Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55887 

deductibles and daily coinsurance 

amounts paid. 

V. Waiver of Proposed Notice and 

Comment Period 

The Medicare statute, as discussed 

previously, requires publication of the 

Medicare Part A inpatient hospital 

deductible and the hospital and 

extended care services coinsurance 

amounts for services for each calendar 

year. The amounts are determined 

according to the statute. As has been our 

custom, we use general notices, rather 

than notice and comment rulemaking 

procedures, to make the 

announcements. In doing so, we 

acknowledge that, under the 

Administrative Procedure Act (APA), 

interpretive rules, general statements of 

policy, and rules of agency organization, 

procedure, or practice are excepted from 

the requirements of notice and comment 

rulemaking. 

We considered publishing a proposed 

notice to provide a period for public 

comment. However, we may waive that 

procedure if we find good cause that 

prior notice and comment are 

impracticable, unnecessary, or contrary 

to the public interest. We find that the 

procedure for notice and comment is 

unnecessary because the formulae used 

to calculate the inpatient hospital 

deductible and hospital and extended 

care services coinsurance amounts are 

statutorily directed, and we can exercise 

no discretion in following those 

formulae. Moreover, the statute 

establishes the time period for which 

the deductible and coinsurance amounts 

will apply and delaying publication 

would be contrary to the public interest. 

Therefore, we find good cause to waive 

publication of a proposed notice and 

solicitation of public comments. 

VI. Regulatory Impact Statement 

We have examined the impacts of this 

notice 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 Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), and 

Executive Order 13132. 

Executive Order 12866, 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). As stated in Section IV of this 

notice, we estimate that the total 

increase in costs to beneficiaries 

associated with this notice is about $230 

million due to: (1) The increase in the 

deductible and coinsurance amounts 

and (2) the change in the number of 

deductibles and daily coinsurance 

amounts paid. Therefore, this notice is 

a major rule as defined in Title 5, 

United States Code, section 804(2), and 

is an economically significant rule 

under Executive Order 12866. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and 

government agencies. Most hospitals 

and most other providers and suppliers 

are small entities, either by nonprofit 

status or by having revenues of $6 

million to $29 million in any 1 year. 

Individuals and States are not included 

in the definition of a small entity. We 

have determined that this notice will 

not have a significant economic impact 

on a substantial number of small 

entities. Therefore we are not preparing 

an analysis for the RFA. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a Metropolitan Statistical Area and has 

fewer than 100 beds. We have 

determined that this notice will not 

have a significant effect 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 

notice has 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. 

This notice has no consequential effect 

on State or local governments. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

Authority: Sections 1813(b)(2) of the Social 

Security Act (42 U.S.C. 1395e–2(b)(2)). 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance) 

Dated: September 12, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: September 15, 2005. 

Michael O. Leavitt, 

Secretary. 

[FR Doc. 05–18838 Filed 9–16–05; 4:00 pm] 

BILLING CODE 4120–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1307–GNC] 

RIN 0938–ZA74 

Medicare Program; Criteria and 

Standards for Evaluating Intermediary, 

Carrier, and Durable Medical 

Equipment, Prosthetics, Orthotics, and 

Supplies (DMEPOS) Regional Carrier 

Performance During Fiscal Year 2006 

AGENCY: Centers for Medicare and 

Medicaid Services (CMS), Health and 

Human Services (HHS). 

ACTION: General notice with comment 

period. 

SUMMARY: This notice describes the 

criteria and standards to be used for 

evaluating the performance of fiscal 

intermediaries (FIs), carriers, and 

Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) regional carriers in the 

administration of the Medicare program 

beginning on the first day of the first 

month following publication of this 

notice in the Federal Register. The 

results of these evaluations are 

considered whenever we enter into, 

renew, or terminate an intermediary 

agreement, carrier contract, or DMEPOS 

regional carrier contract or take other 

contract actions, for example, assigning 

or reassigning providers or services to 

an intermediary or designating regional 

or national intermediaries. We are 

requesting public comment on these 

criteria and standards. 

DATES: Effective Date: The criteria and 

standards are effective on October 24, 

2005. 

Comment Date: To be assured 

consideration, comments must be 

received at one of the addresses 

55888 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

provided below, no later than 5 p.m. 

beginning on the first day of the first 

month following publication of this 

notice in the Federal Register. 

ADDRESSES: In commenting, please refer 

to file code CMS–1307–GNC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

three ways (no duplicates, please): 

1. Electronically. You may submit 

electronic comments on specific issues 

in this regulation to http:// 

www.cms.hhs.gov/regulations/ 

ecomments or to http:// 

www.regulations.gov, (attachments must 

be in Microsoft Word, WordPerfect, or 

Excel; however, we prefer Microsoft 

Word.) 

2. By mail. You may mail written 

comments (one original and two copies) 

to the following address only: Centers 

for Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–1307–GNC, 

P.O. Box 8013, Baltimore, MD 21244–

8013. 

Please allow sufficient time for mailed 

comments to be received at the close of 

the comment period. 

3. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments (one original 

and two copies) before the close of the 

comment period to one of the following 

addresses. If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786–

7197 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 

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 website. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Richard Johnson, (410) 786–5633. 

SUPPLEMENTARY INFORMATION: 

Submitting Comments: We welcome 

comments from the public on all issues 

set forth in this notice to assist us in 

fully considering issues and developing 

policies. You can assist us by 

referencing the file code CMS–1307- 

GNC and the specific ‘‘issue identifier’’

that precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all electronic 

comments received before the close of 

the comment period on its public 

website as soon as possible after they 

are received. Hard copy 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 1–800–

743–3951. 

I. Background 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘BACKGROUND’’ at the beginning of 

your comments.] 

A. Part A—Hospital Insurance 

Under section 1816 of the Social 

Security Act (the Act), public or private 

organizations and agencies participate 

in the administration of Part A (Hospital 

Insurance) of the Medicare program 

under agreements with us. These 

agencies or organizations, known as FIs, 

determine whether medical services are 

covered under Medicare, determine 

correct payment amounts and then 

make payments to the health care 

providers (for example, hospitals, 

skilled nursing facilities (SNFs), and 

community mental health centers) on 

behalf of the beneficiaries. Section 

1816(f) of the Act requires us to develop 

criteria, standards, and procedures to 

evaluate an intermediary’s performance 

of its functions under its agreement. 

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

us to designate regional agencies or 

organizations, which are already 

Medicare intermediaries under section 

1816 of the Act, to perform claim 

processing functions for freestanding 

Home Health Agency (HHA) claims. We 

refer to these organizations as Regional 

Home Health Intermediaries (RHHIs). 

See § 421.117 and the final rule 

published on May 19, 1988 in the 

Federal Register (53 FR 17936) for more 

details about the RHHIs. 

The evaluation of intermediary 

performance is part of our contract 

management process. These evaluations 

need not be limited to the current fiscal 

year (FY), other fixed term basis, or 

agreement term. 

