOS claims by 

establishing regional carriers who 

would be expert processors of DMEPOS 

claims. The rule also proposed to 

change the requirement for assigning 

DMEPOS claims to carriers (that is, the 

DMEPOS claim jurisdiction rule) from a 

‘‘point of sale’’ framework to a 

framework based on ‘‘beneficiary 

residence.’’ In addition, the rule 

proposed to establish supplier business 

standards and information disclosure 

requirements. We expected that these 

changes, taken together, would make 

Medicare’s DMEPOS claim 

administration apparatus less 

susceptible to supplier manipulation. 

On June 18, 1992, we published a 

final rule with comment period (57 FR 

27307) to implement this revised 

statutory authority. The rule provided 

the following: 

• Established four regional carriers 

(known as DME Regional Carriers or 

DMERCS) to standardize the coverage 

and payment of DMEPOS. 

• Designated the States and territories 

to be served by each DMERC. 

• Consolidated and focused efforts to 

curb fraud and abuse. 

• Controlled the enrollment of all 

DMEPOS suppliers through a National 

Supplier Clearinghouse (NSC) (a 

contractor that reviews and approves 

supplier applications for Medicare 

program billing numbers). 

Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 15757

1The contract was initially awarded to Travelers 

Insurance Company and the regulations use this 

name. Through a series of corporate transactions, 

United Healthcare became the successor-in-interest 

to Travelers and served as the DMERC until 

September 2000, when HealthNow was awarded the 

DMERC contract for Region A.

• Introduced the concept of a 

Statistical Analysis DME Regional 

Carrier (SADMERC) to review supplier 

billing patterns. 

• Established minimum business 

standards for all suppliers wishing to 

enroll in the Medicare Program. 

• Required that regional carriers 

administer DMEPOS’ claims based on 

the location (State) of the beneficiary’s 

primary residence. The regulations for 

DMERC contracts, in accordance with 

these authorities are set forth at 42 CFR 

405.874, 421.210, 421.212, and 424.57. 

Finally, on October 31, 1994, the 

Congress enacted the Social Security 

Amendments of 1994, Public Law 103–

432. Among other matters, this statute 

established section 1834(j)(1) of the Act, 

which incorporated and augmented the 

supplier business and operational 

standards established in the final rule of 

June 18, 1992. Paragraph (E) of this 

provision ratified the concept of using 

the NSC. However, this provision 

restricts the type of entity that may 

perform the NSC function exclusively to 

Medicare carriers holding contracts 

under section 1842 of the Act.

C. Provisions of the Existing DMERC 

Regulations (Especially § 421.210) 

As noted above, there are several 

regulatory provisions pertaining to the 

operation of the DMERCs and related 

functions. Section 405.874 establishes a 

process by which the NSC makes 

determinations on whether to issue a 

Medicare billing number to a supplier 

applicant and specifies an 

administrative appeals process if we 

make an adverse determination. Section 

421.212 specifies that the Railroad 

Retirement Board will use the CMScontracted DMERCs to make DMEPOS 

claim determinations for Medicareeligible railroad retirees. Section 424.57 

provides special payment rules for 

DMEPOS suppliers and requirements 

for the issuance of DMEPOS supplier 

billing numbers, including a series of 

business and operational standards that 

DMEPOS suppliers must meet in order 

to qualify for Medicare billing 

privileges. 

Section 421.210 could be viewed as 

the cornerstone regulation for the 

DMERC carrier structure. As we are 

proposing to amend this regulation, it is 

important to discuss its content in some 

detail. 

We published and implemented the 

current regulations at § 421.210 under 

the authority of sections 1842, 1834(a), 

and 1834(h) of the Act. The current 

regulation, which augments and 

expands on the underlying statutory 

provisions, provides for the following: 

Paragraph (a) identifies the statutory 

basis for the rule and indicates that the 

purpose of the rule is to designate one 

or more carriers ‘‘by specific regions’’ to 

process DMEPOS claims. 

Paragraph (b) identifies the types of 

claims for DMEPOS items and services 

that are processed by the DMEPOS 

carrier. 