B. Part B—Supplementary Medical 

Insurance 

Under section 1842 of the Act, we are 

authorized to enter into contracts with 

carriers to fulfill various functions in 

the administration of Part B, 

Supplementary Medical Insurance of 

the Medicare program. Beneficiaries, 

physicians, and suppliers of services 

submit claims to these carriers. The 

carriers determine whether the services 

are covered under Medicare and the 

amount payable for the services or 

supplies, and then make payment to the 

appropriate party. 

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

we are required to develop criteria, 

standards, and procedures to evaluate a 

carrier’s performance of its functions 

under its contract. Evaluations of 

Medicare fee-for-service (FFS) 

contractor performance need not be 

limited to the current FY, other fixed 

term basis, or contract term. The 

evaluation of carrier performance is part 

of our contract management process. 

C. Durable Medical Equipment, 

Prosthetics, Orthotics, and Supplies 

(DMEPOS) Regional Carriers 

In accordance with section 

1834(a)(12) of the Act, we have entered 

into contracts with four DMEPOS 

regional carriers to perform all of the 

duties associated with the processing of 

claims for DMEPOS, under Part B of the 

Medicare program. These DMEPOS 

regional carriers process claims based 

on a Medicare beneficiary’s principal 

residence by State. Section 1842(a) of 

the Act authorizes contracts with 

carriers for the payment of Part B claims 

for Medicare covered services and 

items. Section 1842(b)(2) of the Act 

requires us to publish in the Federal 

Register criteria and standards for the 

efficient and effective performance of 

carrier contract obligations. Evaluation 

of Medicare FFS contractor performance 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55889 

need not be limited to the current FY, 

other fixed term basis, or contract term. 

The evaluation of DMEPOS regional 

carrier performance is part of our 

contract management process. 

D. Development and Publication of 

Criteria and Standards 

In addition to the statutory 

requirements, § 421.120, § 421.122 and 

§ 421.201 provide for publication of a 

Federal Register notice to announce 

criteria and standards for intermediaries 

and carriers before the beginning of each 

evaluation period. The current criteria 

and standards for intermediaries, 

carriers, and DMEPOS regional carriers 

were published in the Federal Register 

(68 FR 74613) on November 26, 2004. 

To the extent possible, we make every 

effort to publish the criteria and 

standards before the beginning of the 

Federal FY, which is October 1. If we do 

not publish a Federal Register notice 

before the new FY begins, readers may 

presume that until and unless notified 

otherwise, the criteria and standards 

that were in effect for the previous FY 

remain in effect. 

In those instances in which we are 

unable to meet our goal of publishing 

the subject Federal Register notice 

before the beginning of the FY, we may 

publish the criteria and standards notice 

at any subsequent time during the year. 

If we publish a notice in this manner, 

the evaluation period for the criteria and 

standards that are the subject of the 

notice will be effective beginning on the 

first day of the first month following 

publication of this notice in the Federal 

Register. Any revised criteria and 

standards will measure performance 

prospectively; that is, any new criteria 

and standards in the notice will be 

applied only to performance after the 

effective date listed on the notice. 

It is not our intention to revise the 

criteria and standards that will be used 

during the evaluation period once this 

information is published in a Federal 

Register notice. However, on occasion, 

either because of administrative action 

or statutory mandate, there may be a 

need for changes that have a direct 

impact on the criteria and standards 

previously published, or that require the 

addition of new criteria or standards, or 

that cause the deletion of previously 

published criteria and standards. If we 

must make these changes, we will 

publish an amended Federal Register 

notice before implementation of the 

changes. In all instances, necessary 

manual issuances will be published to 

ensure that the criteria and standards 

are applied uniformly and accurately. 

Also, as in previous years, this Federal 

Register notice will be republished and 

the effective date revised if changes are 

warranted as a result of the public 

comments received on the criteria and 

standards. 

The Medicare Prescription Drug, 

Improvement and Modernization Act of 

2003 (MMA) (Pub. L. 108–173) was 

enacted on December 8, 2003. Section 

911 of the MMA establishes the 

Medicare FFS Contracting Reform 

(MCR) initiative that will be 

implemented over the next several 

years. This provision requires that we 

use competitive procedures to replace 

our current FIs and carriers with 

Medicare Administrative Contractors 

(MACs). The MMA requires that we 

compete and transition all work to 

MACs by October 1, 2011. 

FIs and or carriers will continue 

administering Medicare FFS work until 

the final competitively selected MAC is 

up and operating. We will continue to 

develop and publish standards and 

criteria for use in evaluating the 

performance of FIs, carriers, and 

DMERCs as long as these types of 

contractors exist. 

II. Analysis of and Response to Public 

Comments Received on FY 2005 

Criteria and Standards 

We received three comments in 

response to the November 26, 2004 

Federal Register general notice with 

comments. All comments were 

reviewed, but none necessitated our 

reissuance of the FY 2005 Criteria and 

Standards. Comments submitted did not 

pertain specifically to the FY 2005 

criteria and standards. 

III. Criteria and Standards—General 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘CRITERIA AND STANDARDS—

GENERAL’’ at the beginning of your 

comments.] 

Basic principles of the Medicare 

program are to pay claims promptly and 

accurately and to foster good beneficiary 

and provider relations. Contractors must 

administer the Medicare program 

efficiently and economically. The goal 

of performance evaluation is to ensure 

that contractors meet their contractual 

obligations. We measure contractor 

performance to ensure that contractors 

do what is required of them by statute, 

regulation, contract, and our directives. 

We have developed a contractor 

oversight program for FY 2006 that 

outlines expectations of the contractor, 

measures the performance of the 

contractor; evaluates the performance 

against the expectations; and provides 

for appropriate contract action based 

upon the evaluation of the contractor’s 

performance. 

As a means to monitor the accuracy 

of Medicare FFS payments, we have 

established the Comprehensive Error 

Rate Testing (CERT) program that 

measures and reports error rates for 

claims payment decisions made by 

carriers, DMERCs, and FIs. Beginning in 

November 2003, the CERT program 

measures and reports claims payment 

error rates for each individual carrier 

and DMERC. FI-specific rates became 

available November 2004. These rates 

measure not only how well contractors 

are doing at implementing automated 

review edits and identifying which 

claims to subject to manual medical 

review but they also measure the impact 

of the contractor’s provider outreach/ 

education, as well as the effectiveness of 

the contractor’s provider call center(s). 

We will use these contractor-specific 

error rates as a means to evaluate a 

contractor’s performance. 

Several times throughout this notice, 

we refer to the appropriate reading level 

of letters, decisions, or correspondence 

that are going to Medicare beneficiaries 

from intermediaries or carriers. In those 

instances, appropriate reading level is 

defined as whether the communication 

is below the 8th grade reading level 

unless it is obvious that an incoming 

request from the beneficiary contains 

language written at a higher level. In 

these cases, the appropriate reading 

level is tailored to the capacities and 

circumstances of the intended recipient. 

In addition to evaluating performance 

based upon expectations for FY 2006, 

we may also conduct follow-up 

evaluations throughout FY 2006 of areas 

in which contractor performance was 

out of compliance with statute, 

regulations, and our performance 

expectations during prior review years 

where contractors were required to 

submit a Performance Improvement 

Plan (PIP). 

We may also utilize Statement of 

Auditing Standards-70 (SAS–70) 

reviews as a means to evaluate 

contractors in some or all business 

functions. 

In FY 2001, we established the 

Contractor Rebuttal Process as a 

commitment to continual improvement 

of contractor performance evaluation 

(CPE). We will continue the use of this 

process in FY 2006. The Contractor 

Rebuttal Process provides the 

contractors an opportunity to submit a 

written rebuttal of CPE findings of fact. 

Whenever we conduct an evaluation of 

contractor operations, contractors have 

7 calendar days from the date of the CPE 

review exit conference to submit a 

written rebuttal. The CPE review team 

or, if appropriate, the individual 

reviewer will consider the contents of 

55890 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

the rebuttal before the issuance of the 

final CPE report to the contractor. 

The FY 2006 CPE for intermediaries 

and carriers is structured into five 

criteria designed to meet the stated 

objectives. The first criterion, claims 

processing, measures contractual 

performance against claims processing 

accuracy and timeliness requirements, 

as well as activities in handling appeals. 

Within the claims processing criterion, 

we have identified those performance 

standards that are mandated by 

legislation, regulation, or judicial 

decision. These standards include 

claims processing timeliness, the 

accuracy of Medicare Summary Notices 

(MSNs), the timeliness of intermediary 

redeterminations, the timeliness of 

carrier redeterminations and hearings, 

and the appropriateness of the reading 

level and content of intermediary and 

carrier redetermination letters. Further 

evaluation in the Claims Processing 

Criterion may include, but is not limited 

to, the accuracy of claims processing, 

the percent of claims paid with interest, 

and the accuracy of redeterminations 

and carrier hearings. 

The second criterion, customer 

service, assesses the adequacy of the 

service provided to customers by the 

contractor in its administration of the 

Medicare program. The mandated 

standard in the customer service 

criterion is the need to provide 

beneficiaries with written replies that 

are responsive, that is, they provide in 

detail the reasons for a determination 

when a beneficiary requests this 

information, they have a customerfriendly tone and clarity, and they are 

at the appropriate reading level. Further 

evaluation of services under this 

criterion may include, but will not be 

limited to, the following: Timeliness 

and accuracy of all correspondence both 

to beneficiaries and providers; 

monitoring of the quality of replies 

provided by the contractor’s telephone 

customer service representatives 

(quality call monitoring); beneficiary 

and provider education, training, and 

outreach activities; and service provided 

by the contractor’s customer service 

representatives to beneficiaries and 

providers who come to the contractor’s 

facility (walk-in inquiry service). 

The third criterion, payment 

safeguards, evaluates whether the 

Medicare Trust Fund is safeguarded 

against inappropriate program 

expenditures. Intermediary and carrier 

performance may be evaluated in the 

areas of Medical Review (MR), Medicare 

Secondary Payer (MSP), Overpayments 

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

addition, intermediary performance may 

be evaluated in the area of Audit and 

Reimbursement (A&R). 

In FY 1996 the Congress enacted the 

Health Insurance Portability and 

Accountability Act (HIPAA), Medicare 

Integrity Program, giving us the 

authority to contract with entities other 

than, but not excluding, Medicare 

carriers and intermediaries to perform 

certain program safeguard functions. In 

situations where one or more program 

safeguard functions are contracted to 

another entity, we may evaluate the 

flow of communication and information 

between a Medicare FFS contractor and 

the payment safeguard contractor. All 

benefit integrity functions have been 

transitioned from intermediaries, 

carriers, and one DMERC to the program 

safeguard contractors. Since, the other 

three DMERC contractors will continue 

to conduct benefit integrity activities in 

FY 2006, we may evaluate their 

performance of that function. 

Mandated performance standards for 

intermediaries in the payment 

safeguards criterion include the 

accuracy of decisions on SNF demand 

bills and the timeliness of processing 

Tax Equity and Fiscal Responsibility 

Act (TEFRA) target rate adjustments, 

exceptions, and exemptions. There are 

no mandated performance standards for 

carriers in the payment safeguards 

criterion. Intermediaries and carriers 

may also be evaluated on any Medicare 

Integrity Program (MIP) activities if 

performed under their agreement or 

contract. 

The fourth criterion, fiscal 

responsibility, evaluates the contractor’s 

efforts to protect the Medicare program 

and the public interest. Contractors 

must effectively manage Federal funds 

for both the payment of benefits and the 

costs of administration under the 

Medicare program. Proper financial and 

budgetary controls, including internal 

controls, must be in place to ensure 

contractor compliance with its 

agreement with HHS and CMS. 

Additional functions reviewed under 

this criterion may include, but are not 

limited to, adherence to approved 

budget, compliance with the Budget and 

Performance Requirements (BPRs), and 

compliance with financial reporting 

requirements. 

The fifth and final criterion, 

administrative activities, measures a 

contractor’s administrative management 

of the Medicare program. A contractor 

must efficiently and effectively manage 

its operations. Proper systems security 

(general and application controls), 

Automated Data Processing (ADP) 

maintenance, and disaster recovery 

plans must be in place. A contractor’s 

evaluation under the administrative 

activities criterion may include, but is 

not limited to, establishment, 

application, documentation, and 

effectiveness of internal controls that are 

essential in all aspects of a contractor’s 

operation, as well as the degree to 

which the contractor cooperates with us 

in complying with the Federal 

Managers’ Financial Integrity Act of 

1982 (FMFIA). Administrative activities 

evaluations may also include reviews 

related to contractor implementation of 

our general instructions and data and 

reporting requirements. 

We have developed separate measures 

for RHHIs in order to evaluate the 

distinct RHHI functions. These 

functions include the processing of 

claims from freestanding HHAs, 

hospital-affiliated HHAs, and hospices. 

Through an evaluation using these 

criteria and standards, we may 

determine whether the RHHI is 

effectively and efficiently administering 

the program benefit or whether the 

functions should be moved from one 

intermediary to another in order to gain 

that assurance. 

In sections IV through VII of this 

notice, we list the criteria and standards 

to be used for evaluating the 

performance of intermediaries, RHHIs, 

carriers, and DMEPOS regional carriers. 

IV. Criteria and Standards for 

Intermediaries 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘CRITERIA AND STANDARDS FOR 

INTERMEDIARIES’’ at the beginning of 

your comments.] 

A. Claims Processing Criterion 

The claims processing criterion 

contains the following four mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted nonPeriodic Interim Payment claims are 

paid within statutorily specified time 

frames. Clean claims are defined as 

claims that do not require Medicare 

intermediaries to investigate or develop 

them outside of their Medicare 

operations on a prepayment basis. 