Paragraph (c) defines four specific 

regions for the processing of DMEPOS 

claims by naming the States and 

territories to be included in each region. 

This section also states that the DMERC 

regions coincide with the ‘‘sector’’

boundaries of our Common Working 

File System. 

Paragraph (d) specifies criteria that we 

use in designating entities to serve as 

regional carriers for DMEPOS claims. 

Paragraph (e)(1) requires that the 

DMERCs process DMEPOS claims only 

for beneficiaries whose permanent 

residence falls within their designated 

regional areas (as established by 

paragraph (c)). Paragraph (e)(1) also 

specifies that in processing DMEPOS 

claims, the DMERCs will apply the 

payment rates applicable to the State of 

residence of the beneficiary. In addition, 

the rule makes clear that the 

‘‘beneficiary residence’’ jurisdiction rule 

applies to qualified Railroad Retirement 

beneficiaries and defines ‘‘permanent 

residence’’ for the purpose of the rule. 

Paragraph (e)(2) identifies by name 

the initial DMERCs; paragraph (e)(3) 

identifies by name the initial NSC and 

SADMERC; paragraph (e)(4) commits us 

to periodically re-compete the four DME 

regional carrier contracts. 

Paragraph (f) requires the DMERCs to 

collect ownership and control 

information, as well as supplier 

standard certifications, from each 

DMEPOS supplier that they service. 

In section II of the preamble, we will 

discuss several changes we propose to 

make to paragraphs (a), (c), (d), and (e) 

of § 421.210. 

D. Establishment and Operation of the 

DMERCs, 1993 Through 2003 

We issued a Request for Proposal in 

May 1992 for the four regional DMERC 

contracts. We also solicited offers for 

two DMEPOS-related national contracts, 

the above-mentioned NSC and the 

SADMERC. In December 1992, the 

contracts, designed around Common 

Working File sectors, were awarded as 

follows:

Region A: Travelers Insurance Company 

for 10 States in the Northeast. 1

Region B: AdminaStar Federal for 9 

States in the Midwest and the District 

of Columbia.

Region C: Palmetto Government Benefits 

Administrators (GBA) for 14 States 

and 2 territories in the South. 

Region D: CIGNA for 17 States and 3 

territories in the West. 

NSC: Palmetto GBA. 

SADMERC: Palmetto GBA.

Initially, the DMERC and SADMERC 

contracts were 2-year contracts with two 

1-year renewal options. The NSC was 

given two 1-year contracts and two 1-

year renewal options. The contracts 

were modeled, to a significant extent, 

after requirements in the Federal 

Acquisition Regulations (FAR). 

One of the biggest challenges and 

accomplishments of the transition to the 

DMERC processing arrangement was the 

consolidation of diverse carrier medical 

policies for DMEPOS. The agency’s 

initiative to configure geographical 

regions to process DMEPOS claims by 

consolidating DME workloads from the 

34 carriers to 4 DMERCs greatly 

improved the rigor and consistency of 

medical review. Formerly, each carrier 

developed its own local medical review 

policies for DMEPOS claims under loose 

guidelines and oversight from us. 

During the transition period, our 

coverage and medical review staff 

worked closely with the DMERC 

medical directors to streamline and 

standardize medical policy within and 

across the DMERC regions. 

Regionalization allowed the DMERCs to 

have a consistent uniform interpretation 

of coverage policies, local medical 

review policies, and pricing for similar 

items and services. Today, the DMERCs 

share essentially one approach to 

coverage and medical review for all 

DMEPOS items. 

II. Provisions of This Proposed Rule 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Provisions of This Proposed Rule’’ at 

the beginning of your comments.] 

We are proposing to make a number 

of changes to § 421.210, which concern 

the designation of regional carriers to 

process claims for DMEPOS. Broadly 

speaking, we are seeking greater future 

flexibility to revise the number and 

boundaries of DMERC regional areas. 

We also desire greater flexibility in 

contracting for DMERC, NSC, and 

SADMERC functions. We have 

examined the statutory framework 

(section 1834(a)(12) of the Act, as set 

forth below at paragraph (a), ‘‘Basis’’) for 

15758 Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 

the current regulation and have 

concluded that the current regulation is 

more restrictive on the Secretary’s 

contracting discretion than required 

either by statute or the program’s 

interest. 

Specifically, we are proposing to 

make the following changes to § 421.210 

‘‘Designations of regional carriers to 

process claims for durable medical 

equipment, prosthetics, orthotics, and 

supplies’’: 

• Paragraph (a), ‘‘Basis.’’

We are proposing to revise paragraph 

(a) to more closely follow the actual 

language of section 1834(a)(12) of the 

Act that authorizes the Secretary to 

‘‘designate, by regulation under section 

1842 of the Act, one carrier for one or 

more entire regions to process all claims 

within the region for covered items 

under this section.’’ We are therefore 

revising paragraph (a) to state that the 

Secretary is authorized to designate 

carriers for ‘‘one or more entire regions’’

rather than to designate carriers by 

‘‘specific’’ regions. 

• Paragraph (c), ‘‘Region 

designation.’’

We are proposing to revise the 

language in paragraph (c), designate the 

current paragraph (c) as (c)(1), and add 

a new paragraph (c)(2). 

In paragraph (c), we are proposing to 

clarify the Secretary’s authority to revise 

the number or configuration of DMEPOS 

regional areas in the future, based on 

appropriate factors and criteria. 

The current regulations in 

§ 421.210(c) specify that there are four 

regional areas for DMEPOS claims and 

further specify that these areas be drawn 

to coincide with the Common Working 

File sectors. The regulations also 

specify, by name, which States and 

territories are assigned to each region for 

DMEPOS claims. To allow greater 

flexibility, in paragraph (c)(1), we are 

proposing to add the word ‘‘initial’’ in 

front of the listing of the current DMERC 

service areas, to make clear that this 

configuration could change in the 

future. 

In addition, we would revise 

paragraph (c)(1) to remove a specific 

reference to the Common Working File 

sector framework as a determinant for 

the DMERC regions. Advances in 

technology have greatly diminished the 

importance of this consideration and, 

therefore, its inclusion in regulation is 

unnecessary. 

The existing reference to Common 

Working File sectors in paragraph (c)(1), 

as a constraint for the DMERC region 

boundaries, illustrates the approach of 

the original rule. The June 18, 1992 rule 

acknowledged a technical Medicare 

claims processing system constraint that 

was significant at the time. Since that 

time, advances in our claims processing 

system have greatly reduced the impact 

of ‘‘out of the area’’ processing, and it 

is no longer necessary to structure the 

DMERCs around the Common Working 

File sectors.

New paragraph (c)(2) would allow us 

to revise the number and boundaries of 

DMERC regional service areas in the 

future based on appropriate factors and 

criteria. Our goal is to constantly strive 

to improve beneficiary and supplier 

satisfaction. Therefore, we would 

consider the effect of any service area 

changes on beneficiaries and suppliers 

in our decisions. Examples of factors 

and criteria include population shifts or 

natural disasters that require a 

reallocation of workload, and workforce 

conditions that may make it difficult for 

DMERCs in certain areas to recruit and 

retain qualified employees. We specify 

in paragraph (c)(2) that this change 

would allow us future discretion to 

identify which States and territories are 

assigned to various DMERC regions by 

publication of a Federal Register notice. 

The Federal Register notice would 

identify the nature of any changes in the 

DMERC service areas, as well as our 

rationale for the changes. 

Absent the proposed changes to these 

regulations, we would have to maintain 

the current DMERC configuration even 

if our administrative and program needs 

change. Currently, the only existing 

mechanism for changing the structure of 

the DMERC regions is to undertake 

notice and comment rulemaking for 

each change. We believe that it is not 

the intent of the statute to constrain the 

Secretary’s administrative discretion to 

this extent. Although we are not now 

proposing to alter the number or 

configuration of the four areas for 

DMEPOS claims, we anticipate that new 

program circumstances may arise that 

may require alterations in the number or 

configuration of DMERC service areas. 