Specifically, the statute specifies that 

clean non-Periodic Interim Payment 

electronic claims be paid no earlier than 

the 14th day after the date of receipt, 

and that interest is payable for any clean 

claims if payment is not issued by the 

31st day after the date of receipt. The 

HIPAA Administrative Simplification 

provisions and the implementing 

regulations established standards for 

electronic transmission of claims. We 

issued instructions that effective July 1, 

2004, electronic claims that do not 

comply with the appropriate HIPAA 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55891 

claim standard will no longer qualify for 

payment as early as the 14th day after 

the date of receipt. These ‘‘non-HIPAA’’

claims will not be paid earlier than the 

27th day after the date of receipt. These 

‘‘non-HIPAA’’ claims will continue to 

have interest payable if payment is not 

issued by the 31st day after the date of 

receipt. Our expectation is that 

contractors will pay 95 percent of these 

clean claims by the 31st day (30 days 

after date of receipt) on a monthly basis. 

Standard 2. Not less than 95.0 percent 

of clean paper non-Periodic Interim 

Payment claims are paid within 

specified time frames. Specifically, 

clean non-Periodic Interim Payment 

paper claims can be paid as early as the 

27th day (26 days after the date of 

receipt) and must be paid by the 31st 

day (30 days after the date of receipt). 

Our expectation is that contractors will 

meet this percentage on a monthly basis. 

Standard 3. Redetermination letters 

prepared in response to beneficiaryinitiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 4. All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

appellant submits documentation after 

the request, in which case the decision 

making timeframe is extended for 14 

calendar days for each submission. 

Because intermediaries process many 

claims for benefits under the Part B 

portion of the Medicare Program, we 

also may evaluate how well an 

intermediary follows the procedures for 

processing appeals of any claims for 

Part B benefits. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Accuracy of claims processing. 

• Remittance advice transactions. 

• Establishment and maintenance of a 

relationship with Common Working File 

(CWF) Host. 

• Accuracy of redeterminations as 

well as the appropriateness of the 

reading level of any redetermination 

decision letters. 

• Accuracy and timeliness of 

processing appeals under section 521 of 

the Medicare, Medicaid and SCHIP 

Benefits Improvement and Protection 

Act of 2000 (BIPA) and sections 933 and 

940 of the MMA. 

Note: Section 521 of BIPA and sections 933 

and 940 of MMA amend section 1869 of the 

Act by requiring major revisions to the 

Medicare appeals process. Section 937 of 

MMA also requires the creation of a process 

outside the appeals process, whereby 

Medicare contractors can correct minor errors 

and omissions. We may evaluate compliance 

with our instructions concerning other 

provisions of section 521 of BIPA and 

sections 933, 937 and 940 of MMA as they 

are implemented. 

B. Customer Service Criterion 

Functions that may be evaluated 

under this criterion include, but are not 

limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with provider inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 

• Entering valid call center 

performance data in the customer 

service assessment and management 

system. 

• Providing timely and accurate 

written replies to beneficiaries and/or 

providers that address the concerns 

raised and are written with an 

appropriate customer-friendly tone and 

clarity and those written to beneficiaries 

are at the appropriate reading level. 

• Maintaining walk-in inquiry service 

for beneficiaries and providers. 

• Conducting beneficiary and 

provider education, training, and 

outreach activities. 

• Effectively maintaining an Internet 

website dedicated to furnishing 

providers and physicians timely, 

accurate, and useful Medicare program 

information. 

• Ensuring written correspondence is 

evaluated for quality. 

C. Payment Safeguards Criterion 

The Payment Safeguard criterion 

contains the following two mandated 

standards: 

Standard 1. Decisions on SNF 

demand bills are accurate. 

Standard 2. TEFRA target rate 

adjustments, exceptions, and 

exemptions are processed within 

mandated time frames. Specifically, 

applications must be processed to 

completion within 75 days after receipt 

by the contractor or returned to the 

hospitals as incomplete within 60 days 

of receipt. 

Intermediaries may also be evaluated 

on any MIP activities if performed 

under their Part A contractual 

agreement. These functions and 

activities include, but are not limited to, 

the following: 

• Audit and Reimbursement 

+ Performing the activities specified 

in our general instructions for 

conducting audit and settlement of 

Medicare cost reports. 

+ Establishing accurate interim 

payments. 

• Benefit Integrity 

+ Referring allegations of potential 

fraud that are made by beneficiaries, 

providers, CMS, Office of Inspector 

General (OIG), and other sources to the 

Payment Safeguard Contractor. 

+ Putting in place effective detection 

and deterrence programs for potential 

fraud. 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision making on medical reviews. 

+ Effectively educating and 

communicating with the provider 

community. 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately reporting MSP savings. 

+ Accurately following MSP claim 

development and edit procedures. 

+ Auditing hospital files and claims 

to determine that claims are being filed 

to Medicare appropriately. 

+ Supporting the Coordination of 

Benefits Contractors’ efforts to identify 

responsible payers primary to Medicare. 

+ Identifying, recovering, and 

referring mistaken/conditional Medicare 

payments in accordance with 

appropriate Medicare Manual 

instructions and any other pertinent 

general instructions, in the specified 

order of priority. 

• Overpayments 

+ Collecting and referring Medicare 

debts timely. 

+ Accurately reporting and collecting 

overpayments. 

+ Adhering to our instructions for 

management of Medicare Trust Fund 

debts. 

• Provider Enrollment 

+ Complying with assignment of staff 

to the provider enrollment function and 

training the staff in procedures and 

verification techniques. 

+ Complying with the operational 

standards relevant to the process for 

enrolling providers. 

D. Fiscal Responsibility Criterion 

We may review the intermediary’s 

efforts to establish and maintain 

appropriate financial and budgetary 

internal controls over benefit payments 

and administrative costs. Proper 

internal controls must be in place to 

ensure that contractors comply with 

their agreements with us. 

Additional functions that may be 

reviewed under the fiscal responsibility 

criterion include, but are not limited to, 

the following: 

• Adherence to approved program 

management and MIP budgets. 

55892 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

• Compliance with the BPRs. 

• Compliance with financial 

reporting requirements. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities Criterion 

We may measure an intermediary’s 

administrative ability to manage the 

Medicare program. We may evaluate the 

efficiency and effectiveness of its 

operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. 

We may measure an intermediary’s 

efficiency and effectiveness in managing 

its operations. Proper systems security 

(general and application controls), ADP 

maintenance, and disaster recovery 

plans must be in place. An intermediary 

must also test system changes to ensure 

the accurate implementation of our 

instructions. 

Our evaluation of an intermediary 

under the administrative activities 

criterion may include, but is not limited 

to, reviews of the following: 

• Systems security. 

• ADP maintenance (configuration 

management, testing, change 

management, and security). 

• Implementation of the Electronic 

Data Interchange (EDI) standards 

adopted for use under HIPAA. 

• Disaster recovery plan and systems 

contingency plan. 

• Data and reporting requirements 

implementation. 

• Internal controls establishment and 

use, including the degree to which the 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of our general 

instructions. 

V. Criteria and Standards for Regional 

Home Health Intermediaries (RHHIs) 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘CRITERIA AND STANDARDS FOR 

RHHIs’’ at the beginning of your 

comments.] 