We believe that we have a definite need 

for the capability to move swiftly and 

make DMERC service area changes 

without going through notice and 

comment rulemaking whenever 

administrative issues arise. Just as 

critical, we believe it is important to 

consider the effects of these kinds of 

changes on beneficiaries and suppliers 

and to provide the public with an 

explanation of changes when they are 

made. 

Under our proposed rules, we would 

not be required to administer four 

DMEPOS areas, would not be required 

to determine these DMEPOS areas based 

on the sector areas of the Common 

Working File, and would not be 

required to go through rulemaking to 

modify the assignment of the States and 

territories to revised DMEPOS areas. 

We are providing a fictitious (but 

plausible) example of a situation, which 

cannot be addressed very well under the 

current regulation. In this example, 

DMERC X, which has historically 

performed well, is having difficulty 

serving all beneficiaries and suppliers in 

all of its assigned States, due to 

difficulties in recruiting a sufficient 

number of qualified personnel. At 

present, the regulations would seem to 

limit our options to—(1) hoping that 

DMERC X improves its performance; or 

(2) terminating DMERC X’s contract for 

the entire service area and procuring 

and installing a replacement. We do not 

have the third option of removing a 

limited number of States from DMERC 

X’s contract and attaching these service 

areas to another DMERC’s service area 

(or setting up a fifth DMERC 

jurisdiction). However, under the 

proposed regulation, this kind of 

contract management action could yield 

many benefits, in that DMERC X could 

focus its resources on its remaining 

workload. Under the current regulation, 

moving a State to another area, or 

setting up a fifth jurisdiction, would 

require an extended rulemaking process 

unless the rules take a more general 

approach, as we are proposing. 

• Paragraph (d), ‘‘Criteria for 

designating regional carriers.’’

Paragraph (d) under this section 

currently discusses our ‘‘designation’’ of 

regional carriers in a manner that does 

not explicitly acknowledge the fact that 

these designations must be premised on 

the awarding of Medicare carrier 

contracts in accordance with applicable 

law. 

We are proposing to revise paragraph 

(d) under this section to make clear that 

we will designate regional carriers to 

process DMEPOS claims by awarding 

DMERC contracts in accordance with 

applicable law. We are not proposing 

any changes to the current criteria under 

paragraphs (d)(1) through (d)(5) of this 

section, which we use in our 

procurement evaluation processes for 

this particular kind of contract. 

• Paragraph (e), ‘‘Carrier 

designation.’’

In paragraph (e)(1), we are also 

proposing to make minor revisions to 

conform the language to the changes 

made in § 421.210(c). 

We are also proposing to revise 

paragraph (e) to provide that we have 

flexibility and discretion with respect to 

contracting for DMERC and related 

functions. The current regulations in 

§ 421.210(e) name the initial DMERCcontracting companies and also identify 

the particular region each company 

Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 15759

serves. The current regulations could be 

interpreted as requiring that we 

constantly update our rules whenever 

our business partners change. 

The proposed regulatory framework 

will clarify our discretion not to name 

a contracting company in future 

regulations if we re-compete a DMERC 

contract after its conclusion or 

termination. This proposed change 

would potentially reduce the agency’s 

administrative burden when a DMERC 

contract is not renewed. We are 

proposing, however, to notify affected 

beneficiaries and suppliers when we 

change contractors.

Specifically in paragraph (e)(2), we 

are proposing to remove the names of 

the initial DMERCs from the regulation. 

This change would also clarify our 

future discretion to award a DMERC 

contract to process DMEPOS claims 

under the Medicare program (that is, 

designate a DMERC), without any 

obligation to name the new DMERC(s) 

in regulations or by Federal Register

notice. We would, however, notify 

affected beneficiaries and suppliers to 

the change in contractors. Therefore, we 

are proposing to revise paragraph (e)(2) 

to add that we will notify affected 

Medicare beneficiaries when we 

designate a regional carrier. 

We are proposing to revise paragraphs 

(e)(3) and (e)(4) to allow us discretion to 

contract for the performance of NSC 

functions through either an amendment 

to a DMERC contract or through a nonDMERC Medicare carrier contract. In 

paragraph (e)(4), the current regulations 

for NSC functions limit the agency’s 

selection of NSC contractors to one of 

the DMERCs. However, section 

1834(j)(1)(E) of the Act actually more 

broadly permits any carrier with a 

contract under section 1842 of the Act 

to perform NSC functions. We believe 

that our rules should reflect this broader 

discretion under the statute. Therefore, 

in paragraph (e)(4), we are proposing to 

remove the limitation that restricts our 

list of contractors to only four DME 

regional carriers. This proposed revision 

gives us greater flexibility when we recompete a DMERC contract after its 

conclusion or termination. 

In addition, we are proposing to 

delete the references to the SADMERC 

function in § 421.210(e)(3) and 

§ 421.210(e)(4). SADMERCS are 

responsible for storing national 

DMEPOS claims history data, for 

distributing to the DMERCS national 

pricing files, and for conducting data 

analysis. Although we recognize the 

importance of the activities that the 

SADMERC provides to us and the 

DMERCS, these activities are not 

identified elsewhere in the regulations, 

and we believe that little purpose is 

served by naming an entity without any 

reference to its functions. Therefore, we 

do not believe it necessary to reference 

the SADMERC in our regulations. 

By removing the current reference to 

the SADMERC, including the constraint 

that this activity be included in a 

DMERC’s contract, we will have the 

flexibility to include this function in a 

DMERC contract or to contract for the 

SADMERC activity through some other 

vehicle. 

In summary, this proposed rule would 

allow us to change the geographical 

boundaries served by the regional 

contractors that process DME claims 

and to make other minor changes in 

contract administration of the DMERCS. 

We would be able to increase or 

decrease the number of DMERCS or 

change the boundaries of the DMERCs 

through a Federal Register notice. 

Further, we would name new 

contractors to perform the functions of 

the DMERC and NSC without going 

through notice and comment 

rulemaking. Instead, we would notify 

affected beneficiaries and suppliers of 

contractor changes through our outreach 

and education initiative. 

III. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60-

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected.

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

This document does not impose any 

new information collection and 

recordkeeping requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995. 

IV. Response to Comments 

Because of the large number of items 

of correspondence we normally receive 

on Federal Register documents 

published for comment, 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 

A. Overall Impact 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘Regulatory Impact’’ at the beginning of 

your comments.] 

We have examined the impacts of this 

rule as required by Executive Order 

(E.O.) 12866 (September 1993, 

Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA) 

(September 16, 1980, Pub. L. 96–354), 

section 1102(b) of the Act, the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4), and E.O. 13132. 

E.O. 12866 (as amended by E.O. 

13258, which merely reassigns 

responsibility of duties) directs agencies 

to assess all costs and benefits of 

available regulatory alternatives and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This rule does not reach 

the economic threshold and thus is not 

considered a major rule. This rule only 

provides the Secretary with greater 

contracting flexibility consistent with 

the statute and would not have any 

direct economic impact. Because this 

proposed rule would only affect our 

administrative structures and does not 

change in any way the Medicare 

DMEPOS benefit (that is, neither 

coverage nor payment is changed), this 

rule would not affect the amount or 

distribution of the Medicare benefit 

payment for DMEPOS. Further, any 

possible restructuring of the DMERC 

regions in the future would not remotely 

approach a net economic impact of $100 

million on either CMS’s administrative 

costs or the administrative costs of 

DMEPOS suppliers. Therefore, we do 

not believe that a regulatory impact 

analysis is necessary under E.O. 12866. 

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 

15760 Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 

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 1 year. 