The following four standards are 

mandated for the RHHI criterion: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted nonPeriodic Interim Payment home health 

and hospice claims are paid within 

statutorily specified time frames. Clean 

claims are defined as claims that do not 

require Medicare intermediaries to 

investigate or develop them outside of 

their Medicare operations on a 

prepayment basis. Specifically, the 

statute specifies that clean non-Periodic 

Interim Payment electronic claims be 

paid no earlier than the 14th day after 

the date of receipt, and that interest is 

payable for any clean claims if payment 

is not issued by the 31st day after the 

date of receipt. The HIPAA 

Administrative Simplification 

provisions and the implementing 

regulations established standards for 

electronic transmission of claims. We 

issued instructions that effective July 1, 

2004, electronic claims that do not 

comply with the appropriate HIPAA 

claim standard will no longer qualify for 

payment as early as the 14th day after 

the date of receipt. These ‘‘non-HIPAA’’

claims will not be paid earlier than the 

27th day after the date of receipt. These 

‘‘non-HIPAA’’ claims will continue to 

have interest payable if payment is not 

issued by the 31st day after the date of 

receipt. Our expectation is that 

contractors will pay 95 percent of these 

clean claims by the 31st day (30 days 

after date of receipt) on a monthly basis. 

Standard 2. Not less than 95.0 percent 

of clean paper non-periodic interim 

payment home health and hospice 

claims are paid within specified time 

frames. Specifically, clean, non-periodic 

interim payment paper claims can be 

paid as early as the 27th day (26 days 

after the date of receipt) and must be 

paid by the 31st day (30 days after the 

date of receipt). Our expectation is that 

contractors will meet this percentage on 

a monthly basis. 

Standard 3. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 4: All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

appellant submits documentation after 

the request, in which case the decision 

making timeframe is extended for 14 

calendar days for each submission. 

We may use this criterion to review 

an RHHI’s performance for handling the 

HHA and hospice workload. This 

includes processing HHA and hospice 

claims timely and accurately, properly 

paying and settling HHA cost reports, 

and timely and accurately processing 

BIPA section 521 redeterminations from 

beneficiaries, HHAs, and hospices. 

Note: Section 521 of BIPA and sections 933 

and 940 of MMA amend section 1869 of the 

Act by requiring major revisions to the 

Medicare appeals process. Section 937 of 

MMA requires the creation of a process 

outside the appeals process, whereby 

Medicare contractors can correct minor errors 

and omissions. We may evaluate compliance 

with our instructions concerning other 

provisions of section 521 of BIPA and 

sections 933, 937 and 940 of MMA as they 

are implemented. 

VI. Criteria and Standards for Carriers 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘CRITERIA AND STANDARDS FOR 

CARRIERS’’ at the beginning of your 

comments.] 

A. Claims Processing Criterion 

The Claims Processing criterion 

contains the following six mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted claims 

are processed within statutorily 

specified time frames. Clean claims are 

defined as claims that do not require 

Medicare carriers to investigate or 

develop them outside of their Medicare 

operations on a prepayment basis. 

Specifically, the statute specifies that 

clean non-Periodic Interim payment 

electronic claims be paid no earlier than 

the 14th day after the date of receipt, 

and that interest is payable for any clean 

claims if payment is not issued by the 

31st day after the date of receipt. The 

HIPAA Administrative Simplification 

provisions and the implementing 

regulations established standards for 

electronic transmission of claims. We 

issued instructions that effective July 1, 

2004, electronic claims that do not 

comply with the appropriate HIPAA 

claim standard will no longer qualify for 

payment as early as the 14th day after 

the date of receipt. These ‘‘non-HIPAA’’

claims will not be paid earlier than the 

27th day after the date of receipt. These 

‘‘non-HIPAA’’ claims will continue to 

have interest payable if payment is not 

issued by the 31st day after the date of 

receipt. Our expectation is that 

contractors will pay 95 percent of these 

clean claims by the 31st day (30 days 

after date of receipt) on a monthly basis. 

Standard 2. Not less than 95.0 percent 

of clean paper claims are processed 

within specified time frames. 

Specifically, clean paper claims can be 

paid as early as the 27th day (26 days 

after the date of receipt) and must be 

paid by the 31st day (30 days after the 

date of receipt). Our expectation is that 

contractors will meet this percentage on 

a monthly basis. 

Standard 3. 98.0 percent of MSNs are 

properly generated. Our expectation is 

that MSN messages are accurately 

reflecting the services provided. 

Standard 4. 90.0 percent of carrier 

hearing decisions are completed within 

120 days. Our expectation is that 

contractors will meet this percentage on 

a monthly basis. This standard will 

remain in effect until the Part B hearing 

officer work is transitioned to the QICs 

sometime in FY 2006. 

Standard 5. Redetermination letters 

prepared in response to beneficiary 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55893 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 6. All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

appellant submits documentation after 

the request, in which case the decision 

making time frame is extended for 14 

calendar days for each submission. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Accuracy of claims processing. 

• Remittance advice transactions. 

• Establishment and maintenance of 

relationship with Common Working File 

(CWF) Host. 

• Accuracy of redetermination 

decisions. 

• Accuracy of processing hearing 

cases with decision letters that are clear 

and have an appropriate customerfriendly tone. This standard will remain 

in effect until the Part B hearing officer 

work is transitioned to the QICs 

sometime in FY 2006. 

• Accuracy and timeliness of appeals 

decisions issued pursuant to the 

requirements of BIPA section 521 and 

sections 933 and 940 of MMA. 

Note: Section 521 of BIPA and sections 933 

and 940 of MMA amend section 1869 of the 

Act by requiring major revisions to the 

Medicare appeals process. Section 937 of 

MMA also requires the creation of a process 

outside the appeals process, whereby 

Medicare contractors can correct minor errors 

and omissions. We may evaluate compliance 

with our instructions concerning other 

provisions of section 521 of BIPA and 

sections 933, 937 and 940 of MMA as they 

are implemented. 

B. Customer Service Criterion 

The customer service criterion 

contains the following mandated 

standard: Replies to beneficiary written 

correspondence are responsive to the 

beneficiary’s concerns, are written with 

an appropriate customer-friendly tone 

and clarity, and are written at the 

appropriate reading level. 

Contractors must meet our 

performance expectations that 

beneficiaries and providers are served 

by prompt and accurate administration 

of the program in accordance with all 

applicable laws, regulations, and our 

general instructions. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with provider inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 

• Entering valid call center 

performance data in the customer 

service assessment and management 

system. 

• Providing timely and accurate 

written replies to beneficiary and/or 

providers. 

• Maintaining walk-in inquiry service 

for beneficiaries and providers. 

• Conducting beneficiary and 

provider education, training, and 

outreach activities. 

• Effectively maintaining an internet 

website dedicated to furnishing 

providers timely, accurate, and useful 

Medicare program information. 

• Ensuring written correspondence is 

evaluated for quality. 

C. Payment Safeguards Criterion 

Carriers may be evaluated on any MIP 

activities if performed under their 

contracts. In addition, other carrier 

functions and activities that may be 

reviewed under this criterion include, 

but are not limited to the following: 

• Benefit Integrity 

+ Referring allegations of potential 

fraud that are made by beneficiaries, 

providers, CMS, OIG, and other sources 

to the payment safeguard contractor. 