Individuals and States are not included 

in the definition of a small entity. This 

proposed rule, as noted above, would 

not have any direct economic impact on 

DMEPOS suppliers, because it would 

not affect the scope of benefits, 

coverage, or payment rules for 

DMEPOS, nor would it affect the billing 

requirements for these services. This 

rule would not commit us to any 

particular reconfiguration of the DMERC 

areas. However, we agree to consider 

any effects on DMEPOS suppliers in any 

future reconfigurations of the DMERC 

regions. We are not preparing an 

analysis for the RFA because we have 

determined that this rule would not 

have a significant economic impact on 

a substantial number of small entities.

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 603 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. The changes that 

this rule proposes pertain to our 

processes for configuring and 

designating contractors to process 

DMEPOS claims and would not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. Therefore, we are not 

preparing an analysis for section 1102(b) 

of the Act. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule that may result in expenditure in 

any 1 year by State, local, or tribal 

governments, in the aggregate, or by the 

private sector, of $110 million. This rule 

would not have a consequential effect 

on the governments mentioned or on the 

private sector. 

E.O. 13132 establishes certain 

requirements that an agency must meet 

when it promulgates a proposed rule 

(and subsequent final rule) that imposes 

substantial direct requirement costs on 

State and local governments, preempts 

State law, or otherwise has Federalism 

implications. Since this regulation 

would not impose any costs on local 

governments, the requirements of E.O. 

13132 are not applicable. 

B. Conclusion 

For these reasons, we are not 

preparing analyses for either the RFA or 

section 1102(b) of the Act because we 

have determined that this rule would 

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. 

C. Alternatives Considered 

We could have chosen to continue to 

operate under the constraints of our 

current regulations. This option would 

require that we periodically undertake 

notice and comment rulemaking to 

update the regulations with the names 

of new contractors. We have provided 

additional discussion in the preamble 

describing why we believe this is not 

the optimal solution. We believe our 

proposal to make modest changes to our 

regulations would offer us greater 

flexibility in contracting with DMERCs 

and allow us to be more responsive to 

the needs of all key stakeholders. 

In accordance with the provisions of 

E.O. 12866, the Office of Management 

and Budget reviewed this regulation.

List of Subjects in 42 CFR Part 421 

Administrative practice and 

procedure, Health facilities, Health 

professions, Medicare, 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 421 as set forth 

below:

PART 421—INTERMEDIARIES AND 

CARRIERS 

1. The authority citation for part 421 

continues to read as follows:

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh).

Subpart C—Carriers 

2. Amend § 421.210 as follows: 

A. Revise paragraph (a). 

B. Revise paragraph (c). 

C. Revise the introductory text of 

paragraph (d). 

D. Revise paragraph (e). 

The revisions read as follows:

§ 421.210 Designations of regional carriers 

to process claims for durable medical 

equipment, prosthetics, orthotics, and 

supplies. 

(a) Basis. This section is based on 

sections 1834(a)(12) and 1834(h) of the 

Act, which authorize the Secretary to 

designate one carrier for one or more 

entire regions to process claims for 

durable medical equipment, prosthetic 

devices, prosthetics, orthotics, and other 

supplies (DMEPOS). This authority has 

been delegated to CMS.

* * * * *

(c) Region designation. (1) The 

boundaries of the initial four regions for 

processing claims described in 

paragraph (b) of this section contain the 

following States and territories: 

(i) Region A: Maine, New Hampshire, 

Vermont, Massachusetts, Connecticut, 

Rhode Island, New York, New Jersey, 

Pennsylvania, and Delaware. 

(ii) Region B: Maryland, the District of 

Columbia, Virginia, West Virginia, Ohio, 

Michigan, Indiana, Illinois, Wisconsin, 

and Minnesota. 

(iii) Region C: North Carolina, South 

Carolina, Kentucky, Tennessee, Georgia, 

Florida, Alabama, Mississippi, 

Louisiana, Texas, Arkansas, Oklahoma, 

New Mexico, Colorado, Puerto Rico, and 

the Virgin Islands. 

(iv) Region D: Alaska, Hawaii, 

American Samoa, Guam, the Northern 

Mariana Islands, California, Nevada, 

Arizona, Washington, Oregon, Montana, 

Idaho, Utah, Wyoming, North Dakota, 

South Dakota, Nebraska, Kansas, Iowa, 

and Missouri. 

(2) CMS may modify the number and 

boundaries of the regions established in 

paragraph (c)(1) of this section based on 

appropriate criteria and considerations 

including the effect of the change on 

beneficiaries and DMEPOS suppliers. 

To announce changes, CMS will publish 

a notice in the Federal Register that 

delineates the regional boundary or 

boundaries changed, the States and 

territories affected, and supporting 

criteria or considerations. 

(d) Criteria for designating regional 

carriers. CMS designates regional 

carriers to achieve a greater degree of 

effectiveness and efficiency in the 

administration of the Medicare program. 

In making this designation, CMS will 

award regional carrier contracts in 

accordance with applicable law and will 

consider some or all of the following 

criteria—

* * * * *

(e) Carrier designation. (1) Each 

carrier designated a regional carrier 

must process claims for items listed in 

paragraph (b) of this section for 

beneficiaries whose permanent 

residence is within that carrier’s area as 

designated under paragraph (c) of this 

section. When processing the claims, 

the carrier must use the payment rates 

applicable for the State of residence of 

the beneficiary, including a qualified 

Railroad Retirement beneficiary. A 

beneficiary’s permanent residence is the 

address at which he or she intends to 

Federal Register / Vol. 69, No. 59 / Friday, March 26, 2004 / Proposed Rules 15761

spend 6 months or more of the calendar 

year. 

(2) CMS will notify affected Medicare 

beneficiaries and suppliers when it 

designates a regional carrier (in 

accordance with paragraph (d) of this 

section) to process DMEPOS claims (as 

defined in paragraph (b) of this section) 

for all Medicare beneficiaries residing in 

their respective regions (as designated 

under paragraph (c) of this section). 

(3) CMS may contract for the 

performance of National Supplier 

Clearinghouse functions through a 

contract amendment to one of the DME 

regional carrier contracts or through a 

contract amendment to any Medicare 

carrier contract under § 421.200. 

(4) CMS will periodically recompete 

the contracts for the DME regional 

carriers. CMS will also periodically 

recompete the National Supplier 

Clearinghouse function.

* * * * *

(Catalog of Federal Domestic Assistance 

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program)

Dated: September 29, 2003. 

Thomas A Scully, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: December 31, 2003. 

Tommy G. Thompson, 

Secretary.

[FR Doc. 04–6833 Filed 3–25–04; 8:45 am] 

BILLING CODE 4120–01–P

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 0, 4 and 63 

[ET Docket No. 04–35; FCC 04–30] 

Commission’s Rules Concerning 

Disruptions to Communications

AGENCY: Federal Communications 

Commission.

ACTION: Proposed rule.

SUMMARY: This document proposes to 

extend the Commission’s disruption 

reporting requirements to 

communications providers who are not 

wireline carriers. The Commission also 

proposes to streamline compliance with 

the reporting requirements through 

electronic filing with a ‘‘fill in the 

blank’’ template and by simplifying the 

application of that rule. In addition, the 

Commission proposes to delegate 

authority to the Chief, Office of 

Engineering and Technology, to make 

the revisions to the filing system and 

template that are necessary to achieve 

the goals of this rulemaking proceeding. 

We believe that these proposals will 

allow the Commission to obtain the 

necessary information regarding service 

disruptions in an efficient and 

expeditious manner and to achieve 

significant concomitant public interest 

benefits.

DATES: Comments must be filed on or 

before May 25, 2004, and reply 

comments June 24, 2004. Written 

comments on the proposed and/or 

modified information collection(s) must 

be submitted by the public, Office of 

Management and Budget (OMB), and 

other interested parties on or before May 

25, 2004.

FOR FURTHER INFORMATION CONTACT:

Charles Iseman at (202) 418–2444, 

charles.iseman@fcc.gov, Office of 

Engineering and Technology, TTY (202) 

418–2989.

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Notice of 

Proposed Rule Making, ET Docket No. 