+ Putting in place effective detection 

and deterrence programs for potential 

fraud. 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision making on medical reviews. 

+ Effectively educating and 

communicating with the provider 

community. 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately reporting MSP savings. 

+ Accurately following MSP claim 

development/edit procedures. 

+ Supporting the Coordination of 

Benefits Contractor’s efforts to identify 

responsible payers primary to Medicare. 

+ Identifying, recovering, and 

referring mistaken/conditional Medicare 

payments in accordance with the 

appropriate Medicare Manual 

instructions, and our other pertinent 

general instructions. 

• Overpayments 

+ Collecting and referring Medicare 

debts timely. 

+ Accurately reporting and collecting 

overpayments. 

+ Compliance with our instructions 

for management of Medicare Trust Fund 

debts. 

• Provider Enrollment 

+ Complying with assignment of staff 

to the provider enrollment function and 

training staff in procedures and 

verification techniques. 

+ Complying with the operational 

standards relevant to the process for 

enrolling suppliers. 

D. Fiscal Responsibility Criterion 

We may review the carrier’s efforts to 

establish and maintain appropriate 

financial and budgetary internal 

controls over benefit payments and 

administrative costs. Proper internal 

controls must be in place to ensure that 

contractors comply with their contracts. 

Additional functions that may be 

reviewed under the Fiscal 

Responsibility criterion include, but are 

not limited to, the following: 

• Adherence to approved program 

management and MIP budgets. 

• Compliance with the BPRs. 

• Compliance with financial 

reporting requirements. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities Criterion 

We may measure a carrier’s 

administrative ability to manage the 

Medicare program. We may evaluate the 

efficiency and effectiveness of its 

operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. 

We may measure a carrier’s efficiency 

and effectiveness in managing its 

operations. Proper systems security 

(general and application controls), ADP 

maintenance, and disaster recovery 

plans must be in place. Also, a carrier 

must test system changes to ensure 

accurate implementation of our 

instructions. 

Our evaluation of a carrier under this 

criterion may include, but is not limited 

to, reviews of the following: 

• Systems security. 

• ADP maintenance (configuration 

management, testing, change 

management, and security). 

• Disaster recovery plan/systems 

contingency plan. 

• Data and reporting requirements 

implementation. 

• Internal controls establishment and 

use, including the degree to which the 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of the Electronic 

Data Interchange (EDI) standards 

adopted for use under the Health 

Insurance Portability and 

Accountability Act (HIPAA). 

• Implementation of our general 

instructions. 

55894 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

VII. Criteria and Standards for Durable 

Medical Equipment, Prosthetics, 

Orthotics, and Supplies (DMEPOS) 

Regional Carriers 

[If you choose to comment on issues in 

this section, please include the caption 

‘‘CRITERIA AND STANDARDS FOR 

DMEPOS’’ at the beginning of your 

comments.] 

The five criteria for DMEPOS regional 

carriers contain a total of six mandated 

standards against which all DMEPOS 

regional carriers must be evaluated. 

There also are examples of other 

activities for which the DMEPOS 

regional carriers may be evaluated. The 

mandated standards are in the claims 

processing and customer service 

criteria. In addition to being described 

in these criteria, the mandated 

standards are also described in the 

DMEPOS regional carrier statement of 

work (SOW). 

A. Claims Processing Criterion 

The claims processing criterion 

contains the following six mandated 

standards: 

Standard 1. Not less than 95.0 percent 

of clean electronically submitted claims 

are processed within statutorily 

specified time frames. Clean claims are 

defined as claims that do not require 

Medicare DMEPOS regional carriers to 

investigate or develop them outside of 

their Medicare operations on a 

prepayment basis. Specifically, the 

statute specifies that clean non-Periodic 

Interim Payment electronic claims be 

paid no earlier than the 14th day after 

the date of receipt, and that interest is 

payable for any clean claims if payment 

is not issued by the 31st day after the 

date of receipt. The HIPAA 

Administrative Simplification 

provisions and the implementing 

regulations established standards for 

electronic transmission of claims. We 

issued instructions that effective July 1, 

2004, electronic claims that do not 

comply with the appropriate HIPAA 

claim standard will no longer qualify for 

payment as early as the 14th day after 

the date of receipt. These ‘‘non-HIPAA’’

claims will not be paid earlier than the 

27th day after the date of receipt. These 

‘‘non-HIPAA’’ claims will continue to 

have interest payable if payment is not 

issued by the 31st day after the date of 

receipt. Our expectation is that 

contractors will pay 95 percent of these 

clean claims by the 31st day (30 days 

after date of receipt) on a monthly basis. 

Standard 2. Not less than 95.0 percent 

of clean paper claims are processed 

within specified timeframes. 

Specifically, clean paper claims can be 

paid as early as day 27 (26 days after the 

date of receipt) and must be paid by day 

31 (30 days after the date of receipt). 

Our expectation is that contractors will 

meet this percentage on a monthly basis. 

Standard 3. 98.0 percent of MSNs are 

properly generated. Our expectation is 

that MSN messages are accurately 

reflecting the services provided. 

Standard 4. 90.0 percent of DMEPOS 

regional carrier hearing decisions are 

completed within 120 days. Our 

expectation is that contractors will meet 

this percentage on a monthly basis. This 

standard will remain in effect until the 

Part B hearing officer work is 

transitioned to the QICs sometime in FY 

2006. 

Standard 5. Redetermination letters 

prepared in response to beneficiary 

initiated appeal requests are written in 

a manner calculated to be understood by 

the beneficiary. Letters must contain the 

required elements as specified in 

§ 405.956. 

Standard 6. All redeterminations must 

be concluded and mailed within 60 

days of receipt of the request, unless the 

appellant submits documentation after 

the request, in which case the decision 

making timeframe is extended for 14 

calendar days for each submission. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Claims processing accuracy. 

• Accuracy and timeliness of appeals 

decisions prior to the implementation of 

BIPA sections 521 and 933 and section 

940 of MMA requirements. 

• Requests for ALJ hearings are 

forwarded timely. 

• Accuracy and timeliness of appeals 

decisions issued pursuant to the 

requirements of BIPA sections 521 and 

933 and section 940 of MMA. 

Note: Section 521 of BIPA and sections 933 

and 940 of MMA amend section 1869 of the 

Act by requiring major revisions to the 

Medicare appeals process. Section 937 of 

MMA also requires the creation of a process 

outside the appeals process, whereby 

Medicare contractors can correct minor errors 

and omissions. We may evaluate compliance 

with our instructions concerning other 

provisions of section 521 of BIPA and 

sections 933, 937 and 940 of MMA as they 

are implemented. 

B. Customer Service Criterion 

The customer service criterion 

contains the following mandated 

standard: Replies to beneficiary written 

correspondence are responsive to the 

beneficiary’s concerns, are written with 

an appropriate customer-friendly tone 

and clarity, and are written at the 

appropriate reading level. 

Contractors must meet our 

performance expectations that 

beneficiaries and suppliers are served 

by prompt and accurate administration 

of the program in accordance with all 

applicable laws, regulations, the 

DMEPOS regional carrier SOW, and our 

general instructions. 

Additional functions that may be 

evaluated under this criterion include, 

but are not limited to, the following: 

• Maintaining a properly 

programmed interactive voice response 

system to assist with provider inquiries. 

• Performing quality call monitoring. 

• Training customer service 

representatives. 

• Entering valid call center 

performance data in the customer 

service assessment and management 

system. 

• Providing timely and accurate 

written replies to beneficiaries and/or 

providers. 

• Maintaining walk-in inquiry service 

for beneficiaries and suppliers. 

• Conducting beneficiary and 

provider education, training, and 

outreach activities. 

• Effectively maintaining an internet 

website dedicated to furnishing 

providers timely, accurate, and useful 

Medicare program information. 

• Ensuring that communications are 

made to interested supplier 

organizations for the purpose of 

developing and maintaining 

collaborative supplier education and 

training activities and programs. 

• Ensuring written correspondence is 

evaluated for quality. 

C. Payment Safeguards Criterion 

DMEPOS regional carriers may be 

evaluated on any MIP activities if 

performed under their contracts. The 

DMEPOS regional carriers must 

undertake actions to promote an 

effective program administration for 

DMEPOS regional carrier claims. These 

functions and activities include, but are 

not limited to the following: 

• Benefit Integrity 

+ Identifying potential fraud cases 

that exist within the DMEPOS regional 

carrier’s service area and taking 

appropriate actions to resolve these 

cases. 

+ Investigating allegations of 

potential fraud made by beneficiaries, 

suppliers, CMS, OIG, and other sources. 

+ Putting in place effective detection 

and deterrence programs for potential 

fraud. 

• Medical Review 

+ Increasing the effectiveness of 

medical review activities. 

+ Exercising accurate and defensible 

decision making on medical reviews. 

+ Effectively educating and 

communicating with the supplier 

community. 

Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 55895 

+ Collaborating with other internal 

components and external entities to 

ensure the effectiveness of medical 

review activities. 

• Medicare Secondary Payer 

+ Accurately reporting MSP savings. 

+ Accurately following MSP claim 

development/edit procedures. 

+ Supporting the coordination of 

benefits contractors’ efforts to identify 

responsible payers primary to Medicare. 

• Identifying, recovering, and 

referring mistaken/conditional Medicare 

payments in accordance with the 

appropriate program instructions in the 

specified order of priority. 

• Overpayments 

+ Collecting and referring Medicare 

debts timely. 

+ Accurately reporting and collecting 

overpayments. 

+ Compliance with our instructions 

for management of Medicare Trust Fund 

debts. 

D. Fiscal Responsibility Criterion 

We may review the DMEPOS regional 

carrier’s efforts to establish and 

maintain appropriate financial and 

budgetary internal controls over benefit 

payments and administrative costs. 

Proper internal controls must be in 

place to ensure that contractors comply 

with their contracts. Additional matters 

that may be reviewed under this 

criterion include, but are not limited to, 

the following: 

• Compliance with financial 

reporting requirements. 

• Adherence to approved program 

management and MIP budgets. 

• Control of administrative cost and 

benefit payments. 

E. Administrative Activities 

We may measure a DMEPOS regional 

carrier’s administrative ability to 

manage the Medicare program. We may 

evaluate the efficiency and effectiveness 

of its operations, its system of internal 

controls, and its compliance with our 

directives and initiatives. Our 

evaluation of a DMEPOS regional carrier 

under this criterion may include, but is 

not limited to, review of the following: 

• Systems security. 

• Disaster recovery plan/systems 

contingency plan. 

• Internal controls establishment and 

use, including the degree to which the 

contractor cooperates with the Secretary 

in complying with the FMFIA. 

• Implementation of the EDI 

standards adopted for use under HIPAA. 

VIII. Action Based on Performance 

Evaluations 

[If you choose to comment on this 

section, please include the caption 

‘‘ACTION BASED ON PERFORMANCE 

EVALUATIONS’’ at the beginning of 

your comments.] 

We evaluate a contractor’s 

performance against applicable program 

requirements for each criterion. Each 

contractor must certify that all 

information submitted to us relating to 

the contract management process, 

including, without limitation, all files, 

records, documents and data, whether 

in written, electronic, or other form, is 

accurate and complete to the best of the 

contractor’s knowledge and belief. A 

contractor is required to certify that its 

files, records, documents, and data are 

not manipulated or falsified in an effort 

to receive a more favorable performance 

evaluation. A contractor must further 

certify that, to the best of its knowledge 

and belief, the contractor has submitted, 

without withholding any relevant 

information, all information required to 

be submitted for the contract 

management process under the 

authority of applicable law(s), 

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

provision(s). Any contractor that makes 

a false, fictitious, or fraudulent 

certification may be subject to criminal 

or civil prosecution, as well as 

appropriate administrative action. This 

administrative action may include 

debarment or suspension of the 

contractor, as well as the termination or 

nonrenewal of a contract. 

If a contractor meets the level of 

performance required by operational 

instructions, it meets the requirements 

of that criterion. When we determine a 

contractor is not meeting performance 

requirements, we will use the terms 

‘‘major nonconformance’’ or ‘‘minor 

nonconformance’’ to classify our 

findings. A major nonconformance is a 

nonconformance that is likely to result 

in failure of the supplies or services, or 

to materially reduce the usability of the 

supplies or services for their intended 

purpose. A minor nonconformance is a 

nonconformance that is not likely to 

materially reduce the usability of the 

supplies or services for their intended 

purpose, or is a departure from 

established standards having little 

bearing on the effective use or operation 

of the supplies or services. The 

contractor will be required to develop 

and implement PIPs for findings 

determined to be either a major or minor 

nonconformance. The contractor will be 

monitored to ensure effective and 

efficient compliance with the PIP, and 

to ensure improved performance when 

requirements are not met. 

The results of performance 

evaluations and assessments under all 

criteria applying to intermediaries, 

carriers, RHHIs, and DMEPOS regional 

carriers will be used for contract 

management activities and will be 

published in the contractor’s annual 

Report of Contractor Performance (RCP). 

We may initiate administrative actions 

as a result of the evaluation of 

contractor performance based on these 

performance criteria. Under sections 

1816 and 1842 of the Act, we consider 

the results of the evaluation in our 

determinations when—

• Entering into, renewing, or 

terminating agreements or contracts 

with contractors, and 

• Deciding other contract actions for 

intermediaries and carriers (such as 

deletion of an automatic renewal 

clause). These decisions are made on a 

case-by-case basis and depend primarily 

on the nature and degree of 

performance. More specifically, these 

decisions depend on the following: 

+ Relative overall performance 

compared to other contractors. 

+ Number of criteria in which 

nonconformance occurs. 

+ Extent of each nonconformance. 

+ Relative significance of the 

requirement for which nonconformance 

occurs within the overall evaluation 

program. 

+ Efforts to improve program quality, 

service, and efficiency. 

+ Deciding the assignment or 

reassignment of providers and 

designation of regional or national 

intermediaries for classes of providers. 