04–35, FCC 04–30, adopted February 12, 

2004, and released February 23, 2004. 

The full text of this document is 

available for inspection and copying 

during normal business hours in the 

FCC Reference Center (Room CY–A257), 

445 12th Street, SW., Washington, DC 

20554. The complete text of this 

document also may be purchased from 

the Commission’s copy contractor, 

Qualex International, 445 12th Street, 

SW., Room, CY–B402, Washington, DC 

20554. The full text may also be 

downloaded at www.fcc.gov. Alternate 

formats are available to persons with 

disabilities by contacting Brian Millin at 

(202) 418–7426 or TTY (202) 418–7365. 

Pursuant to §§ 1.415 and 1.419 of the 

Commission’s rules, 47 CFR 1.415, 

1.419, interested parties may file 

comments on or before May 25, 2004, 

and reply comments on or before June 

24, 2004. Comments may be filed using 

the Commission’s Electronic Comment 

Filing System (ECFS) or by filing paper 

copies. See Electronic Filing of 

Documents in Rulemaking Proceedings,

63 FR 24121, May 1, 1998. Comments 

filed through the ECFS can be sent as an 

electronic file via the Internet to

http://www.fcc.gov/e-file/ecfs.html.

Generally, only one copy of an 

electronic submission must be filed. If 

multiple docket or rulemaking numbers 

appear in the caption of this proceeding, 

however, commenters must transmit 

one electronic copy of the comments to 

each docket or rulemaking number 

referenced in the caption. In completing 

the transmittal screen, commenters 

should include their full name, U.S. 

Postal Service mailing address, and the 

applicable docket or rulemaking 

number. Parties may also submit an 

electronic comment by Internet e-mail. 

To get filing instructions for e-mail 

comments, commenters should send an 

e-mail to ecfs@fcc.gov, and should 

include the following words in the body 

of the message, ‘‘get form <your e-mail 

address>.’’ A sample form and 

directions will be sent in reply. Parties 

who choose to file by paper must file an 

original and four copies of each filing. 

If more than one docket or rulemaking 

number appears in the caption of this 

proceeding, commenters must submit 

two additional copies for each 

additional docket or rulemaking 

number. 

All paper filings must be addressed to 

the Commission’s Secretary, Office of 

the Secretary, Federal Communications 

Commission. Filings can be sent by 

hand or messenger delivery, by 

commercial overnight courier, or by 

first-class or overnight U.S. Postal 

Service mail (although we continue to 

experience delays in receiving U.S. 

Postal Service mail). The Commission’s 

contractor, Natek, Inc., will receive 

hand-delivered or messenger-delivered 

paper filings for the Commission’s 

Secretary at 236 Massachusetts Avenue, 

NE., Suite 110, Washington, DC 20002. 

The filing hours at this location are 8 

a.m. to 7 p.m. All hand deliveries must 

be held together with rubber bands or 

fasteners. Any envelopes must be 

disposed of before entering the building. 

Commercial overnight mail (other than 

U.S. Postal Service Express Mail and 

Priority Mail) must be sent to 9300 East 

Hampton Drive, Capitol Heights, MD 

20743. U.S. Postal Service first-class 

mail, Express mail, and Priority Mail 

should be addressed to 445 12th Street, 

SW., Washington, DC 20554. 

Initial Paperwork Reduction Act of 

1995 Analysis 

This NPRM contains proposed 

modified information collection(s). The 

Commission, as part of its continuing 

effort to reduce paperwork burdens, 

invites the general public and the Office 

of Management and Budget (OMB) to 

comment on the information 

collection(s) contained in this NPRM, as 

required by the Paperwork Reduction 

Act (PRA) of 1995, Public Law 104–13. 

Public and agency comments are due 

May 25, 2004. PRA comments should 

address: (a) Whether the proposed 

collection of information is necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information shall have 

practical utility; (b) the accuracy of the 

Commission’s burden estimates; (c) 

ways to enhance the quality, utility, and 

clarity of the information collected; and 

(d) ways to minimize the burden of the 

collection of information on the