We make individual contract action 

decisions after considering these factors 

in terms of their relative significance 

and impact on the effective and efficient 

administration of the Medicare program. 

In addition, if the cost incurred by the 

intermediary, RHHI, carrier, or DMEPOS 

regional carrier to meet its contractual 

requirements exceeds the amount that 

we find to be reasonable and adequate 

to meet the cost that must be incurred 

by an efficiently and economically 

operated intermediary or carrier, these 

high costs may also be grounds for 

adverse action. 

IX. Collection of Information 

Requirements 

This document does not impose 

information collection and record 

keeping requirements. Consequently the 

Office of Management and Budget need 

not review it under the authority of the 

Paperwork Reduction Act of 1995 (44 

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

X. Response to Comments 

Because of the large number of items 

of correspondence we normally receive 

on Federal Register documents 

published for comment, we are unable 

55896 Federal Register / Vol. 70, No. 184 / Friday, September 23, 2005 / Notices 

to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the Comment Period 

section of this preamble, and, if we 

proceed with a subsequent document, 

we will respond to the comments in the 

preamble of that document. 

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

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

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

(Catalog of Federal Domestic Assistance 

Program No. 93.774, Medicare—

Supplementary Medical Insurance Program) 

Dated: May 19, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services. 

[FR Doc. 05–18923 Filed 9–22–05; 8:45 am] 

BILLING CODE 4120–01–U 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–8025–N] 

RIN 0938–AO01 

Medicare Program; Part A Premium for 

Calendar Year 2006 for the Uninsured 

Aged and for Certain Disabled 

Individuals Who Have Exhausted Other 

Entitlement 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Notice. 

SUMMARY: This annual notice announces 

Medicare’s Hospital Insurance (Part A) 

premium for uninsured enrollees in 

calendar year (CY) 2006. This premium 

is to be paid by enrollees age 65 and 

over who are not otherwise eligible 

(hereafter known as the ‘‘uninsured 

aged’’) and for certain disabled 

individuals who have exhausted other 

entitlement. The monthly Part A 

premium for the 12 months beginning 

January 1, 2006 for these individuals 

will be $393. The reduced premium for 

certain other individuals as described in 

this notice will be $216. Section 1818(d) 

of the Social Security Act specifies the 

method to be used to determine these 

amounts. 

EFFECTIVE DATE: This notice is effective 

on January 1, 2006. 

FOR FURTHER INFORMATION CONTACT: 

Clare McFarland, (410) 786–6390. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 1818 of the Social Security 

Act (the Act) provides for voluntary 

enrollment in the Medicare Hospital 

Insurance program (Medicare Part A), 

subject to payment of a monthly 

premium, of certain persons aged 65 

and older who are uninsured under the 

Old-Age, Survivors and Disability 

Insurance (OASDI) program or the 

Railroad Retirement Act and do not 

otherwise meet the requirements for 

entitlement to Medicare Part A. (Persons 

insured under the OASDI program or 

the Railroad Retirement Act and certain 

others do not have to pay premiums for 

hospital insurance.) 

Section 1818A of the Act provides for 

voluntary enrollment in Medicare Part 

A, subject to payment of a monthly 

premium, of certain disabled 

individuals who have exhausted other 

entitlement. These are individuals who 

are not currently entitled to Part A 

coverage, but who were entitled to 

coverage due to a disabling impairment 

under section 226(b) of the Act, and 

who would still be entitled to Part A 

coverage if their earnings had not 

exceeded the statutorily defined 

substantial gainful activity amount 

(section 223(d)(4) of the Act). 

Section 1818A(d)(2) of the Act 

specifies that the provisions relating to 

premiums under section 1818(d) 

through section 1818(f) of the Act for 

the aged will also apply to certain 

disabled individuals as described above. 

Section 1818(d) of the Act requires us 

to estimate, on an average per capita 

basis, the amount to be paid from the 

Federal Hospital Insurance Trust Fund 

for services incurred in the following 

calendar year (including the associated 

administrative costs) on behalf of 

individuals aged 65 and over who will 

be entitled to benefits under Medicare 

Part A. We must then determine, during 

September of each year, the monthly 

actuarial rate for the following year (the 

per capita amount estimated above 

divided by 12) and publish the dollar 

amount for the monthly premium in the 

succeeding CY. If the premium is not a 

multiple of $1, the premium is rounded 

to the nearest multiple of $1 (or, if it is 

a multiple of 50 cents but not of $1, it 

is rounded to the next highest $1). 

Section 13508 of the Omnibus Budget 

Reconciliation Act of 1993 (Pub. L. 103–

66) amended section 1818(d) of the Act 

to provide for a reduction in the 

premium amount for certain voluntary 

enrollees (section 1818 and section 

1818A). The reduction applies to an 

individual who is eligible to buy into 

the Medicare Part A program and who, 

as of the last day of the previous 

month—

• Had at least 30 quarters of coverage 

under title II of the Act; 

• Was married, and had been married 

for the previous 1-year period, to a 

person who had at least 30 quarters of 

coverage; 

• Had been married to a person for at 

least 1 year at the time of the person’s 

death if, at the time of death, the person 

had at least 30 quarters of coverage; or 

• Is divorced from a person and had 

been married to the person for at least 

10 years at the time of the divorce if, at 

the time of the divorce, the person had 

at least 30 quarters of coverage. 

Section 1818(d)(4)(A) of the Act 

specifies that the premium that these 

individuals will pay for CY 2006 will be 

equal to the premium for uninsured 

aged enrollees reduced by 45 percent. 

II. Monthly Premium Amount for CY 

2006 

The monthly premium for the 

uninsured aged and certain disabled 

individuals who have exhausted other 

entitlement for the 12 months beginning 

January 1, 2006, is $393. 

The monthly premium for those 

individuals subject to the 45 percent 

reduction in the monthly premium is 

$216. 

III. Monthly Premium Rate Calculation 

As discussed in section I of this 

notice, the monthly Medicare Part A 

premium is equal to the estimated 

monthly actuarial rate for CY 2006 

rounded to the nearest multiple of $1 

and equals one-twelfth of the average 

per capita amount, which is determined 

by projecting the number of Part A 

enrollees aged 65 years and over as well 

as the benefits and administrative costs 

that will be incurred on their behalf. 

The steps involved in projecting these 

future costs to the Federal Hospital 

Insurance Trust Fund are: 

• Establishing the present cost of 

services furnished to beneficiaries, by 

type of service, to serve as a projection 

base; 

• Projecting increases in payment 

amounts for each of the service types; 

and 

• Projecting increases in 

administrative costs. 

We base our projections for CY 2006 

on: (a) current historical data, and (b) 

projection assumptions derived from 

current law and the Mid-Session Review 

of the President’s Fiscal Year 2006 

Budget. 

We estimate that in CY 2006, 35.205 

million people aged 65 years and over 

will be entitled to benefits (without 

premium payment) and that they will 

incur $166.121 billion of benefits and 

related administrative costs. Thus, the 

estimated monthly average per capita 

amount is $393.23 and the monthly